LaycanDeskTime Charter Terms: Trip Charter, Hire, Delivery & Off-Hire
How a time charter works clause by clause: hire per day paid in advance, delivery and redelivery, bunkers, off-hire, speed and consumption, ILOHC, on NYPE 2015. The mechanics of a time charter for a first-time charterer or an owner: trip time charter against period, hire per day paid in advance, delivery and redelivery places and notices, bunkers taken over and handed back, off-hire, the speed and consumption warranty and the hold-cleaning lumpsum, on the NYPE 2015 form, and when a trip charter is the better shape than a voyage charter.
A time charter hands the charterer the commercial use of a ship, with the owner's crew still running her, for a hire per day. The owner pays the crew, maintenance, insurance and stores; the charterer pays hire, bunkers, port costs, canal dues and cargo handling and decides where she goes within the agreed trading limits. A trip time charter, TCT, is a time charter for one voyage: the ship is delivered near the load port, does the trip, and is redelivered near the discharge port, with the duration stated as about so many days without guarantee. A period charter runs for months or years for a programme. The dry cargo form is NYPE, the New York Produce Exchange form, revised as NYPE 2015 by ASBA, BIMCO and the Singapore Maritime Foundation on 3 June 2015, 57 clauses and a four-page ship description. Hire is paid in advance, 15 days at a time under NYPE 2015, and a charterer who misses a payment gets three banking days' written notice to pay before the owner may withdraw the ship. Delivery and redelivery are fixed by a place or range, a laycan for delivery, approximate and definite notices on both ends, and an on-hire and off-hire survey that records the ship's condition and the bunkers on board. The charterer takes over the bunkers on delivery at agreed quantities and prices, buys fuel during the charter and redelivers with about the same quantities, which the owner pays for at the agreed price; NYPE 2015 also obliges the charterer to redeliver with enough fuel to reach the nearest bunkering port, and the hire and bunker balance is settled within five banking days of redelivery.
Off-hire is the clause charterers read first: hire stops for time lost through the ship's own deficiencies, breakdown, crew, drydocking, and the clause names what counts and what does not. The owner warrants the ship's speed and consumption in the description, and under NYPE 2015 that warranty runs for the whole charter; a shortfall in good weather is claimed as time lost and extra fuel, with time saved set off, and disputes go to an agreed weather routing service or expert. ILOHC, in lieu of hold cleaning, is the lumpsum a charterer pays at redelivery instead of cleaning the holds himself, alongside any cargo-hold or intermediate-hold cleaning agreed for the cargoes carried. Against this, a voyage charter gives the charterer a freight per tonne and no exposure to time except through laytime and demurrage, and a bareboat charter hands over the ship without crew for the charterer to man and run. We suggest a trip charter over a voyage charter when the charterer wants to control the ship's rotation, carry two or more cargoes in sequence, tranship or wait without a demurrage clock, or hold the ship for a receiver's dates the owner would price heavily as a voyage; and a voyage charter when there is one cargo, two named ports and known rates. What an owner needs before a hire idea is the delivery and redelivery ranges with the laycan, the intended cargo and route with any exclusions, the duration, the bunker quantities wanted on delivery and the charterer of record, who is screened before any owner hears the enquiry. The ship's description, the clauses and the hire sit on one email thread from the first offer to the recap.
Who pays what
- Owner: crew, maintenance, insurance, stores, the ship's own delays
- Charterer: hire, bunkers, port costs and canal dues, cargo handling, agency
- Bunkers on delivery bought by the charterer, on redelivery bought back by the owner, at agreed prices
- ILOHC lumpsum at redelivery instead of cleaning the holds
Clauses that move the hire
- Trading limits and cargo exclusions; the tighter, the lower
- Delivery and redelivery ranges, and how wide the redelivery range is
- Duration: about so many days for a trip, months or years for a period, and any option
- Speed and consumption warranty and the good-weather definition it is measured in
- Hire payment: 15 days in advance, the grace notice, the withdrawal right
- Off-hire events and how bunkers and time are deducted
Trip charter, voyage or bareboat
- Voyage: one cargo, two named ports, freight per tonne, time risk only through laytime and demurrage
- Trip time charter: one voyage under the charterer's orders, hire per day, the charterer carries the time and fuel
- Period: the same for a programme of months or years
- Bareboat: hull only, the charterer crews, insures and operates her
Ships that carry it
The cargo itself, on Commbril
Questions charterers and owners ask
What is a trip time charter and how does it differ from a voyage charter?
A trip time charter is a time charter for one voyage: the ship is delivered near the load port and redelivered near the discharge port, the charterer pays hire per day plus bunkers and port costs and gives the orders. Under a voyage charter the owner runs the voyage for a freight per tonne and the charterer's only time exposure is laytime and demurrage. A trip charter suits a charterer who wants to control rotation, carry several cargoes in sequence or wait without a demurrage clock; a voyage charter suits one cargo between two known ports.
How is hire paid?
In advance, in the currency and to the account named in the charter. NYPE 2015 provides for hire 15 days in advance; if a payment is missed the owner gives three banking days' written notice, and if it is still unpaid he may withdraw the ship and claim for the rest of the charter. The first hire covers the first period from delivery together with the value of the bunkers on delivery; the last hire is adjusted at redelivery for the bunkers handed back and any off-hire.
What happens with bunkers on delivery and redelivery?
The charterer buys the fuel on board at delivery at the agreed quantities and prices, buys his own fuel during the charter, and redelivers with about the same quantities, which the owner buys back at the agreed price. The on-hire and off-hire surveys record the quantities. NYPE 2015 also requires enough fuel on redelivery to reach the nearest bunkering port, and the hire and bunker balance is settled within five banking days of redelivery.
What is off-hire, and what is ILOHC?
Off-hire is time for which no hire is paid because the ship cannot do what the charterer needs through a cause on the owner's side, such as breakdown, crew or drydocking; the clause lists the events and how time and any extra fuel are deducted. ILOHC, in lieu of hold cleaning, is the lumpsum the charterer pays at redelivery instead of cleaning the holds himself; it is agreed in the recap alongside any intermediate hold cleaning between cargoes.