voyage charter nedir

Charter Party (Gemi Kira Sözleşmesi) Nedir? Çeşitleri Nelerdir?

Charter Party (Gemi Kira Sözleşmesi), gemi sahibinin, yük taşımacılığının yapılabilmesi için bir başkasına gemisini kiraladığı sözleşmedir. Gemi sahibi, geminin yönetimini kontrol etmeye devam eder ancak taşımacılık işlemleri kiracı tarafından gerçekleştirilir.

Tarifesiz taşımacılıkta 3 temel kiralama çeşidi vardır.

• Sefer Sözleşmesi (Voyage Charter)
• Zaman Sözleşmesi (Time Charter)
• Boş Gemi Sözleşmesi (Bareboat Charter)

Voyage Charter (Sefer Sözleşmesi) en yaygın kullanılanıdır. Bu sözleşme çeşidiyle gemi, tek yönlü olarak belirlenen limanlar arasında, belirlenen yük çeşidi ve belirlenen navlun ücretiyle kiralanır.

Time Charter (Zaman Sözleşmesi) ile kiracı, gemiyi belirlenen bir süre için kiralar ve ücretler aylık, yıllık veya günlük şeklinde verilir. Voyage Charter’da yolculukla ilgili tüm masraflar (yükleme ve boşaltma maliyetleri sözleşmeye göre değişebilir), gemi sahibi tarafından ödenir. Time Charter’da ise bu masraflar kiracıya aittir.

Gemi kiralamalarında daha az sıklıkla kullanılan Bareboat Charter’da (Boş Gemi Sözleşmesi) ise gemi sahibi gemiyi, belirlenen yerde ve belirlenen zaman aralığında personel, sigorta ve herhangi bir kumanya olmadan kiracıya verir.

Sözleşmeler aynı zamanda, gemi sahibi, belirtilen miktardaki bir yükü bir limandan diğerine belirli bir miktar para karşılığında göndermeyi kabul ettiğinde, lump-sum esas alınarak düzenlenebilir.

Gemi Kira Sözleşmesi, anlaşmazlık durumunda bir yasa mahkemesi tarafından incelenen ve yorumlanan bir belgedir. Ancak pratikte çoğu anlaşmazlık tahkime sunulur. Herhangi bir gemi kira sözleşmesindeki en önemli maddeler, yükleme ve tahliye için verilen gün sayısını ve ortaya çıkan masraflardan kimin sorumlu olacağını kesin bir şekilde belirleyen maddelerdir.

Kaynak : https://www.britannica.com/topic/charter-party

Çeviren : Mahmut Mollaoğlu

DSR (Deutsche Seereederei Rostock) Lines Gmbh, MD ve Bir KAZAN’ın Hikâyesi

Konşimento neden genellikle üç nüshalı set hâlinde düzenlenir, i̇lginizi çekebilecek diğer yazılar, gazze’deki çatışma açık deniz, kruvaziyer ve liman operasyonlarını..., tersine lojistik nedir, deniz taşımacılığında fiyatların düşürülmesi ve fırsat eşitliğinin sağlanması, çeki listesi (packing list) nedir, havayolu taşıma senedi (air waybill) nedir, navlun nedir nasıl hesaplanır çeşitleri nelerdir, orijinal konşimento ve sea waybill arasındaki farklar nelerdir, cfr (cost and freight) ve cif (cost, insurance..., cfr (cost and freight) ve fob (free on....

Voyage Charter : Definition & Full Guide

• By MascotMaritime
• April 22, 2022
• 3 mins read

Table of Contents

What is a voyage charter.

Voyage charter definition : The voyage charter is a contract (voyage charter party) between the shipowner and the charterer wherein the shipowner agrees to transport a given quantity of a shipment, using a pre-nominated vessel for a single voyage from a nominated port (say X) to a nominated port (say Y), within a given time period.

Who is a voyage charterer? What is the freight & voyage charter party? 

The person who charters the vessel is called the voyage charterer , the payment is called freight & the contract is called the voyage charter party. The freight rate is calculated as $/tonne of shipment. 

What is the most significant part of a voyage charter party?

The most significant parts are the description of the voyage, size & capacity of the vessel, cargo, the allocation of duties and costs in connection with loading and discharging, the specification of the freight, and the payment of the freight, the laytime rules, the allocation of the liability for the cargo and the allocation of other costs and risks.

Depending on the circumstances, other questions and clauses can be very important in the negotiations between the owners and the charterers.

In this type of charter, the vessel must be in the position that the owner specified when the charter was concluded & the vessel must, without undue delay, be directed to the port of loading.

At the port of loading, the charterer must deliver the agreed cargo. 

The cargo must not be dangerous cargo unless otherwise agreed. The cargo must be brought alongside the ship at the loading port & must be collected from the ship side at the port of discharge.

Mainly with the bulk cargoes, the charterer often undertakes to pay to load and discharge & often clauses of f.i.o or f.o.b are met. Very often parties agree on f.i.o.s or f.i.o.s.t terms.

In voyage charter, the discharge port need not be nominated in the charter party & in such cases, the charterer must have the right later to direct the vessel within a certain range to a specific port of discharge.

In a voyage charter where the charterer carries out loading &(or) discharging, it is generally agreed that the charterer will have a certain period of time at his disposal for loading & discharging of the vessel & it is called laytime .

If the charterer fails to load and(or) discharge the cargo from the vessel within the laytime, then he has to pay compensation for the extra time used called demurrage . Once in demurrage always in demurrage.

In other cases, if the charterer loads &(or) discharges the cargo from the vessel more quickly than the agreed laytime time, then he is entitled to claim compensation (only if agreed earlier) called despatch money.

In voyage charter, unless lumpsum freight is paid, the owner may claim freight compensation if less cargo is delivered, or cargo is delivered in such a way that ship’s capacity cannot be utilized due to broken stowage . This freight compensation is called deadfreight .

Voyage charter party agreement example:

Click here to see the example of a voyage charter party (NORGRAIN 73).

What are the factors which influence the freight rate in a voyage charter market?

In the voyage charter market, rates are influenced by cargo the charterer must deliver the agreed cargo size, commodity, port dues, and canal transit fees, as well as delivery and redelivery regions.

In general, a larger cargo size is quoted at a lower rate per tonne than a smaller cargo size. Routes with costly ports or canals generally command higher rates than routes with low port dues and no canals to transit.

Voyages with a load port within a region that includes ports where vessels usually discharge cargo or a discharge port within a region with ports where vessels load cargo also are generally quoted at lower rates because such voyages generally increase vessel utilization by reducing the unloaded portion (or ballast leg) that is included in the calculation of the return charter to a loading area.

What are the costs paid by the shipowner & charterer in a voyage charter?

In a voyage charter, the shipowner retains the operational control of the vessel and pays all the operating costs (crew, fuel, freshwater, lubes, port charges, extra insurances, taxes, etc.), with the possible exclusion of the loading/unloading expenses. 

The charterer’s costs are usually costs & charges relating to the cargo.

What are the types of voyage charter?

It can be of the following types:

• Immediate  –  which is carried out within weeks of the contract agreement and the agreed freight rate is called the spot rate.
• Forward –  which is scheduled & fulfilled at the agreed time in the future, for example in say three months.
• Consecutive – which refers to several same consecutive voyages.

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Time Charter vs. Voyage Charter: Everything You Need to Know

Navigating maritime logistics demands a robust understanding of chartering options—each type has unique implications for operational strategy and financial outcomes.

Choosing between a time charter and a voyage charter isn’t merely a logistical decision; it’s a strategic one that impacts cost, control, risk management, and operational flexibility.

In this article, we delve deep into the two main types of charters – a time charter and a voyage charter – exploring their advantages and disadvantages, and offering a comparison between the two.

The goal of this article is to:

• equip you with the essential knowledge to navigate these choices 
• ensure that your chartering decisions align seamlessly with your business objectives and market conditions 
• enhance your company’s competitive edge in the global marketplace.

But before going any further, it’s important to understand the terms used by the industry. Here are the most common: 

Time Charter

A time charter   grants the charterer the use of a vessel and its crew for a specified period from a shipowner. The ship owner and the charterer will agree on the exact period the lease will run for. 

However, the two parties will not need to agree on ports of call and destinations, as the charterer has complete discretion over this. The charterer can direct the vessel’s movements and cargo operations within agreed and imposed contractual limits. 

The shipowner retains responsibility for the vessel’s operational aspects, including maintenance (ensuring the vessel meets all necessary maritime safety standards), and crewing, but the charterer must pay for fuel and supply costs, as well as the cost of cargo operations and port charges. 

This arrangement is akin to leasing a car, where the lessee drives but doesn’t worry about long-term maintenance. For example, a charterer might lease the ship for six months, during which time they have the flexibility to choose their routes and destinations.

Ship owners generally prefer their vessels to be leased on a time charter. This is because time charters guarantee income for a long period, giving the ship owner increased security.

Voyage Charter

A voyage charter focuses on the transportation of a specific cargo on a single voyage between designated ports.

The most common way to pay for this type of charter is on a per-ton basis. As the name implies, this sees the charterer paying a set price for every ton of cargo they transport and is preferred when the amount of cargo they’re transporting is significantly less than the vessel’s gross maximum cargo tonnage.

The second most common payment method is a lump sum – one payment that allows the charterer to transport as much cargo as they wish. It is the ship owner’s responsibility to ensure the cargo weight does not exceed the gross maximum tonnage of the vessel. This type of payment is preferred by charterers when they’re carrying a higher weight of cargo.

Under this contract, the ship owner is tasked with delivering the cargo and handling all nuances of the voyage itself. Nearly all costs are covered by the ship owner and include costs relating to staffing, berthing, loading, unloading, and fuel. They cover these costs by charging the charterer a fee for leasing the vessel.

Before the charter contract is signed, the parties will agree on the end destination, any ports of call, laytime, and whether there will be any restrictions on cargo. The ship owner pays for all costs at the port of call. If the charterer exceeds the agreed time, they must pay demurrage to the ship owner.

This type of vessel chartering is generally preferred by charterers. This is because it often has more competitive prices, plus they are not tied down to any long-term commitments

Voyage and Time Charters

There are other definitions which are useful to understand.

Charter party

Central to these contracts is the charter party —the formal agreement that stipulates the specific terms, conditions, and obligations agreed upon by the ship owner and the charterer. 

This document is crucial as it governs what each party is responsible for, including costs, risks, and how disputes are resolved.

Freight Rates

Freight rates, a critical element of the contract, determine the cost associated with transporting cargo and are influenced by various market conditions and ship specifications.

These rates not only affect the profitability of a voyage but also influence global trade patterns.

Cost Analyses

Cost analysis in this context involves evaluating the expenses related to different chartering options to determine the most cost-effective approach. 

This analysis is essential for chartering managers and financial analysts who aim to optimize operational costs against market conditions. 

The Statement of Facts (SoF) is an important maritime document that logs vessel activities while in port. It includes times of arrival and departure, cargo handling details, and records of any delays or incidents, providing a factual foundation for operational and legal evaluations.

Freight and Charges

Lastly, understanding freight & charges—the costs incurred during the shipment of cargo—is vital. These charges can vary widely depending on the route, type of cargo, and specific terms of the charter party.

Once again, the use of historical data from SoFs can assist in providing clarity and transparency on these fees.

Advantages and Disadvantages of a Time Charter

Time chartering presents a unique set of advantages and disadvantages that vessel chartering managers, operations VPs, and demurrage cost analysts must weigh carefully when strategizing for optimal operational flexibility and cost efficiency.

Advantages:

• Flexibility in Operations : Time charters offer charterers significant control over the vessel’s employment, including the types and routes of cargoes, as well as one of the most important: access to a vessel. This flexibility is invaluable for adapting to changing market conditions or specific logistical requirements. Using no-code workflows to streamline processes and voyage turnaround simulators can support maritime operations and greatly improve flexibility.
• Cost Predictability : With a fixed daily hire rate, companies can better forecast and manage their shipping expenditures. This predictability aids in budgeting and financial planning, reducing the unpredictability associated with fluctuating freight rates in spot market dealings.
• Reduced Exposure to Market Volatility : During periods of market volatility, time charter arrangements protect the charterer from soaring freight rates, as the hire rate remains constant regardless of market conditions.

Disadvantages:

• Long-term Commitment : One of the primary drawbacks of time charters is the requirement for a longer-term commitment to a vessel. This can be a double-edged sword, especially if market rates fall below the agreed hire rate, potentially leading to higher-than-market operational costs.
• Operational Costs and Risks: While the shipowner handles maintenance and crewing, the charterer is responsible for costs related to the voyage, including fuel, port charges, and other variable expenses. 

Charterers should employ proactive cost tracking, negotiate favorable fuel clauses, utilize cost-efficient routing software, and maintain transparent communication with shipowners about anticipated expenses and operational strategies.

For example, a well-prepared and accurate Statement of Facts (SoF ) can provide detailed information about the events that occurred during the time a vessel spent at port.

However, when the opportunity to properly analyze the SoF has not been made available, disputes over ambiguous statements may arise.

On one side, charterers will try to leverage the delays that happened to decrease demurrage. Shipowners, on the other hand, may challenge a charterer’s laytime statement based on the events that are available in the SoF.

Time charters often include terms for demurrage (charges when the charterer uses the vessel beyond the agreed period) and dispatch (rewards for completing operations early). The SoF provides the necessary data to calculate these charges or rewards accurately, documenting the exact time spent during loading and unloading.

• Lesser Control Over Maintenance : Charterers have limited control over the maintenance and condition of the vessel, relying on the shipowner to maintain standards. Poor maintenance can affect cargo schedules and overall shipping efficiency.

Maintenance of the vessel can also have a direct effect on the charterer due to new emissions regulations. 

Keeping track of current changes in maritime emissions regulations is a challenging task. With so many initiatives and new norms being implemented, trying to provide frameworks to capture and report on emissions, makes the topic extremely complex for operators, shipowners, and commodity manufacturers.

Advantages and Disadvantages of Voyage Charter

Voyage charters represent a different approach compared to time charters, focusing on specific trips rather than extended periods. This method suits operations that require precise cargo deliveries without long-term ship commitment, but it also carries its own set of pros and cons.

• Direct Cost Association : The major appeal of voyage charters lies in their direct cost association with individual voyages. The charterer is not liable for any costs, except the initial charter fee, and is not responsible for finding a crew. Charterers pay per trip, making it easier to allocate costs directly to specific cargoes or projects. 
• No Long-Term Commitment or Contract: Unlike time charters, voyage charters do not require a long-term commitment to a vessel, providing flexibility to switch between ships and routes as dictated by cargo needs or market conditions.
• High Control Over Cargo Operations : Charterers maintain extensive control over the loading and unloading processes, ensuring that handling aligns with their standards and schedules. This is particularly beneficial for sensitive or high-value cargoes. 
• Vulnerability to Market Fluctuations : While time charters protect against market volatility, voyage charters expose charterers to fluctuating freight rates. During peak times, costs can escalate significantly, affecting overall profitability and a lack of flexibility for the charterer.
• Inconsistent Costs (and higher initial costs): The costs in voyage charters can vary widely from one trip to another, influenced by factors like fuel prices, port fees, and canal dues. This inconsistency makes budgeting and financial planning more complex.

For example:

a. Exceeding laytime – the time allowed for loading and unloading cargo at ports – can lead to demurrage charges. Having a well-prepared SoF ensures that the arrival, cargo operations, and departure times are documented, which are key data points for laytime calculations.

b. New emissions regulations leading to the use of specific fuels or ship adjustments may soon be passed on to charterers via higher freight costs. For many ships, technical modifications may be the only realistic way to attain the required certifications and to be under the emissions limit, impacting the commercial operation of the vessel.

• Dependency on Ship Availability : Charterers are at the mercy of market availability. During periods of high demand, finding suitable vessels can be challenging and more expensive, potentially leading to delays and increased operational risks.

How to Choose Between Time Charter and Voyage Charter: Factors to Consider

Choosing between a time charter and a voyage charter is a strategic decision that hinges on several criteria to be weighed carefully to align with organizational objectives and the dynamic nature of the maritime industry.

Here we present six criteria that every chartering manager or analyst should consider.

• Duration and Frequency of Cargo Needs

Consider the length and frequency of your shipping needs. 

Time charters are more suitable for longer and more regular shipping requirements, providing stability and predictability. These agreements are signed only for a limited period, without providing any specified route to the other party. Throughout this charter period, the Charterer can use the vessel for trading on the recognized trade routes without restrictions. 

On the other hand, voyage charters are ideal for single, occasional, or irregular shipments. These contracts are signed for carrying a particular quantity of goods on the preset by the two parties. They also are obliged to carry the stated commodity onboard between pre-decided ports only. After the said trip is completed, the contract is automatically terminated.

• Market Conditions and Freight Rate Volatility

The current and anticipated market conditions play a crucial role. In a volatile market with rising freight rates, a time charter might lock in a more favorable rate for a longer period. 

Conversely, in a stable or declining market, voyage charters might offer more cost-effective and flexible options.

• Operational Control

Evaluate the level of control you need over the vessel’s operation. 

Time charters offer more control over the vessel’s itinerary and operations, beneficial for complex logistics operations.

Voyage charters provide control over the cargo but less so over the vessel’s operations.

• Financial Planning, Profitability, and Budget Constraints

Assess your financial flexibility

Time charters require a substantial and consistent financial commitment, which is predictable but potentially higher in the long term. 

Time charters provide more predictable cash flow due to fixed daily hire rates, which can be advantageous in a volatile market as they protect against rate increases. 

However, they may result in negative cash flow if the market rates decrease significantly below the charter rate agreed upon, as the charterer still must pay the fixed rate.

Voyage charters , while potentially more variable in cost, do not require long-term financial commitments and can be adjusted according to budgetary needs. The absence of a long-term commitment allows companies to avoid the financial drain of a non-performing asset, which is possible in a time charter if market conditions worsen. 

Typically, payments in voyage charters are tied to specific milestones, such as loading or unloading completion, which can help in planning cash flow. 

• Cargo Specificity and Handling Requirements

Consider the nature of the cargo. Special handling requirements, sensitivity, and value of the cargo might dictate the need for more direct control over handling processes, favoring voyage charters.

• Risk Tolerance

Finally, analyze your company’s risk tolerance. 

Time charters minimize exposure to market fluctuations but involve commitment risks . They provide more predictable cash flow due to fixed daily hire rates, which can be advantageous in a volatile market as they protect against rate increases. However, they may result in negative cash flow if the market rates decrease significantly below the charter rate agreed upon, as the charterer still must pay the fixed rate.

Voyage charters offer flexibility but expose the charterer to market rate risks and operational uncertainties. Profitability and effectiveness in managing cash flow depend on the charterer’s ability to manage and mitigate risks associated with market volatility and operational uncertainties.

By automating manual workflows with available low-code technology , companies can save and reduce risk while maintaining data integrity and real-time visibility of their voyages’ most essential KPIs. 

To reduce risk, dedicated software to automatically assign tasks and notify stakeholders prevents constant back and forth through emails or updating of spreadsheets can be implemented. Stakeholders can be given dedicated access to track their inbound shipments, schedule changes, and collect documents.

If you want the lowest possible ongoing costs, the clear winner is the voyage charter.

Why? Because they don’t require a long-term contract. They do have a higher initial cost, but this is offset by the fact that no other significant fees need to be paid, in general.

But, when it comes to the initial cost of chartering a ship, it’s nearly always going to be cheaper to go with a time charter.

A ship owner is more open to a lower price, as they know you’ll be hiring the vessel for longer. What’s more, you, and not the ship owner, will be expected to cover other costs, pushing the initial price down further. As the vessels are leased for long periods, the vessel can be used to travel anywhere, without restriction.

In making your final decision, engage with stakeholders, including operations managers, financial analysts, and logistics coordinators, to understand the full implications of each option.

Besides, using a holistic approach to evaluate these factors will guide you toward the most strategic chartering decision for your specific circumstances.

• April 30, 2024

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Voyage Charter vs Time Charter

Ships, boats and other recreational vessels are owned by a large number of individuals who often purchase them as assets. They do not use these vessels for shipping goods or for ferrying passengers.

Instead, they often lend them out to third party organizations who use them for a variety of purposes. In maritime legal terms, this lending process is known as chartering. Chartering is an important concept of the global maritime trade sector, and is of different types.

This article will delve into the differences between two specific categories of charters – the voyage charter and the time charter.

What is a Charter?

A charter is an agreement between two or more groups known as charter parties, regarding the leasing of a vessel for a fixed set of conditions. The terms and conditions stipulated in the charter are binding on all the parties in the agreement and covers a wide variety of clauses and possible scenarios that may arise. It is considered to be an official document in legal aspects and is required by Admiralty Law to be drawn up in case of any form of vessel hiring or leasing.

A shipowner is the first party in the charter agreement who owns the vessel under consideration. The charterer is an individual or organization who is in need of a ship.

The charterer may have cargo that he wishes to transport, or may further lease out the vessel to third parties.

The shipbroker is a link between ship owners and charterers, and aids in finalizing the terms of the agreement. The terms of the agreement include the duration of leasing, fees, payment instalments, regulations on usage, and detailed surveyor reports on the condition of the ship.

Payment is termed as a freight rate and is remitted to the shipowner at fixed intervals decided in the agreement.

Surveyor reports are important in chartering, as they ensure that the vessel is seaworthy prior to being chartered. Similarly, on completion of a charter agreement, and before final payment formalities, another survey report is conducted to ensure that the vessel has sustained no damage during the lease period.

The charter agreement lays down the responsibilities of each group and stipulates the condition in which the vessel is to be maintained.

There are three main types of charters – voyage charter, time charter, and demise charter.

The demise charter is often known as a bareboat charter, and grants ownership or possession of the vessel to the charterer subject to certain time-bound conditions.

Terms and Features of a Voyage Charter

A voyage charter is a type of charter in which a vessel is leased out for a particular voyage. The charter agreement lists the ports of call, destination, and restrictions on cargo, if any.

Most voyage charters are undertaken by charterers who have cargo that needs to be shipped. For this, they contact ship owners through brokers and arrange a ship for a particular voyage.

Payment of voyage charters can be done in two methods – on a per-ton basis, or on a lump-sum basis .

The per-ton basis involves paying the owner for every ton of cargo or freight transported on the vessel. This is preferred when the cargo tonnage is considerably lower than the gross maximum cargo tonnage of the vessel.

On the other hand, when a higher weight of the cargo is carried, it is advisable to pay on a lump-sum basis . The shipowner must ensure that the tonnage carried on board the vessel is within the acceptable limits of the ship. This includes checking the tonnage of on-deck cargo, and the various load lines of the vessel.

There are some important terms used in a contract agreement, that lays out the time-based rules to be followed for the duration of the contract.

Laytime refers to the time that a charterer is allowed to complete the loading and unloading process at a port of call. Since the owner pays duties and berthing charges at the port, they expect the charterer to hasten the process.

In case the charterer exceeds the laytime laid out in the contract, he is obliged to pay a penalty known as demurrage . This covers the extra costs incurred by the shipowner owing to the delay by the charterer.

On the other hand, if the ship is able to complete the loading and unloading operations before the stipulated time, the charterer can claim payment of a despatch from the owner. This is often seen as an incentive for charterers to complete the port operations as soon as possible.

In voyage chartering, the shipowner undertakes payment of fuel, operation, and employment-related costs. It is their responsibility to hire the officers and other crew members for the voyage either from a pool of individuals working for them, or using brokers as middlemen to source mariners and seafarers.

In addition, the owner must also pay costs such as berthing and loading operations. Any equipment used must also be paid for by the owners.

To recoup these costs, the owners charge a higher rate from the charterer. In general, charterers transporting a one-off consignment prefer voyage charters despite the high cost. This is because they are not tied down to the contract for a long period of time.

Simply put, a voyage charter involves a charterer hiring a vessel for the purpose of a single voyage, in which the route and ports have been pre-determined. The responsibility of duty and other payments along with recruitment is handled completely by the shipowner, while the cargo is the sole responsibility of the charterer.

Terms and Features of a Time Charter

A time charter is a time-bound agreement, as opposed to a voyage charter. The shipowner leases a vessel to a charterer for a fixed period of time, and they are free to sail to any port and transport any cargo, subject to legal regulations.

Although the charterer controls the ship, the maintenance of the vessel still falls under the purview of the owner. They are responsible for ensuring that the vessel meets internationally accepted maritime standards, throughout the course of the agreement. They regularly employ marine surveyors to prepare reports on the seaworthiness of the vessel and make repairs as and when required. The owner will face legal action in case the vessel is found to have some major problem.

The time charter agreement can span anywhere from a few days to a few years. This is a long-term agreement that works on a single rate of payment known as the freight rate.

Payment is to be remitted every quarter and does not fluctuate under ordinary circumstances.

In time chartering, the charterer is responsible for selecting a crew, paying charges that arise during the voyages, and arranging for provisions to ensure smooth operations at every port of call. They must intimate the planned route to the owners in advance. The payment is calculated on a per-day basis, with penalties added at a later time. The cost of fuel, provisions etc. are to be covered by the charterer, while the owner will handle all maintenance-related costs.

The charterer often does not sail on the vessel and provide instructions to the master of the vessel in their stead. This includes permissible cargo, route and ports, required charter speed etc.

Unlike voyage charters that use a rigid payment calculation, there are several provisions for unforeseen delays in time charters.

Since payment is on a daily basis, the charterer may be delayed for a certain reason, and these are covered in the agreement.

Time not included in the final payment is known as off-hire hours . For instance, if a vessel is slowed down because of poor weather that could not have been predicted, the extra time spent is not included in the final time count.

Similarly, if some form of damage occurs and repairs need to be carried out, the duration is considered to be off-hire . Certain clauses can be inserted in the agreement, that allows for a fixed number of off-hire hours. Beyond this, the charterer is charged for delays.

Briefly put, a time charter involves leasing a vessel for a fixed period, on a per-day rate, where the charterer is free to use the vessel. The owner only looks after maintenance-related cost.

Clauses are inserted to protect the charterer from having to pay for hours that were spent due to events that could not have been foreseen.

How to Choose a Charter Type

Voyage and time charters are very different, in their intended use and service conditions. Knowing when to choose each type of charter can go a long way in meeting expectations of the charterer and shipowner.

A voyage charter is preferred in cases where the charterer only needs the vessel for specific voyages that may arise for different reasons. This could be the case when there is an occasional cargo to transfer.

An occasional cargo commonly springs up during sudden surges in demand, when the supply services are down. Thus, companies that may deal in other commodities may enter the cargo industry for that period of time, in order to make a profit.

This can also happen when the charterer has already pressed into service their own fleet of vessels, which forces them to hire a ship from a third party so that they may undertake a single voyage.

Voyage chartering can be tricky for inexperienced charterers, since the matter of the crew and equipment must be handled correctly.

Most owners make arrangements to look after these requirements, but it is mostly based on goodwill. Having a shipbroker negotiate the terms can be very helpful in ensuring that the occasional charterer is not inconvenienced by having a ship without a crew to man it.

A time charter is more commonly used by more experienced chartering firms when there is a long-term requirement for a vessel. Instead of having to specify the ports and routes undertaken by the vessel in the charter agreement, the charterer simply hires the boat for a fixed period of time and takes complete control over the vessel in all but name.

As they are free to sail to any destination with any group of crew and officers, it is beneficial to companies that already deal in shipping. For instance, if a ship is decommissioned or is sent in for repairs, the company needs to be able to procure a vessel for the duration of that period.

Instead of having to book a ship every time they wish to undertake a voyage, they use time charters. Thus, for the duration of the agreement, they will have possession of the vessel and are free to use it, within the purview of the law. This is especially useful since such a charterer will often already have a crew ready to take over the hired vessel.

Another major factor that sways the decision to pick either a voyage or time charter is the finances of the shipping industry. Voyage chartering is considered to be a volatile market since there is no assurance of leasing a boat on completion of an existing contract. Since it is only applicable for a single voyage, the overall volatility of the voyage charter is high.

However, charterers prefer voyage charters for the reason that they can always get a more competent rate from other ship owners. In other words, the owners are at the mercy of the chartering sector.

So, most ship owners prefer time charters, as it guarantees financial returns for a fixed period of time, at a fixed rate. This offers some protection against rapid fluctuation of the chartering rates. However, charterers do not prefer this contract, as it ties them down at a single rate for an extended period.

A one-off charterer always goes for a voyage charter, while a regular charterer prefers time charters. Shipowners are often directly approached by charterers, instead of having marine brokers. Thus, one must have an overall look at various factors influencing the shipping sector, prior to choosing between a voyage and time charter.

Overall Comparison

Table of responsibilities.

You may also like to read –

• 8 Main Factors that Affect Ocean Freight Rates
• What is the Difference between Lay days and Lay time?

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Ajay Menon is a graduate of the Indian Institute of Technology, Kharagpur, with an integrated major in Ocean Engineering and Naval Architecture. Besides writing, he balances chess and works out tunes on his keyboard during his free time.

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Voyage Charter vs Time Charter – Everything You Need to Know

Voyage Charter vs Time Charter – Everything you need to know.

One of the biggest questions facing a charterer is whether to opt for a voyage charter or a time charter. Evaluating voyage charter vs time charter can be a complex process, but we’ve broken everything down on this page, making it easier for charterers to decide which type of vessel chartering is best for them.

1. What is a Charter? 2. What is a Voyage Charter? 3. Voyage Charter Features/Terms 4. Voyage Charter Pros & Cons 5. What is a Time Charter? 6. Time Charter Features/Terms 7. Time Charter Pros & Cons 8. How to Choose a Charter Type 9. Charter Cost 10. Ongoing Cost 11. Flexibility 12. Contract Length 13. Convenience 14. FAQs About Voyage Charter and Time Charter 15. Conclusion

What is a Charter?

A voyage charter and a time charter are two options commonly found in the chartering business. A voyage charter is when the charterer leases a vessel for a specific voyage, such as Dubai to Singapore, while a time charter is a type of lease that allows the charterer use of the vessel for a specific period of time.

As you might imagine, there are many differences between these two types of charters, and both vessel chartering options have their own pros and cons. Keep on reading this page about voyage charter vs time charter to find out which of the two options will be most suitable for your ship chartering requirements.

Voyage Charter

What is a voyage charter.

A voyage charter is a type of ship chartering that sees the charterer agree to lease the vessel for one specific voyage. So, for example, the agreement might be for the charterer to gain use of the charter ship for a journey from Dubai to Dover.

Features/Terms

As just mentioned, a voyage charter is when a charterer leases a vessel for one voyage. Before the charter contract is signed, the parties will agree on the end destination, any ports of call, and whether there will be any restrictions on cargo. Once signed, the charterer must not deviate from any of these agreements.

The terms and conditions of the charter agreement will also stipulate the laytime permitted. The laytime refers to the amount of time it takes for the vessel to be loaded and unloaded. As the ship owner pays for all costs at the port, they need this process to be as quick as possible. If the charterer exceeds the agreed time, they must pay demurrage to the ship owner. Conversely, the ship owner will usually refund some money if the loading and unloading is quicker than stipulated.

But who is responsible for what costs? Well, with a voyage charter, nearly all costs are covered by the ship owner. These include costs relating to staffing, berthing, loading, unloading, and fuel. They cover these costs by charging the charterer a fee for leasing the vessel.

The amount of money paid by the charterer can be determined in two ways. The most common way to pay is on a per-ton basis. As the name implies, this sees the charterer paying a set price for every ton of cargo they transport. This is preferred by charterers when the amount of cargo they’re transporting is significantly less than the vessel’s gross maximum cargo tonnage.

The other payment type is a lump sum – one payment that allows the charterer to transport as much cargo as they want to. It is the ship owner’s responsibility to ensure the cargo weight does not exceed the gross maximum tonnage of the vessel. This type of payment is preferred by charterers when they’re carrying a higher weight of cargo.

This type of vessel chartering is generally preferred by charterers. This is because it often has more competitive prices, plus they are not tied down to any long-term commitments.

Pros & Cons

Pro: Charterer not liable for any costs, except initial charter fee Pro: Incentives to complete port operations quickly Pro: No need to find a crew Pro: No long-term contract

Con: Lack of flexibility for charterer Con: Higher initial charter fee

Time Charter

What is a time charter.

A time charter is a type of vessel chartering that sees the charterer lease the ship for a set period of time. So, they might lease the ship for two months, during which time they have the flexibility to choose their own routes and destinations.

Before anything is signed, the ship owner and the charterer will agree the exact period of time the lease will run for. Unlike with voyage charters, the two parties will not need to agree on ports of call and destinations, as the charterer has complete discretion over this.

With a time charter, the ship owner does not cover all costs. Instead, the charterer must pay for fuel and supply costs, as well as the cost of cargo operations. However, the charterer won’t have to pay such a large charter fee, which balances things out somewhat. The owner is still required to pay for the crew and ongoing maintenance, and also must ensure the vessel meets all necessary maritime safety standards.

It is generally the case that the charterer will pay for hire in advance, on a per-day basis. Payment is not usually made in one lump sum, with the charterer instead paying the lease charge in set instalments, which are usually quarterly. It’s important to note that, should the ship be held up in unforeseen circumstances, such as inclement weather, the lost time – referred to as off-hire hours – will not usually be charged for, although if too many off-hire hours are accrued, the charterer might end up being liable.

Ship owners generally prefer their vessels to be leased on a time charter. This is because time charters guarantee income for a long period of time, giving the ship owner increased security.

Pro: Guarantees charterer access to a vessel Pro: Initial lease cost is lower Pro: More flexibility for the charterer

Con: Several ongoing costs to pay Con: Tied down to long-term contract

How to Choose a Charter Type

We’ve discussed voyage charter vs time charter above, looking at the various pros and cons of each. But which should you choose when looking to charter a ship?

Well, this really depends on your requirements. We’ve broken things down into five sections – charter cost, ongoing costs, flexibility, contract length, and convenience – and will let you know which of the ship chartering options is better for each one.

Charter Cost

When it comes to the initial cost of chartering a ship, it’s nearly always going to be cheaper to go with a time charter. This is because the ship owner will be more amenable to a lower price, as they know you’ll be hiring the vessel for longer. What’s more, you, and not the ship owner, will be expected to cover other costs, pushing the initial price down further.

So, if you’re looking for the lowest possible upfront cost, the best option is a time charter. However, remember that other costs will also need to be paid.

Ongoing cost

If you choose to take out a time charter, you will have to pay several costs, including fuel and supply costs. With voyage charters, the only significant cost payable is the initial charter – all other major expenses are covered by the ship owner.

Therefore, if you want the lowest possible ongoing costs, the clear winner is the voyage charter. However, the upfront cost will be more expensive than a time charter.

Flexibility

Those who sign up for a voyage charter are limited in their movements, as they will have already agreed a set route with the ship owners. Those who have taken a time charter have far more freedom, as they can choose where to go throughout their charter.

This clearly means that those looking for more flexibility should opt for a time charter, as there are no limitations on route, ports of call, and destinations.

Contract Length

With a time charter, you’re tied into a long contract, committing you to ongoing payments. Voyage charters, on the other hand, only last for the duration of the voyage, meaning voyage charters are generally much shorter than time charters.

This all means that those looking for the shortest contract should opt for a voyage charter. However, if you know you’ll constantly need an available vessel, the long contract of a time charter could be more suitable.

Convenience

There will be no need to hire and pay a crew when opting for either the time charter or the voyage charter. It’s only bareboat charters that require the charterer to hire and pay their own crew. However, the ongoing costs associated with time charters can be inconvenient.

Overall, voyage charters are the more convenient of the two options, as there’s no need to organise payment for such things as port costs and fuel. However, both options are generally far more convenient than a bareboat charter.

FAQs About Voyage Charter and Time Charter

What are BIMCO Sanctions Clause for Voyage Charter Parties 2020?

These are intended to help in two scenarios. Firstly, if one of the signatories of the agreement gets sanctioned, the other signatories will be able to end the contract and claim damages. Secondly, when the trade or activity is subject to or becomes subject to sanctions, the ship owners can refuse to perform their contracted duties.

What is the difference between bill of lading and charter party vs time and voyage charter?

A charter party is an agreement between charterer and ship owner to lease a ship. A bill of lading is an agreement that legally obligates the charterer to carry cargo that has been loaded aboard the ship.

A time charter is a type of vessel chartering whereby the ship owner leases the ship for a set length of time. A voyage charter is a type of vessel chartering whereby the ship owner leases the ship for the duration of a specific voyage.

What are the duties and responsibilities of the ship owner and charterer under a time charter and voyage charter party?

Under a voyage charter, the ship owner assumes almost all responsibility, including hiring and paying crew, and paying for all significant costs associated with the journey. The charterer simply has to pay the ship owner a fee to secure their vessel.

With time charters, ship owners must still hire and pay staff. However, most other significant costs associated with a voyage, such as fuel and port fees, must be paid by the charterer.

Why do ship owners prefer voyage charter over time charter?

Quite simply, they don’t. Ship owners usually prefer time charters, as they ensure that their ship is guaranteed to be chartered for a longer period, generating income throughout.

Voyage charters are short, meaning the ship owner must continually find new charterers to lease the vessel to – something that isn’t always possible. When a new charterer can’t be found, the ship owner loses money.

Please note that charterers are required to take out insurance for both types of charter, to cover them against damage, injury, marine salvage , and more.

Those looking for short-term charters are best served by opting for a voyage charter, as these don’t require a long contract to be signed. They do have a higher initial cost, but this is offset by the fact that no other significant fees need to be paid.

However, those who know they’ll regularly require the use of a vessel might be better off with a time charter, as these see vessels leased for a long period of time. During this time, the vessel can be used to travel anywhere, without restriction. Time charters cost less upfront, but require the charterer to pay various other costs, such as the cost of fuel and port fees.

Have you found this page to be helpful? If so, please share it on social media! Also, feel free to leave a comment below!

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A Layman’s Guide to Laytime, Charter party Agreement and Voyage Charter

The word “Charterer” is probably as old as the word “Ship” itself.

Do you keep hearing this word so regularly?

Well, who doesn’t?

From seafarer’s point of view, it is so much important to understand these terms.

From commercial point of view, it is the moral responsibility of the seafarers to ensure that the ship owner profits from the ship operation.

And for this reason, we must understand when and where our loyalties lies.

But sometimes it becomes difficult to get a hang of all of it.

Not anymore.

In this blog, we will discuss about the terms charterer and charter party agreement.

Concept of Charter party agreement

It is all business.

And like in all kind of business, there are at least two parties involved, one of which provide a service or product to the other for a price.

With respect to carrying the cargo onboard the ships, these two parties are,

1) Ship owner who has the ship and provide the space on the ship to carry the cargo.

2) Shipper who has the cargo and wants a ship to transport the cargo

Then where does the term charterer fits into this?

Charterer is the party that has chartered (think of simple word “hired”) the ship.

If the shipper has chartered the entire ship then shipper will also be the charterer.

In most of the cases, charterer is a kind of middle man between shipper(s) and shipowners

This is particularly the case if there are more than one shipper.

For example, if the vessel is to load 50000 tons of cargo, there could be 10 shipper, say each of them with 5000 tons of cargo.

Alone none of the shippers would want to hire the entire vessel of 50000 tons capacity for their 5000 tons of cargo.

So they contact a charterer for transporting their cargo.

The charterer’s job is to find a vessel for the cargoes they have from different shippers and maximazing the space on ship they plan to hire.

Charterers may not be the only person involved in filling the gap between shipowner and shipper.

Sometime there are some other companies or persons who help shipper, charterer and shipowner to connect with each other for a fees.

They are called “Brokers”.

So the shipper’s broker is the person or company that help shipper find a charterer for a fees called brokerage.

And charterer’s broker is the person that help charterer find a ship to hire.

The charterer may even have brokers for different purpose. For example charterer may have a broker to find a cargo for the ship they want to hire and they may have another broker to find a ship for the cargo they have in hand.

Broker or no broker, the charterer and shipowner would agree on the terms and conditions which would form “ Charter party agreement “.

Charter party agreement is a detailed document which, apart from various clauses, has informations such as

• When and where the vessel is required to be
• the freight agreed
• If the broker was used, who need to pay the brokerage fee and how much

Even though shipowners is primarily dealing with the charterer, it does not mean that the shipowner would have no relation with the shipper.

Shipper and shipowner are connected by the “carriage of cargo at sea act”, also called COGSA .

And one of the main point of it is that shipowner is required to issue bill of lading to the shipper for the cargo loaded onboard.

And with that each of the shipper have entered into an agreement with the ship owner which is called “Contract of  carriage”.

While the “charter party agreement” is a formal agreement, the contract of carriage is governed by various laws and regulations such as Hague-Visby rule .

Charter party agreement supplement the contract of carriage.

Usually you would find a mention of the charter party agreement in the bill of lading. The wording in the bill of lading could be something like this.

This shipment is carried pursuant to charter party agreement between “ Charterer’s name ” and “ Carrier’s name ” and all the terms, clauses, conditions, liberties and exceptions whatsoever contained therein are incorporated into this bill of lading.

But do the shipowners and charterers do this exercise of negotiating the format of the charter party agreement each time they do the business together.

Absolutely not. Hell, it would take a lot of time.

Instead they use pre-defined forms. These forms are developed by Independent International stakeholders such as BIMCO and INTERTANKO and are widely used in the shipping business.

There are different forms for different trades.

For example there is form  SHELLVOY 6 for use in tanker trade and then there is form AMWELSH 93 for coal dry cargo chartering.

Also if a charterer and ship owner have done the business before, they use the same charter party agreement for the future shipments too.

For this reason, many a times even for a voyage in 2019, you may find the mention of charter party dated in 2016 or even before. In the bill of lading issued even in 2019 , it may read something like,

The shipment is carried pursuant to charter party agreement between “ Charterer’s name ” and “ Carrier’s name ” dated 01 January 2016…..

Now that we understand the concept of chartering, let us understand the different ways in which the ships can be chartered.

Voyage Charter, Time charter, Demise charter

There are different ways in which a charterer can charter (Hire) the vessel.

Charterer can charter the vessel for one voyage (Voyage charter), for a particular time period (time charter) or they can hire and run the vessel as if they are the owner of the vessel (Demise or bareboat charter).

In each type of charter, charterers and shipowners have different area of responsibilities.

Each type of charter is a subject in itself. So in this blog we will explore the voyage charter.

Voyage Charter

It should be clear from the name.

Under the voyage charter, the ship is hired from the ship owner for one voyage.

One voyage could consists of multiple load ports and multiple discharge port.

The best analogy to the term voyage charter is that with hiring an Uber for a ride from one place to the other, sometimes with multiple stops in between.

So when we hire an Uber, we hire just the cab. The cab driver is still under the instructions of Uber.

Similarly, under the voyage charter, the charterer has hired the ship’s cargo space. But the Master and crew still remains under the disposal and instructions of ship owner and  ship managers.

When we hire a cab for a ride, we just pay the hire (pre-agreed or by the meter). We do not pay for or are not concerned about the fuel costs or the amount of fuel consumed.

Similarly, under the voyage charter, charterer is not concerned about the fuel consumption. The fuel costs are for the ship owners.

And when we hire an Uber, we do not pay for maintenance of the cab.

Similarly, under the voyage charter it is the ship owner who pays for the maintenance of the ship.

Whenever we have any doubt about anything under voyage charter, just think of this analogy of hiring the cab.

Most likely you will get the answer.

Laytime, Demurrage and despatch

Lord Diplock during one of the leading cases on Laytime described the voyage charter party comprising of four stages .

• Stage 1 is the loading voyage: The voyage from wherever the ship is to the loading port specified in the voyage charter party
• Stage 2 is the Loading operation: The loading of the cargo at the port of loading
• Stage 3 is the carrying voyage: The voyage from load port to the discharge port specified in the voyage charter party.
• Stage 4 is the discharging operation: The discharging of the cargo from the ship to the port of discharging as specified in the voyage charter party.

In the first and third stage, it is only the ship owner that need to perform. For example. ship owner is required to adjust the speed of the ship to arrive at the loading port within the agreed dates (Laycan).

And in the third stage, the ship owner is required to instruct the vessel to maintain the charter party speed.

However it is the second and fourth stage where most of the disputes take place.

Because in these two stages it is mutual reponsibility of the two parties to ensure that cargo loading and discharging is done without any delays.

In case of delays, each one can accuse the other for delays.

It is definately not commercially profiting for the shipowner if the voyage is extended beyond their expectations.

For example, what if the loading of the cargo took 15 days in comparison to just 2 days that shipowner had expected?

Or what if the ship could not berth at load port or discharge port for many days because of other ships ahead in line up?

Too many uncertainties.

But ship owner’s freight (and profits) cannot depend upon so many uncertainties.

So the shipowner and charterers agree on the factors like allowed number of days for loading and discharging.

In chartering terms this is called “Laydays” or “Laytime”.

The laydays is mentioned in the voyage charter party agreement between ship owner and charterer.

It could be mentioned as number of days and hours or as tons per hours or per day.

If the charterer uses more time for loading and discharging than the allowed laydays as per charter party agreement, then charterer is supposed to pay for extra time used.

The chartering term for this additional payment is “Demurrage”.

So we can say that if charterer uses more time for loading/discharging than laydays, they need to pay demurrage to the ship owner.

But if the charterer uses less time than laydays then ship owner need to pay the charterer for the time saved.

The chartering term for this is “despatch”.

Usually the agreed amount of despatch is about half of the agreed amount for demurrage.

Finally at the end of the voyage, a statement is made to shows the time saved and/or extra time taken at different ports.

Below is the simplified version of the laytime summary calculated at the end of the voyage.

This statement would also show the final amount due and to whom it is due. Means if the final amount is demurrage or despatch and how much.

Notice of readiness and statement of facts

For calculation of laytime, it is important to know when the laytime counting and calculation would start.

This information is also provided in the charter party agreement.

In most of the cases, the laytime would commence to start when the vessel has arrived at the port. In chartering term, this is called “ Arrived Ship “.

Legally, a ship is considered as an ‘Arrived Ship” only when

• Ship has arrived at the port of loading or discharging (port voyage charter) or at the designated berth (Berth Voyage charter).
• Ship is ready in all respects to commence loading (or discharging) or the cargo, and
• Master has sent the notice of readiness to the all parties concerned

The charter party agreement contains the information if the voyage charter is a port voyage charter or a berth voyage charter.

Irrespective if it is port or berth voyage charter, from the ship’s point of view it is important that the master of the vessel send the notice of readiness.

Notice of readiness need to  state that the vessel has arrived and she is ready in all respect to commence loading (or discharging ) of the cargo.

The laytime would start to commence at this time or sometimes few hours later if specifically mentioned in the charter party agreement.

Since one of the condition for the laytime to start is for the master to send the notice of readiness, it makes it so much of an important aspect.

Statement of Facts

The vessel and the master of the ship are the owner’s representative at the action site (loading port or discharging port).

Ship Owner would know only know the information that we provide them. They would use this information for calculation of any demurrage due to the charterers.

But for the correct demurrage calculation, the information we provide must be correct and we must not miss any important information such as any delays.

That make the statement of facts (commonly called SOF) an important document.

At the least, statement of facts must include

• any delays from shore side or from ship’s side and reason of delay
• any delays because of weather conditions
• Timings for the movement of the ship (such as times for anchoring, anchor aweigh, pilot onboard, NOR Tendered etc)
• Timings related to cargo operations (Commenced cargo operation and completed cargo operation

Master’s actions during voyage charter

Master and ship staff may not see the actual charter party agreement between the charterer and the ship owner.

And it is for their own benefit too.

Because there would be so many things in that which we seafarers are not concerned about.

But when the  ship is fixed for the voyage charter, master will receive “Voyage instructions” from the charterer through the ship owner’s commercial team.

The voyage instructions contains the information from the charter party agreement that requires master’s attenstion and subsequent actions.

Master must not miss the points in the voyage orders that requires his actions.

One of the way to do it is to highlight the text of the voyage instructions that require his attention for easy follow up.

Once Master reads the voyage instructions, he may come across insufficient information that need more information or clarification.

Like this one in one of the voyage orders.

Clarification must be sought from the ship operator for any of such information in the voyage orders.

After all it just takes a simple email to get everything in place.

And once everything is clear and in place, it is just about following that.

There are may be only a handful of shipowners that do not rely on the charterer to find the cargo for their vessel.

Having the vessel on charter is so common.

And vessel can be chartered in different ways. Vessel can be on a voyage charter, time charter or demise/bareboat charter.

With respect to voyage charter, master and ship staff must understand few thing

First, when is the laycan for the vessel. This is period in which vessel must arrive at the load port.

If master thinks that vessel may not be able to make it to the loadport in laycan period, the commercial operator must be informed who can then try to extend the laycan.

Second, when the notice of readiness need to be tendered.

If the voyage charter is a port charter, NOR can only be tendered when vessel is at least within the port limits. Usually in this case NOR is tendered when pilot boards the vessel.

If the voyage charter is berth charter, the NOR can only be tendered when the vessel is alongside the designated berth.

Wrong tendering of NOR can make the Notice of readiness null and void and shipowner may loose tons of money.

Lastly, the ship staff need to be make sure that a correct record of statement of facts is kept. This is the document that is used for laytime calculations .

If the charterer uses more time than agreed for loading or discharging the cargo, the ship owner is supposed to get a pre-agreed compensation called demurrage.

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About Capt Rajeev Jassal

Capt. Rajeev Jassal has sailed for over 24 years mainly on crude oil, product and chemical tankers. He holds MBA in shipping & Logistics degree from London. He has done extensive research on quantitatively measuring Safety culture onboard and safety climate ashore which he believes is the most important element for safer shipping.

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70 comments.

How i wish that our exam books were written so precisely yet so easy to understand .Thanx for all the pain you take .No amount of words would do justice to match the level of you efforts.

Thanks Alok...The readers liking it make all the hardwork worthwhile...

its amazing how you describe anything sir

what if the vessel is about to tender NOR and shipper cancels the order. what would be the penalty

Great article to understand the business with ease as an ASM candidate

Many thanks for writing such articles with such an ease of understanding sir...

Glad you liked it Sukhchain...

Another good read. Thank you for taking time to write articles. All Seafarers must understand the commercial aspects of ships. All the best and I cant wait to read the next one.

Glad you liked it Marlon...

what if the ship could not berth at load port or discharge port for many days because of other ships ahead in line up?Too many uncertainties.But ship owner’s freight (and profits) cannot depend upon so many uncertainties.So the shipowner and charterers agree on the factors like allowed number of days for loading and discharging.In chartering terms this is called “Laydays” or “Laytime” ??? Laydays refer to the time when a ship must present itself to the charter.If the vessel arrives after the laydays ,than contract can be cancelled. -Laycan. Laytime is the amount of time allowed (in hours and days)in a voyage charter for the loading and unloading of cargo.

Thanks for your input Zibi...

Laydays or "Laycan "I think is the correct term not Laytime. :)

Thanks for such simplified explanations. Sir could you please tell the few famous ship brokers names in india and worldwide.

Interocean is one of them...

Thank Captain for simple & detailed explanation. Information is really worthy .

Glad you found it useful Sajjad...

Thanks Capt. Rajeev for this good information in simple way.

Glad you liked it Dharmdeep...

Very well written capt., pls continue the good work

Thanks Capt Pereira...

This is a scholarly article Great job Captain!

Glad you liked it Tunde...

Good job, Capt. Jassal! These mandatory intricacies of ship's business & chartering are excellently presented. Organized and laid out as you have, this blog subject does a great service to anyone who longs to learn more about it & be more familiar with the clauses, details & positions (which is probably everyone, right?) -- including this marine cargo surveyor!

Glad you liked it Capt Edward...

Many thanks

Thanks Rafik...

sir plz explain magnetic compass

I will do that in a different blog...

Once again thank you very much.

Thanks Raju...

Informative Awaiting next one regarding time charterers

Will write on Time chartering too...

many thanks for this jobs cap

How easy way for explain this matter ,really very good job captain I appreciate your good effort waiting more and more

Thanks Ahmed...

sir waiting for your blog on purging and gas freeing cargo tanks

Very nicely explained and written good effort

Very nice explanation capt,

Generally the CP agreement is never sent to ship..and hence for tendering NOR what criteria(LOCATION) shall be followed as Master will not be aware if the C/P is voyage or Port C/P .These days Master tender NOR on arrival and then they keep re tendering every 24 hrs or at important events like POB, or All Fast.What is the logic behind following this and how we can ensure the NOR tendering doesn't becomes null and void. really APPRECIATE YOUR GREAT EFFORTS

if the vessel arrived at the agreed laycan and gave a valid NOR tendered and waited for almost 5 days before berthing, then while berthing the vessel had an accident and the owner requsted a new laycan, the question here is, does cancelling the old laycan result in canceling the demurrage fees caused by it?

When a vessel suffers breakdown typically NOR becomes invalid as the vessel was not in all respects ready to load her cargo.

U don't see such priceless articles often.. Good work cap. Let's make the world a better place to sail????????

To the writer of this blog- what made you write this? IT IS FANTASTIC. Well done. Also your MBA, was it the distant learning one from Middlesex?

On the Laytime Summary calculation, wouldn't it be correct to say that on the loading it was lost 0d-12h-24 min instead of 1d-00-24m?

Captain sahab, if I ever get a chance, I'll surely shake hand and say thank you, for all your efforts in simplifying the topics

can you advise for the following : in case a vessel is on Voyage Charter, and during loading or discharging alongside berth, there is a rainy period, so the daytime for this period should be NOT TO COUNT, correct??? cause there is the terms "weather permitting".

Great article sir......waiting for more.....

Hi. How does the shipbroker locate a suitable ship to transport the cargo?

Good day! You have mentioned different stages of voyage charter. May I ask what are the different stages of Time Charter and Bareboat Charter? Thank you in advance.

Nice blog...pleasure to read

I love your write up. Please, keep exposing our mind to the rudiments of shipping business.

Sir, in voyage charter party at what time and place charter party agreement will start? After ship arriving on laycan days or after giving notice of readiness? And notice readiness when we can give? Is there any specific time only we can give NOR?

I have a question, How to calculate the freight for a Multiport voyage. for example, there is a Cargo loaded from the country (C) and need to discharge its half portion in other countries multiple ports (A) & (B). For single port discharge, the cost is 8$ in port A and in Port B 11$, but the agent says he could fulfill this in 10$ for both ports. Now my question is how is he calculating the freight 10$ for Multiple port ?

Thank you sir for this great effort helping a lot for phase2 law preparation

Hi Sir! I am so pleased to have found your blog, it is absolutely helpful. if it is not too much to ask, do you have a quote sample for time and voyage charter? and the stardard terms and conditions? sorry if I am asking too much. thank you

Excellent blog about chartering service. This blog cleared my doubt about chartering service for ship

could you please advise that how long a shipowner should wait cargo to load on board (if cargo not ready) and no any specific clause written on voyage cp

Hi, Capt Jassal, I find every write up on any marine subject is excellent and easy to understand for students. I highly appreciate the contents of your blog. Regards Capt MK Srivastava , Ex-DPA, The SCI Ltd.

Wonderfully explained

While the blockchains themselves are secure, the applications running on the blockchain may not be. These applications interact with the blockchain through smart contracts, but just like any other software, bugs in the code can lead to security vulnerabilities. For this, we need to involve the auditors who conduct security audits on the smart contract. Smart Contract Audit helps you find hidden exploits and eventually reduce the risk and provide you an extra layer of security. Bug-free code is nice to have in other types of software, in blockchain applications, it is essential.

Dear Capt Rajeev Jassal, with interest i have seen your blog however the title struck me a bit - A Layman's Guide to Laytime - this sounds very familiar, if not accurate, with the dissertation i wrote for the ICS, Institute of Charterers Shipbrokers London, who hold copyright on this. Kindly amend the title of your blog to avoid confusion in the industry as to whom the readers take their information from. With best regards, Erwin de Zwarte, FICS

sir will you pls write on paramount clause , new jasson clause , cesser clause and both to blame collision clause

Such a great explanation! Thank you so much!

This article is a big help for those individuals that are trying to expound their knowledge in shipping. I much appreciated because at present i am taking my master's degree in ship management. Thank you...

Wow, so clearly written that I didn't have to read it twice to understand! Why don't our text books/ Oral notes be like this?! Thank you so much Capt. Jassal.

It’s a great and useful piece of info. I’m happy that you just shared this useful info with us. Please stay informed like this. Thank you for sharing. Here’s another informative content on Common Law Separation Agreement , may find more details here.

thanks alot of info keren bgt

Sir u r the best , undoubtedly . The confidence which i gain every time when ever I read your blog is just unspeakable and it sharpens my knowledge every single time. A teacher like you is what this shipping industry needs and I am glad to find the perfect one . Every time when ever I am in doubt I refer to your blogs and it works miracle .....thanks a ton to you sir .....simply great.

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Time charter and voyage charter: general guide

This is an introductory article on time charters and voyage charters.

There are three main types of charters in shipping:

Voyage charter

• Time charter.
• Bareboat charter (demise charter).

Charters are often compared to taxis because it is the most straightforward analogy to understand.

Let’s begin with an example:

Sergey orders an Uber to get to work. Sergei pays the price based on distance and traffic jams. He does not pay for gas and does not pay the driver’s wage. If the car waits longer than 3 minutes for Sergey, he pays for the wait time. If the driver breaks the traffic rules, Sergey will not be held responsible (but his boss can reprimand him for being late).

Let’s consider this example in the context of a voyage charter:

Poseidon chartered a vessel to carry 15,000 tons of wheat from Varna to Barcelona. The freight rate is $30 per tonne. The loading and unloading rate is 5,000 tons per working day. The demurrage rate is $2,000 per day.

Now let’s break down the example into components:

• Port of loading and discharge. A charterparty may indicate more than one port.
• The charge for the carriage is the freight. Freight is often calculated per tonne of cargo, although it can also be fixed.
• Time for loading and discharge – laytime. Usually stated as a loading/unloading rate per day.
• Wait time – demurrage.

The shipowner is responsible for the actions of the master and crew. The shipowner may not only be the registered owner of the vessel but also, for example, the time charterer or bareboat charterer.

In a voyage charter, the shipowner pays for bunker, master and crew wages, port charges, and other expenses related to the vessel. These costs are included in the freight rate. The shipowner also bears the cost of repairs to the vessel.

The primary responsibility of the charterer under a voyage charter is to provide the cargo and pay the freight. The shipowner takes care of everything else.

Time charter

A time charter is a car hire with a driver. Back to Sergey:

Sergey went on a business trip to London for a fortnight. He has no time to explore the city, so he has rented a car with a driver. Sergey pays by the day, regardless of the frequency and length of his trips. He also pays for petrol and paid parking. Sergey does not pay the driver’s wage and does not pay traffic fines.

In a time charter, the vessel is not chartered to carry specific cargo from point “A” to point “B”. It’s chartered for a specific period of time. The shipowner provides and pays for the master and crew, as well as the insurance costs for the vessel. As with a voyage charter, the shipowner is responsible for their actions.

A time charterer has more responsibility:

• Instead of the freight for the carriage, the charterer pays hire, a fixed fee for the use of the vessel. As a rule, hire is paid monthly or semi-monthly.
• The charterer pays for bunker, port charges, loading and unloading costs, agency services, etc.

There is no laytime and demurrage in a time charter, as the charterer uses the vessel at his own discretion.

Main terms of a voyage charter and a time charter

There are two types of terms in a charterparty: implied and express. Implied terms automatically apply to all charterparties as a matter of fact or law, even if they are not mentioned in the charter. The express terms are the terms of the charterparty.

Implied terms

There are five main implied terms:

• The shipowner shall provide a seaworthy vessel at the commencement of the voyage.
• The vessel shall proceed with reasonable despatch.
• There should be no unjustifiable deviation.
• Not to ship dangerous goods without notice.
• To nominate safe ports of loading and discharge.

This list is not exhaustive.

Time charter terms

Main terms of a time charter:

• Period of hire
• Trading limits – the geographical limitations in which the charterer is allowed to use the vessel.
• Provisions for the place and manner of delivery of the vessel to the charterer and redelivery to the shipowner
• Laydays/Cancelling – charterer’s ability to terminate the charter if the vessel is not delivered by the agreed date
• Hire rate and payment procedure
• Off-hire – cases where the charterer does not pay the hire because the vessel cannot be used (e.g. due to a breakdown)
• Quantity and payment of bunker fuel
• Cargo allowed for carriage
• Excluded cargo – cargo that the shipowner prohibits carrying on the vessel
• Speed and bunker consumption
• Provisions on the allocation of liability between the charterer and shipowner

Bareboat charter

This article does not cover bareboat (demise) charters, but getting back to Sergey, a bareboat charter is a hire car without a driver. You can read more about bareboat charters here .

English solicitor. I assist in winning court cases and arbitrations in London. My specialization includes Gafta and FOSFA arbitrations, as well as maritime law (shipping).

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Pros and Cons of Voyage Charter

Voyage Charter Pros

Voyage Charter provides a flexible means by which a ship can be provided for the carriage of a specific cargo between two specific ports. To this extent it will provide cover for a cargo interest’s short-term requirement to move cargo from X to Y.

Additionally, a shipowner can provide short-term employment for the ship by engaging them on voyage charters.

Many shipowners operating fleets of ships will employ ships in this way in order to balance their portfolio of work. A number of ships from the fleet will be operated on long-term time charters to provide a steady income stream for the shipowners.

The remaining proportion of the fleet will be employed on Voyage Charters in order to allow the shipowners to benefit from fluctuations in the market price for ships caused by shortages of ships.

In this way Voyage Charters provide a flexible solution to the intrinsically variable demands of shipping.

A voyage charter is a type of charter party in the shipping industry where a shipowner agrees to transport a specific quantity of cargo for a set price from one or more ports to one or more destinations. Like any contractual arrangement, voyage charters come with their own set of advantages and disadvantages:

Pros of Voyage Charter

• Defined Costs for Charterers : In a voyage charter, the cost of transporting goods is agreed upon in advance. This allows the charterer to know the exact cost of transportation, aiding in budgeting and financial planning.
• No Ship Operating Costs for Charterers : The shipowner bears all the operating costs of the ship, including fuel, crew, maintenance, and insurance. This is beneficial for the charterer as they are not exposed to these variable expenses.
• Efficiency in Cargo Transportation : Voyage charters are often the most efficient way to transport large quantities of cargo over long distances, making them ideal for bulk and commodity shipments.
• Flexibility in Cargo Handling : The charterer has some flexibility in specifying loading and unloading procedures, which can be tailored to the nature of the cargo.
• Market Opportunities for Shipowners : Voyage charters allow shipowners to capitalize on favorable market conditions, setting higher freight rates when demand is high.
• No Long-Term Commitment for Charterers : Voyage charters are typically for a single voyage, offering charterers flexibility without the need for a long-term commitment, as opposed to time charters which can last for several months or years.
• Market Insight for Shipowners : Engaging in various voyage charters can provide shipowners with valuable insights into different cargo markets and trade routes, which can inform future business decisions.
• Profit Maximization for Shipowners in High-Demand Periods : During periods of high demand, shipowners can capitalize by negotiating higher freight rates, maximizing their profit potential.

Cons of Voyage Charter

• Market Risk for Shipowners : The shipowner bears the risk of fluctuating market conditions. If the market rate for freight falls below the agreed-upon charter rate, the shipowner cannot benefit from the lower prices.
• Risk of Delays for Shipowners : The shipowner is exposed to the risk of delays due to loading and unloading operations, bad weather, or port congestion, which can increase operational costs.
• Limited Flexibility for Shipowners : Once a voyage charter is agreed upon, the shipowner has limited flexibility in employing the ship for other opportunities until the charter is completed.
• Potential for Cargo-Specific Issues for Charterers : If the cargo requires special handling or is subject to market fluctuations, the charterer might face challenges in timing and cargo readiness.
• Demurrage and Dispatch : If the loading or unloading takes longer than agreed (laytime), the charterer is typically liable to pay demurrage charges. Conversely, if operations are completed in less time, the charterer may receive dispatch money, but this is less common.
• Dependency on Ship’s Performance : The charterer’s operations are heavily dependent on the ship’s performance and punctuality, which they do not control.
• Operational Restrictions for Charterers : The charterer has limited control over the operational aspects of the ship, such as speed and route, which can impact the timing and efficiency of the cargo delivery.
• Risk of Freight Rate Fluctuations for Charterers : If the market freight rate falls after entering into a voyage charter, the charterer may end up paying more than the current market rate for the transportation.
• Potential Liability for Cargo Damage : In some cases, the charterer might be responsible for any damage to the cargo during loading or unloading operations, which could incur additional costs.
• Bunker Fuel Price Variability for Shipowners : The cost of bunker fuel, which is a significant operational expense, can fluctuate, impacting the profitability of the voyage for the shipowner, especially if not properly hedged or accounted for in the charter party agreement.
• Administrative and Coordination Efforts : Voyage charters often require significant administrative and coordination efforts, including contract negotiation, cargo scheduling, and liaison with port authorities.
• No Guarantee of Future Business : For shipowners, each voyage charter is a standalone agreement, which means there is no guarantee of continuous business once a voyage is completed.

While voyage charters offer a clear and straightforward way to transport goods, they also carry specific risks and limitations for both shipowners and charterers. The choice between a voyage charter and other types of charters, like time or bareboat charters, depends on the specific needs, risk tolerance, and operational preferences of the parties involved.

What are the benefits of Voyage Charter?

The benefits of a voyage charter, where a shipowner agrees to transport a specified amount of cargo for a charterer from one point to another for a predetermined rate, are numerous for both parties involved. Here are some key benefits:

Benefits for the Charterer

• Predictable Costs : The cost of transportation is fixed and agreed upon in advance, allowing the charterer to budget transportation expenses accurately.
• No Operating Costs : The charterer is not responsible for the operating costs of the ship, such as fuel, crew, and maintenance. This reduces financial risk and administrative burden.
• Suitable for Single or Occasional Shipments : Voyage charters are ideal for businesses that do not require regular shipments, offering a flexible and cost-effective solution for occasional transport needs.
• Flexibility in Cargo Management : Charterers can specify loading and unloading procedures to suit their cargo, ensuring optimal handling and safety.
• Reduced Liability : The charterer’s liability is generally limited to the cargo and operations at the port, reducing broader operational risks.

Benefits for the Shipowner

• Profit Opportunities : During periods of high demand, shipowners can negotiate favorable freight rates, maximizing their earnings.
• Market Exposure : Engaging in various voyage charters exposes shipowners to different markets and cargo types, diversifying their business experience and opportunities.
• Utilization of Ship : Voyage charters allow for the effective utilization of the ship, ensuring it generates income rather than remaining idle.
• Control Over Ship Operations : Shipowners retain control over the operation and navigation of the ship, allowing them to manage their fleet efficiently.
• Flexibility in Fleet Management : After the completion of a voyage charter, the shipowner is free to engage the ship in other charters or operations, maintaining flexibility in fleet management.

General Benefits

• Simplicity : Voyage charters are often straightforward and easier to negotiate and manage compared to more complex chartering arrangements like time charters.
• Clear Terms : The contract terms, including the freight rate, ports of loading and discharge, and laytime, are clearly defined, reducing the potential for disputes.
• Market Insights : For both parties, engaging in voyage charters can provide valuable insights into market trends, rates, and operational best practices.

Voyage Charters offer financial predictability and operational flexibility, making them an attractive option for both charterers and shipowners. The specific benefits can vary based on the nature of the cargo, market conditions, and the strategic objectives of the parties involved.

What are the advantages of Time Charter?

A time charter is a type of chartering agreement in the shipping industry where a charterer rents a ship for a specified period of time, with the shipowner still responsible for the ship’s operation and maintenance. This arrangement offers several advantages for both the charterer and the shipowner:

Advantages for the Charterer

• Operational Control : The charterer gains operational control over the ship for the charter period, including deciding the routes and cargoes, which offers greater flexibility in logistics and trade opportunities.
• Fixed Hire Rate : The charterer pays a fixed daily or monthly hire rate, making budgeting and financial planning more predictable.
• No Long-Term Capital Commitment : Charterers can secure the use of a ship without the capital investment required to purchase a ship, optimizing their capital allocation.
• Adaptability to Market Conditions : Time charters allow charterers to respond quickly to market changes by repositioning ships to more profitable routes or cargoes.
• Reduced Risk : Since the shipowner is responsible for the ship’s operation and maintenance, the charterer has reduced exposure to operational risks.
• Efficiency in Cargo Operations : Time charters are efficient for businesses with regular shipping needs, avoiding the need to negotiate separate voyage charters for each shipment.

Advantages for the Shipowner

• Stable Income : Time charters provide a steady, predictable income over the charter period, which can help in financial planning and securing loans.
• Reduced Marketing Effort : The shipowner doesn’t need to find new cargoes for each trip, as the charterer is responsible for cargo arrangements.
• Utilization of Fleet : Time charters help ensure that the ship is actively employed for a longer duration, reducing idle time.
• Operational Oversight : The shipowner retains control over the crew and the technical management of the ship, ensuring that standards are maintained.
• Flexibility in Fleet Management : After the expiration of the charter, the shipowner can reposition the ship for other opportunities, including other time charters or spot market voyages.

General Advantages

• Risk Distribution : Risks are distributed between the shipowner and the charterer, with each party bearing the risks associated with their responsibilities.
• Market Adaptability : Both parties can benefit from the flexibility to adapt to market conditions – the charterer through operational control and the shipowner through stable, long-term contracts.
• Long-Term Relationships : Time charters often foster long-term business relationships between shipowners and charterers, leading to future business opportunities.

Time Charters offer a balance of benefits for both parties, providing operational flexibility and market adaptability for charterers, and financial stability and reduced marketing efforts for shipowners. This makes them an attractive option for businesses with regular shipping needs and shipowners seeking stable, long-term engagements.

Why do Shipowners prefer Voyage Charter over Time Charter?

Shipowners may prefer voyage charters over time charters for several reasons, each linked to the specific characteristics of voyage charters and the strategic and financial priorities of the shipowner. Here are some of the key reasons:

• Higher Potential Profit in Favorable Markets : In a strong freight market, voyage charters can offer higher earning potential per voyage compared to the steady, but possibly lower, daily rates of time charters. This is particularly true when freight rates are rising, as shipowners can capitalize on higher market rates.
• Control Over Ship Operations : In a voyage charter, the shipowner retains control over the ship’s operation, including navigation and management. This allows them to maintain their operational standards and practices, which can be important for maintaining the ship’s condition and performance.
• Flexibility in Market Engagement : Voyage charters offer the flexibility to engage the ship in different markets and trade routes. After the completion of a voyage, the shipowner can reassess the market and choose the next charter based on the most favorable conditions, without being tied to a long-term commitment.
• No Dependency on Charterer’s Cargo Operations : In a time charter, the ship’s profitability is linked to the charterer’s ability to find and manage cargo effectively. In a voyage charter, the shipowner is not dependent on the charterer’s cargo operations, reducing the risk of inefficiencies or delays caused by the charterer.
• Risk of Market Downturn : While voyage charters expose shipowners to market fluctuations, some owners might prefer this over locking in a potentially lower long-term rate in a time charter, especially if they anticipate an upturn in the market.
• Reduced Credit Risk : Voyage charters typically involve shorter engagements with charterers and quicker payment terms. This reduces the credit risk associated with the charterer compared to longer time charter commitments.
• Easier Budgeting for Operational Costs : Since the shipowner is responsible for the ship’s operating costs in a voyage charter, they can more directly control and budget these expenses, as opposed to relying on the charterer’s management in a time charter.
• Lump Sum Payments : Some voyage charters involve lump-sum payments, which can be advantageous for cash flow management for the shipowner.
• Market Insights : Engaging in different voyage charters provides valuable insights into various cargo markets and trade routes, which can inform future business strategies.

However, it’s important to note that the preference for voyage charters over time charters can vary depending on the shipowner’s business model, risk tolerance, market conditions, and specific operational preferences. While some owners prefer the potential higher earnings and control of voyage charters, others might favor the stability and predictability of revenue from time charters.

Why do Charterers prefer Voyage Charter over Time Charter?

Charterers may prefer voyage charters over time charters for several reasons, mostly related to the specific benefits and characteristics of voyage charters that align with the charterers’ logistical needs, financial objectives, and risk management strategies. Here are some key reasons for this preference:

• Cost Predictability : In a voyage charter, the cost of transporting goods is fixed and agreed upon in advance. This allows charterers to know the exact cost of transportation, aiding in budgeting and financial planning.
• No Operational Responsibilities : The charterer is not responsible for the ship’s operational costs and management in a voyage charter. This includes crew wages, ship maintenance, and insurance, reducing the administrative burden and operational risks for the charterer.
• Ideal for Single or Specific Shipments : Voyage charters are particularly suitable for businesses that do not have regular shipping needs but require transportation for specific, occasional shipments.
• Reduced Capital Commitment : Since voyage charters are typically for single voyages, they require less commitment of financial resources compared to the potentially longer-term and more costly time charters.
• Avoidance of Market Fluctuations : Charterers are not exposed to fluctuations in charter rates once the voyage charter rate is agreed upon. This can be particularly advantageous in volatile markets.
• Flexibility in Cargo Handling : Charterers can have more say in specifying loading and unloading procedures in voyage charters, ensuring that these operations are tailored to the nature of the cargo.
• No Risk of Ship Underperformance : In voyage charters, the charterer is not affected by the risk of ship underperformance in terms of speed and fuel consumption, as these aspects are the shipowner’s responsibility.
• Simplicity and Convenience : Voyage charters are often more straightforward and easier to arrange and manage compared to the more complex and ongoing commitments of time charters.
• Less Liability for the Ship : The charterer’s liability is usually limited to the cargo and the operations at the port, and does not extend to the broader operations and maintenance of the ship.
• Suitable for Specific Trade Routes or Cargoes : For businesses that deal with specific trade routes or specialized cargoes, voyage charters offer the precision and customization needed for such operations.

The preference for voyage charters by charterers is largely driven by the cost predictability, reduced operational responsibilities, and suitability for specific or occasional shipping needs. However, the choice between voyage and time charters ultimately depends on the specific requirements, financial considerations, and risk appetite of the charterer.

What is the difference between Time Charter and Voyage Charter?

Time charter and voyage charter are two principal types of charter parties used in the shipping industry, and they differ significantly in terms of structure, responsibilities, and financial arrangements. Here’s a comparative overview:

Time Charter

• Duration-Based Agreement : In a time charter, the ship is chartered for a specific period. The charterer pays for the hire of the ship over this period, regardless of the number of voyages made.
• Charterer’s Control and Flexibility : The charterer has greater control over the ship’s operation, including its routes and cargoes, within the agreed limits of the charter.
• Shipowner’s Responsibilities : The shipowner is responsible for the ship’s operation and maintenance, including crewing, insurance, and repairs.
• Payment Structure : Payment is made on a per-day basis (hire rate), and the charterer is responsible for the fuel costs (bunker) and port charges.
• Risk Distribution : The charterer bears the commercial risks (such as cargo delays), while the shipowner bears the operational risks (such as mechanical failures).

Voyage Charter

• Trip-Specific Agreement : In a voyage charter, the agreement is for a specific voyage or series of voyages. The ship is chartered for the transportation of cargo from one or more load ports to one or more discharge ports.
• Shipowner’s Control : The shipowner controls the ship’s operation, including its navigation and management.
• Fixed Freight Rate : The charterer pays a lump sum or a rate per ton for the cargo transported. This rate is fixed regardless of the voyage duration.
• Shipowner’s Expenses : The shipowner pays for the ship’s operating costs, including fuel, crew, and maintenance.
• Risk Distribution : The shipowner bears most risks, including voyage duration and operational costs, while the charterer is primarily responsible for loading and unloading the cargo within the agreed laytime.

Key Differences

• Control and Flexibility : In a time charter, the charterer has more control and flexibility in employing the ship, while in a voyage charter, the shipowner has more control over the ship’s operation.
• Payment Structure : Time charters involve a day-rate payment model, while voyage charters involve payment based on cargo quantity or a lump sum for the journey.
• Duration of Agreement : Time charters are for a set period, whereas voyage charters are for one or more specific voyages.
• Risk and Responsibility : In time charters, operational responsibilities and some risks are with the shipowner, while commercial risks are with the charterer. In voyage charters, the shipowner assumes most of the operational and voyage risks.

Choosing between a time charter and a voyage charter depends on factors like the charterer’s need for flexibility, the duration of the requirement, cost considerations, and risk appetite. Each type offers different advantages and suits different shipping needs.

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What Is Ship Chartering? Charter Types Explained!

The need for organizations to transport goods by sea in a cost-effective manner constitutes the backbone of Global trade. Organizations achieve this objective by either using their own ships or leasing them from others in cases where their own assets do not meet their requirements.

Chartering of a vessel is a maritime term that is used to describe the form of business hiring or renting out a vessel and crew to transport goods or passengers for a fee.

Ship chartering is a popular way for companies to transport goods and materials around the world. It is also used by the military and government for the transport of personnel and equipment.

Ship chartering is a complex process, as there are a number of factors that must be taken into account before a charter is finalized. In this article, we’ll explain the different types of chartering, how ships are chartered, and the different parties involved in chartering.

What is Ship Chartering?

Let’s take a closer look at what is ship chartering. Ship chartering is the process of entering into an agreement where a shipowner agrees to rent out their vessel to a cargo owner to carry freight from one port to another.

The two parties involved in this process are the shipowner, who is the legal entity registered as the owner of the vessel, and the charterer, which is a company that has hired out the ship for transporting their goods. A charter contract outlines all of the conditions, obligations, and details related to how these agreements are established.

Sometimes a charterer may also be a party that does not have cargo but takes a vessel on hire for a predetermined period from a shipowner. This party then trades the ship to carry cargo at a profit that is greater than the hire rate or even makes a profit in a rising market by re-letting the ship out to other charterers.

Sometimes operators employ a ship and then re-employ the vessel for further business chartering. In such a new role they are described as disponent owners or time charter owners. A disponent owner is a party deemed to be the shipowner having control of the vessel by time charter

Chartering activity relies heavily on the services of brokers who may either be hired to locate a ship that will deliver the cargo for a specified fee known as the freight rate – ship brokerage, or brokers who locate cargo for ships- cargo brokerage.

Rates for transporting freight can be calculated based on the number of tons transported along a particular route, or they can be stated as a total amount – typically denominated in United States dollars – each day for the period of the charter that has been agreed upon.

What Are the Different Types of Ship chartering

The process of ship chartering is an important one in the world of maritime transportation . In order to understand ship chartering, it is first important to understand the different types of ship charters that exist.

There are three main types of ship charters: Bareboat, Time, and Voyage. Each type of charter has its own unique benefits and drawbacks that should be considered before entering into an agreement.

The various costs associated with chartering which are as follows are shared amongst the shipowner and charterer according to the type of charter. Ship operating costs. are costs that do not vary with ship use but are essentially incurred in the running of the vessel. They include crew costs, stores, maintenance & repairs, insurance, and administration

Voyage Costs on the other hand are expenses associated with moving the vessel from one port to another. They include port charges, light dues, stevedoring charges , cleaning holds, cargo claims, bunker fuel , and canal fees .

Voyage Charters

Voyage chartering is a contract in which the shipowner agrees to carry a specific cargo on their vessel for a single trip from one or more loading ports to one or more discharge ports. The payment for this service is called freight, and the contract is called a voyage charter party.

Voyage charters are typically between the shipowner or despondent owner and the charterer. The person who charters the ship is known as the voyage charterer, while the person who charters out their ship is known as the shipowner or deponent owner. This form of contract is often selected when the charterer has no experience in operating a ship, or when they only need to transport one consignment of cargo from one place to another.

Under a voyage charter, the master is appointed by the owner, revenue depends on the quantity of cargo and rate, and the shipowner is responsible for both operating and voyage costs. There are different forms of voyage chartering which are: single voyage chartering  return voyage chartering,  consecutive single-voyage chartering, and consecutive return voyage chartering

A voyage charter indicates a specific vessel, specific cargo, specific port, and specific route. The rights, duties, and responsibilities of ship owners and charterers are determined by the charter party, and the payment by the charterer to the shipowner for the chartered vessel is usually called freight instead of hire. The ship-owner can charter out the whole vessel or part of her space to the charterer. There are provisions made for laytime, demurrage, and dispatch

Time Charters

A time charter is when a ship owner offers a designated manned ship to a charterer to use for a set time period in exchange for a hire fee rather than for a set number of voyages or excursions. The entire or a portion of the ship is hired, and the hire is computed and paid based on the period of the charter and the agreed-upon hiring rate. The delivery and redelivery of the vessel are covered by stipulations.

Loading and unloading fees are often excluded from time charter rates. The duration of the charter could be for a single trip, many months, or even a few years. The time charterer could be a cargo owner who always requires transportation or a shipowner who needs to temporarily expand his fleet but does not want to invest in a ship but wants to be in charge of its commercial operation. A speculator taking a position in anticipation of a shift in the market may be the charterer.

The charterer is responsible for all expenses directly related to using the vessel, such as port fees and bunker costs, and they also cover loading and unloading. In a time charter, the shipowner, who is also in charge of the maintenance and navigational operation of the vessel as well as the management of the cargo, employs the crew.

The costs of the crew’s salary and rations are covered by the shipowner, who is also in charge of the manning of the vessel. In terms of employment and agency, the master is subject to the charterer’s orders and directives.

The ship owner must, upon receiving a complaint from the charterer, make any necessary changes to the appointments of the master and officers if the charterer has good grounds to be unhappy with their performance.

The charterer is in charge of running the ship and is responsible for paying all variable operating expenses like bunkers , port fees, handling fees, tolls on canals, etc.

The shipowner is responsible for paying the fixed operating expenses such as the cost of the ship’s capital, upkeep, supplies, insurance premiums, etc. Time charters are typically used for shorter-term leases and offer more flexibility to the charterer.

Bareboat Charters

The bareboat charter or demise charter is a different kind of charter. According to this agreement, the shipowner is leasing the ship to the charterer. Bareboat chartering typically involves placing a vessel at the charterer’s disposal for an extended length of time without any crew.

Thus, other than paying capital costs, the charterer will assume nearly all of the shipowner’s duties. This implies that the charterer will be financially responsible for the vessel’s maintenance, personnel expenses, insurance, and other charges, in addition to having commercial and technical responsibility for it.

Compared to other contract forms, bareboat chartering is less frequent. When a shipowner or ship operator wants to operate ships or add to his fleet for a while without making the financial obligations of true ownership, but at the same time has to have full control of the chartered vessel, including control over its navigation and management, it may be employed.

Additionally, bareboat chartering is occasionally used in conjunction with the financial plans for the vessel’s installment purchase. The bareboat charter then functions as a hire/purchase agreement, under which the shipowner/seller maintains legal ownership of the vessel and, consequently, security in it, up until the full purchase price is paid.

By employing the master and crew, a time charter differs from a bareboat charter. The master and crew are still the shipowner’s workers when a time charter is in place, but they will be under the time charterer’s control. As a result, the time charterer does not acquire ownership of the ship. With a bareboat charter, the charterer employs the master and crew and therefore assumes ownership of the ship.

What Are the Benefits of Ship Chartering?

There are many benefits that come with chartering a ship. First and foremost, chartering a ship is a great way to save money on transportation costs. Shipping cargo via a charter vessel can be up to 50% cheaper than shipping via a liner vessel.

Another benefit of chartering a ship is that it gives the charterer complete control over the vessel. The charterer gets to choose the route, speed, and port of call for the vessel. This is a great way to ensure that your cargo arrives on time and in good condition.

Finally, chartering a ship is a great way to avoid the hassles and costs associated with owning and operating a vessel. When you charter a ship, you don’t have to worry about things like maintenance, repairs, or crew. This can be a great way to save time and money.

What is a Charter Party?

A Charter Party is the agreement between the party in charge of a ship and a party seeking to use the ship. 

A Voyage Charter party contains the names of the parties, the ship’s name and nationality, its deadweight and bale or grain capacity, the description of the goods to be loaded, the port of loading and discharge, lay days , the time for loading and discharge, the payment of freight, demurrage, despatch, and other pertinent information. There are more standard forms of voyage charter party than any other type of agreement.

The most well-known and often used general-purpose voyage charter party worldwide for all types of trades and for many different types of cargoes is the Uniform General Charter, also known by the code name GENCON and here is the latest published version by BIMCO . When these forms are used, multiple additional clauses usually referred to as rider clauses will be attached to address situations that the written provisions do not address.

There are several time forms for usage in the time chartering industry, although significantly less than the extensive selection offered for voyage chartering.  The NYPE (New York Produce Exchange (NYPE 93) (amended 2001) and BALTIME (Baltic and International Marine Council (BALTIME 1939) are the two main types used for time charters. The NYPE Charter Party forms the basis for the vast majority of time charters.

There is just one widely used standard form for bareboat charter parties, and that is the BARECON form created by BIMCO. There are several clauses in this form that are frequently seen in time charter parties, as can be seen by closely examining it.

Particularly, if included in a time charter party, the provisions pertaining to delivery, canceling, trading limitations, surveys, inspections, hire, redelivery, general average, war, commission, and law and arbitration would be similarly effective.

Charter abbreviations

ATDNSHINC = Any Time Day or Night Sundays and Holidays Included

ATUTC = Actual Times Used to Count

FHEX = Fridays/Holidays Excluded

FHINC = Fridays/Holidays Included

FILO = Free In/Liner Out. Seafreight with which the shipper pays load costs and the = carrier pays for discharge costs.

FIO = Free In/Out. Freight booked FIO includes the sea freight, but no loading/discharging costs, i.e. the charterer pays for the cost of loading and discharging cargo.

FORCE MAJEURE = Clause limiting responsibilities of the charterers, shippers, and receivers due to events beyond their control.

SSHEX (or SATSHEX) = Saturdays, Sundays, Holidays Excluded

SSHINC = Saturdays, Sundays, Holidays Included (or SATSHINC)

WPD = Weather Permitting Day

WWD = Weather Working Day

Ship chartering is a great way to save money on transportation costs and avoid the hassles and costs of owning and operating a vessel. There are three main types of ship charter: Bareboat, Time, and Voyage.

Each type of charter has its own unique benefits and drawbacks. When chartering a ship, it’s important to understand the terms of the contract and to have the financial resources in place to make the initial payment and cover the costs of operating the vessel

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Time Charter Equivalent (TCE): Definition and How It's Calculated

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What Is Time Charter Equivalent (TCE)?

Time charter equivalent (TCE) is a shipping industry measure used to calculate the average daily revenue performance of a vessel. Time charter equivalent is calculated by taking voyage revenues, subtracting voyage expense, including canal, bunker and port costs, and then dividing the total by the round-trip voyage duration in days. It gives shipping companies a tool to measure period-to-period changes.

Key Takeaways

• Time charter equivalent (TCE) is a method for determining the net profit or loss of operating a vessel per day.
• Voyage expenses are mainly fuel and the costs related to maintaining the crew onboard in terms of salary but also food and quarter.
• Looking at TCE provides shipping companies a way to track period-by-period changes.

Understanding Time Charter Equivalent

The time charter equivalent is calculated as:

(Voyage Revenues - Voyage Expenses) Round Trip Duration in Days

It can also be calculated on a per-day basis based on period, spot and weighted average .

TCE revenue is used as a measure of performance to track performance from one period to another but it is a non-GAAP measure. Companies may still choose to report it in their financial statements as a footnote.

The TCE is used by cargo brokers in the shipping industry to present chartering opportunities to shipowners. Chartering opportunities differ widely in potential revenues and costs. The TCE is a way to describe these opportunities in a standardized way — essentially dollars per day — making comparisons easier for shipowners.

Why Per-Day Costs Matter

The single largest variable costs of a voyage are fuel and the cost related to crew upkeep, and this varies in direct relationship to the speed at which the voyage is performed. The speed of the laden part of the voyage is agreed with the charterer when the voyage charter is negotiated. The ship owner or, if there is one, the time charterer chooses the speed of the vessel for the ballast voyage (when the ship is empty of cargo) sailing the ship to a position where it can load a cargo for the voyage charter. In both cases the slower the ship, the lower the fuel cost as consumption will be lower and the faster the ship, then the higher the fuel consumption and therefore the cost.

The slower a ship sails, the longer the voyage (more days) but the less fuel it consumes. So the calculation of the TCE will be affected in two ways (as the Freight lump sum remains the same). The net freight will go up because of the savings made on the fuel but at the same time, it will be divided by more days taking the TCE down. Therefore a ship should only go slower if the cost of fuel, saved by slower sailing, offsets the reduction of the TCE caused by the increase in the number of days the voyage lasted. Finally, if the fuel cost saving justifies slower sailing then the owner will look to the lost opportunity of the days that could have been spent on the next voyage compared with the improvement in TCE from slower steaming on the current voyage. This is a very important point but the decision must be taken at the start of a voyage.

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A/E or ACC/EXC (Accept/Except)

stipulation in written offers and counteroffers for contracts of affreightment, charter parties and other shipping contracts which are used to denote that all terms have been accepted, except the terms which then are delineated and referred to as the “outstanding terms.” Negotiations will then continue on the outstanding terms.

AAAA (always accessible always afloat)

Term often found in charter parties stipulating that the charterer is to only order the vessels to ports or places where the vessel will not touch bottom, or where the vessel can depart at any time regardless of variations in tides, force majeure excepted. Compare: NAABSA (not always afloat but safely aground).

Affreightment, Contract of

see CoA below.

AFSPS (Arrival First Sea Pilot Station)

The term is usually used in a time charter party to

denote the place where the vessel will be delivered by the owners to the time charterers,

and the port is up river and will require not only sea pilots but river and harbor pilots.

AG (Arabian Gulf)

abbreviation which may be used in charter parties to stipulate that

the Arabian Gulf an area where the vessel is/is not permitted to trade or be delivered or

redelivered.

Fee paid to a port agent by the shipowner or ship operator for arranging a

berth with the port authority, ordering pilots, arranging tugs and labor, entering the ship in

at Customs and collecting freight.

AGW (all going well)

a term frequently used as a subject or an exception to a warranty or

stipulation, such as “the voyage will be performed in 14 days, agw.”

All-in Rate

A freight rate which includes all extra costs or surcharges, usually prevalent in

liner trades.

AP (All Purposes) and DAP (Days All Purposes)

A term in a charter party usually following

the provision for laytime which indicates that the total number of days stipulated may be

used for loading or discharging including waiting for a berth if the vessel is an arrived ship.

APS (Arrival Pilot Station)

The term is usually used in a time charter party to denote the

place where the vessel will be delivered by the owners to the time charterers.

Arbitration Clause

A charter party clause usually stipulating that all disputes arising from or

connected with the contract will be resolved by reference to arbitration specifying the place

where the arbitration is to be held, defining the number of arbitrators and their qualifications,

and determining the procedure should one party fail to nominate an arbitrator.

Arbitration Rules or Terms

The rules under which arbitration will be held. Arbitrations are

frequently subject to the terms published by the London Maritime Arbitrators’ Association

(LMAA) (see www.lmaa.london.com), the Society of Maritime Arbitrators in New York

(SMA) (see www.smany.org). A growing number of arbitrations are also subject to the rules

published by the German Maritime Arbitration Association in Hamburg (GMAA) (see www.

gmaa.de) and the Singapore Chamber of Maritime Arbitration (SCMA) (see scma.org.sg)

Arrived Ship

In a voyage charter party, the ship must have arrived before laytime can

commence. Arrival may be determined by whether the charter party is a “berth” charter

party (in which case the vessel can only tender notice once she is at berth) or a port charter

party (in which case the vessel can tender notice once she is in port).

The following conditions are required for a vessel to be considered to be an “arrived” vessel:

The vessel must have arrived at the loading or discharging berth or port as stipulated

in the charter; or so near thereto as she may safely get.

The vessel must be fully ready for cargo operations;

If and as required, Notice of Readiness (NOR) in writing, as prescribed,

must have been tendered to shippers, charterers, merchants, agents

or consignees as stipulated in the charter party. Unless otherwise

stipulated, NOR may only be required at the first load/discharge port.

As Agent(s) Only

designation in a charter party, bill of lading or other shipping documents

that the party executing the document is executing “as agent(s) only” and on behalf of their

Condition or subject of a sale or offer which indicates that the subject cargo or vessel

or other item is offered or sold in its current condition.

As is, Where is

Term which may be included in a vessel sale and purchase contract which

indicates that the vessel would be sold where she is currently lying and in her current state

ATDN (Any Time Day or Night)

Stipulation in a charter party regarding the delivery or

redelivery of a vessel. Also may be used with laytime stipulations and in which case may

be followed by SHINC (Sundays Holidays Included), SHEX (Sundays Holidays Excluded),

FHINC (Fridays Holidays Included) or FHEX (Fridays Holidays Excluded)

ATS (All Time Saved)

calculation of despatch money payable by the owner to the voyage

charterer which is usually the time saved to the vessel from the completion of the loading

or discharging operation until the end of permitted laytime.

ATUTC (All Time Used To Count)

Laytime stipulation that all time utilized by the voyage

charterer will count as laytime, regardless of any other term in the voyage charter party.

Averaging for Laytime

If the amount of laytime stipulated is permitted to be used for

both laytime at loadport and at the discharge port so that voyage charterers may avoid or

mitigate demurrage, then the laytime is said to be averaged or reversed.

Back-to-Back-Charter

Concerning a time charter, a back-to-back charter party is a charter

party between a time charterer and a sub-time charterer further down the charter party

chain that is based on a charter party between the time charterer and an owner or time

charterer that is further up the charter party chain. Therefore, the time charterer has the

same obligations to the owner or superior time charterer that the sub-charterer has to the

time charterer. For voyage charterers, back-to-back terms often occur when a Non-Vessel

Owning Common Carrier (NVOCC) or another Owner/Carrier has contracted for cargo on

voyage charter party terms but cannot perform and relets the cargo to another carrier

on the same terms as the initial voyage charter party with the Charterers/Merchants. The

principle of a back-to-back charter is that anyone acting as a time charter or owner should

have the same obligations with their contractual party.

BAF (Bunker adjustment factor)

A clause which stipulates that the freight rate is predicated upon bunkers being at a particular market price and if the cost of bunkers goes up (down), there is an associated increase (decrease) in freight. The BAF is usually expressed as a percentage of freight

A measurement of the vessel’s carrying capacity, usually for breakbulk cargo, which takes into consideration the inability to load between the vessel’s stanchions or frames. Compare with Grain which is a measurement, usually for bulk cargoes which assume the cargo will be able to be loaded around the vessel’s frames and stanchions. Accordingly, the grain capacity will always be greater than the bale capacity.

Ballast Bonus (BB)

A lump sum paid to the owner or carrier by a time or voyage charterer to compensate the owner or carrier for steaming to or near the first load port before the commencement of the charter party.

Baltic Code

A code of ethics promulgated by the Baltic Exchange (see below) specifically for independent chartering or ship brokers.

Baltic Exchange

A London institution dedicated to the exchange of information regarding freight contracts and time charter party rates as well as freight futures of larger vessels as well as vessel and demolition values. The Baltic Exchange can trace its origins to the informal discussions between merchants and ship owners at the Virginia and Baltick coffee house in the mid-1700s. In 1823 an admission procedure instituted and formal rules were for the exchange of information was adopted. In November 2016, the Singapore Exchange acquired the Baltic Exchange the Baltic Exchange. (See www.balticexchange.com).

The Baltime 1939 time charter party (revised in 2001) is an industry standard time charter party published by BIMCO.

Bareboat Charter

Arrangement for the charter of a ship in which the shipowner only provides the ship; while the charterer provides the crew, stores, bunkers, and pays all operating costs. In other words, the shipowner hands possession of the ship to charterer, differentiating a bareboat charter from voyage and time charters, where shipowners provide the master and the crew.

BBB (Before Breaking Bulk)

A critical period in the vessel operations immediately before discharging the cargo and a stipulation or condition contained in the terms of the contract (usually a bill of lading or voyage charter party) regarding the time for the payment of freight or partial freight.

BENDS (Both Ends)

Term usually found in a voyage charter party designating responsibility of either the owner or charter at both the loading and discharge port. Example: “Charterers’ agents bends” which would mean that Charterers’ agents would be responsible for vessel agency at both the load and discharge port.

Bill of lading (B/L)

After cargo has been loaded onboard a vessel, a bill of lading is issued to the Merchant upon request by the Carrier. A bill of lading serves three vital functions in the transportation of cargo. First, a bill of lading is a receipt for the cargo. Secondly, a bill of lading is evidence of the terms of the contract for carriage between the Merchant and the Carrier. Thirdly, the bill of lading is a negotiable document of title, and accordingly, the holder of the bill of lading is the owner of the cargo or goods described in the bill of lading.

BIMCO (The Baltic and International Maritime Council)

Originally founded as “the Baltic and White Sea Conference” in Copenhagen in 1905, BIMCO remains headquartered in Copenhagen and is an industry association primarily for shipowners although membership is also open to brokers and agents. BIMCO provides its members with industry information and has created many of the contractual forms utilized in shipping, including time and voyage charter parties. (See bimco.org)

Booking Note

Contract between a Carrier and a Merchant which delineates the terms of carriage. The terms of the subsequently issued bill of lading reflect the terms of the booking note.

Both to Blame Collision Clause

A clause incorporated in a bill of lading and/or charter party which contemplates a vessel collision resulting in damaged cargo and aims to achieve an equitable result by preventing the Merchant from recovering damages from both the carrying and non-carrying vessel. The clause stipulates that if the Merchant has recovered damages from the carrying vessel, the Merchant is to pay the carrying vessel owners any sums received by the Merchant for damages by the non-carrying vessel. The both-to-blame clause is not enforceable under US maritime law.

Bottom fouling

a condition where the ship’s bottom becomes affected by marine growth, usually from trading in warm waters. Per usual standard terms of time charters, it is owners’ obligation to maintain the vessel in an efficient state, and therefore the cost of cleaning the ship’s bottom is usually for owners’ account.

Breach of Contract

the failure of a party to perform one of the terms of the contract without an excuse that is recognized as such under the contract or at law.

Cargo which is not bulk, not containerized, and usually stowed in packages and bundles. Machinery and steel coils are examples of breakbulk cargoes.

homogeneous cargoes like grains or oils.

Bunker Surcharge

See BAF above.

fuels used by ships and which span from the lighter Marine Gas Oil (MGO) to Marine Diesel Oil (MDO) to Intermediate Fuel Oil (IFO- which is a blend of MGO and heavy fuel oil), and then to Heavy Fuel Oil (HFO). The essential characteristics or parameters of bunkers include viscosity (thickness) with the lighter fuels being less viscous and more expensive, as well as Sulphur content as there are international and regional regulations regarding the maximum Sulphur content of bunkers.

Canceling Date or Event

In a voyage or time charter party, the final date agreed in which a ship must be available to the Charterer at the agreed location. If the canceling date is not respected, the Charterer may have the right to cancel the charter party.

Cancellation (of a Contract)

The exercise of an option contained in a contract by one party to cancel, or repudiate, the contract. For example, many charter parties and other contracts of affreightment contain a clause which provides the Charterer or Merchant the option of canceling the contract if the vessel is not presented by the specified dates. In this event, the Charterer or Merchant has the option of accepting this breach as a repudiation of the contract, and therefore, the contract will be cancelled.

Carriage of Goods by Sea Act (COGSA)

United States Act which has incorporated the Hague Rules into US law and which delineates the obligations of the Carrier and Merchant for cargo shipments to or from the United States which may be governed by a bill of lading. US COGSA also provides the Carrier with defenses and a package limitation. (See Package Limitation below). The official citation for US COGSA is The Carriage of Goods by Sea Act 46 U.S.C. §30701 n.1 (2012).

Under a bill of lading, the Carrier is the party who has the obligations to carry the cargo, usually under the Hague, Hague-Visby or Hamburg Rules which govern the duties and the obligations of the Carrier. The Carrier’s contractual partner is generally the Merchant who may include the shipper and/or the receiver and/or the consignee of the cargo.

Charter Party (or charterparty) (Latin, carta partita or “divided document”)

an agreement between a vessel Owner and a Charterer which provides for the terms under which the Charterer may use or employ the ship. The three most prevalent types of charter parties are: (1) time charters under which the Charterer hires the vessel (including the crew) from the Owners for a period; (2) voyage charters under the Owners agree to carry the Charterers cargo from particular port(s) to particular port(s) and (3) demise or bareboat charters under which the Charterer hires the vessel but provides the crew and vessel management. Note: In the United States legal cases and commercial writing, it is common to write charter party as a two-word term whereas in English law and commercial discourse, charterparty is commonly written as one word.

Charter Party Bill of Lading

bill of lading issued under the terms of a voyage charter party. The bill of lading will usually include an incorporation clause, incorporating the terms of the relevant charter party.

Party who charters the vessel from the Owner under the terms of the charter party. The Charterer may be a time, voyage or demise (bareboat) charterer (see charter party above).

Charterer’s Agent

Ship’s port agent which is nominated by charterers although paid for and the agent of the vessel and vessel owners. The agent will provide the necessary vessel husbandry at the port.

Chartering in/out

the chartering of a vessel to a Charterer from an Owner. The Charterer will “charter in” the vessel while the Owner will “charter out” the vessel.

Chartering term and abbreviation for “Charterers’ Option. The charter party may allow for additional ports to be called or cargo to be loaded in charterers’ option, or chopt.

Clause Paramount

A standard clause in a bill of lading or charter party which provides a process for determining which Rules shall apply to the bill of lading. Typically, a Clause Paramount will state that the Hague Rules “…enacted in the country of shipment shall apply to this Contract. When no such enactment is in force in the country of shipment, the corresponding legislation of the country of destination shall apply. In respect of shipments to which there are no such enactments compulsorily applicable, the terms of Articles I-VIII [of the Hague Rules] inclusive of said Convention shall apply.” Otherwise, the Clause Paramount will usually provide that in countries where the Hague-Rules are compulsorily applicable, the Hague-Visby Rules shall apply. The importance of the Clause Paramount, among other things, is that the Clause provides for determining which package limitation applies to the shipment.

Combined or Multimodal Transport

Carriage of goods involving two modes of transport, such as ocean carriage and rail. A bill of lading may be issued for combined or multimodal transport, and the Carrier under such bill may be responsible for the cargo until the cargo is discharged at the final destination specified under the bill of lading unless the Carrier is acting as agent only during any segment of the transport.

Common Carrier

In shipping, a Carrier which offers carriage to the public generally. A common carrier generally cannot discriminate between shippers and must offer identical and identically situated cargo to be carried on the same terms. Under U.S. law, common carriers are regulated by the Federal maritime Commissions (FMC), and all common carriers are required to publish a tariff following FMC rules.

Competitive Broker

A ship broker who does not represent either the charterer or owner and works in between other brokers.

Also referred to as “liner shipping”, where multiple shipping lines operate between specially designated routes. The lines agree on freight rates, and each line charges the same as the other(s). Conference rates are relatively stable because a general rate increase amends the base rate - often occurring once a year. Lines in a conference are governed by the rule of membership such as rights to load or discharge at specific ports, and cargo pooling.

Type of charter party bill of lading that is intended to be used with Gencon charter parties. BIMCO’s documentary committee has approved the Congenbil.

Congestion Surcharge

Additional cost applied to the base freight rate to reflect the cost of delay when calling a congested port.

Conline Booking Note

Liner Booking Note approved by BIMCO.

Conlinebill

Liner Bill of Lading published and approved by the BIMCO.

Consecutive Voyages

Sequential voyage charters to another party. The charter party may indicate the number of voyages, cargo to be carried or the total period in which the agreed voyages are to be completed.

Entity responsible for receiving delivery of the goods at the place of destination. The consignee typically the same party as the receiver.

Term denoting elements of a ship that is somewhat permanent, such as crew and effects, stores and spare parts, which must be deduced from the deadweight measurement when determining the deadweight available for cargo.

COP (Custom of the Port)

Common and established practice at a port that may become an element of a contract, unless the terms of the agreed terms provide otherwise. A typical example would be the daily rate of loading/discharging.

Counter-offer or Counter

Response (by offeree) to an offer (by offeror) which in some way changes the terms or conditions of the initial offer. The mere fact of a party making a counteroffer renders the offer itself no longer binding. In other words, the counteroffer must be accepted by the offeror to form a contract.

CQD (Customary Quick Despatch)

The charterer must load and/or discharge as fast as is reasonably possible in the circumstances prevailing at the time of loading or discharging; no prior agreement on demurrage exists. From the standpoint of an owner, very little assurance is provided, if any, of a quick load and/or discharge (See charter party Laytime Definitions 1980, as reprinted in Laytime and Demurrage, Schofield 4th Edition Page 428).

Currency Adjustment Factor (CAF)

Fee applied by the carrier, in addition to the base freight rate that offsets losses for fluctuating exchange rates. The CAF is normally expressed as a percentage of the freight; thus a freight rate of $100 becomes $110 when subject to a plus 10 percent CAF.

D/A (Disbursements Account)

An account set up by a ship’s port agent for all sums paid relating to the ship’s port call. This account may include towage, pilotage, cash advanced to the master, supply of provisions and stores and the agency fee. Port agents typically use vouchers to support such charges.

Deadfreight

Damages payable by a shipper or charterer of a ship for failing to load the amount of cargo stipulated in the contract. Deadfreight is typically payable at the full freight rate.

Deadweight Cargo

Cargo that is heavy in proportion to the space it uses. Freight for deadweight cargo is generally calculated on a per metric ton basis.

Cargo carried on the open deck of a ship. A carrier and a shipper may agree to carry some goods, such as those too large for the ship’s holds, on deck. For some cargoes such as hazardous materials, deck carriage may be required.

Delivery Certificate

Document signed by or on behalf of the shipowner and charterer, indicating the time, date and place of delivery, quantity of bunkers, and number of water for boilers. This document also provides the charterer an opportunity to address any allegations that the ship failed to comply with the terms of the charter party.

Dely (Delivery (of a ship))

Term denoting when a shipowner makes a ship available to the charterer at the beginning of the period of the charter. The ship is typically delivered to an agreed upon location, where an on-hire survey may be arranged to determine the condition of the ship and the number of bunkers on board at the time of delivery.

Dem (Demurrage)

Damages paid to the shipowner for the failure to complete loading and/or discharge within the time allowed in the charter party. The rate of demurrage is typically agreed upon as a liquidated damage. A longstanding maxim applying to demurrage is that once a ship is on demurrage, it is always on demurrage. In other words, deductions are no longer made for any excepted periods stipulated in the charter party – all time falling on charterer’s account.

Demise Clause

Clause commonly found in a bill of lading issued by time charterers of a ship, which provides that the contract of carriage is between the shipper or bill of lading holder and the shipowner. Depending on the country, the demise clause may be accepted in favor of charterers or shipowners.

DESP (Despatch or Despatch Money)

Under a voyage charter, agreed upon amount of money paid by the shipowner to the charterer, for loading and/or discharging in less than the time allowed. Despatch may be either the same rate as or half the rate of the rate of demurrage.

Damages payable to the shipowner for failing to load and/or discharge the cargo within the time allowed in the charter party. Here, detention is owed for each day until loading and/or discharge operations are complete. Detention differs from demurrage in that, the amount is not agreed in advance as a liquidated damage, but instead determined by a court. A court may either (1) set a detention rate as the same rate as demurrage if such a rate has been incorporated into the charter party or (2) base it on the daily running cost of the ship plus any profit which shipowner might reasonably have expected.

Detention Charge

Damages payable by a shipper for detaining the ship or equipment outside of the agreed period allowed.

Deviation Clause

Clause in a contract of affreightment that allows the shipowner to deviate from an agreed route. This clause varies from contract to contract and may permit the ship to call unscheduled ports for whatever reason, or to deviate to save life or property.

DHD (Demurrage Half Despatch)

Term that may be included in a voyage charter signifying that despatch money is to be paid at half the daily rate of demurrage.

Disponent Owner

Party responsible for the commercial operation of a ship. Generally, a disponent owner is a commercial carrier that time charters a ship and issues its own bills of lading. In most cases, BBC Chartering is acting as “disponent owners.”

DLOSP (Dropping Last Outward Sea Pilot)

Term in a time charter used to determine the time and place of redelivery of a ship to the owner by the charterer, when redelivering after discharging in a port up a river, which will require not only sea pilots but river and harbor pilots. Hire payments are no longer due once the last sea pilot disembarks.

Charge levied against a shipowner or ship operator by a port authority for the use of a dock.

DOP (Dropping Outward Pilot)

Term in a time charter used to determine the time and place of redelivery of a ship to the owner by the charterer. Hire payments are no longer due once the pilot disembarks.

DWCC (Deadweight Cargo Capacity or Deadweight Carrying Capacity)

Weight of cargo that can be loaded on a ship without extra provisions; usually expressed in tons.

DWT or DWAT (Deadweight or deadweight all told)

Deadweight is the total of the cargo, fuel, ballast water, fresh water, passenger, crew and other provisions; this does not include the weight of the ship on its own.

EIU (Even if Used)

Term used in a voyage charter party providing that time used to load or discharge during excepted periods will not be deducted from the time allowed. For instance, a charter party might stipulate that time does not count from 1700 hours Friday to 0800 hours Monday, even if used. Here, if charterers choose to load or discharge during these hours, time spent working would not count as laytime.

Endorse a Bill of Lading

The act of signing a Bill of Lading to transfer title of the described goods to another party.

ETA (Estimated Time of Arrival)

the date and time in which a ship is estimated to arrive at a particular port.

ETC (Estimated Time of Completion)

the date and time in which a ship is estimated to complete cargo operations.

ETD (Estimated Time of Departure)

the date and time in which a ship is estimated to depart from a particular port.

Excepted Period

Express provision in a charter party providing for specific periods where time used does not count toward demurrage or despatch calculations; for example, weekends and public holidays. Once laytime expires, time will count during the excepted periods for purposes of demurrage.

Extension of a Charter

The act of extending the period a ship is on time charter under a particular charter party. This option may be expressly incorporated into the charter party. Terms of extension may be the same as under the charter party, or they may include a different rate of hire.

Extension to the Canceling Date

Generally a charter party stipulates when a ship is obligated to tender a notice of readiness; an extension to the canceling date is an additional agreement to a later date of tender. For example, a ship owner may request that the charterer agree to amend the contract with the new date. If the charterer refuses to agree, it may have the option to cancel.

F/C (Full and Complete Cargo)

A full cargo according to the particular customs of a port; this will either (1) bring the vessel to her maximum draft or (2) fill the vessel cubically.

FAC (Fast as Can)

A contractual term indicating that the shipper must provide the cargo as fast as the ship can load, or that the receiver must take delivery as fast as the ship can discharge.

FD (Free Despatch)

A term that may be included in a voyage charter party indicating that despatch is not owed when time is saved.

FEU (Forty Foot Equivalent Unit)

Unit of measurement equaling one 40-foot container. This measurement is used to quantify the container capacity of a ship, the number of containers carried on a particular voyage or over a period of time, or it may be the unit on which freight is based.

FHEX (Fridays and Holidays Excepted)

A term in a charter party in which Fridays and holidays do not count in the calculation of laytime. This term applies to those countries where Friday and Saturday constitute the public weekend.

FI (Free In)

Term denoting that the costs of cargo handling at the load port are free of expense to the shipowner.

FILO /FILTD (Free in Liner Out / Free in Liner Terms Discharge)

Freight rate qualifier that includes sea carriage and cost of discharge. The cost of loading, and in some cases, dunnaging, lashing, and securing are all payable by the charterer or shipper.

FIO (Free In and Out)

Freight rate qualifier in which the costs of loading and discharging, and in some cases, stowing, dunnaging, lashing and securing, are paid by the charterer or shipper. Because the shipowner typically has no control over loading and discharging, the charter party often contemplates laytime and demurrage to allow for delays at the loading and discharging ports.

FIO LSD (Free In and Out, Lashed, Secured and Dunnaged)

Freight rate qualifier equivalent to free in and out, but which avoids any ambiguity by specifying that the cost of lashing, securing and dunnaging is not for the account of the shipowner.

FIOS (Free In and Out and Stowed)

Freight rate qualifier equivalent to free in and out but avoids any ambiguity by indicating that the cost of stowage is not to be paid by the shipowner.

FIOT (Free In and Out and Trimmed)

Freight rate qualifier, typically used for the carriage of bulk cargo. This term is equivalent to free in and out but avoids ambiguity by specifying that the cost of trimming is not payable by the shipowner.

An offer that is unconditionally accepted by the offeror. Such offer is binding if it is accepted in full without further conditions.

First Class Ship

A ship with the highest class given by a classification society following applicable rules on construction and maintenance.

Fixed on Subjects

When the terms and conditions of chartering a ship have been agreed except for a few, ordinarily minor, conditions.

Conclusion of the negotiations between shipowner and charterer, generally through shipbrokers, resulting in the charter of a ship.

FLT (Full Liner Terms)

Freight rate qualifier indicating that freight covers the ocean carriage and the cost of cargo handling at the loading and discharging ports, according to the custom of those ports; this varies widely from port to port. For instance, in some ports, freight excludes all cargo handling costs; while in others, the costs of handling are included.

FO (Free Out)

Freight rate qualifier indicating that the cost of discharging cargo from the ship’s hold is not included in the freight but is payable by the charterer or shipper. Often, daily rates of discharging and demurrage are incorporated into these contracts.

FOB (Free on Board)

A common sales term indicating that the seller is (1) responsible for delivering the goods to the agreed upon port of loading, and (2) for loading them on the ship. The risk of loss or damage to the goods generally passes from the seller to the buyer once the goods have been loaded on board the vessel.

FOB Charges

Are cargo handling charges levied on the shipper by the shipping line at the port of loading.

Force Majeure

Agreed upon circumstances, beyond the control of a contractual party, that may, according to the terms and conditions, relieve that party of liability for failing to execute the contract.

Forwarding Agent or Forwarder

Party that arranges for the carriage of goods and accompanying formalities on behalf of a shipper. A Forwarder (also known as a Freight Forwarder), for example, may book space on a ship, provide necessary documentation, and arrange Export Customs clearance.

FOW (First Open Water)

Period in Spring or early Summer when rivers, lakes, or seas have become sufficiently clear of ice for safe navigation.

Having tendered notice of readiness, the period between the time a ship is ready to load or discharge, and the time that laytime begins per the charter party, during which the charterer is not obligated to load or discharge.

Freight Collect

Freight that is paid upon arrival at the destination, also commonly referred to as freight forward. As this poses a risk to the carrier, surcharges may apply.

Freight Prepaid

Freight that is paid before performance of the contract begins. Generally, once the bills of lading are signed, they are exchanged with the shipper for freight payment.

Freight Quotation

Estimation of freight given by a shipping line that is provided as an indication only.

Freight Rate

Price for the carriage of certain cargo. This price may depend on several factors including the nature of the cargo (weight and dimension) and distance traveled.

Freight Tariff

published schedule by a liner conference or shipping line, with freight rates for a variety of commodities likely to be carried; this also includes whether these rates are payable on the weight of commodity or its cubic measurement, and details of charges for heavy lifts, long length cargoes, and terminal charges. Apart from matters of rating, the tariff of a liner conference states the geographical areas served, the names of the member lines and the conference’s general regulations.

Freight Ton

Freight rates are generally charged on a ton or cubic meter basis, whichever is greater. May also be referred to as revenue ton or cargo ton.

FRT (Freight)

Charge paid to a shipowner or carrier for the carriage of cargo. Under certain circumstances, freight may either include the cost of loading and/or discharging or may cover the ocean transport.

GA (General Average)

Legal principle apportioning financial responsibility for a loss resulting from the Intentional or voluntary act during the voyage to preserve the whole venture from a peril. General Average has been codified in the York Antwerp rules. Necessarily, all parties to the marine adventure pay a proportion of the amount of the loss according to the value of their interest.

A general purpose voyage charter party published by the Baltic and International Maritime Counsil. The boilerplate clauses in the Gencon charter party can, and often are, amended to fit the particular voyage.

Gless (Gearless Ship)

A ship that is not equipped with her own cranes. Likewise when chartering a gearless ship for a voyage, it is critical to verify whether the loading and discharging ports have shore cranes capable of lifting up to the heaviest weight required by the ship’s cargo.

Grain / Grain Capacity

Term referring to the cubic capacity of a ship’s holds available for the free-flowing bulk cargo, like grain. Grain Capacity is often expressed in cubic feet or meters.

Gross Terms

A voyage charter on gross terms is one in which the shipowner pays for the full operating costs of the ship.

Groupage Bill of Lading

A bill of lading issued by a carrier to a freight forwarder covering consignments from multiple shippers destined for the same port and consolidated into one consignment. At the discharge port, each receiver gets a house bill of lading from the freight forwarder covering his consignment.

GT (Gross Tonnage)

Measure of a ship’s total of all enclosed or internal volume that is often expressed in tons. This is sometimes referred to as GT, gt, or GRT.

Hague Rules

Also known as the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading, govern the carriage of goods by sea. They identify the minimum rights and responsibilities of carriers and owners of cargo. The rules were published in 1924 and given the force of law by many countries.

Hague-Visby Rules

International rules governing the shipment of goods that amend and update the Hague Rules. These rules govern the rights and responsibilities of the carrier and shipper.

Hamburg Rules

International rules governing the shipment of goods which may be incorporated into a contract for the carriage either by prior agreement of the parties or by operation of law. The rules were adopted by the United Nations Convention on the Carriage of goods by sea in 1978 as an attempt to equalize the rights of developing countries.

Harbor Dues

Charge levied by a port authority against a shipowner or operator for the services connected with the use of a harbor. Also known as port dues.

Head Charterer

Charterer whose contract is direct with the shipowner in respect of a ship that is being chartered out and then sub-chartered - perhaps several times.

Hire or Hire Money

Compensation by a charterer to a shipowner for the use of a ship taken on time charter. Hire may be paid, for example, on a daily or monthly basis. Hire is generally paid in advance; if not paid on time, under some circumstances the shipowner may have the right to withdrawal from the contract.

Hire Statement

Statement breaking down the amount of hire money owed by a charterer to a shipowner. Charterers may be entitled to deductions for items disbursed on behalf of the shipowner or under the responsibility of the owner, for example, off-hire periods, cash to the master, and claims that rightfully fall under the responsibility of the shipowner.

Storage area below the deck of a ship generally used to carry various types of cargo. If a ship has more than one hold, they are numbered consecutively. The holds are accessed by opening the hatch covers.

House Bill of Lading

Bill of Lading issued by a freight forwarder to a shipper covering a cargo shipment. Here, the shipper will be the actual shipper, as opposed to the master bill of lading where the forwarding agent will be the shipper.

Husbandry Agent

An agent for shipowners that is often tasked with general agency authority. The Husbandry Agent may attend matters concerning vessel crew, repairs, supplies, provisioning and classification society surveys.

Prior agreed upon term in a bill of lading or charter party that stipulates the options if ice inhibits navigation. The terms vary from clause to clause; for example, the master may have the right to divert the ship to the nearest safe port, or the charterer may have the option of waiting for ice conditions to clear upon payment of demurrage.

Identity of Carrier Clause

Clause in a Bill of lading stipulating who the carrier is, to clarify whether the bill of lading is a shipowners’ or charterers’ bill of lading.

Also known as International Commercial Terms, are pre-defined commercial terms/rules used in international trade and accepted by governments globally. The International Chamber of Commerce published the Incoterms.

Security offered by one party to another as protection against the consequences undertaking a particular act or omission. Indemnities usually are generally memorialized in writing. They are, however, unenforceable in a court of law if the act for which it is given is intended to defraud an innocent third party.

An agreement that a ship will call a particular port only if the minimum quantity of cargo or freight make it worthwhile. In other words, enough cargo to justify the voyage.

INL (Institute Navigating Limits)

Geographical boundaries, determined by the Institute of Chartered Underwriters in London, within which a ship may navigate without incurring additional insurance premiums.

Intaken Weight

The true weight of cargo that is loaded on board a ship.

Interclub Agreement

Mechanism to apportion liability for loss and damage to cargo carried on ships chartered under a New York Produce Exchange (NYPE) or Asbatime charter parties between Owners and Charterers.

Interim Voyage

Intermittent Voyage by a ship scheduled between the time she is chartered for a particular voyage and the performance of it.

Joint Survey

Simultaneous inspection performed by surveyors in the representation of their respective parties.

Jurisdiction Clause

Contractual clause stipulating that any dispute between the parties arising from the contract be resolved in a court of law, rather than arbitration. It also specifies the agreed country of valid jurisdiction, in other words, the authority to administer justice.

L/C - (Letter of credit)

Assurance from a bank on behalf of a an importer to pay the seller a specified amount if the seller submits the documents required by the bank.

An abbreviation for “Laydays and Cancelling” is a period during which the shipowner must tender notice of readiness to the charterer indicating the ship’s arrival and readiness at the port of loading. If the ship arrives before the beginning of Laycan, the charterer is not obliged to commence loading until the first date and may have the option of canceling the charter if the ship arrives after the final date, known as a canceling date.

Days allowed by the shipowner or Carrier to the voyage in which to load and/or discharge the cargo without incurring demurrage charges.

Amount of time provided by the shipowner or carrier to the voyage charterer in which to load and/or discharge the cargo. This time is generally expressed in days, hours, or as a number of tons per day. The charter party typically contains a provision for the commencement of laytime. A provision may also be included for periods when laytime does not count, for instance during lousy weather, weekends or holidays.

Letter of Indemnity (LOI)

Signed document by a party undertaking to compensate or indemnify another for the costs and consequences of carrying out a particular act or omission. For instance, a shipper who has been delayed in sending an original Bill of lading to the receiver may request that the master of the ship release the goods to a named third party without production of an original Bill of lading. If the master agrees he may require an LOI from the shipper for the consequences of complying - should it turn out that the named party is not entitled to take delivery of the goods. It should be noted that, as a rule, any LOI seeking to indemnify against an act or omission intended to defraud a third party, is unenforceable in court.

Lien Clause

Clause in a voyage charter party allowing the shipowner or carrier, in possession of the goods, to exercise a lien. Put differently, to retain physical control over the cargo until any freight, deadfreight or demurrage is paid.

LIFO (Liner In Free Out)

Freight rate qualifier indicating inclusiveness of the sea carriage and the cost of loading, but excluding the cost of discharging. Laytime and demurrage provisions may be included in the discharge port because the carrier lacks control over the discharge operations.

Liner Bill of Lading

Shipping line’s bill of lading terms and conditions.

Liner Waybill

Also known as a seaway bill, is a document, issued by a carrier to a shipper, serving as receipt for the goods and evidence of the contract. A Liner waybill has similarities to a bill of lading, but it does not constitute title over the goods. Because Liner Waybills are not negotiable, they are not accepted by banks as collateral for security. A waybill may be used to avoid delays to a ship when the bills of lading have not arrived at the discharge port.

LT (Liner Terms)

Freight rate qualifier indicating that freight includes ocean carriage and the costs of cargo handling at the load and discharge ports.

Document with a full list of the ship’s cargo. An outward manifest is lodged with Customs authorities at the port of loading; an inward manifest is lodged at the discharge port - with one copy going to the ship’s agent so that the unloading of the ship may be planned in advance.

Min/Max (Minimum/Maximum)

When qualifying the contractual quantity in a voyage charter, this term signifies that the freight is payable on that precise quantity, no more and no less.

Mis-description

Incorrect information concerning a ship was given by the shipowner to a charterer. Alternatively, incorrect information concerning cargo was given by a charterer or shipper to a shipowner or shipping line. These situations may give rise to a claim for extra costs or damages or, in some cases, cancellation of the contract of carriage.

More or Less.

Molchop (More or Less in Charterer’s Option)

Choice provided to a voyage charterer, in a contract, to load a percentage of cargo over or under a specified quantity. This choice is useful if the charterer is not sure of the exact quantities available for loading.

MOLOO (More or Less in Owner’s Option)

Choice provided to the shipowner or carrier to carry over or under a certain quantity of cargo specified in the voyage charter.; this is useful if the owner or carrier is uncertain what the ship’s cargo capacity will be upon loading.

More in dispute if on board to be delivered

Notation made on a bill of lading if the shipper disputes the tally of cargo quantity on board the ship.

When a ship is on time charter, but hire is ceased for a particular period, for example, because of the breakdown of the ship or her equipment. Generally, a time charter party explicitly lists events that constitute off-hire and any remedies. Off-hire clauses are typically either net loss of time or period off hire clauses.

Off Hire Survey

Survey that takes place at the time a ship is redelivered to determine whether the ship is in the same condition, wear and tear excepted, as on delivery. One surveyor typically inspects the ship for each of the two parties.

OO (In Owner’s Option)

Common charter party term indicating that the shipowner or carrier has a choice in certain circumstances. For example, in a voyage charter, the owner may have the option of specifying the exact quantity of cargo to be loaded.

Original Bill of Lading

Bill of Lading with the original signature of the master of a ship or his agent and exchanged for the goods at the appropriate discharge port.

OSB (One Safe Berth)

See safe berth.

OSP (One Safe Port)

See safe port.

Outturn Report

Also known as a damage report, is a written statement by the stevedores on the condition and quantity of the cargo discharged.

Outturn Weight

Weight of cargo taken once it is discharged from a ship.

Cargo discharged over the quantity on the ship’s manifest and bill of lading.

Term for when a charterer retains a vessel beyond the stipulated period of the time charter.

Owners Agents

Agent nominated by the Owner’s and acting on their behalf.

Owners’ Broker

Broker acting on behalf of a shipowner in negotiations leading up to the chartering out of the owner’s ship.

Paramount Clause

Also known as a clause paramount, may be included in a bill of lading or charter party to ensure that the governed by the Hague / Hague-Visby Rules, or enactment of these rules in the country with proper jurisdiction over the contract.

Describes a cargo smaller than full vessel load.

Performance Clause

Clause often included in a time charter party indicating that a ship should be able to perform at an agreed speed and efficiency. Otherwise, the charterer may be able to recover damages – generally by deducting the amounts from hire payments.

PFT (Per Freight Ton)

see freight ton.

Post Fixture

After a contract for the charter of a ship is fixed, post fixture includes, hire payments, demurrage and/or despatch calculations and the resolution of potential disputes.

Pro Forma Charter Party

Pre-drafted charter party terms with all the terms and conditions of a contract between a shipowner and charter. This document may, and is often amended to fit the specific needs of the contracting parties.

Pro Forma Disbursements Account

Document containing estimated expenses that are likely to incur by a shipowner before calling a port. These expenses may include, port charges, towage, agent’s commission and pilotage.

Protecting Agent

Agent acting on behalf of owners or charterers to supervise the work carried out by another party’s agent. For instance, if the charter party states that owner’s agent is to be appointed, the charterers may have an interest in appointing a protecting agent to supervise and protect their interests at the port. This logic also applies to owners.

Protective Clauses

Clauses in a charter party that contemplate generally unforeseeable circumstances, like, strikes, general average, or collision.

Rate of Demurrage

A form of liquidated damages agreed between a voyage charterer and shipowner for each day used to load and/or discharge the cargo more than the laydays provided in the charter party.

Rate of Discharging / Loading

Quantity of cargo discharged or loaded each day to or from a ship.

Received for Shipment Bill of Lading

Type of bill of lading the indicates that the goods are in possession and care of the carrier, but not loaded on board the ship. A received for shipment bill of lading also a document of title and provides evidence of the contract of carriage. Banks may not accept this kind of bill of lading as collateral.

Party who takes possession of the cargo at the agreed upon destination.

Redelivery Certificate

Document signed by the shipowner or its agent and the charterer, certifying the time, date and place of redelivery. The certificate also states the number of bunkers onboard at the time redelivery.

Redly (Redelivery)

Return of a ship to an agreed upon place, by a time charterer to the shipowner at the end of the charter period.

Release a Bill of lading (to)

Releasing or providing a shipper with the original bill of lading; this is often done in exchange for payment of freight.

Reversible Laytime

A term providing that any time allowed during loading, may at charterers option, be used instead as time allowed at the discharge port when calculating demurrage or despatch.

RT (Revenue Ton)

Freight rate based on a ton or cubic meter of cargo. Round Voyage - Voyage consisting of two legs, where the ship completes its voyage in the same location it started.

Running Days

Two consecutive 24-hour days, including weekends and holidays.

SB (Safe Berth)

A common term that places responsibility on the cargo interests to nominate a safe berth, including the arrival and departure from the berth, in the absence of abnormal circumstances. If good navigation and seamanship could have avoided the berth, then it will likely be deemed a safe berth.

Single deck ship.

Seaworthiness

baseline requirements of a ship for a particular voyage with a particular cargo. The main necessities for seaworthiness are that a ship has sufficient crew, stores and fuel, the machinery and equipment are in good repair, and the ship is adequate to carry a particular cargo.

SHEX (Sundays and Holidays Excepted)

Charter party term indicating that Sundays and public holidays do not count for purposes of calculating laytime.

SHINC (Sundays and Holidays Included)

Charter party term indicating that Sundays and public holidays do count in the calculation of laytime.

Ship’s Agent

Person or entity that protects the interests of a ship while she is in port. A ship’s agent often arranges pilotage, towage and a berth for the ship. The ship’s agent may also sign the bills of lading and collect freight.

A shipbroker may be (a) a chartering agent or owner’s broker that negotiates the terms for the charter of a ship; (b) a sale and purchase broker negotiates on behalf of a buyer or seller of a ship; (c) ship’s agent, attends to a ship, her master, and crew at the port and on behalf of the shipowner; and (d) a loading broker finds cargo for a ship.

Shipped on Board Bill of Lading

Bill of lading issued once the goods are loaded on board the vessel. This bill of lading must also reference that the goods have been shipped on board.

Person or entity that contracts with another party for the carriage of goods by sea.

Short Form Bill of Lading

Bill of Lading that lacks the full terms and conditions of the contract of carriage but instead contains a reference to the carrier’s conditions. The reference may be to a terms and conditions document on the carrier’s website.

Short Shipment

When cargo is listed on a manifest or bill of lading but not received by the proper party. In other words, when the quantity received by the Receiver is less than the quantity on the bill of lading.

Sim Sub. (Similar Substitute)

Ship offered by a shipowner or carrier to a charterer as a replacement for the one initially nominated ship. This replacement is generally similar characteristic, such as deadweight, capacities, and hold and hatch sizes.

Sister Ship

Ship with the same specification as another. A sister ship may be an option provided to a charterer by a shipowner who has two or more identical ships but is not sure at the time of negotiating the charter which will be in the most suitable geographical position to perform the voyage.

SP (Safe Port)

Common term in a charter party placing responsibility on the cargo interests to nominate a safe port for the ship to reach, remain and leave.

SSHEX (Saturdays, Sundays and Holidays Excepted)

Charter party term providing that Saturdays, Sundays, and public holidays do not count toward the calculation of laytime.

SSHINC (Saturdays, Sundays and Holidays Included)

Charter party term providing that Sundays and public holidays count toward the calculation of laytime.

Statement of Facts (SOF)

Statement, generally signed by the master, recognized by many courts as prima facie evidence of the date and time of the ship’s arrival, and the commencement and completion of loading and discharging. The SOF details the quantity of cargo loaded or discharged each day, the hours worked and the hours stopped, including reasons for the stoppages, such as bad weather, strikes, or equipment breakdown.

Availability of a cargo on the date or dates on which a ship is offering to load. Strike Clause - Clause in a Bill of Lading or charter party that contemplates the available options if a strike prevents or delays any cargo operations. The wording of these clauses may depend on the individual contract and situation at the respective ports.

Sub-Charterer

Party in a charter chain in which the “head charterer” charters the ship to another charterer (sub-charterer). The head charterer will remain responsible for its contract with the owner of the ship. The head charterer may appear as owner in the charter between head charterer and sub-charterer.

Also known as a sub-charter, is the chartering of a ship to another party who is not the owner but has the charter of the ship. Charter parties often contemplate a charterer’s right to sub-let the whole or part of the ship.

Sub. Details (Subject Details)

Condition to the conclusion of a contract for the charter of a ship. “Subjects” are typically minor details that are not yet agreed. A U.S. court has held that a contract accepted on condition of such minor details may conclude an agreement, with the details to be worked out later.

Sub. Free (Subject Free / Subject Open / Subject Unfixed)

When negotiating a contract, Sub. Free may be inserted into an offer by a shipper to signify that acceptance is contingent on whether a separate contract is concluded, prior to acceptance, with a third party.

Substitution

A shipowner or carrier may have the option to nominate a ship other than the one named in the charter party. This is often the case because when negotiating the contract, it may be difficult to anticipate which ship will be available to perform the voyage. Substitution is essentially owner’s right to replace the named ship with another.

SWL (Safe Working Load)

The maximum amount of weight that can be safely lifting mechanism, such as a crane. The safe working load for a piece of equipment is usually indicated on the equipment.

Published rates charged by a carrier. For instance, the freight tariff of a shipping line would indicate freight rates, possibly for several types of goods.

TBN (To Be Nominated)

Used in place of a ship’s name when a specific ship has not been nominated.

Tender Notice of Readiness (to)

Document provided by the master to cargo interests, or their agent, providing notice that the ship has arrived and is ready to load or discharge. Some charter parties indicate parameters of when notice of readiness may be tendered.

TEU (Twenty Foot Equivalent Unit)

Common unit method of measurement in shipping, equivalent to one 20-foot shipping container. A 40-foot container is equal to two TEUs. This unit is often used, for example, to indicate the container capacity of the ship.

THC (Terminal Handling Charges)

Costs levied by a shipping company for handling of goods at the port.

Through Bill of Lading

Bill of Lading that covers multiple modes of transportation, often including ocean and inland transport.

Time Charter

The chartering of a ship and its crew, for a period of time from the shipowner; the charterer pays hire for the use of the ship. Time Charter parties set out the terms and restrictions to the time charter, including cargo type and quantity, accessible ports, offhire, etc. Responsibility for the technical operation and navigation of the ship stay with the master and owner. (See also Time Charter Party)

Time Charter Party

A contractual document setting out the terms and conditions between a charterer and a shipowner for the hire of a ship over a period of time.

Time Charterer

A person or entity that charters a ship for a period.

Time Lost Waiting for Berth to Count

A term that may be included in a charter party, which indicates that once Notice of Readiness is tendered, laytime will begin to count, even if no berth is immediately available.

Time reversible

Calculation of laydays, in a voyage charter partying, for both the load and discharge port. Time stipulated for loading or discharge is fungible.

Time to Begin on Arrival

A term that may be included in a charter party clause which indicates that laytime will begin to count immediately upon arrival at the load or discharge port.

Turn round Time / Turnround / Turnaround Time

The time it takes for a ship to arrive at port, complete all necessary operations, and sail. Turn Time – Amount of time a ship spends waiting for berth.

UCE (Unforeseen circumstances excepted)

Qualifying term in a charter party.

UU (Unless Used)

Term providing for a portion of time used to load or discharge cargo, during otherwise excepted periods.

V/C (Voyage Charter)

In a voyage charter, the charterer pays for the use of the ship’s cargo space for one or more voyages. The terms of this contract are set out in a charter party. Under this type of charter, the shipowner or carrier is responsible for the operating costs of the ship.

Voyage Charter party

Contractual document for the carriage of goods by sea, outlining the terms between charterer and shipowner, for the use of the ship’s cargo space.

Clause that may be inserted into a bill of lading or charter party that sets out the master’s options if the ship is put at risk because of war. Under these clauses, the master will never be required to put his ship at risk of harm.

WIBON (Whether in berth or not)

Provision that may be included in a voyage charter indicating that once a ship has tendered notice or readiness, laytime will begin to count, even if the ship is not in berth.

WICCON (Whether Customs Cleared or Not)

Provision that may be included in a voyage charter party indicating that once a ship has arrived in port and tendered a notice of readiness, laytime will count, even if the ship has not been customs cleared. WOG (Without Guarantee) - Qualification to a charter party term.

WIFPON (Whether in Free Pratique or not)

Provision that may be included in a charter party indicating that once the ship has arrived in port and tendered notice of readiness, lay time will count, even if the ship is in free pratique.

WIPON (Whether in port or not)

Provision that may be included in a voyage charter indicating that once a ship has tendered notice of readiness, laytime will begin to count, even if the ship has not reached the port. Generally, the ship must have reached the usual waiting place at the particular port.

Workable Crane

Voyage charter party term setting out the amount of time allowed for loading/discharging by the number of cranes available for use.

Workable Hatch

Voyage charter party term setting out the amount of time allowed to load and/or discharge, by dividing the quantity of cargo in the largest hatch by the quantity of cargo in accessible hatches.

Working Day

When work customarily takes place at a particular port.

Working Day of 24 Consecutive Hours

One working day equals one layday. A court held that a working day of twenty-four hours could be considered as more than one layday, depending on the port. Thus, “consecutive” was added to clarify.

Working Day of 24 Hours

A total of 24 working hours; if the particular port, for example, has a usual eight hour working day, then 24 hours would calculate to three laydays.

WP (Weather Permitting)

Voyage charter party term indicating that laytime will not count when weather conditions inhibit or prevent loading or discharge operations.

WTS (Working Time Saved)

Can also be referred to as “laytime saved,” is a common charter party term that allows for the deduction of laytime used from laytime allowed. For instance, if the contract provides for five laydays to load and the charterer only uses two, they are entitled to a despatch payment.

WWD (Weather Working Day)

If, at the particular port, work is typically carried out, laytime will count; that is, unless loading or discharge operations would halt because of bad weather.

WWR (When Where Ready)

Term used when determining the time and place for delivery and redelivery of a ship. This term is designed to make time and place unambiguous.

voyage charter ne demek?

• Sefer sözleşmesi
• Yolculuk, seyahat. Bir yerden bir yere gitme.
• Genellikle ülke dışına yapılan askerî harekât, savaşa gitme, savaş.
• Kez, yol, defa
• Gemilerin kalktıkları limana tekrar dönünceye kadar yaptıkları fiil.
• Istılahta: şer'i bakımdan üç gün üç gecelik (veya onsekiz saatlik) yola gitmek için kişinin oturduğu yerden ayrılması.
• Savaş hazırlığı. savaşa gitme. harp, savaş.
• Bkz. yolculuk
• (Safer) Arabi ayların ikincisinin ismi.

• Yurt dışına çıkma

voyage policy

• Seyahat poliçesi
• Yolculuk poliçesi
• Tanımak (ayrıcalık)
• Patent, imtiyaz, berat
• Gemi kira kontratı
• Kiralamak, tutmak (uçak vb,)
• Berat, imtiyaz veya patent vermek

Türetilmiş Kelimeler (bis)

Motor Boat Charters Moscow. Motor Yacht Charter Moscow

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