Under a time charter, who generally pays the vessel's operating costs such as fuel and port dues?

• A. The shipowner bears all operating costs; hire is paid by the charterer.
• B. The charterer bears operating costs; the owner receives a fixed daily hire.
• C. The owner bears none of the operating costs.
• D. The charterer both hires the vessel and bears all maintenance costs.

Answer: (B)

In a time charter the charterer takes control of the vessel’s operations for a set period and pays for the vessel’s running costs. Those operating costs include fuel, port dues, stores, and the crew’s wages needed to keep the vessel moving during the charter. The owner still provides the vessel and assumes responsibilities tied to ownership (such as insurance and major repairs), and in return receives a fixed daily hire for the use of the ship. This separation—charterer paying running costs while the owner gets a fixed daily hire—is why the correct understanding is that the charterer bears the operating costs.