Ship Hire is the Shipowner’s remuneration for making his or her ship available for the Charterer’s service. Ship Hire is paid from the time of delivery of the ship to the charterer until her redelivery to the shipowner, always subject to nonpayment for any time lost when the ship comes off-hire under the terms of the charter party.
Time Charterparty Ship Hire
The payment of Ship Hire is the primary obligation that the Charterer undertakes as part of the performance of the charter party contract. Hire represents the payment made in a Time Charterparty and is expressed as a daily rate in US dollars.
Time Charterparty Ship Hire Example
For example $30,000/per day. Time charter parties stipulate that hire is paid monthly or semimonthly (every fifteen days) in advance. Clause 5 in the ASBATIME charter par- ty indicates that hire is payable semimonthly in advance. Clause 6 in the BALTIME charter party states every thirty days in advance.
Ship Hire is agreed at $30,000 per day and payable for a thirty-day calendar month would be calculated as 30,000 x 30 = $900,000. Hire must be paid in full and without deduction, as stipulated in the charter party.
Deductions from Ship Hire
Deductions from Ship Hire may be made by the charterer if the charter party contract permits such deduction or byway of equitable set-off.
If the charterers fail to pay hire as per the charter party terms, then the Shipowners are entitled to withdraw the ship from the service of the charterer. The same would apply in case of underpayment by the charterers.
Charter party contracts are fairly clear on this issue. For example, Clause 5 of the ASBATIME reads: ” .. otherwise failing the punctual and regular payment of the hire … or on any breach of this Charter Party, the Owners shall be at liberty to withdraw the vessel from the service of the Charterers.”
Ship Hire Period
The period of hire runs from the time of the delivery of the vessel to the charterer to the time of redelivery to the shipowner. The ship may come on hire immediately (spot), or the shipowner may be required to deliver the ship within a spread of dates (laycan), with the charterer being given the option of canceling the charter if the ship is not delivered on or before a given date.