If you would like clarification on your rights and obligations as a charterer or shipowner, img will be happy to help you. Chartering is an activity within the shipping industry in which a shipowner leases the use of his vessel to a charterer. The contract between the parties is referred to as a charter-party (from the French “charte partie” or “document partage”). The three main types of charters are: shipwreck charter, voyage charter and time charter. The coverage of a charterer`s liability insurance may vary depending on the type of charter party and any additional inclusions or exclusions agreed upon prior to the purchase of the insurance. The details of these contractual variables have a profound impact on the nature of the agreement and the decisions made by key stakeholders. Different charter parties set out different obligations, exclusions and restrictions between each company. For this reason, shipowners and charterers should consider seeking sound and practical legal advice before designing, amending or supplementing a time charter, travel charter or bareboat charter. In a dispute between charter parties, shipowners and charterers must be particularly aware of their legal risks and contractual obligations. In the case of bareboat chartering, which is used less frequently in normal business practices, the shipowner shall deliver it to the charterer for the agreed period without crew, business, insurance or other provisions. Contracts can also be concluded on a lump sum basis if an owner agrees to ship a certain amount of a certain cargo from one port to another for a certain amount of money. Charterers` liability insurance is a type of insurance designed to protect shipping companies from certain risks or liabilities.

[3] This may include fines and violations of the law, damage to cargo or ship, as well as physical injury, including death. Time chartering is a complex undertaking. Shipowners shall grant charterers in time substantial control over the commercial operation of the vessel in exchange for the regular payment of rent. Although this agreement suggests that shipowners have transferred much of the potential operational risk to charterers and that charterers can do more or less whatever they want with the ship, such a first impression on the part of the time charterer is both misleading and dangerous. In the world of shipping, there are three main elements: ships, cargo, and contracts that determine how the two interact. When a ship is needed to carry cargo, it can be used in a variety of ways. Depending on the type of vessel and the type of charter, a standard contract form called Charter Party is usually used to record the exact price, duration and terms agreed between the shipowner and the charterer. A ship can be used on a (single) voyage basis, which means that charterers pay the cargo to the owner to carry out their transport of goods. Alternatively, a vessel may be used on a time charter basis, which means that the vessel is leased by the charterer for an agreed period of time in exchange for a rental price to be paid to the owner for the duration of the charter period. Charter party, a contract by which the owner of a ship leases it to others for use in the carriage of cargo. The shipowner continues to control the navigation and management of the vessel, but its carrying capacity is taken over by the charterer. This is a widely discussed topic and one of the most common strategic decisions for owners and charterers.

Some key factors influencing this decision-making are market volatility, cargo availability, vessel repositioning and financial reasons. The charter party is the document that is reviewed and interpreted by a court in the event of a dispute, but in practice, most disputes are submitted to arbitration. The most important clauses of each charter party include those that determine the number of days allowed for loading or unloading and those that determine who must bear the associated costs. See also Censorship, Bill of. There are four main methods for chartering a tramp vessel: voyage charter, time charter, bareboat charter and “flat contract”. The travel charter is the most common. In this method, a ship is chartered for a one-way trip between certain ports with specific cargo at a negotiated freight rate. In time chartering, the charterer shall lease the vessel for a certain period of time, for a specific round trip or occasionally for a specified one-way journey, the rental rate being expressed as much per tonne of load capacity per month.

While in the case of a travel charter, the owner bears all the costs of the trip (subject to the agreement on loading and unloading costs), in the case of a time charter, the charterer bears the costs of bunkers and used supplies. Charterers who wish to take control of a vessel or fleet to meet their own freight transportation needs and who do not wish to bear the costs of purchasing and operating the vessel will support TC`s option. This means that the TC option is seen as a business opportunity with no asset burden on charterers. A time charter (TC) is a type of ship charter and a ship employment contract between two counterparties: the owner and the charterer. Each counterparty has different responsibilities and concerns, which are set out in the Agreement between the Parties to the Charter. A charterer can also be a cargo-free party that charters a ship from the owner for a period of time and then exchanges the ship to carry cargo at a profit higher than the rental price, or even makes a profit in a rising market by subletting the ship to other charterers. For example, at the outset of charter negotiations, the owner must provide the charterer with a complete description of the vessel, commonly referred to as the “time charter description”. The detailed description of the vessel includes information such as the speed and consumption rates of the vessel, which are important for the charterer to accurately and efficiently plan the voyages he must make during the charter and to plan cargo operations.

These factors generate expectations from both parties, and these expectations are reflected in market fluctuations and essentially in freight rates. Low ship supply will lead to higher freight rates, and low demand on the freight side will lead to lower freight rates. This is commonly referred to as the spot market. The perception of market forecasts by counterparties will be a very important factor in the choice between travel or TC. In this context, and in order to avoid potential volatility or control costs, counterparties will consider placing the vessel on a TC. A bareboat charter is the simplest type of charterparty agreement. As part of a bareboat charter (also known as a “shipwreck charter”), the charterer effectively becomes the owner of the ship for all operational and commercial purposes and is therefore responsible for the navigation, operation, repair, maintenance, insurance and crew of the ship. Despite a semblance of simplicity, bareboat charters are complex agreements, and many problems can arise during their use. Owners and charterers should seek legal advice before drafting or amending a bareboat charter. Travel charters are the most commonly used charter contracts. In the context of a voyage charter, a shipowner and a charterer enter into a contract under which the ship transports goods between two points.

The voyage may be a single voyage or multiple voyages, provided that the charterer has absolutely no operational control over the vessel while it is in service. Delays in loading and unloading cargo, as well as delays during the maritime part of a voyage, are usually transmitted to the shipowner. Many charterers prefer this allocation of risk. In some cases, a charterer may own cargo and hire a shipping broker to find a ship that will deliver the cargo at a specific price, called a freight rate. Freight rates can be calculated on a certain route (e.B. for iron ore between Brazil and China), expressed in points globally (for tankers) or alternatively as a total sum – usually in US dollars – per day for the agreed duration of the charter. Another common business case is that an LAnger TC can be part of a financial package with the purchase of the vessel. In other words, the financial and operational management of the fleet will have an impact on this type of decision. The time charter equivalent is a standard measure of the performance of the shipping industry that is primarily used to compare changes in a shipping company`s performance from one period to the next despite changes in the combination of charter types.

For seasoned industry professionals, these concepts are all too familiar. .