Where the charterer’s commodity is drawn from a number of different places and sold to several buyers in different locations, neither consecutive voyages nor a contract of affreightment will give the merchant the flexibility he requires. Especially if there are marked differences in the speed of loading/discharging at the different places involved.
The charterer may overcome this problem by moving entirely away from a contract of carriage based on a rate of freight per tonne of cargo carried and instead, hire the ship on a contract based on time; not surprisingly called a time charter.
In Time Charter Contract, the shipowner still remains responsible for the running of the vessel. The crew, for example are still his employees but the commercial direction of the ship is transferred to the Time Charterer. Time Charterer decides where the ship will load and discharge and such things as the time it takes to do so and who pays for it now becomes his concern.
All the incidental expenses directly resulting from those commercial instructions will be for the Time Charterer’s Account including port expenses, except those directly for the ship’s account such as cash for the captain to use as advances of wages to the crew, medical attention for the crew and such like items.
Time Charter Trip (TCT)
The biggest item of expenditure for the time charterer, after the hire payment, is the cost of bunker fuel. The charterer may simply want the ship on time charter for just one voyage but needs the flexibility of a time charter. Such a time charter is often referred to as a Time Charter Trip (TCT).
On the other hand the charterer may want the vessel to be at his disposal for several months even years. During such time the time charterer acts almost as if the ship belonged to him, in fact in law, he will be described as the Disponent Owner. One advantage of a time charter, unless the wording is extremely restrictive, is that if the charterer’s own business does not require the ship for any part of the period, he can sublet the ship either on a time or a voyage basis to a third party.