Who pays for fuel, who employs the crew and who carries the risk of delay: a practical comparison of voyage, time and bareboat charters.
Chartering is how most of the world's cargo finds a ship. The charter party — the contract between owner and charterer — allocates costs and risks very differently depending on its type. Choosing the right structure is as important as negotiating the right rate.
Voyage charter
The owner carries a specified cargo between named ports for an agreed freight, usually per tonne or as a lump sum. The owner remains responsible for running the ship and pays the voyage costs — fuel, port charges and canal dues — unless the contract says otherwise.
- Laytime: the time the charterer is allowed for loading and discharging without paying extra.
- Demurrage: the agreed daily amount the charterer pays when laytime is exceeded.
- Despatch: a payment from the owner to the charterer when cargo operations finish early, if the charter provides for it.
Common forms include BIMCO's GENCON for general dry cargo, whose current edition is GENCON 2022. Laytime terms are often defined by incorporating BIMCO's Laytime Definitions for Charter Parties 2013.
Time charter
The charterer hires the ship, with its crew, for a period or a trip and pays hire per day. The charterer directs the ship's employment and pays voyage costs such as fuel and port charges; the owner keeps paying the running costs — crew, maintenance and insurance of the hull.
- Off-hire: hire stops for periods when the ship cannot perform, for example after a breakdown, under the terms of the off-hire clause.
- Trip time charter: a time charter for a single voyage — popular in the dry bulk market.
The NYPE form, current edition NYPE 2015, is widely used for time charters.
Bareboat charter
The charterer takes the ship without crew and assumes full operational control for a long period: it appoints the crew, runs and maintains the ship and usually insures it. The owner's role is close to that of a financier, and bareboat charters are often used in ship finance and hire-purchase structures. BIMCO's BARECON is the standard form; its current edition is BARECON 2017.
At a glance
| Voyage | Time | Bareboat | |
|---|---|---|---|
| Payment | Freight | Daily hire | Hire (long term) |
| Crew employed by | Owner | Owner | Charterer |
| Fuel and port costs | Owner | Charterer | Charterer |
| Main delay risk | Owner (beyond laytime: charterer) | Charterer | Charterer |
Our chartering desk matches cargo with tonnage on all three bases and negotiates the clauses that matter. Explore ship chartering.