Legal Definitions - dispatch money

Dispatch money is a term used in maritime shipping law. It refers to a payment made by a shipowner to a charterer (the party who has hired the ship) when the charterer manages to load or unload the vessel's cargo in less time than was agreed upon in their contract. Essentially, it acts as a reward or incentive for the charterer's efficiency, as completing port operations ahead of schedule saves the shipowner valuable time and potential costs by allowing the vessel to depart sooner.

Here are some examples to illustrate how dispatch money works:

• Example 1: Container Ship Unloading

  Imagine a large shipping company, acting as a charterer, hires a container ship to transport electronics from Asia to a major European port. Their contract with the shipowner specifies that they have five days to unload all the containers once the ship arrives. However, by employing advanced logistics, pre-arranged dock space, and additional port workers, the shipping company manages to complete the entire unloading process in just three days. In this scenario, the shipowner would pay dispatch money to the shipping company for the two days saved, as the ship is now free to proceed to its next engagement ahead of schedule.

• Example 2: Bulk Carrier Loading Grain

  Consider an agricultural trading company, acting as a charterer, that has hired a bulk carrier to transport a large quantity of grain from a port in North America. The charter agreement allocates seven "lay days" (the agreed-upon time for loading) for the grain to be loaded onto the vessel. Through excellent coordination with the port authority and efficient use of high-capacity loading equipment, the trading company completes the loading operation in only four and a half days. The shipowner would then pay dispatch money to the agricultural trading company for the two and a half days saved, benefiting from the vessel's earlier departure.

• Example 3: Oil Tanker at Multiple Ports

  An oil refinery, as a charterer, hires an oil tanker to deliver crude oil to two different ports. The contract with the shipowner specifies 36 hours for unloading at the first port and 48 hours for unloading at the second port. At the first port, the refinery's team manages to unload the oil in 28 hours. At the second port, they complete the unloading in 40 hours. In this case, the shipowner would calculate dispatch money for the 8 hours saved at the first port and another 8 hours saved at the second port, paying the total amount to the oil refinery for their combined efficiency across both locations.