What is TIME CHARTER? Examples of Time Charter Party

There are two main types of time charters, the period time charter, which, as its name implies, is for a period of time, usually several months or years, while the trip time charter is for a single voyage only – but under time charter conditions. The time or period charter is where the charterer takes over the ship for a certain period of time – it could be as short as one month or as long as 20 years, although the latter is not very common. The shipowner still operates the ship but, instead of earning freight per ton carried, shipowner is paid ‘hire’ at an agreed amount either every calendar month or, much more usually, every 15 days in advance, either as a lump sum or occasionally an amount per deadweight ton per month. The trip charter is usually for a single voyage; however, the division of responsibilities is the
same as those for a time charter and the usual time charter forms are used. These charters may be used by shipowners where port delays are
expected or during periods of uncertainty over fuel prices and fuel availability. The advantage of a trip charter as far as the charterer is concerned is the greater freedom which this allows, because details of the voyage are kept off the market and therefore trader competitors will not know the charterer’s load or discharge ports. The charterer is able to select ports or indeed a trading area without having to agree to the details with the owner, who is indifferent to any additional costs which may result from the charterer’s choice of ports, as these
costs will be met by the charterer. The division of responsibilities is spelt out clearly in the different charterparty documents as it forms the
basis of the contract between the owner and charterer.