Ballast Bonuses

In some cases, ships may be delivered to timecharter some distance from their original position, shipowners may negotiate a positioning bonus (ballast bonus – BB) to cover time and expenses (e.g. bunker costs, canal tolls etc.) incurred between departure from the original position to the ships’s delivery under the new employment. Usually, if a time charterer redelivers a ship in a poor position relative to following employment opportunities, it may be possible for shipowner to negotiate a redelivery positioning bonus (ballast bonus – BB). Such a lumpsum payment by time charterer to a shipowner, 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. Like for freight payments, hire payments are usually subject to a discount for address commissions (ADDCOM) and/or brokerages (shipbroker fees), 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 ‘net’ of such deductions. In practice, it all depends on the negotiating strength of each party (shipowners and charterers) and the state of the freight market. In some cases, ballast bonuses are paid as net and in others they are paid as gross. Usually, ballast bonuses are paid net of address commission but gross of brokerage.

Bunkers:  when a ship is delivered on timecharter, charterers will normally take over the bunkers remaining on board (ROB) the ship at that time, and reimburse the shipowner accordingly. Remaining on board bunkers payment is usually made with the first hire payment.