voyage charter responsibilities

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?

Do you have info to share with us ? Suggest a correction

Disclaimer : The information contained in this website is for general information purposes only. While we endeavour to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.

In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits arising out of, or in connection with, the use of this website.

About Author

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.

Read More Articles By This Author >

Related Articles

Maritime Labour Convention 2006: What It Is, What It Does, How It Works

American Bureau of Shipping (ABS) Proposes New Rules for Ultra Large Container Ships

A General Overview of Maritime Domain Awareness (MDA)

Daily maritime news, straight to your inbox.

Sign Up To Get Daily Newsletters

Join over 60k+ people who read our daily newsletters

By subscribing, you agree to our  Privacy Policy  and may receive occasional deal communications; you can unsubscribe anytime.

BE THE FIRST TO COMMENT

Great article that provides lots of fundamental knowledge! Kudos to the author, thank you!

@Edward: Glad you liked it 👍

Leave a Reply

Your email address will not be published. Required fields are marked *

Subscribe to Marine Insight Daily Newsletter

" * " indicates required fields

Marine Engineering

Marine Engine Air Compressor Marine Boiler Oily Water Separator Marine Electrical Ship Generator Ship Stabilizer

Nautical Science

Mooring Bridge Watchkeeping Ship Manoeuvring Nautical Charts  Anchoring Nautical Equipment Shipboard Guidelines

Explore 

Free Maritime eBooks Premium Maritime eBooks Marine Safety Financial Planning Marine Careers Maritime Law Ship Dry Dock

Shipping News Maritime Reports Videos Maritime Piracy Offshore Safety Of Life At Sea (SOLAS) MARPOL

WAIT! Did You Download 13 FREE Maritime eBooks?

Sign-up and download instantly!

We respect your privacy and take protecting it very seriously. No spam!

WAIT! Did You Download 12 FREE Maritime eBooks?

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!

DEXTER OFFSHORE LTD

Mazaya Business Avenue – BB2- 1403 – First Al Khail St – Dubai, United Arab Emirates Tel: +971 04 430 8455

MORE INFORMATION

Contact Us About Us Meet Our Team QHSE Policy

CONNECT WITH US

LinkedIn Facebook Instagram YouTube

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

Share this post

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.

Related Popular Articles

On board and online – importance of on board connectivity for seafarers.

On Board and Online explores the importance of connectivity and communication in the lives of seafarers and how they contribute to their overall happiness while

Women in shipping – Pros and Cons

  Women currently make up only 1.2% of the maritime workforce. This presents an incredible opportunity for growth, diversity, and empowerment within the maritime industry

Passive income streams for mariners

Passive income streams for mariners can vary depending on individual circumstances, skills, and interests. Most mariners focus on honing their skills in navigation, safety, operating

One Response

• Pingback: INCOTERMS 2020 : A MUST READ FOR SHIPPING, CUSTOM & LOGISTIC PROFESSIONALS! - MascotMaritime

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Save my name, email, and website in this browser for the next time I comment.

Terms & Conditions | Privacy Policy | Disclaimer

World Clock ×

• Market recognition
• Social responsibility
• Dispute resolution

Charter Parties: The Complete Guide – Types & Agreements

August 21, 2023

Looking for a comprehensive guide to charter parties? Our page covers all types and agreements, distinguishing us from the competition.

Charter Parties The Complete Guide

Charter parties , the legal contracts for chartering vessels, are the backbone of international shipping. They define the rights and obligations of shipowners and charterers, ensuring smooth operations on voyages. Whether it’s a time charter or a voyage charter, these agreements play a crucial role in facilitating global trade for carriers.

A charter party is not just any document; it serves a specific purpose in the context of chartering. Its clauses, articles, and provisions outline the terms that govern the relationship between parties involved in maritime commerce, typically in a contract. Shipowners carefully craft these agreements, known as charterparties, to protect their interests while meeting the needs of charterers who engage their services as carriers.

Understanding charter parties is essential for anyone venturing into international shipping. From specifying the duration of the charter period to determining responsibilities during loading and unloading, every detail matters in chartering. So let’s dive into this intricate world of maritime contracts and explore how they shape our interconnected global economy, specifically in relation to carrier and specific cargo.

Types of Charter Parties

Time charters.

A ship chartering, or time charter, involves leasing a vessel from a ship owner for a specific period. This type of charter party allows the charterer, or carrier, to have exclusive use and control over the vessel during the agreed-upon timeframe. It provides flexibility as the charterer can determine the ports of call and cargo carried.

Voyage charters

Voyage charters in ship chartering involve hiring a vessel for a single journey. Unlike time charters, which focus on an extended period, voyage charters are specific to one trip. The charterer pays the ship owner for transporting goods from one port to another without long-term possession or control over the carrier.

Bareboat charters

Bareboat charters involve ship chartering by leasing a vessel without crew or provisions. In this type of arrangement, the charterer assumes complete responsibility for operating and maintaining the ship during the agreed charter party duration. The shipowner transfers possession and control to the charterer, who becomes the carrier responsible for all aspects of navigation, crewing, and provisioning.

These main types of charter parties, including time charters, voyage charters, and bareboat charters, offer different options depending on the specific needs and requirements of the charterparty, carrier, ship owner, or shipowner. Time charters provide flexibility and extended use, voyage charters focus on individual trips, while bareboat charters grant full control to the lessee. By understanding these various types, individuals and businesses can choose which option best suits their particular circumstances.

Charter Party Agreements

Charter party agreements, also known as charterparty agreements, are legally binding documents that are negotiated between shipowners and charterers. These agreements specify important terms such as freight rates, laytime, demurrage, and more. Here’s a brief overview of charterparty agreements and how they form an essential part of container shipping.

• Charter party agreements, also known as charterparty agreements, are contracts that outline the terms and conditions of the chartering arrangement for container ships. They are typically negotiated between the shipowner, who owns the vessel, and the charterer, who will be using the container ship for a specific period or voyage.
• Charter party agreements include various provisions that define important aspects for ship owners. This includes details about freight rates (the cost of hiring the vessel), laytime (the allowed time for loading and unloading cargo), demurrage (additional fees if there is a delay in cargo operations), and other relevant terms.
• Legally binding documents: Once both ship owners agree to the terms outlined in a charter party agreement, it becomes a legally binding document. This means that both ship owners are obligated to fulfill their respective responsibilities as stated in the agreement.

Charter party agreements play a crucial role in the shipping industry by providing clarity and protection for all parties involved. They ensure that both shipowners and charterers understand their rights and obligations throughout the duration of the charter. Whether it’s a slot charter (a partial space booking) or a demise charter (complete transfer of vessel control), these agreements establish clear guidelines for smooth operations.

The Importance of Charter Parties in International Trade

Charter parties play a vital role in facilitating global trade, ensuring the efficient transportation of goods by sea. These agreements establish clear responsibilities and liabilities for both shipowners and charterers, promoting smooth operations and minimizing disputes. Let’s explore why charter parties are crucial in international trade.

• Facilitate global trade by providing vessel availability : Charter parties enable shipowners to make their vessels available for hire, allowing them to meet the demand for transporting goods across borders. This availability ensures that businesses can access reliable shipping services to move their products worldwide.
• Ensure efficient transportation of goods by sea: By defining the terms and conditions of carriage, charter parties help streamline the logistics process for ship owners. They specify loading and unloading procedures, delivery timelines, and any additional requirements for cargo handling. This clarity promotes efficiency and helps avoid delays or misunderstandings during transit, benefiting both shipowners and the overall shipping industry.
• Establish clear responsibilities and liabilities: Charter parties outline the obligations of both shipowners and charterers, ensuring accountability throughout the voyage. They determine who is responsible for vessel maintenance, crew expenses, insurance coverage, and compliance with maritime regulations. Clearly defined responsibilities minimize uncertainties and protect all parties involved.

Charter Parties and Bills of Lading

A bill of lading issued under charter party terms serves as a crucial document for shipowners in the shipping industry. It provides evidence of cargo receipt and condition, making it essential for transferability and financing.

• Under voyage charters or bareboat charters, a bill of lading is often issued to acknowledge the receipt of specific cargo by the shipowner or charterer.
• This document is essential for shipowners and charterers in the shipping industry as it serves as proof that the cargo has been loaded onto the ship and is in good condition. It is particularly important for both bareboat charter and voyage charter party agreements during the specified charter period.
• Charter parties facilitate the agreement between the shipowner (or bareboat charterer) and the charterer, outlining their respective rights and responsibilities.
• The bill of lading acts as a contract between the carrier (shipowner) and the shipper (charterer), ensuring that both parties fulfill their obligations.
• For freight forwarders, having a bill of lading issued under charter party terms allows them to confidently arrange transportation for their clients’ cargo with the ship owner’s assurance.
• The bill of lading also enables financing options for shippers who may need to use it as collateral or provide proof of ownership for obtaining loans during a bareboat charter, slot charter, or voyage charter party within the charter period.
• In addition to its importance in commercial transactions, bills of lading issued under charter parties serve as critical documents for ship owners’ insurance claims related to damaged or lost cargo.

Charter parties and bills of lading are integral components within the shipping industry. They ensure smooth operations, protect stakeholders’ interests, and provide necessary documentation for various purposes.

Ship Speed and Fuel Consumption in Time Charter

Ship speed plays a crucial role in determining fuel consumption within time charter agreements. The rate at which a vessel travels directly impacts the amount of fuel it consumes during its journey. Here are some key points to consider:

• Slow steaming: Slowing down the ship’s speed can significantly reduce fuel costs. By adopting this practice, charter parties can achieve substantial savings. However, it is important to note that slow steaming also extends the duration of the voyage.
• Cost versus time: When deciding on ship speed, charter parties must strike a balance between cost reduction and voyage duration. While slower speeds may result in lower fuel consumption, they can lead to longer transit times, affecting overall efficiency and profitability.
• Fuel efficiency considerations: In time charter agreements, fuel efficiency is a critical factor that influences financial outcomes. Parties involved must carefully evaluate the impact of ship speed on fuel consumption to ensure optimal profitability.

By considering these factors, charter parties can make informed decisions regarding ship speed and its effect on fuel consumption within time charter agreements. Achieving the right balance between cost reduction and voyage duration is essential for maximizing profitability while maintaining operational efficiency.

Understanding Laytime and Total Laytime

Laytime, a crucial aspect of charter parties for ship owners, refers to the time allowed for loading/unloading cargo. It determines the financial implications for both ship owners and other parties involved. Exceeding the laytime incurs demurrage charges, resulting in additional costs for ship owners.

Key points to understand about laytime and total laytime:

• Laytime : Laytime is the agreed-upon period during which the charterer has the right to load or unload cargo. It is typically expressed in days, hours, or even minutes. The clock starts ticking once the vessel arrives at the designated port or berth.
• Demurrage : When laytime is exceeded due to delays caused by either party, demurrage charges come into play. Demurrage refers to the money the charterer paid to compensate for the extra time taken beyond the agreed-upon laytime. This ensures that shipowners are compensated for any lost time and potential revenue.
• Financial Implications : Understanding laytime is essential because it directly impacts both parties’ financial interests. For shipowners, shorter laytimes result in quicker turnaround times and increased efficiency. On the other hand, charterers aim to maximize their use of laytime while avoiding demurrage costs.

By comprehending these concepts related to laytime and total laytime, ship owners and other parties involved in charter parties can effectively manage their operations while minimizing potential financial risks.

Remember: Promptly completing loading or unloading operations within the agreed-upon timeframe helps avoid unnecessary expenses and contributes to smoother logistics processes for all stakeholders involved in the ship charter, slot charter, voyage charter party, and charter party chain.

Safe Port Requirements in Voyage and Time Charters

Voyage charters require the charterer to transport cargo from one port to another by ship. In these agreements, it is crucial for the charterer to ensure that the chosen ports for cargo operations meet certain safety requirements. Similarly, time charters impose an obligation on the charterer to nominate safe ports throughout the duration of the agreement.

The selection of a safe port is crucial for ships due to the potential risks involved. Safety concerns encompass navigational hazards, ship security measures, and infrastructure conditions. By considering these factors, charter parties can mitigate dangers and ensure smooth ship operations.

Here are some key points regarding safe port requirements for ships in both voyage and time charters.

• Charterers must carefully evaluate the safety aspects of each port before initiating cargo operations on their ship.
• When entering a voyage charter party, it is essential to consider navigational hazards such as shallow waters, narrow channels, or unpredictable weather conditions that may be encountered during the ship’s journey.
• Security measures at ports are crucial in safeguarding cargo, whether on a ship or on land, from theft or any other criminal activities.
• The responsibility to nominate safe ship ports lies with the charterer throughout the duration of the contract.
• It is essential for charterers to stay updated on any changes in safety conditions at nominated ports to ensure their ships’ safety.
• Regular communication between all parties involved in the ship ensures that any safety concerns related to the ship are promptly addressed.

Key Takeaways on Charter Parties

Charter parties are critical legal instruments in the maritime industry. They establish rights, obligations, and liabilities between parties involved in international shipping. Here are some key aspects to consider:

• Lesson: Charter parties serve as a vital framework that ensures smooth operations within the maritime sector.
• Aspects: These agreements cover various aspects, including vessel specifications, cargo details, and the duration of the charter.
• News: Staying informed about recent developments and changes in charter party regulations is crucial for all parties involved.
• Details: The terms and conditions outlined in charter parties provide specific details regarding payment terms, insurance requirements, and dispute resolution mechanisms.
• Act: Charter parties act as binding contracts that protect the interests of both shipowners and charterers.
• Fortior: By clearly defining responsibilities and obligations, these agreements fortify relationships between shipowners, charterers, and other stakeholders.

Charter parties play an instrumental role in facilitating international trade by ensuring the efficient transportation of goods across borders. As these agreements govern vital aspects of maritime operations, it is essential for all parties to familiarize themselves with their provisions. Understanding the intricacies of charter parties can help mitigate potential disputes while fostering mutually beneficial relationships within the global shipping community.

Real-world Challenges with Charter Party Disputes

Legal professionals play a crucial role in resolving charter party disputes, which can be complex and challenging. These disputes often arise from breaches of the terms outlined in the charter party agreement. Arbitration is frequently employed as an alternative to court proceedings to settle such disagreements.

The involvement of legal professionals is essential due to the intricate nature of charter party disputes . Breaches of contract terms can lead to various issues, including financial costs, risks, and responsibilities for both parties involved. Here are some examples that highlight the complexities faced in this industry:

• Maintenance Responsibility: Disagreements may arise.
• Demise Charter Issues: A demise charter involves transferring full control and possession of a vessel to another party. However, conflicts may occur regarding the condition or performance of the vessel during this arrangement.
• Country-Specific Practices: Different countries have their own regulations and practices concerning charter parties, leading to potential clashes between international parties.

Arbitration is commonly utilized to settle these disputes outside of traditional court processes. This alternative dispute resolution practice offers several advantages:

• Confidentiality: Arbitration provides a more private setting compared to court hearings.
• Expertise: Parties involved can select arbitrators with specialized maritime law knowledge or specific aspects of their cases.
• Flexibility: The arbitration process allows for tailor-made procedures that suit the unique circumstances of each dispute.

At ANHISA, we have established ourselves as trusted lawyers and counsels for shipowners and charterers involved in charter party disputes. Our extensive experience in practical cases has allowed us to successfully advise and resolve complex situations, such as indemnification requests by shipowners due to early termination breaches.

We understand the importance of finding amicable solutions that benefit all parties involved. However, when negotiations fail, our team at ANHISA is well-equipped to guide shipowners through the arbitration process, ensuring their claims are properly represented.

Our expertise goes beyond shipping knowledge; we possess the technical know-how and strategic insights required to meet our clients’ expectations. With a strong foundation in shipping practice and a track record of working with international and local clients, we are committed to providing efficient, reliable, and personalized service for all your charter party disputes.

If you require assistance in resolving any charter party dispute, do not hesitate to reach out to us for a consultation. We are here to help.

Contact us via:

• Mr. Dang Viet Anh
• Email: [email protected]
• T: +84 28 5416 5873
• M: +84 983 467070

Q1: How can ANHISA assist with charter party disputes?

At ANHISA, we offer comprehensive legal counsel and guidance throughout the process of resolving charter party disputes. From negotiation strategies to arbitration representation, we ensure that our clients’ interests are protected.

Q2: What sets ANHISA apart from other law firms?

ANHISA’s unique advantage lies in our deep-rooted expertise in shipping practice combined with years of experience working with international and local clients. Our team possesses the technical knowledge and insights necessary to navigate complex charter party disputes effectively.

Q3: Can ANHISA help with both voyage and time charter disputes?

Yes, our expertise covers both voyage and time charter disputes. Regardless of the type of charter party involved, we have the knowledge and experience to provide tailored solutions for our clients.

Q4: How long does resolving a charter party dispute typically take?

The duration of resolving a charter party dispute can vary depending on the case’s complexity and the parties’ willingness to reach a settlement. At ANHISA, we strive to expedite the process while ensuring thorough representation for our clients.

Related posts

Mr. Đặng Việt Anh is one of the key speakers at Advanced Mediation Skills Training Course organized by the Vietnam Mediation Center (VMC)

April 10, 2024

Ship Arrest in Vietnam? ANHISA – Your Trusted Legal Services

April 02, 2024

Bills of Lading: Importance for International Shipping 

March 19, 2024

Mediators’ Role in Alternative Dispute Resolution (ADR) 

March 13, 2024

What is Alternative Dispute Resolution (ADR) – ANHISA International Law Firm

March 03, 2024

• [email protected]
• [email protected]
• Hanoi Office: +84 24 320 47609
• Saigon Office: +84 28 5416 5873
• +84 (0) 939 117 398
• +84 (0) 983 488 380

© 2022 Anhisa LLC

The ins and outs of ship chartering

Ship chartering is the hiring out the use of a ship by a vessel owner to another company, the charterer, for the transportation of goods. It may sound straightforward enough, but in practicality, it’s anything but simple. There are many different types of charter contracts, various cost components, and of course many different players involved. In this article, we’ll breakdown the ins and outs of chartering, covering how it works, who’s involved and how costs are divided.

• The main players

The two main players in ship chartering are the ship owner and the charterer. There are others as well, the most important being the ship broker. There is also the shipping agent who takes care of the essential in-port details and the ship manager, who takes care of operating and crewing the vessel on behalf of the owner for a fee.

It should be noted that the term charter party refers to the contract itself, and not to the parties entering into the contract. The charter party defines the rate, duration, and terms agreed between the ship owner and the charterer.

The ship owner provides the means for transporting cargo from one port to another. The Charterer enters into a contract with the owner to hire the ship, or space in the ship, for transporting his cargo. In some cases a charterer may own the cargo and employ a ship broker to find a suitable vessel to deliver the cargo for a certain price, called the freight rate.

The charterer may also not have his own cargo, but instead charters a vessel for a certain period of time and trades the ship to carry cargoes at a profit. He can also sub-hire the ship to other charterers in positive market conditions.

The ship broker is essentially a middleman who connects the principals in order to earn a brokerage fee. He can represent either the owner or the charterer in negotiations, and usually specialises in specific areas of cargo carrying. For example, a dry cargo broker focuses on the chartering of bulk carrier vessels. He can represent either an owner looking for a charterer, or a charterer seeking a suitable vessel for shipping his cargo.

Similarly, and as the name suggests, a tanker broker specialises in chartering tanker vessels and has a good understanding of the specific needs for transporting crude oil, gas, oil products, or chemicals.

Shipping Agents are designated to take responsibility for handling shipments and cargoes at the ports on behalf of the owners, fleet managers, and charterers. They handle the essential routine tasks, such as crew transfers, customs documentation, waste declarations and so on, working closely with port authorities. They can also provide detailed information on activities at the destination port, so that the shippers can be aware of situations while the goods are in transit.

• Types of charters

The three most common types of charter contracts are the voyage charter, the time charter, and the demise (or bareboat) charter.

Voyage Charter

The basic hiring of a vessel and its crew for a voyage between the port of loading and the port of discharge is known as a voyage charter. In this type of contract, the ship owner is paid by the charterer either on a per-ton basis, or as a lump sum. Port costs, with the exception of stevedoring, fuel costs, and the crew costs are paid by the owner, and payment for the use of the vessel is known as freight.

Under the terms of a voyage charter, a specific time is agreed for the loading and unloading of the cargo. This is known as laytime, which, if exceeded, obliges the charterer to pay demurrage. Conversely, if laytime is saved, the owner may have to pay despatch to the charterer.

There is also a consecutive voyages clause. This is used when one voyage follows another immediately for an agreed number of voyages within a specific timeframe. The ship is thus going back and forth with an agreed cargo between agreed ports.

Time Charter

A time charter refers to the hiring of a vessel for a specific period of time. Here, the owner still manages the ship, but the charterer selects the ports, decides the routing, and has full operational control of the vessel for the duration of the contract. He pays the fuel costs, port charges, cargo handling costs, commissions, and a daily hire fee.

There is also a trip time charter covering a specific voyage route only for the transportation of a specific cargo. It can be said to be a combination of a voyage charter and a time charter. The responsibilities are similar to those with a time charter (the fixed costs being paid by the owner and the variable costs by the charterer), but as with a voyage charter, the period of the contract depends upon when the voyage is completed.

The Demise Charter

Under the terms of a demise charter, also known as a bareboat charter, the charterer has full control of the vessel. Apart from the capital cost of building the vessel, which is the owner’s responsibility, all other costs including fuel, crew, port charges and insurance, are paid by the charterer. The legal and financial responsibility for the vessel rests with the charterer.

Under the demise clause, the contract can be for long period charters lasting for many years. This is fairly common for tankers and bulk carriers. It can be a form of hire-purchase whereby the charterer eventually acquires ownership of the vessel.

In the leisure industry, the term used is Bareboat Yacht Charter and the Demise Charter term is not used. It is normally a short-term charter for a matter of weeks only. Here, the owner supplies the yacht fully fuelled and in seaworthy readiness. The charterer is expected to pay for the fuel consumed.

Contract of Affreightment

Finally, there is what is known as a contract of affreightment. This is not strictly a charter contract, but is somewhat similar to a voyage charter. Under this type of contract, the owner agrees to transport the goods for the charterer on a specified route and for a specific period of time. More than one ship can be used and, in contrast to a true charter, there is no laytime period and no demurrage is payable.

• Who pays what?

There are various cost components applicable to all charter contracts. These can be summarized as follows:

In all cases, the owner is responsible for the capital cost of building and equipping the ship. The operating costs (OPEX), i.e. operating and maintaining the ship and complying with all applicable rules and requirements, are also paid by the owner in voyage and time charters. In demise charters, however, the operating costs are paid by the charterer.

Periodic costs are those that are incurred at certain intervals of time. These include, for example, periodic technical inspections and surveys for class classification purposes. Here again, the owner is responsible with time and voyage charters, but not for demise charters. In demise charters, it is the charterer who pays such periodic costs.

Voyage costs cover the fuel, any right of passage dues, such as canal dues, towage and piloting costs, as well as port agency costs. With time and demise charters, the voyage costs are paid by the charterer. Only in voyage charters are these costs paid by the owner.

The same is true of cargo handling costs – the cost of loading and discharging the cargo. With time and demise charters this is the responsibility of the charterer, while the owner pays these costs only with voyage charters.

Sign up for our newsletter for latest news, insights and innovations

Charter Party Agreements

Img is one of the only law firms in the pacific northwest that focuses on both the transactional side and the litigation side of charter party agreements..

Different charter parties impose different obligations, exclusions, and limitations between each entity. For this reason, both shipowners and charterers should consider seeking sound and practical legal advice before drafting, amending or complementing any time charter, voyage charter, or bareboat charter party. During a contentious charter party dispute, shipowners and charterers should be especially aware of their legal exposures and contractual liabilities.

With experience in bareboat, time and voyage charters, contracts of affreightment and slot charters, dry bulk and containerized cargoes, oil, gas and products, IMG regularly acts on behalf of the region’s largest shipowners and charterers. Indeed, our expertise in transactional and contentious charter party matters gives us an invaluable perspective – we can foresee the problems that might arise and take steps to avoid them. Need help understanding your legal rights in a charter party contract? IMG can help.

or call   (206) 707-8338 to speak to a legal expert.

Bareboat Charters – What you need to know

Strapped for capital but want to expand your fishing fleet?  Bareboat charters can be a great financial alternative, provided you understand your liability.  

Frequent Charters We Advise Upon

Time Charters

Time chartering is a complex business. The shipowners give the time charterers substantial control over the commercial operation of the vessel in exchange for the regular payment of hire. While this arrangement suggests that the shipowners have transferred much of the potential operational risk to the charterers and that the charterers can do more or less what they like with the ship, such an initial impression on behalf of the time charterer is both deceptive and dangerous.

If you would like clarification of your rights and liabilities as either a time charterer or a shipowner, IMG can help.

Voyage Charters

Voyage charters are the most commonly used charter party agreement. Under a voyage charter, a ship owner and a charterer enter into a contract whereby the vessel will carry cargo between two points. The voyage can be a single trip or multiple trips, provided that the charterer has absolutely no operational control over the vessel while it is being operated. Any delays during the loading and unloading of the cargo, as well as any delays during the seagoing part of a voyage, generally fall onto the vessel owner. Many charterers prefer this allocation of risk.

Bareboat Charters

A bareboat charter is the simplest type of charter party agreement. Under a bareboat charter (a.k.a. “demise charter”), the charterer effectively becomes the owner of the vessel for all operational and trading purposes, and thus, is responsible for the navigation, operation, repair, maintenance, insurance, and crew of the vessel.

Despite an appearance of simplicity, bareboat charters are complex agreements, and numerous problems can arise during their use. Owners and charterers should seek sound legal advice before drafting or amending a bareboat charter.

What to Expect From Your Legal Team

• We provide practical, commercial and results-driven advice on a discreet and confidential basis.
• All assignments will have a nominated lead partner who will be your dedicated point of contact.
• We will work to your agenda, timescales and budgets to achieve the best outcome.
• We would expect to be your trusted adviser during the process and our industry knowledge and reputation will facilitate a direct and open dialogue between all stakeholders.

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.

Share this:

Related blogs, follow us today on our social network.

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.

Search Blog

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.

Leave Comment

More things to do on myseatime.

MySeaTime Blogs

Learn the difficult concepts of sailing described in a easy and story-telling way. These detailed and well researched articles provides value reading for all ranks.

Seafarers Question Answers

Ask or answer a question on this forum. Knowledge dies if it remains in our head. Share your knowledge by writing answers to the question

MySeaTime Podcast

This podcast on the maritime matters will provide value to the listeners. Short, crisp and full of value. Stay tuned for this section.

Voyage Charter: Laytime and Demurrage

• First Online: 02 September 2021

Cite this chapter

• Arun Kasi 2  

750 Accesses

This chapter covers laytime and demurrage in voyage charterparties. The various laytime definitions such as weather working day, etc and the charterer’s obligations arising from the laytime clause are considered.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

• Available as PDF
• Read on any device
• Instant download
• Own it forever
• Available as EPUB and PDF
• Compact, lightweight edition
• Dispatched in 3 to 5 business days
• Free shipping worldwide - see info
• Durable hardcover edition

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Box 16 and cl. 6(a) and (b).

E.g. Stolt Tankers v Landmark [2002] 1 Lloyd’s Rep 786 (EW HC).

[1908] 1 KB 499 (EW CA).

[1963] AC 691 (UK HL).

Reardon Smith Line Ltd v Ministry of Agriculture, Fisheries and Food [1963] AC 691 (UK HL).

Dow Chemical (Nederland) BV v BP Tanker Co Ltd (The Vorras) [1983] 1 Lloyd’s Rep 579 (EW CA).

Margaronis Navigation Agency Ltd v Henry W Peabody & Co of London Ltd (The Vrontados) (HC) [1965] 1 QB 300, [1964] 2 All ER 296 (EW HC).

Another similar decision was reached in Total Transport Corporation v Arcadia Petroleum Ltd (The Eurus) [1996] 2 Lloyd’s Rep 408 (EW HC).

(1868) LR 2 QB 566 (EW HC), affirmed by the Court of Appeal in (1868) LR 3 QB 412 (EW CA).

[2015] SGCA 37, [2015] 5 SLR 178 (SG CA).

Houlder v General SN Co (1862) 3 F&F 170.

Christensen v Hindustan Steel [1971] 1 Lloyd’s Rep 395 (EW HC).

Compania de Naviera Nedelka SA v Tradax International SA of Panama City RP (The Tres Flores) [1974] QB 264, [1973] 2 Lloyd’s Rep 247, [1973] 3 All ER 967, [1973] 3 WLR 545 (EW CA).

Cobelfret NV v Cyclades Shipping Co Ltd (The Linardos) [1994] 1 Lloyd’s Rep 28 (EW HC).

Surrey Shipping Co Ltd v Compagnie Continentale (France) SA (The Shackleford) [1978] 1 WLR 1080, [1978] 2 Lloyd’s Rep 154 (EW CA).

Transgrain Shipping BV v Global Transporte Oceanico SA (The Mexico 1) (CA) [1990] 1 Lloyd’s Rep 507 (EW CA).

Ocean Pride Maritime Ltd Partnership v Qingdao Ocean Shipping Co (The Northgate) [2007] EWHC 2796 (Comm), [2008] 2 All ER (Comm) 330 (EW HC).

Sofial SA v Ove Skou Rederi (The Helle Skou) [1976] 2 Lloyd’s Rep 205 (EW HC).

Glencore Grain Ltd v Flacker Shipping Ltd (The Happy Day) [2002] EWCA Civ 1068, [2002] 2 All ER (Comm) 896, [2002] All ER (D) 219 (Jul), [2002] 2 Lloyd’s Rep 487 (EW CA).

E.g. Pteroti Cia Nav SA v National Coal Board [1958] 1 QB 469 (EW HC); Glencore Grain Ltd v Goldbeam Shipping Inc; Goldbeam Shipping Inc v Navios International Inc (The Mass Glory) [2002] EWHC 27 (Comm), [2002] 2 Lloyd’s Rep 244 (EW HC).

It is not compulsory that the destination point stipulated in the charterparty is a port or berth. It can also be other places like a sea mooring buoy or customary anchorage.

Cl. 6(c) (para 2).

Novologistics SARL v Five Ocean Corp (The Merida) [2009] EWHC 3046 (Comm), [2010] 1 Lloyd’s Rep 274 (EW HC).

Bulk Transport Group Shipping Co Ltd v Seacrystal Shipping Ltd (The Kyzikos ) [1989] AC 1264, [1988] 3 All ER 745, [1989] 1 Lloyd’s Rep 1 (UK HL).

[1950] 2 KB 194 (EW CA).

Oldendorff (E L) & Co GmbH v Tradax Export SA (The Johanna Oldendorff) [1974] AC 479, [1973] 3 All ER 148 (UK HL).

Federal Commerce and Navigation Co Ltd v Tradax Export SA (The Maratha Envoy) [1978] AC 1, [1977] 2 All ER 849 (UK HL).

See also Federal Commerce and Navigation Co Ltd v Tradax Export SA (The Maratha Envoy) [1978] AC 1, [1977] 2 All ER 849 (UK HL).

Navalmar UK Ltd v Kale Maden Hammaddeler Sanayi Ve Ticart AS (The Arundel Castle) [2017] EWHC 116 (Comm), [2017] 2 All ER (Comm) 1033, [2017] 1 Lloyd’s Rep 370 (EW HC).

There are a few LMAA awards that recognise this proposition. See Feoso (Singapore) Pte Ltd v Faith Maritime Co Ltd (The Daphne L) [2003] SGCA 34, [2003] SLR 556 (SG CA).

Bulk Transport Group Shipping Co Ltd v Seacrystal Shipping Ltd (The Kyzikos) [1989] AC 1264, [1988] 3 All ER 745, [1989] 1 Lloyd’s Rep 1 (UK HL).

[2011] EWHC 1361 (Comm), [2011] 2 Lloyd’s Rep 278 (EW HC).

North River Freighters Ltd v HE President of India (North River) [1956] 1 QB 333 (EW CA); Ionian Navigation Company Inc v Atlantic Shipping Company SA (The Loucas N) [1971] 1 Lloyd’s Rep 215 (EW CA); Aldebaran Compania Maritime SA, Panama v Aussenhandel AG Zurich (The Darrah) [1977] AC 157, [1976] 2 All ER 963 (UK HL); Freight Connect (S) Pte Ltd v Paragon Shipping Pte Ltd [2015] SGCA 37, [2015] 5 SLR 178 (SG CA).

Agios Stylianous Compania Naviera SA v Maritime Associates International Ltd Lagos (The Agios Stylianos) [1975] 1 Lloyd’s Rep 426 (EW HC).

Government of Ceylon v Societe Franco-Tunisienne D’armement-Tunis (The Massalia) (No. 2) [1960] 2 Lloyd’s Rep 352 (EW HC).

[2011] EWHC 1165 (Comm), [2011] 2 Lloyd’s Rep 177 (EW HC).

Aldebaran Compania Maritime SA, Panama v Aussenhandel AG Zurich (The Darrah) [1977] AC 157, [1976] 2 All ER 963 (UK HL).

The House of Lords overruled The Radnor [1955] 2 Lloyd’s Rep 668 (EW CA). The Radnor treated ‘time lost’ that did not admit laytime definition and exceptions when dealing with ‘time lost’ clauses.

Huyton SA v Inter Operators SA (The Stainless Emperor) [1994] 1 Lloyd’s Rep 298 (EW HC).

Moerland (Arnt J) K/S v Kuwait Petroleum Corpn (The Fjordaas) [1988] 2 All ER 714, [1988] 1 Lloyd’s Rep 336 (EW HC).

Seatrade Group NV v Hakan Agro DMCC (The Aconcagua Bay) [2018] EWHC 654 (Comm), [2018] 2 All ER (Comm) 843 (EW HC).

Inca Compania Naviera SA and Commercial and Maritime Enterprises Evanghelos P Nomikos SA v Mofinol Inc (The President Brand) [1967] 2 Lloyd’s Rep 338 (EW HC); Nereide SpA di Navigazione v Bulk Oil International (The Laura Prima) [1982] 1 Lloyd’s Rep 1 (UK HL).

Shipping Developments Corpn v v/o Sojuzneftexport (The Delian Spirit) [1972] 1 QB 103, [1971] 2 WLR 1434, [1971] 1 Lloyd’s Rep 506 (EW CA).

Inca Compania Naviera SA and Commercial and Maritime Enterprises Evanghelos P Nomikos SA v Mofinol Inc (The President Brand) [1967] 2 Lloyd’s Rep 338 (EW HC).

Oldendorff (E L) & Co GmbH v Tradax Export SA (The Johanna Oldendorff) [1974] AC 479, [1973] 3 All ER 148 (UK HL). See Chapter  14.4.2.1 for a discussion of this case.

Nereide SpA di Navigazione v Bulk Oil International (The Laura Prima) [1982] 1 Lloyd’s Rep 1 (UK HL).

The compensation payable by the charter, rightly, will be damages for detention, which may most of the time be same as the demurrage, unless the market rates have differed since the charterparty was entered into.

Sunbeam Shipping Co Ltd v President of India (The Atlantic Sunbeam) [1973] 1 Lloyd’s Rep 482 (EW HC): the charterer had a duty to secure ‘jetty challan’ for the ship to enter the port, where that was a requirement of the port authority.

Sociedad Financiera De Bienes Raices Sa v Agrimpex Hungarian Trading Company for Agricultural Products [Appeal in The Aello] [1961] AC 135, [1960] 3 WLR 145 (UK HL).

It follows that the ship could not issue notice of readiness.

Malaysian Contracts Act 1950.

Section 68 of the Malaysian Contracts Act 1950 identically provides.

See Chapter  12.6.1 .

Cl. 6(3) (para 2).

Tidebrook Maritime Corp v Vitol SA of Geneva (The Front Commander) [2006] 2 Lloyd’s Rep 251 (EW CA), speech of Rix JL: where the charterer requires early notice of readiness, the charter sanctions early commencement of laytime.

TA Shipping Ltd v Comet Shipping Ltd (The Agamemnon) [1998] 1 Lloyd’s Rep 675 (EW HC).

Galaxy Energy International Ltd v Novorossiysk Shipping Co (The Petr Schmidt) [1997] 1 Lloyd’s Rep 284 (EW HC), affirmed by the Court of Appeal in [1998] 2 Lloyd’s Rep 1 (EW CA).

See Tidebrook Maritime Corp v Vitol SA of Geneva (The Front Commander) [2006] EWCA Civ 944, [2006] 2 All ER (Comm) 813, [2006] 2 Lloyd’s Rep 251 (EW CA); Total Transport Corporation v Arcadia Petroleum Ltd (The Eurus) [1996] 2 Lloyd’s Rep 408 (EW HC).

[2010] EWCA Civ 713, [2010] 2 Lloyd’s Rep 257 (EW CA).

See Trafigura Beheer BV v Ravennavi SpA (The Port Russel) [2013] EWHC 490 (Comm), [2013] 2 Lloyd’s Rep 57 (EW HC).

Cl. 16 of Gencon 1994 form has detailed provision dealing with strikes.

Grant & Co v Coverdale, Todd & Co (1884) 9 App Cas 470, 53 LJQB 462 (UK HL).

Navrom v Callitsis Ship Management SA (The Radauti) [1988] 2 Lloyd’s Rep 416 (EW CA).

Cl. 6(c) (para 2): “… Time used in moving from the place of waiting to the loading/ discharging berth shall not count as laytime. …”

[1925] AC 799, [1925] All ER Rep 607 (UK HL).

Gem Shipping Co of Monrovia v Babanaft (Lebanon) SARL (The Fontevivo) [1975] 1 Lloyd’s Rep 339 (EW HC).

Blue Anchor Line Ltd v Alfred C Toepfer International GmbH (The Union Amsterdam) [1982] 2 Lloyd’s Rep 432 (EW HC).

Overseas Transportation Co v Mineralimportexport (The Sinoe) [1971] 1 Lloyd’s Rep 514 (EW HC), affirmed by the Court of Appeal in [1972] 1 Lloyd’s Rep 201 (EW CA).

[1920] AC 88 (UK HL).

[2002] 1 Lloyd’s Rep 786 (EW HC).

[1927] 1 KB 879 (EW CA).

[1905] 2 QB 267 (EW HC).

Universal Cargo Carriers Corp v Citati [1957] 2 QB 401 (EW HC).

Inverkip SS Co v Bunge [1917] 2 KB 193 (EW CA).

Wilson & Coventry Ltd v Otto Thoresen Linie [1910] 2 KB 405 (EW HC).

See Chapter  13.7 .

[2003] SGCA 34 (SG CA).

Dias Cia Naviera SA v Louis Dreyfus Corpn (The Dias) [1978] 1 All ER 724, [1978] 1 WLR 261 (UK HL).

Dias Cia Naviera SA v Louis Dreyfus Corpn (The Dias) [1978] 1 All ER 724; Nippon Yusen Kaisha v Marocaine de L’Industrie du Raffinage (The Tsukuba Maru) [1979] 1 Lloyd’s Rep 459.

Rich (Marc) & Co Ltd v Tourloti Cia Naviera SA (The Kalliopi A) [1988] 2 Lloyd’s Rep 101 (UK CA).

DGC Commodities Corp v Sea Metropolitan SA (The Andra) [2012] EWHC 1984 (Comm), [2012] 2 Lloyd’s Rep 587 (EW HC).

Which is identical to Article IV(2) of the Hague/Hague-Visby Rules.

K Line PTE Ltd v Priminds Shipping (HK) Co Ltd (The Eternal Bliss) [2020] EWHC 2373 (Comm), [2020] 9 WLUK 40 (EW HC).

Part II, cl. 15(c)

National Shipping Co of Saudi Arabia v BP Oil Supply Co (The Abqaiq) [2011] EWCA Civ 1127, [2012] 1 Lloyd’s Rep 18 (EW CA).

Waterfront Shipping Company Ltd V Trafigura AG (The Sabrewing) [2007] EWHC 2482 (Comm), [2008] 1 Lloyd’s Rep 286 (EW HC).

The Petroleum Oil and Gas Corporation of South Africa (Pty) Ltd v Fr8 Singapore Pte Ltd (The Eternity) [2009] 1 Lloyd’s Rep 107 (EW HC).

Emeraldian Ltd Partnership v Wellmix Shipping Ltd (The Vine) [2010] EWHC 1411 (Comm), [2011] 1 Lloyd’s Rep 301 (EW HC).

Nolisement (Owners) v Bunge and Born [1916-17] All ER Rep 734, [1917] 1 KB 160 (EW CA).

Zim Israel Navigation Co Ltd v Tradax Export SA (The Timna) [1971] 2 Lloyd’s Rep 91 (EW CA).

[1951] 1 KB 240, [1950] 1 All ER 768 (EW HC).

Author information

Authors and affiliations.

Arun Kasi & Co, Kuala Lumpur, Malaysia

You can also search for this author in PubMed   Google Scholar

Corresponding author

Correspondence to Arun Kasi .

Rights and permissions

Reprints and permissions

Copyright information

© 2021 The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd.

About this chapter

Kasi, A. (2021). Voyage Charter: Laytime and Demurrage. In: The Law of Carriage of Goods by Sea. Springer, Singapore. https://doi.org/10.1007/978-981-33-6793-7_14

Download citation

DOI : https://doi.org/10.1007/978-981-33-6793-7_14

Published : 02 September 2021

Publisher Name : Springer, Singapore

Print ISBN : 978-981-33-6792-0

Online ISBN : 978-981-33-6793-7

eBook Packages : Law and Criminology Law and Criminology (R0)

Share this chapter

Anyone you share the following link with will be able to read this content:

Sorry, a shareable link is not currently available for this article.

Provided by the Springer Nature SharedIt content-sharing initiative

• Publish with us

Policies and ethics

• Find a journal
• Track your research

Chartering is a process where people working for a shipowner, operator, cargo owner or trader try to optimize the freight revenues for a portfolio of vessels and cargoes.  Understanding the nuances of chartering is vital to make the process of moving goods around the globe in an efficient and cost-effective way.  In this article we will provide you with a brief overview of some elements of the process.

Chartering a ship is the process of hiring out the use of a ship by a vessel owner to another company, the charterer, for the transportation of goods.

PartiesInvolved in Chartering: Ship owner/operator: The entity providing the ship.

Charterer: The entity who controls the cargo and is renting the vessel for transportation.

Ship broker: A middleman who provides market information and connects charterers with vessel owners/operators

‍ Types of Charter: Voyage Charter: This is the most common type of ship charter. A voyage charter normally involves renting the vessel as well as its crew for a particular voyage between two or more ports. The rent will be based on the quantity or weight of the cargo that is carried on the voyage or it could be a fixed amount that is agreed upon between the parties.All costs related to the voyage are paid by the owner, and payment for the use of the vessel is known as freight.

Time Charter: In this type of charter, the charterer hires the vessel for a specific period of time, usually several months to a few years. The charterer pays hire for the use of the vessel, as well as voyage related costs. The owner is responsible for the vessel's crew, maintenance and insurance.

Bareboat Charter: The charterer has full control of the vessel. Apart from the capital cost of building the vessel, which is the owner’s responsibility, all other costs including fuel, crew, port charges, maintenance and insurance, are paid by the charterer.

The ship chartering process: Identifying Needs: The first step in the chartering process is determining the specific shipping requirements. Identify factors such as type of cargo, route, port restrictions, and schedule.

Selecting a Broker: Most companies work with shipbrokers who specialize in matching charterers with ship owners. Brokers will have extensive knowledge about available ships, their condition, and the current market level for freight.

Finding Potential Vessels: The next steps involves identifying suitable vessels based on size, quality, age, and the desired timeline.  The broker will approach the ship owners with the cargo requirement and ask for the owners offer (the freight they want for transporting the cargo or the hire they want to rent out their ship on timecharter).  When one or more offers have been received the negotiations will commence.

Negotiating Terms: This involves agreeing on the charter rate, laytime (the total time allowed for loading and discharging the cargo),demurrage (the overtime payment if laytime has expired), and other specific terms outlined in the charter party agreement.

Charter Party Agreement: Once the negotiations are concluded, a charter party agreement is established. This legacy binding document outlines the terms and conditions of the charter, including the type of charter(voyage or time), the terms of payment, responsibilities and any additional terms.

The ship chartering process is an efficient way of making sure that vital goods are transported around the globe. It is a process that has evolved over manycenturies and will continue to develop as the world-trade continues to grow.

More shipping academy lessons

Statement of facts, notice of readiness (nor), demurrage and despatch, bill of lading, standard charterparties, shipbrokers, ship operations, ship agents, bunker suppliers, charterparty.

Information

Helpful links.

You are using an outdated browser. Please upgrade your browser to improve your experience and security.

• Eyes on 2024
• Our Services
• Our Knowledge
• Our Offices
• Arbitration
• Banking & Finance
• Capital Markets
• Competition
• Construction & Infrastructure
• Corporate / Mergers & Acquisitions
• Corporate Services
• Corporate Structuring
• Digital & Data
• Dispute Resolution
• Employment & Incentives
• Family Business
• Innovation, Patents & Industrial Property (3IP)
• Intellectual Property
• International Litigation
• Legislative Drafting
• Private Client Services
• Private Equity
• Private Notary
• Real Estate
• Shipping, Aviation & Logistics
• Sustainable Business
• Turnaround, Restructuring & Insolvency
• Venture Capital & Emerging Companies
• White Collar Crime & Investigations
• Defence & Security
• Energy & Resources
• Financial Services
• Healthcare & Life Sciences
• Hotels & Leisure
• Real Estate & Construction
• Retail & Consumer
• Sports & Events Management
• Technology, Media & Telecommunications
• Transport & Logistics
• Doing Business in MENA
• Podcasts: Tamimi Talks
• Video Gallery
• Eyes on 2024: Legal Updates in MENA
• Publications
• Saudi Arabia
• United Arab Emirates

Select Your Region

Find a Lawyer

Book an appointment with us, or search the directory to find the right lawyer for you directly through the app.

Committed to a Sustainable Future

We are excited to unveil our inaugural Environmental, Social, and Governance (ESG) Report, highlighting our dedication to responsible and sustainable business practices. 

From our efforts on cutting carbon emissions to promoting diversity and inclusion initiatives, offering pro bono legal aid, and aiding local communities, each initiative underscores our profound commitment to fostering positive change in our communities and beyond.

Delve into our journey of progress and future aspirations.

The leading law firm in the Middle East & North Africa region.

• Responsible Business
• Our Partners

A complete spectrum of legal services across jurisdictions in the Middle East & North Africa.

• All Practices
• All Sectors
• Sports and Events Management
• Technology, Media and Telecommunications
• Transport and Logistics
• All Country Groups

Today's news and tomorrow's trends from around the region.

17 offices across the middle east & north africa..

• All Locations

Our Firm Back

Our services back, our knowledge back, our offices back.

• September 2012

A shipowners duty to provide a seaworthy ship under the charterparty

Saif Almobideen

It is worth noting initially that the Shipowners Duties are the Charterers’ Rights, the various duties of the Shipowners can be summarised as follows:

• To provide a seaworthy ship which complies with the charterparty description;
• To properly and carefully load, handle, stow, carry, keep, care for, discharge and deliver the cargo;
• To comply with charterers’ legitimate employment instructions;
• To prosecute voyages with reasonable dispatch

THE DUTY TO PROVIDE A SEAWORTHY SHIP:

Most of contracts of carriage “particularly charterparties” provide expressly that the ship should be seaworthy. For instance,  clause 1 of ASBATANKVOY provides that “…and being seaworthy and having all pipes, pumps and heater coils in good working order, and being in every respect fitted for the voyage…”

Notwithstanding that, other clauses in the charterparties may not mention the seaworthiness expressly but nevertheless, have the same effect. For example; clause 2.1 of BPTIME states that; “Upon delivery the vessel shall be tight, staunch and strong and in every way fit for service…”

Even if there is no express seaworthiness clause, the duty to provide a seaworthy ship is, nevertheless, implied at law.

It was provided in Kopitoff v Wilson, [ (1876)  1 QBD 602 ], that “The shipowner is, by nature of the contract, impliedly and necessarily held to warrant that the ship is good, and is in a condition to perform the voyage then about to be undertaken, or, in ordinary language, is seaworthy, that is, fit to meet and undergo the perils of the sea and other incidental risks to which she must necessarily be exposed in the course of the voyage.”

Moreover, the same was enacted at the UAE Maritime Law , Article 227 under Section 2 of Chartering the Vessel for a Voyage, which provides: “The disponent owner must put the vessel in question at the disposal of the charterer at the time and place agreed in a seaworthy condition and properly equipped in such a manner as to carry out the voyage or voyages specified in the charter-party and likewise he must keep the vessel in such condition throughout the voyage or voyages the subject of the charterparty”. In addition Article 245 Section 3 “Time Charter” and Article 253 section 4 “Bareboat Charter” of the said law, provided the same wordings of the aforesaid article.

However, the same duty to provide a seaworthy vessel was lessened for the carrier, to only provide a seaworthy vessel before and at the commencement of each voyage, as per Article 272 (1) of the said law which provides that: “1. The carrier must before setting sail and upon the commencement of a voyage use the necessary care to put the vessel in a seaworthy condition and to fit it out, man it and provision it properly. He must prepare the holds and cold rooms and other parts of the vessel to receive, carry and preserve the goods”.

What is seaworthiness?

It was stated by Channell J in McFadden v Blue Star Line, [(1905) 1 KB 697], that: “A vessel must have that degree of fitness which an ordinary careful and prudent owner would require his vessel to have at the commencement of her voyage having regard to all the probable circumstances of it…Would a prudent owner have required that it (i.e. the defect) should be made good before sending his ship to sea, had he known of it? If he would, the ship was not seaworthy…”

Accordingly, the essential standard of seaworthiness depends not only upon physical fit, but also to the nature and age of the ship, the type of the carried cargo, the manner of voyage envisaged, and all other relative conditions.

It is worth noting that the following examples would amount to unseaworthiness breach of duty;

•  An incompetent crew
• A crew which is insufficiently instructed or insufficient in numbers
• Out of date charts
• Insufficient bunkers for the voyage (depends on the type of charterparty).
• Stowage which affects the safety of the ship.
• Deficient systems ashore or on board.
• The absence of documents required by law (including local law) for the satisfactory prosecution of the contemplated voyage e.g.  a deratting certificate.
• SMS or ISPS certificates are likely to be treated in the same way; however, documents which are not required by law (e.g. ITF Blue Cards) may not render the ship unseaworthy [The Derby (1985) 2 Ll. Rep 325].

What is Uncargoworthiness?

Cargoworthiness is categorised under the seaworthiness requirements, the vessel must be in every way reasonably fit to receive and carry the contemplated cargo in order to be considered as a seaworthy vessel. It was stated as well in “The Good Friend” [ (1984) 2 Ll. Rep 586] that the ship would be considered as uncargoworthy due to the presence on board of other cargoes which may affect the potential cargo.

The same was stipulated impliedly under Article 234 of the UAE Maritime Law, which provides that; “It shall not be permissible for the disponent owner to load upon the vessel or upon the part thereof which is chartered goods which are not the charterer’s without the charterer’s consent, otherwise the freight for the goods loaded without consent shall belong to the charterer who shall also have the right to claim compensation for damages if appropriate”.

Doctrine of Stages

It is crucial to tackle the issue of Doctrine of Stages, since the voyage might be performed in stages; therefore, the shipowner’s duty is to ensure that the ship is seaworthy for/ and in each stage prior the commencement of that stage.

For instance, a ship should be considered seaworthy with regards to stage 2 of a voyage, even if she does not have enough bunkers when leaving stage 1 to complete stage 2, provided that the carrier is able to obtain further bunkers at the end of stage 1.

Unseaworthiness gives rise to civil liability only if it actually causes loss or damage, and / or addressed in the charterparty, pursuant to Article 228 of the UAE Maritime Law. Bearing in mind that if loss or damage has been caused partly by unseaworthiness and partly by some other factors for which the carrier has a defence under the contract of carriage, or the applicable regime, then the carrier is not entitled to rely on that defence unless he can prove precisely the extent of the damage/loss has been caused solely by the exempted event.[ Smith Hogg v Black Sea (1940) AC 99].

Article 228 of the UAE Maritime Law provides expressly that: “The lessor shall be liable for any damages arising to the goods received by the master on board the vessel within the provisions of the charter-party, unless it is established that the lessor fulfilled his duties referred to in the preceding and the damage did not arise from his default.” Accordingly, the aforesaid article affirms the principal that a shipowner shall not be liable to any loss or damages arise to the cargo, if so proved that he exercised his duty of providing a seaworthy ship.

When is seaworthiness relevant?

Seaworthiness timing issue is significantly relevant in the absence of express terms to the contrary, which becomes as an implied duty. Under the common law, the carrier is under a duty to provide a seaworthy ship at the commencement of the cargo loading in order to consider his vessel as a cargoworthy vessel satisfies the purpose of the charterparty, and at the commencement of the voyage to be considered as a seaworthy.

However, where there are some express terms to the contrary, the carrier’s duty will depend upon the construction of the particular term. Such duty might commence at the date of the charter, as provided for example in line 5 of NYPE, or the date of delivery into the charter (e.g. clause 2.1 of BPTIME) or, additionally, throughout the charter (e.g. clause 1 of BPVOY 4).

On the other hand, under the perspective of the UAE Maritime Law, Articles 227, 245 and 253 require the shipowner to provide a seaworthy vessel at the agreed time and location in the charterparty and shall continue throughout the voyage(s). However, with regard to the carrier, the same has a duty to provide a seaworthy vessel before and at the commencement of the voyage, pursuant to Article 272 of the aforesaid law.

How does the duty considered to be broken?

The duty to provide a seaworthy ship will be considered as breached/broken in various situations depending upon the applicable regime.

Firstly; in the absence of (a) The Hague or Hague-Visby Rules; or (b) express terms to the contrary in the charterparty; the carrier’s duty is to provide a seaworthy vessel in fact. Therefore, if the vessel is not seaworthy in fact then the  carrier shall be liable if the unseaworthiness caused loss or damage to the cargo, even if the defect was latent and not discoverable by due diligence.

Secondly; When The Hague or Hague-Visby Rules are applicable, then the severe duty aforementioned shall be replaced by a mere duty to exercise due diligence to ensure that the vessel is seaworthy before and at the commencement of the voyage, by a virtue of Article III and IV rule 1 of the Hague/ Hague Visby Rules..

Thirdly; Under the UAE Law, the shipowner’s duty is to provide a seaworthy vessel at the agreed time and location stated in the charterparty and shall continue throughout the voyage(s), and the carrier’s duty is to provide a seaworthy vessel before and at the commencement of the voyage, failure to do so by any of the concerned parties, this will establish a liability for any damages arising to the goods, unless it is established that the concerned parties satisfied the duties referred to in UAE Maritime Law and the damage did not arise from such default, as established in Article 248 of the UAE Maritime Law, which provides “1.The disponent owner shall be responsible for damage to the goods if such damage arises out of his default in carrying out his obligations”.

THE ONUS OF PROOF

In conclusion, the onus of proof with regards to loss of damage to a cargo caused by unseaworthiness is regulated by the applicable law, for instance under the common law, if the cargo claimant alleges that the loss or damage has been caused by unseaworthiness, then he has the onus of proof to establish the followings:

(i) That the vessel was unseaworthy at the beginning of the voyage; and that (ii) The loss or damage has been caused by such unseaworthiness.

Accordingly, if he proves (i) and (ii) then there is a assumption that the carrier has not exercised due diligence to make the ship seaworthy and therefore, the onus is then on him  to prove that he has in fact exercised due diligence.[ Minister of Food v Reardon Line (1951) 2 Ll. Rep 265] However, if he fails to prove the same, then the carrier will not be entitled to rely upon the exceptions given in Article IV, rule 2 of the Hague/Hague Visby Rules.

On the other hand, if the carrier succeeds in doing so, then he can rely upon the exceptions in Article IV Rule 2 to defend his liability.[ “Eurasian Dream” (2002) 1 Lloyds Rep. 719] With regards to the UAE law, the onus of proof is on the carrier (lessor), since the liability to any loss or damages arise to the cargo, is a presumed one, unless the carrier proves the contrary and his satisfaction to the obligations stipulated in the articles of the Maritime Law.

Spread the news

Stay updated.

To learn more about our services and get the latest legal insights from across the Middle East and North Africa region, click on the link below.

• Ship Charter Rates
• Ship Bunker
• Chartering News
• Chartering Lessons

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.

We kindly suggest to read more about Voyage Charter Vs Time Charter www.handybulk.com

HEADQUARTERS

HandyBulk LLC Oceania Business Plaza Tower 2000 Street Punta Colon 43th Floor Panama City, Panama

Contact Form

Lloyd’s of london, what is force majeure in shipping, hardwood logs shipping.

• Start Business Tips
• Start-up guides
• Content Writing
• Business Ideas
• Home business ideas
• Retail business ideas
• Part-time business ideas
• Buying a business
• Calculating
• Online Payments
• Low cost business ideas
• Working Smarter
• Privacy Policy

Inventory Management 101: A Startup Guide

Starting a therapy business – essential things you need, starting a business in industrial dust collection, starting strong: 10 essential tips for new business owners, how to start a wholesale grocery business: the perfect guide to…, compelling reasons to opt for a career in strategic communication, crafting excellence in email communication: a deep dive into professionalism, tips for developing your style as an online radio personality, the physical and mental demands of a trucking career, customer mastery: the key to business growth, sustainability and environmental stewardship in education, education and edtech: the growing need for advisory services, big ideas math answers – useful resources for students struggling with…, what is the definition for mitigation mission area, which ics functional area sets the incident objectives, voyage charter vs. time charter: choosing the right agreement.

In the vast sea of maritime commerce, choosing the right charter is like setting the correct sail. For shipowners and charterers, this choice boils down to two primary options: voyage charter or time charter.

Think of them as the twin anchors of the shipping world, each with its unique strengths. In this article, we will guide you through the essentials of these two maritime agreements, making it simpler for you to pick the one that fits your needs just right.

Voyage Charter: Navigating the Waters of Single Voyage Agreements

A voyage charter, often called a “trip charter,” is a maritime agreement that revolves around a specific journey from one port to another. This contract type is particularly suitable for shippers with cargo to transport on a one-off basis or for a single voyage. Let’s explore the key features and considerations of a voyage charter:

• Single Voyage Focus

The primary characteristic of a voyage charter is its focus on a single journey, which can be from one port to another or involve multiple ports along the way. The terms and conditions of the charter are tailored to that particular voyage.

• Freight Rate Structure

In a voyage charter, the freight rate is often determined based on the distance traveled, the nature of the cargo, market conditions, and other factors. This allows shipowners and charterers to negotiate rates for individual voyages.

•   Charterer’s Responsibilities

Charterers in a voyage charter are typically responsible for loading and unloading the cargo, as well as covering port fees, canal tolls, and other voyage-specific expenses.

Voyage charters are short-term agreements covering the duration of the specific voyage, which can vary from a few days to several weeks, depending on the route and cargo.

Important Factors to Consider When Choosing a Voyage Charter

Cargo Flexibility: One of the notable advantages of a voyage charter is the flexibility it offers in terms of cargo. It allows charterers to specify the type and quantity of goods to be transported. This means that if you have specific cargo needs, a voyage charter might be the best fit.

Cost Control: With a voyage charter, charterers often find it easier to predict costs. They’re typically responsible for the cargo costs, while the shipowner covers the ship’s operational costs. Knowing these expenses upfront helps in budgeting and eliminates any surprises.

Operational Responsibility: In voyage charters, the shipowner retains a greater degree of operational control. They’re responsible for managing the vessel, including its crew and maintenance. This can be beneficial for charterers who prefer not to delve deep into the nitty-gritty of ship operations.

Short-Term Commitment: Voyage charters are generally shorter-term agreements compared to time charters. They’re tailored for specific voyages, which means once the cargo reaches its destination, the agreement concludes. For those not looking for long-term commitments, this is an attractive feature.

Time Charter: The Steady Course of Long-Term Agreements

Now that we have seen what the voyage charter is, let’s take a moment to look at the time charter. A time charter is a maritime contract that revolves around the long-term hiring of a vessel for a specified duration, often several months or years.

In a time charter, the shipowner provides the ship, crew, and maintenance while the charterer gains control of the vessel for a predetermined period. Here’s a closer look at time charters:

Key Features of Time Charters

•   Long-Term Commitment

Time charters are long-term agreements, that provide shipowners and charterers with a stable business relationship over an extended period. They are often used when charterers have consistent cargo transportation needs.

•   Fixed Rate Structure

Unlike voyage charters, time charters typically involve fixed daily or monthly hire rates. These rates provide predictability for both parties and can help manage budgeting and cash flow.

• Shipowner’s Responsibilities

In a time charter, shipowners are responsible for vessel maintenance, crewing, and operational costs, ensuring that the vessel remains seaworthy throughout the charter period.

• Charterer’s Control

Charterers in a time charter have control over the vessel’s itinerary and cargo loading and unloading schedules within the agreed-upon limits.

Factors to Consider When Going for a Time Charter

Long-Term Planning: Time charters are well-suited for charterers with consistent cargo transportation needs and long-term planning. They offer stability and predictability in terms of vessel availability and costs.

Budget Predictability: Fixed hire rates in time charters allow for easier budgeting, as charterers know their monthly expenses in advance. This can be advantageous for financial planning.

Reduced Operational Burden: Shipowners take on most of the operational responsibilities in a time charter, allowing charterers to focus on their core business without the complexities of vessel management.

Limited Flexibility: While time charters offer stability, they lack the flexibility of voyage charters. Charterers may face constraints if they change routes or adjust cargo volumes frequently.

Voyage Charter vs. Time Charter: What to Consider Before Going for One

Selecting between a voyage charter and a time charter depends on various factors. So before opting for any of the two, you should consider the factors below:

#1: Cargo Volume and Consistency

A time charter may be a suitable option if you have a consistent cargo volume to transport over an extended period. Conversely, a voyage charter may offer more flexibility if your cargo volume varies significantly or you require occasional transport for irregular shipments.

#2: Market Volatility

Consider the prevailing market conditions. Voyage charters can provide opportunities for cost savings when market rates are favorable. However, they also expose you to rate volatility. Time charters offer rate stability, shielding you from market fluctuations.

#3: Budget and Financial Planning

Assess your budget and financial planning needs. If you prefer predictable expenses, a time charter with fixed hire rates may align better with your financial strategy. Voyage charters’ variable rates may require more agile financial planning.

#4: Operational Capabilities

Evaluate your organization’s ability to manage vessel operations. Voyage charters demand more operational involvement from charterers, while time charters relieve them of many operational responsibilities.

#5: Risk Tolerance

Consider your risk tolerance. Voyage charters carry more market-related risks, such as fluctuating freight rates. Time charters provide stability but may entail long-term commitments that limit flexibility.

#6: Cargo Type

The cargo you transport can also influence your choice. Certain cargo types may better suit specific charter types due to their handling requirements or regulations.

In the maritime world, choosing between a voyage charter and a time charter is a decision that can significantly impact your business operations and financial stability. Both charter types have advantages and trade-offs; the right choice depends on your unique circumstances and priorities.

Voyage charters offer flexibility for sporadic shipments and potential cost savings when market conditions align. On the other hand, time charters provide stability, predictability, and reduced operational burden for long-term cargo transportation needs.

Whether you opt for the flexibility of a voyage charter or the stability of a time charter, understanding these maritime agreements will ensure you make informed decisions in the dynamic world of maritime commerce.   

40 Facts About Elektrostal

Written by Lanette Mayes

Modified & Updated: 19 May 2024

Reviewed by Jessica Corbett

Elektrostal is a vibrant city located in the Moscow Oblast region of Russia. With a rich history, stunning architecture, and a thriving community, Elektrostal is a city that has much to offer. Whether you are a history buff, nature enthusiast, or simply curious about different cultures, Elektrostal is sure to captivate you.

This article will provide you with 40 fascinating facts about Elektrostal, giving you a better understanding of why this city is worth exploring. From its origins as an industrial hub to its modern-day charm, we will delve into the various aspects that make Elektrostal a unique and must-visit destination.

So, join us as we uncover the hidden treasures of Elektrostal and discover what makes this city a true gem in the heart of Russia.

Key Takeaways:

• Elektrostal, known as the “Motor City of Russia,” is a vibrant and growing city with a rich industrial history, offering diverse cultural experiences and a strong commitment to environmental sustainability.
• With its convenient location near Moscow, Elektrostal provides a picturesque landscape, vibrant nightlife, and a range of recreational activities, making it an ideal destination for residents and visitors alike.

Known as the “Motor City of Russia.”

Elektrostal, a city located in the Moscow Oblast region of Russia, earned the nickname “Motor City” due to its significant involvement in the automotive industry.

Home to the Elektrostal Metallurgical Plant.

Elektrostal is renowned for its metallurgical plant, which has been producing high-quality steel and alloys since its establishment in 1916.

Boasts a rich industrial heritage.

Elektrostal has a long history of industrial development, contributing to the growth and progress of the region.

Founded in 1916.

The city of Elektrostal was founded in 1916 as a result of the construction of the Elektrostal Metallurgical Plant.

Located approximately 50 kilometers east of Moscow.

Elektrostal is situated in close proximity to the Russian capital, making it easily accessible for both residents and visitors.

Known for its vibrant cultural scene.

Elektrostal is home to several cultural institutions, including museums, theaters, and art galleries that showcase the city’s rich artistic heritage.

A popular destination for nature lovers.

Surrounded by picturesque landscapes and forests, Elektrostal offers ample opportunities for outdoor activities such as hiking, camping, and birdwatching.

Hosts the annual Elektrostal City Day celebrations.

Every year, Elektrostal organizes festive events and activities to celebrate its founding, bringing together residents and visitors in a spirit of unity and joy.

Has a population of approximately 160,000 people.

Elektrostal is home to a diverse and vibrant community of around 160,000 residents, contributing to its dynamic atmosphere.

Boasts excellent education facilities.

The city is known for its well-established educational institutions, providing quality education to students of all ages.

A center for scientific research and innovation.

Elektrostal serves as an important hub for scientific research, particularly in the fields of metallurgy, materials science, and engineering.

Surrounded by picturesque lakes.

The city is blessed with numerous beautiful lakes , offering scenic views and recreational opportunities for locals and visitors alike.

Well-connected transportation system.

Elektrostal benefits from an efficient transportation network, including highways, railways, and public transportation options, ensuring convenient travel within and beyond the city.

Famous for its traditional Russian cuisine.

Food enthusiasts can indulge in authentic Russian dishes at numerous restaurants and cafes scattered throughout Elektrostal.

Home to notable architectural landmarks.

Elektrostal boasts impressive architecture, including the Church of the Transfiguration of the Lord and the Elektrostal Palace of Culture.

Offers a wide range of recreational facilities.

Residents and visitors can enjoy various recreational activities, such as sports complexes, swimming pools, and fitness centers, enhancing the overall quality of life.

Provides a high standard of healthcare.

Elektrostal is equipped with modern medical facilities, ensuring residents have access to quality healthcare services.

Home to the Elektrostal History Museum.

The Elektrostal History Museum showcases the city’s fascinating past through exhibitions and displays.

A hub for sports enthusiasts.

Elektrostal is passionate about sports, with numerous stadiums, arenas, and sports clubs offering opportunities for athletes and spectators.

Celebrates diverse cultural festivals.

Throughout the year, Elektrostal hosts a variety of cultural festivals, celebrating different ethnicities, traditions, and art forms.

Electric power played a significant role in its early development.

Elektrostal owes its name and initial growth to the establishment of electric power stations and the utilization of electricity in the industrial sector.

Boasts a thriving economy.

The city’s strong industrial base, coupled with its strategic location near Moscow, has contributed to Elektrostal’s prosperous economic status.

Houses the Elektrostal Drama Theater.

The Elektrostal Drama Theater is a cultural centerpiece, attracting theater enthusiasts from far and wide.

Popular destination for winter sports.

Elektrostal’s proximity to ski resorts and winter sport facilities makes it a favorite destination for skiing, snowboarding, and other winter activities.

Promotes environmental sustainability.

Elektrostal prioritizes environmental protection and sustainability, implementing initiatives to reduce pollution and preserve natural resources.

Home to renowned educational institutions.

Elektrostal is known for its prestigious schools and universities, offering a wide range of academic programs to students.

Committed to cultural preservation.

The city values its cultural heritage and takes active steps to preserve and promote traditional customs, crafts, and arts.

Hosts an annual International Film Festival.

The Elektrostal International Film Festival attracts filmmakers and cinema enthusiasts from around the world, showcasing a diverse range of films.

Encourages entrepreneurship and innovation.

Elektrostal supports aspiring entrepreneurs and fosters a culture of innovation, providing opportunities for startups and business development.

Offers a range of housing options.

Elektrostal provides diverse housing options, including apartments, houses, and residential complexes, catering to different lifestyles and budgets.

Home to notable sports teams.

Elektrostal is proud of its sports legacy, with several successful sports teams competing at regional and national levels.

Boasts a vibrant nightlife scene.

Residents and visitors can enjoy a lively nightlife in Elektrostal, with numerous bars, clubs, and entertainment venues.

Promotes cultural exchange and international relations.

Elektrostal actively engages in international partnerships, cultural exchanges, and diplomatic collaborations to foster global connections.

Surrounded by beautiful nature reserves.

Nearby nature reserves, such as the Barybino Forest and Luchinskoye Lake, offer opportunities for nature enthusiasts to explore and appreciate the region’s biodiversity.

Commemorates historical events.

The city pays tribute to significant historical events through memorials, monuments, and exhibitions, ensuring the preservation of collective memory.

Promotes sports and youth development.

Elektrostal invests in sports infrastructure and programs to encourage youth participation, health, and physical fitness.

Hosts annual cultural and artistic festivals.

Throughout the year, Elektrostal celebrates its cultural diversity through festivals dedicated to music, dance, art, and theater.

Provides a picturesque landscape for photography enthusiasts.

The city’s scenic beauty, architectural landmarks, and natural surroundings make it a paradise for photographers.

Connects to Moscow via a direct train line.

The convenient train connection between Elektrostal and Moscow makes commuting between the two cities effortless.

A city with a bright future.

Elektrostal continues to grow and develop, aiming to become a model city in terms of infrastructure, sustainability, and quality of life for its residents.

In conclusion, Elektrostal is a fascinating city with a rich history and a vibrant present. From its origins as a center of steel production to its modern-day status as a hub for education and industry, Elektrostal has plenty to offer both residents and visitors. With its beautiful parks, cultural attractions, and proximity to Moscow, there is no shortage of things to see and do in this dynamic city. Whether you’re interested in exploring its historical landmarks, enjoying outdoor activities, or immersing yourself in the local culture, Elektrostal has something for everyone. So, next time you find yourself in the Moscow region, don’t miss the opportunity to discover the hidden gems of Elektrostal.

Q: What is the population of Elektrostal?

A: As of the latest data, the population of Elektrostal is approximately XXXX.

Q: How far is Elektrostal from Moscow?

A: Elektrostal is located approximately XX kilometers away from Moscow.

Q: Are there any famous landmarks in Elektrostal?

A: Yes, Elektrostal is home to several notable landmarks, including XXXX and XXXX.

Q: What industries are prominent in Elektrostal?

A: Elektrostal is known for its steel production industry and is also a center for engineering and manufacturing.

Q: Are there any universities or educational institutions in Elektrostal?

A: Yes, Elektrostal is home to XXXX University and several other educational institutions.

Q: What are some popular outdoor activities in Elektrostal?

A: Elektrostal offers several outdoor activities, such as hiking, cycling, and picnicking in its beautiful parks.

Q: Is Elektrostal well-connected in terms of transportation?

A: Yes, Elektrostal has good transportation links, including trains and buses, making it easily accessible from nearby cities.

Q: Are there any annual events or festivals in Elektrostal?

A: Yes, Elektrostal hosts various events and festivals throughout the year, including XXXX and XXXX.

Elektrostal's fascinating history, vibrant culture, and promising future make it a city worth exploring. For more captivating facts about cities around the world, discover the unique characteristics that define each city . Uncover the hidden gems of Moscow Oblast through our in-depth look at Kolomna. Lastly, dive into the rich industrial heritage of Teesside, a thriving industrial center with its own story to tell.

Was this page helpful?

Our commitment to delivering trustworthy and engaging content is at the heart of what we do. Each fact on our site is contributed by real users like you, bringing a wealth of diverse insights and information. To ensure the highest standards of accuracy and reliability, our dedicated editors meticulously review each submission. This process guarantees that the facts we share are not only fascinating but also credible. Trust in our commitment to quality and authenticity as you explore and learn with us.

Share this Fact: