In my last article, I explained what is chartering and how it works. In this article, I will try to cover one type of chartering, time chartering. Well the name itself is self-explanatory, hiring a ship for a specific amount of time. Assume you received a promotion and with promotion a transfer to a new location. Since travelling back and forth is not an option you search for a house on rent in a near-by your new location. Well, this is a perfect example of the time chartering. In this case, you get in touch with the house owner to strike a deal on monthly rent. You may approach the owner through a real estate agent. Once you and the house owner both agree to specific terms, you prepare a contract stating the duration of engagement and the negotiated price. The contract between you and the house owner strictly defines each other’s responsibilities and liabilities. The time charter is similar but a complex business.
The Charterers in time chartering hire the ship from a shipowner for a specific duration of time. The shipowner has to make sure that the vessel given on time charter is fully manned and well equipped. Now let’s understand the responsibilities of the Charterer and the Ship Owner.
Owners Responsibilities and Liabilities:
- Ship on time charterer must be fully manned and properly equipped.
- The ship must be seaworthy all the times during the contract of engagement.
- Competent crew must man the ship.
- Vessel repairs and spare management is the owner’s responsibility.
- Ship’s insurance and instalment dues.
Charterers Responsibilities and Liabilities:
- Competent crew of the ship takes voyage orders from the charterers.
- Bunker required for the voyage is charterers responsibilities.
- Voyage expenses of cargo handling are borne by charterers.
- Charterer insurers the cargo.
From above its clear that shipowners give time charterer a huge control over the commercial operation of the vessel while the owner is restricted only towards the navigational and technical operational. Time chartering can be for a specific duration(normally in years) or it can even be for specific voyages. In time charter the vessel can have several voyages or a single voyage. Sometimes ship can be hired for only a short time duration in such cases it can also be called Trip Time Charter.