Ballast Bonuses

Ballast Bonuses: (Already referred to in lesson three). Where some ships deliver on to timecharter some distance from their original position, their owners may negotiate a positioning bonus to cover time and expenses (e.g. bunker costs or canal tolls) incurred between departure from the original position to the vessel’s delivery under the new employment. (Very occasionally, if a time charterer redelivers a vessel in a poor position relative to following employment opportunities, it may be possible for an owner to negotiate a redelivery positioning bonus, although this is not very common). Such a lumpsum payment, however, whether applicable to delivery on to or redelivery off timecharter, is termed a ‘ballast bonus’, and a delivery ballast bonus is usually payable in full together with the first hire due under a new timecharter. Payments in respect of hire are usually subject to a discount for address commissions and/or brokerages (just as for freight), but not so in respect of bunkers or canal tolls. Consequently, with ballast bonuses containing elements of both hire and voyage expense reimbursement, the question arises as to whether such bonuses should be paid ‘gross’ (i.e. liable to deduction for commission/ brokerage) or ‘nett’ of such deductions. In practice it all depends on the negotiating strength of each party and the state of the freight market. In some cases ballast bonuses will be nett and in others they will be gross. It is not unusual, even, for ballast bonuses to be nett of address commission but gross of brokerage. Bunkers: As we have seen in Lesson Four, when a vessel delivers on timecharter, the charterers will normally take over the bunkers remaining on board the vessel at that time, and reimburse the shipowner accordingly. Payment is usually made with the first hire payment.