LaycanDeskTime Charter: Trip & Period
Trip time charter for one voyage, period charter for 6–12 months: hire per day, delivery and redelivery ranges, bunkers and off-hire. Time charter chartering on trip and period basis: a ship delivered to the charterer for one trip or for six to twelve months against a daily hire, with the delivery and redelivery ranges, bunkers on delivery, off-hire and cargo exclusions negotiated, and a screened charterer of record before any owner sees the enquiry.
Under a time charter the owner delivers the ship with her crew and the charterer directs where she goes and what she carries, paying a hire per day rather than a freight per tonne and paying for bunkers and port costs himself. A trip time charter covers one voyage, delivery near the load port and redelivery near the discharge, and is the way most operators take a ship for a single cargo they want to run themselves. A period charter of six or twelve months gives a trader, a supply-contract holder or an operator a ship for a programme, and is priced on the owner's view of the market over that period, the trading range, the ship's speed and consumption warranty, and the charterer's name. The delivery and redelivery ranges, bunkers on delivery and redelivery at agreed quantities and prices, off-hire for breakdown and drydocking, and cargo exclusions are the clauses that move the hire, and a one-year commitment is only as good as the party signing it.
Two recent shapes: a 25,000 dwt product tanker sought for one year in West Africa, and a six-month ask for a VLCC. Both start with the same questions. What are the trading intentions, the areas and the cargoes; what is excluded; what are the delivery and redelivery ranges and the earliest and latest delivery dates; and which company is the charterer of record and what is its account, meaning the business behind the period. Owners will not put a ship at a charterer's disposal for a year without those, and neither will we put the enquiry to owners until the charterer of record is named and has cleared our screening. With that done we go to the owners whose ships fit the range and come back with named candidates, their speed and consumption, and a hire idea. Owners looking for period employment send positions to the board the same way. The work runs on email so the description, the clauses and the hire sit on one thread.
What a charterer must show
- Trading intentions: areas, cargoes and the programme behind the period
- Cargo exclusions and any cargoes the charterer must carry
- Delivery and redelivery ranges, earliest and latest delivery dates
- The charterer of record and its account
- Duration, with any option to extend and whose option it is
How owners price it
- Hire per day, against their view of the market over the period
- Trading range: a wide range costs more than a narrow one
- Speed and consumption warranty, and who bears a shortfall
- The charterer's name and the certainty of payment
Terms that move the number
- Bunkers on delivery and redelivery: quantities and prices
- Off-hire: breakdown, drydocking, deviation for the owner's account
- Redelivery range and notice, and the last-voyage margin
- Hire payment: in advance, the period, and the withdrawal clause
- Cargo exclusions, ice and war-risk areas
Ships that carry it
The cargo itself, on Commbril
Questions charterers and owners ask
What is the difference between a trip time charter and a period charter?
Duration and purpose. A trip time charter covers one voyage, delivered near the load port and redelivered near the discharge, and is how an operator takes a ship for a single cargo he runs himself. A period charter of six or twelve months gives the charterer the ship for a programme, at a hire per day for the whole term.
Who pays for bunkers and port costs on a time charter?
The charterer. He takes over the bunkers on board at delivery at an agreed quantity and price, buys fuel during the charter, and redelivers with about the same quantity, settled at the agreed price. Port costs, canal dues and cargo handling are his too; the owner pays the crew, maintenance and insurance.
What is off-hire?
Time during which the ship cannot do what the charterer needs because of something on the owner's side, a breakdown, a crew matter, a drydocking, and for which no hire is paid. The clause defines what counts and how the time and any extra bunkers are deducted.
Why do you need a screened charterer of record for a one-year charter?
Because an owner is handing over a ship for a year on the strength of that company's name and its business, and the owner's club, flag and insurers will read the charterer's trading before they read the charter party. We name the charterer of record, screen it and confirm the trading intentions before any owner sees the enquiry.