Ballast bonus (BB)

It may occur that charterers, in order to attract tonnage agree to pay a certain ballast bonus. The ballast bonus serves as a compensation and incentive for the ballast (empty) trip from the ship’s last port of discharge to the port where the charter will commence, for example, the first place of loading under a voyage charter or the point of delivery under a time charter. It is more common under time charters, especially in a good market when charterers are unable to obtain ships easily or at a low rate of hire.

For the shipowner, the BB covers the cost of fuel and time in proceeding to the port where the contract commences and from where the freight or hire will begin to earn the owner some money. In a “good market,” the shipowner can and does use this during the negotiating stages and the amount agreed upon depends on the negotiating strength of the owner and his shipbroker. The freight rate and time charter rate of hire can sometimes reflect the effect of a high ballast bonus.

The BB is usually a lump-sum payment and is paid in full either in advance or with the first hire payment. If the BB is paid free of any commissions and brokerage it is termed “Nett ballast bonus”, and “Gross ballast bonus” if paid after deducting commissions and brokerage.

Sometimes the BB may also be paid by the shipowner to the time-charterer when the ship is being redelivered on termination of the time charter. This may apply when the market is not good for the shipowner.