Time Charter vs Voyage Charter

The two main ways to charter a ship differ in what you pay for and who controls the ship. Here is a side-by-side view.

What you pay for

In a voyage charter you pay freight for the cargo carried, per tonne or as a lump sum. In a time charter you pay hire for the time the ship is yours, usually per day.

Who pays the voyage costs

In a voyage charter the ship operator pays fuel and port costs, unless agreed otherwise. In a time charter the charterer normally pays fuel and port costs, while the ship operator pays crew, maintenance and insurance.

Who controls the ship

In a voyage charter the ship operator runs the ship and the charterer decides the cargo and ports. In a time charter the charterer gives the voyage orders within the agreed limits.

Which one to choose

Choose a voyage charter for a single cargo with fixed ports and a known freight. Choose a time charter for flexibility over a period. A trip time charter sits between the two: time charter terms for one trip.

Risk and delays

In a voyage charter the ship operator carries the risk of a slow voyage, because the freight does not change. Time spent waiting at a port is settled separately as demurrage. In a time charter the charterer carries that risk, because hire runs every day the ship is at the charterer's disposal, whether it sails or waits. A ship that is stopped by a breakdown can be off-hire, so the hire stops for that time.

An example

A charterer with one cargo of grain from a Black Sea port to a Mediterranean port usually wants a voyage charter: one cargo, one freight, no worry about fuel. A charterer who moves many small cargoes over several months, or who wants to choose the ports as the trade changes, often prefers a time charter, and takes over the planning of the voyages.

Questions to ask before you choose

How many cargoes do you have and how regular are they? Do you know the ports in advance? Do you want to plan the voyages yourself? Can you carry the cost of fuel and port charges? If the answers point to one cargo and little planning, a voyage charter is simpler. If they point to many cargoes and control over the ship, look at a time charter.

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