FOX Brasil Freight Forwarder
What if you could have an entire ship, all to yourself?
In a nutshell, that is what a chartering service allows individuals with different goals to achieve. Be it to transport cargo or even passengers, there are multiple types of chartering to fit the needs of the renting party.
Want to know more about this maritime practice? Continue reading!
What is chartering?
Chartering is the term used to name the renting of a whole ship, in an agreement between a shipowner and a renting party, in this case known as charterer, intermediated by a freight forwarder or a shipbroker.
The charterer
The charterer is the individual or organization renting the ship. There are many common reasons why a charterer rents a ship, it can be to transport their own cargo or to offer this service to another party, or even to re-rent the ship to someone else for a profit.
In general, the charterer becomes responsible for the integrity of the vessel, its crew, and the cargo carried, but we will get into specifics of the role of the charterer in each type of chartering later on this post.
The shipowner
The shipowner is the individual or organization that owns ships, registered under their name. Sometimes, shipowners have particular shipbrokers that work for them in order to find potential charterers and ease negotiations.
The shipbroker
The shipbroker is the individual who finds suitable vessels for interested charterers or interested charterers for available vessels, it will depend on who they’re working for. They charge a fee for their services, and sometimes can be specialized in a specific type of ship.
It is important to add that, different from a freight forwarder who can also arrange ships for chartering and are responsible for the coordination of the transport operations on behalf of the charterer, a shipbroker is just there as an intermediary between the two main parties, the charterer and the shipowner, and is not responsible for the vessel itself in any way.
The types of charter
There are three main types of charter, each dictating specifics of their contracts that involve the usage of the vessel by the charterer.
- A demise charter, or bareboat charter, is the hiring of a ship in which the charterer is fully responsible for the vessel during the charter period, legally and financially. This type of charter can have years-long contracts, and even end up with the charterer becoming the shipowner after a while, acquiring the ship for themselves in a formal manner.
- A voyage charter, where a ship is rented for a voyage between two ports, with the crew included. In this case, the shipowner is still in full control of the ship, and is simply offering the usage for the charterer, that pays a freight for this service. This type of charter also has a specified period in which the cargo must be unloaded from the ship, called laytime. If laytime is exceeded, the charterer must pay demurrage fees. If not, the shipowner pays despatch to the charterer according to the time saved.
- A time charter, where a ship is rented, with the crew included, for an established period of time in which the charterer is in full control of the vessel, paying for the fuel, the port charges, and the fees for the use of the vessel to the shipowner.
FAQs
A time charter, where a ship is rented, with the crew included, for an established period of time in which the charterer is in full control of the vessel, paying for the fuel, the port charges, and the fees for the use of the vessel to the shipowner.
How does chartering work? ›
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.
What is the meaning of chartering? ›
charter verb [T] (RENT)
to rent a vehicle, especially an aircraft, for a special use and not as part of a regular service: They've chartered a plane to take delegates to the conference.
What are the basics of chartering? ›
Chartering is an activity within the shipping industry whereby a shipowner hires out the use of their vessel to a charterer. The contract between the parties is called a charterparty (from the French "charte partie", or "parted document").
What does it mean when a ship is chartered? ›
Chartering is defined as an agreement where a shipowner agrees to rent out his ship to a cargo owner to move cargoes from one point to another. Hence, ship charters refer to the rental contracts for agreements that allow for the rental of a ship to move cargoes.
Is chartering the same as renting? ›
Renting and chartering a boat are technically the same thing: you pay someone to use his or her boat. Practically, though, these two terms refer to different boating experiences.
Can you make money chartering? ›
The dream of making a profit from a yacht charter is achievable with expert guidance and a strategic approach. Offsetting the Costs of Owning a Yacht: Chartering your yacht can be a smart way to make some money when you're not using it, helping to offset the cost of ownership.
What is a chartering fee? ›
Charter Fee means the fees payable by the Charterer to the owner for the Charter including the Ahoy Fees, the Central Agent Fee and any Other Agent(s) Fee (as applicable).
What is a charter and how does it work? ›
A project charter is a formal document delineating the project's purpose, scope, stakeholders, objectives, and comprehensive plan. It's an important document for anyone who runs projects, because it's designed to guide all subsequent decisions and actions. Essentially, a project charter works like a project's roadmap.
What is chartering income? ›
Charter Earnings means, in relation to a Chartered Ship, all moneys whatsoever from time to time due and payable to the relevant Obligor arising out of the chartering or other employment or utilisation of such Chartered Ship including any pool earnings and any damages for breach (or payments for variation or ...
There are three main types of charters – voyage charter, time charter, and demise charter.
What is the most common type of chartering? ›
Voyage chartering 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 is based on the quantity or weight of the cargo that is carried on the voyage or based on a fixed agreed-upon amount.
What are the practices of chartering? ›
The four principal methods of chartering a tramp ship are voyage charter, time charter, bareboat charter, and contract charter. The voyage charter, in which a ship is chartered for a one-way voyage between specified ports, with a specified cargo at a negotiated rate of freight, is most common.
What is the process of ship chartering? ›
Ship chartering is the process of renting a ship to move cargo from one location to another. This is in much the same way as a company might hire a lorry to transport goods by road. An agreement, known as a charter party, is made between the parties involved in ship chartering, namely the charterer and the shipowner.
What is the purpose of chartered? ›
Chartered status is considered a mark of professional competency, and is awarded mainly by chartered professional bodies and learned societies. Common in Britain, it is also used in Ireland, the United States and the Commonwealth, and has been adopted by organizations around the world.
What is the difference between a shipper and a charterer? ›
The shipowner or charterer or whoever enters into a contract with the shipper for the transportation of merchandise. Shipper A person or company who enters into a contract with a liner conference, shipping line or shipowner for the carriage of goods.
How does chartering a plane work? ›
When you charter a flight, you are renting an aircraft for your own use and on your schedule. Once that aircraft is under your temporary control, you determine all the details. You decide flight times and destinations. You choose who comes with you on your flight.
What is the process of chartering a ship? ›
Chartering is the term used to name the renting of a whole ship, in an agreement between a shipowner and a renting party, in this case known as charterer, intermediated by a freight forwarder or a shipbroker. The charterer is the individual or organization renting the ship.
Who pays for what on a time charter? ›
You pay the fuel, the most significant expense in a time charter. The shipowner bears the port charges, the customs duties, and the insurance fees for the vessel. However, depending on the contract terms, you may have to reimburse the shipowner for some of these expenses.
