Charterers and charter contracts

Star InactiveStar InactiveStar InactiveStar InactiveStar Inactive
 

The traditional contract of carriage for the movement of these goods is the charter party

Charterers are traders, merchants, commodity brokers who simply hire a vessel from the owner for the movement of a specific cargo or raw materials, usually bulk cargo, for a specific voyage or time period. The traditional contract of carriage for the movement of these goods is the charter party.

The chartering markets are very much divided into dry cargoes and the tanker market.

In both trades standard forms of contract are used although in practice these forms will probably be subject to additions, deletions and covered with added typed clauses.These forms are produced by organisations such as the Baltic International Maritime Council (BIMCO) (www.bimco.org) and the International Chamber of Shipping (ICS) (www.marisec.org).

In the dry cargo markets standard forms such as the GENCO are used especially in a single voyage charter. This is where the ship is hired to go to a specified port, load a specific type and quantity of cargo, then carry it to a specific port for discharge all for a negotiated rate usually based on a per tonne of cargo basis.

Many charterers may have a requirement to ship more than one shipment of cargo and in this case, a consecutive voyages charter party may be entered into.

Another form of charter party is the time charter. When a charterer has the requirement to ship more than one shipment involving more than one loading or discharge port, over a period of time, then this type of charter party gives the charter that flexibility. In this contract the ship owner retains the running of the ship but all commercial decisions are made by the charterer. The charterer in return as well as paying the hire fees also pays for the fuel and the expenses associated with their instructions to the vessel.

charterer role

In the tanker trade there are single voyage, consecutive voyage, time charter and contracts of affreightment. The latter two are the more common types used due to the vagaries of the tanker market. The demand for crude oil by the producers and refiners can and will affect the load or discharge port even during the voyage. Standard forms are still used and these have been produced by the oil majors and organisations like Intertanko. Shellvoy is a common tanker charter party form.

The main difference between dry and tanker charters is the way the freight rate is expressed. In the dry charter market the rate is easily fixed at a rate per tonne of cargo carried. In the tanker trade, the choice of loading or discharge port can change quickly due to the changing demand by the producers and refiners. To overcome this, a scale of nominal rates, worldscale was introduced after the second world war which, with amendments, is still used today. This worked by allowing a charter to the whole of the Arabian Gulf as the load port and say Europe as the discharge port. The final rate was then sorted out once details of the exact loading and discharging port were known. This fluctuation in the markets was adjusted by applying a plus or minus percentage to the Worldscale rate.

Interesting articles

About CAMER

Home

Mediation services between Shipowners, Charterers and the different actors in the transport industry of any type of merchandise, facilitating the management of their operations. We offer our experience, personal and reliable service.