What are charter rates?
A charter rate is the price a charterer pays an owner for the use of a vessel. In dry bulk the term most often means time-charter hire, quoted in US dollars per day for the whole ship. You hire the vessel, you direct where it trades, and you pay the running voyage costs on top. The owner keeps the ship crewed, maintained, insured and in class, and bills you a flat daily figure from delivery to redelivery.
This is the commercial answer to the question every cargo or trading desk asks first: what does it cost to charter a vessel. The honest answer is that there is no single number. Hire is a market price that moves daily with the supply of open tonnage and the demand for it. What this page gives you instead is the structure: how the rate is quoted, what drives it up and down, how a period deal differs from a single trip, and exactly what the daily figure does and does not buy.
One distinction matters before anything else. A time-charter rate is not a freight rate. Hire prices the use of the ship over time in USD per day. Freight prices the carriage of one cargo on a voyage charter in USD per tonne, with the owner paying the voyage costs. The two answer different questions and are quoted on different units. This page covers the per-day hire side only and points to the freight rate page for the per-tonne voyage side.
How time-charter hire is quoted
Hire is almost always expressed as a lump daily figure for the entire vessel. A desk fixing a Supramax for a few months will agree a single USD-per-day number that covers the ship as a whole, not a per-tonne or per-deadweight figure. That daily number is then multiplied by the number of days on hire to give the gross cost of the commitment.
For long period business the parties sometimes quote on a different basis: USD per deadweight tonne per month. This is common on multi-year deals because it scales cleanly across ship sizes. It converts to a daily figure once you apply the vessel’s deadweight and divide by the days in the month, so it is the same economic quantity expressed differently.
Hire runs from delivery to redelivery and is paid in advance, commonly semi-monthly (every 15 days) or monthly. If the ship is unable to perform, for example during a breakdown or a survey that is the owner’s responsibility, the vessel goes off-hire and hire stops accruing for that period under the off-hire clause. The mechanics of delivery, redelivery and off-hire live on the time charter page; this guide stays on the rate itself.
One reason desks compare voyage and time-charter business on a common footing is the time-charter-equivalent figure, or TCE. TCE takes a voyage charter’s per-tonne freight, subtracts the owner’s voyage costs, and expresses the result as a notional USD-per-day number. That lets an owner line up a per-tonne voyage against a per-day period offer on the same ship and see which earns more. So while hire and freight are quoted on different units, the market routinely translates between them, and the TCE is the bridge. When you read that a benchmark route is earning a given daily number, that is usually a TCE derived from voyage rates, not a hire fixture.
What drives the charter rate
A small number of factors explain most of the spread between two quotes for what looks like the same job.
- Vessel class and size. Capesize, Panamax, Supramax and Handysize tonnage each trade in their own market with their own daily levels. A larger ship carries more cargo per day of hire but is harder to fill and limited to deepwater ports, so the per-day figure is not comparable across classes.
- Ship age and efficiency. A modern, fuel-efficient ship commands a premium over older tonnage because the charterer burns less fuel for the same work. Since the charterer pays for bunkers, an eco vessel can justify higher hire and still cost less all-in.
- Charter duration. The length of the commitment changes the rate. A short trip prices the live spot market plus a positioning premium. A long period fixes a rate that reflects both parties’ view of the market over the whole term, so it can sit well above or below today’s spot depending on where the cycle is.
- The market cycle. Dry bulk hire moves through a freight cycle driven by the balance of open tonnage against cargo demand. The same ship can be worth very different daily money in a tight market versus a soft one, and the swing within a single year can be large.
- Vessel positioning and ballast. Where the ship is when you need it matters. If the nearest suitable vessel has to ballast (sail empty) a long way to reach your load port, that lost time and fuel is priced into the hire. A ship already open in your region is cheaper to fix than an equivalent vessel on the other side of the world.
Period charter vs trip charter
The single biggest commercial choice on the time-charter side is whether to fix for a period or for one trip. Both are time charters and both quote hire in USD per day. What differs is the term, who carries the redelivery position risk, and how the rate is built.
| Period charter | Trip charter | |
|---|---|---|
| Commitment | Months to years | One laden voyage plus repositioning |
| Rate basis | USD per day, sometimes USD per dwt per month | USD per day |
| What the rate reflects | Both parties' view over the whole term | Live spot market plus positioning |
| Redelivery risk | Charterer holds the position for the term | Defined redelivery range, shorter exposure |
| Best for | Programme cargo, fleet control, hedging a view | A single cargo with no fleet need |
| Market sensitivity | Locks a rate against the cycle | Tracks the spot market closely |
A period charter suits a desk with repetitive lifts that wants control of a vessel and is willing to take a view on the cycle. A trip charter suits a desk with one cargo to move that wants the operational control of a time charter without committing for months. If the desk has a single parcel and no appetite for voyage-cost or schedule risk at all, a spot charter on voyage terms, priced per tonne, is often the simpler instrument. The bareboat charter is a financing arrangement rather than a freight one and prices on a different logic entirely.
The way the rate is built differs too. A trip charter is priced almost entirely off the live spot market, plus or minus a positioning premium for where the ship sits relative to the load port. The owner knows the trip is short, so the rate tracks today’s conditions closely. A period charter is a negotiation about the future: the owner wants protection against a rising market over the term, the charterer wants protection against a falling one, and the agreed rate lands somewhere between the two views. In a market the parties expect to strengthen, period rates can sit above spot; in one they expect to soften, period rates can sit below. That is why a long period rate fixed today can look wrong against the spot market a few months later and still have been a sensible deal at the time.
What hire includes and excludes
The defining feature of time-charter hire is the split of costs between owner and charterer. The owner’s fixed running costs are baked into the daily figure. The charterer pays the variable voyage costs on top. Getting this split clear is the difference between a daily rate and the true all-in cost of moving cargo.
| Cost item | Owner (in the daily hire) | Charterer (on top of hire) |
|---|---|---|
| Crew wages and provisions | Included | Not paid |
| Lubricating oils and stores | Included | Not paid |
| Routine maintenance and repairs | Included | Not paid |
| Hull and machinery insurance | Included | Not paid |
| Protection and indemnity cover | Included | Not paid |
| Keeping the ship in class | Included | Not paid |
| Bunkers (fuel) | Not paid | Charterer pays |
| Port and canal dues | Not paid | Charterer pays |
| Pilotage and towage | Not paid | Charterer pays |
| Agency fees | Not paid | Charterer pays |
| Cargo handling (load and discharge) | Not paid | Charterer pays |
The practical consequence is that hire alone understates the cost of the commitment. On most dry bulk trades the bunker bill the charterer carries is a large line in its own right, which is why fuel efficiency feeds straight back into how much hire a modern ship can command. When you compare a per-day hire quote against a per-tonne freight rate on the same cargo, you have to add the charterer’s voyage costs to the hire side before the comparison is fair, because on the voyage side the owner has already absorbed those costs into the per-tonne figure.
To build the all-in cost of a time charter, start with the daily hire and multiply by the number of days from delivery to redelivery, including the ballast leg to reach the first load port and any positioning at the end. Then add the bunkers the ship will burn over that period at the fuel prices you expect to pay, the port and canal dues for every call, and the cost of loading and discharging the cargo. The total of those lines is what the commitment actually costs. Two ships quoted at the same daily hire can produce very different all-in costs once an older, thirstier vessel’s fuel bill is added in, which is the single most common reason a headline rate misleads. The rate calculator exists to do exactly this build-up for a specific job.
Where to find live numbers
This page is structural by design. It does not quote live hire because any number printed in a guide is stale within weeks. For current levels, use the market tools:
- The Baltic indices for the benchmark daily assessments by vessel class.
- The rate calculator to model hire and voyage costs for a specific job.
- The bulk shipping rates 2026 briefing for the current market read and direction.
If you want a desk to turn the live market into a firm number for a specific cargo and lane, the ship-chartering team can model period against trip against voyage and come back with an indication you can act on.
Frequently asked questions
What is a charter rate?
How are charter rates quoted?
What is included in the charter rate?
Why do charter rates change so much?
What is the difference between a time-charter rate and a freight rate?
Are the rates on this page live market numbers?
Scope and what this page does not cover
This page explains charter rates as a commercial concept on the time-charter side: how hire is quoted in USD per day, what drives it, how period and trip charters price, and what the daily figure includes and excludes. It does not quote live market levels, forecast hire for any vessel class or lane, or model a specific fixture. For live numbers, use the market tools linked above. For the per-tonne voyage concept, see freight rate.