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Hi. I am a shipping company director, transport academic, author, family man and all round nice guy. I have worked as shipbroker, shipowner, freight trader and bulk charterer, in senior positions, with some of the largest and most disrespected (joke) companies in the world. Ask my advice on all things shipping and you will receive my blunt and always honest answer. Hang around to learn more about chartering and ship broker salaries, chartering and ship broker jobs, chartering and shipbroker recruitment agencies, cheap freight, maritime education, chartering and ship broker qualifications, become a ship broker, tips on how to be a successful bulk shipping executive, philosophy, Zen and the art of shipbroking, and much more. Yours The Virtual Shipbroker (recently proclaimed the guru of shipbroking) Copyright © 2009-17 by Virtualshipbroker

Sunday, September 20, 2009

Time Charter VS Voyage Charter

In the lead up to the availability of the VS voyage estimation pack, I want to discuss a few of the major concepts.

The main purpose of running a voyage estimation is for the user to try and work out the 'per metric tonne rate' for a particular piece of voyage cargo.

In general, when brokers, shipowners and charterers talk about the market, and when one reads market reports, what we are mostly discussing are 'Time charter rate' not Voyage rates. So you will hear and read commentary saying that such and such vessel was fixed at USD 20,000 per day for a time charter trip from Singapore to Europe. Thats all well and good if you want to know the time charter rates, but the figure of USD 20,000 per day means nothing for a cargo owner who wants to move his cargo on a voyage basis ie a per metric tonne rate.

What does USD 20,000 per day convert to on a per metric ton basis they scream...

So this is the main purpose of the voyage estimation - to convert this Time Charter Daily Hire Rate into a meaningful Per Metric Ton "voyage rate". Alternatively if the charterer has given his/her 'voyage ideas' the shipowner and broker can plug in the voyage rate in order to work out the breakeven time charter rate!

Wrap your minds around that - lucky its early in the week hey..

Any questions then give me a hoy!

PS - Not all market discussions are based on time charter. Some well know KEY markets are discussed using voyage rates. But these trades tend to be very generic and thus allow for easy voyage rate comparisons. Examples of well know voyage based markets include USG / Japan grains and South Africa / Europe Coal routes.



  1. Will the rates for the gas markets be in /mt or /m3?

  2. Hello Suraz - the gas markets are different. They will use a different method of calculation altogether.

    The area I am focusing on the the dry bulk market.

    Thank you for the question.

  3. sir, how did the rates of bdi has been arrived . regarding the particular type of vessel, what are the factors affecting the rates

  4. Venki - try this link!


  5. Hi there!
    Could u be soooo kind to compare trip time charter and voyage charter.I'm going to write my final diploma thesis on this subject .By what means and knowledge do charterers reduce their expenses on trip time charter delivery?
    Do the above mentioned Time Charter Daily Hire Rate for "handysize" vsl covers trip time charter , say, on one week duration?

  6. Hello UP.

    Thats a big topic! I will not write your theses for you unless you pay me 2k - lol.

    In short

    - improve routing
    - source cheap bunkers
    - negotiate ports costs and agency fees
    - improve ability to arbitrage with various ships
    - more control over the process

    There are a few others but you get the picture.

    Yes the daily hire rate covers the duration of the contract.

    Hope this helps


  7. Hi there
    Would you be able to answer a question for me?
    Under what conditions would freight be payable to the charterer under a voyage charter party?

  8. hi

    Charterer diesnt receive freight - the shipowner does. Usually 95 percent 3 days after the signing and releasing of the bills of lading. So just after the ship has loaded. The rest payable after discharge.

  9. what are the liabilities of the insurer with regards tothe loss of charter time

  10. hi, can i ask whether cost for spot charter or voyage charter which is higher?

  11. I think you are asking the diference between a voyage charter and a spot time charter.

    Time charter should be a little cheaper but you are taking more risk.

    A voyage charter is the simnplest method but you will be paying a shipowner a margin.

  12. Sir, as a shipowner, how do I calculate the time charter daily hire rate? I mean a mathematical formula...

  13. Am i right in thinking you are an ICS student?

  14. Sorry I don't know what ICS student means.
    I'm studying Maritime Economics sir. At university, I'm studying a subject called "Merchant Fleet Operation" and there is a practical exercise which asks students to put themselves into a shipowner's shoes and decide the hire rate in a time charter party.
    I thought of calculating the shipowner's cost first (depreciation, repairs and maintenance, manning, ship management, lubricant oil, victualing). But when it comes to determining the hire rate. I'm really confused and stuck...

  15. Best if you ask your teacher who gets paid to teach you! - lol...In all seriousness its not really the role of this blog to help students pass assignments and exams especially when you have teachers (whome you are paying through your fees) and text books to help. This blog offer heaps of FREE advice to all and sundry which I hope is of benefit to you in your overall understanding of the industry.

    Just this onece I will throw you a bone. The time charter market rate is not devised through a mathematical calculation. It is a purely subject to market forces - supply and demand. its like me asking you - what is the mathematical calculation for the price of a house in London?

    Those costs you mention help the shipowner understand his fixed costs but generally they will have little impact on the Time charter rate he can charge in the market.

    Thanks for reading and good luck with your studies


  16. When we talk about daily time charter rate, does that rate include expenses?


  18. Very good blog! Good info. Greetings from Greece

  19. I work for a company that is going to begin shipping a product from North America to Rotterdam. It will be dry bulk and hydrophobic. We are very new to the ocean freight game, I am curious as to whether we should become a member of the Baltic Exchange in order to educate ourselves and hopefully save some money.

  20. Hi There

    I respectfully suggest you need to do alot more than that. Considering that feight will constitute a large percentage of the landed cost of your product...and the inherent risk associated with shipping you need to dedicate adequate resources for this function.

    Yes you will need people with shipping expertise. If that is going to be you then yes yu need to be educated quickly and this is not always possible. Booking bulk freight is not like booking a container on a liner ship...

    The difference - usually 1 million bucks give or take a few dollars.

    So yes, get educated, hire shipping people, alternatively hire a consultant, and use a good broker. Joining the baltic exchange is a good thing but its mostly just a professional body. You need much much more.

  21. What's a good website to determine the spot charter rates for Handymax for US to Asia routes?

  22. Hi all,

    I am jus in ICS and recently started to be prepared to exams in APril, too challenging. Need some help:
    1. Tutor replied to develop formal Essay style., is anybody has done it for ICS and has good style? First Essay I did is: Discuss the similarities and differences between voyage charter and time charters. I have got 3/10 mark :(, commeted as needed additional on actual time and voyage charter arties. Bring into discussion Gencon or NYPE and where possible discuss specific terms. has anybody done it?

    1. hi, please contact me on zuleikha0786@gmail.com i need to talk to you thank you sir

  23. hey there,
    is the voyage c/p better for the ship owner? and why?
    thank you

  24. What are the various factors considered, to decide whether time or voyage charter

  25. Hi , I would like to know why ship owners prefer a voyage charter over a time charter.