Ballast bonus in a time charter fixture
The lump sum a charterer pays on delivery to compensate an owner for positioning the vessel to the delivery port, and how it is negotiated against the hire rate.
A ballast bonus is a lump sum a charterer pays a shipowner on delivery under a time charter, compensating the owner for the unpaid ballast passage to the delivery port. It is separate from hire, is usually payable with the first hire instalment, and is not governed by any standard clause: it is negotiated as part of the overall economics of the fixture.
It arises where the delivery range is remote from the vessel’s last discharge. A ship redelivering in the Far East and fixed for delivery in the Atlantic spends weeks in ballast earning nothing, and a charterer that wants her there prices that passage into the deal. The commercial question is always whether to pay it as a bonus or to fold it into a higher daily rate, and the answer turns on the length of the period: over a long fixture a rate increment outweighs a lump sum, while on a trip charter the bonus is the cleaner instrument.
The full article will cover how a ballast bonus is quoted and negotiated, its treatment on an early redelivery or a withdrawal, whether commission is payable on it, its tax and accounting treatment, and how brokers reconcile a rate plus bonus fixture against a plain rate fixture when reporting the market.