What are the differences between voyage and time charter parties?

Chartering of a vessel is maritime term which is used to describe hiring or renting a vessel especially for bulk cargo transportation.

On the previous articles I have explained voyage charter party contracts and time charter party contracts one by one in detail.

Both time and voyage charters are types of charter party contracts that can used when chartering of vessels for bulk cargo carriage.

There are different standard format time and voyage charter party contracts available that can be used with different type of commodity transportation. For example;
  • BIMCHEMTIME 2005 is a standard format time charter party contract, which is created by BIMCO, is used when chartering vessels carrying chemicals in bulk.
  • Gencon 94 is a standard format voyage charter party contract, which is created by BIMCO, is used when chartering vessels carrying commodity cargoes in bulk.

Today I would like to explain the main differences between voyage charter party contracts and time charter party contracts.

What is a voyage charter party?

A voyage charter party can be defined as a legal contract, in which shipowners promise to carry a particular cargo on a particular ship on a particular voyage for an agreed sum.

What is a time charter party?

A time charter party can be defined as a legal contract, in which charterers are hiring of vessels for a specific period of time from the shipowners.

What are the differences between voyage carter parties and time charter parties?

Responsibilities of the Parties:

Time Charter Parties:
  • Under time charter party contracts, shipowner remains responsible for the technical operation of the vessel, but commercial control of the vessel is handled by the charterer. 
  • Under time charter party contracts, shipowner must cover all costs associated with crewing, maintenance of the vessel and insurance, but vessel fuel consumption and port charges will be compensated by the charterer.
Voyage Charter Parties:
  • Under voyage charter party contracts both technical and commercial management handled by the shipowner.
  • Under voyage charter party contracts, shipowner is not only responsible for the costs associated with with crewing, maintenance of the vessel and insurance, but also pays for all the costs of the voyage, including bunkers and port charges.
Duration:

Time Charter Parties:
  • Time charter party contracts are signed for a limited period of time without dictating a fixed route to the charterer. During the charter party contract period, the charterer could operate the vessel commercially within allowed routes freely.
Voyage Charter Parties:
  • Voyage charter party contracts are signed to carry specific amount of goods between pre-determined route. Under voyage charter parties shipowners carry pre-defined cargo between pre-determined ports. Once the transportation is completed, the voyage charter party contract 
Calculation of the Contract Amount:

Time Charter Parties:
  • Under time charter party contracts charterers pay daily hire to the shipowners of the vessels.
Voyage Charter Parties:
  • Under voyage charter party contracts charterers are obliged to pay the freight to the shipowners. Freight is calculated either according to the quantity of cargo loaded or carried, or a lump sum freight (money paid to shipper for a charter of a ship up to stated limit irrespective of quantity of cargo).
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