Time charter
TC
Meaning
A time charter hires the ship for a period at a daily rate; the charterer directs its employment and pays for voyage costs like bunkers and port fees.
Also written as Period charter, Time charter party
Time charter explained
The owner still crews, maintains and insures the ship, but the charterer decides where it goes and pays hire, typically in US dollars per day, every 15 or 30 days in advance. The charterer also pays voyage costs: bunkers, port charges and canal dues.
Time charters run from a few months to several years. Because the charterer takes the operating risk, the owner warrants the ship's speed and consumption, and performance claims are a common source of dispute.
Related terms
Voyage charter
A voyage charter is a contract to carry a cargo between named ports for a freight payment, with the owner running the ship and paying its costs.
Bareboat charter
A bareboat charter leases the ship itself; the charterer supplies the crew, runs and maintains it, and is treated almost as the owner for the term.
Trip time charter
A trip time charter hires a ship on time-charter terms for a single voyage, paid at a daily hire rate instead of freight per tonne.
Hire
Hire is the payment for a ship under a time charter, normally a fixed amount per day, paid in advance at regular intervals.
Off-hire
Off-hire is a period when a time-chartered ship cannot work as required, such as during a breakdown, so the charterer stops paying hire.
Speed and consumption warranty
A speed and consumption warranty is the owner's promise on a time charter that the ship can steam at a stated speed on a stated daily fuel consumption.
TCE
TCE (time charter equivalent) converts a voyage's freight into daily earnings: freight minus voyage costs, divided by the days the voyage takes.