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Types of Charterparty for cargo ship - Related procedure

What is Ships Charterparty agreement ? - The Contract between one party who has control of a ship and another party who wishes to make use of the ship is known as a Charterparty.

Types of Charterparty:
Time Charter

In a Time Charter the Owner hires the ship to the Charterer for a set period of time, usually with restrictions on trading limits and cargoes – so that the Owner’s interest is protected.

Time Charters can be for short (e.g. single voyages) or for long periods of time. Normally the Owner is paid a hire rate per day whilst the vessel is on charter. i.e. The Owner agrees to provide the vessel to the Charterer for his commercial use for an agreed period of time.

Time and vessel performance are key under time charter’s and of prime importance are meeting the C/P warranties with regard to speed and performance and to also avoid off-hire time as far as possible.

Details of the responsibilities of the Owner and Charterer under a T/C are as below:

Voyage Charter

In a voyage charter the ship is hired to carry a particular cargo (or a variety of cargoes) between specified places, usually either at a freight rate per MT of cargo carried or for lump sum freight to the Owner. i.e. The Owner agrees to provide the cargo carrying capacity of his vessel to the Charterer for a specific voyage(s).

The commercial operator will operate the vessel on a voyage charter and relay specific instructions from the Charterer to the Master. These instructions must be followed exactly, unless there is any safety or operational restrictions, in which case the commercial operator and/or DPA should be consulted immediately. Responsibilities of the Owner and Charterer under a V/C as below.

  1. Ship
  2. Crew
  3. Stores & Provision
  4. Maintenance
  5. Communications
  6. Insurances
  7. Fuel
  8. Port & Canal Dues
  9. Agency Fees
  10. Towage/Linesmen
  11. Pilotage
  12. Berth Dues
  13. Wharfage
  14. Stevedoring
  15. Freight Tax (sometimes see C/P)
  16. War risk insurance
  1. Berth Dues (sometimes : see C/P)
  2. Wharfage (see C/P terms)
  3. Stevedores (see C/P terms)
  4. Cargo Dues/Freight Tax (see C/P)
  5. War risk insurance
Commercial awareness is knowing how to make the correct decisions to ensure that your vessel's commercial performance is optimal. In turn, this will boost the vessel's profitability significantly.
Contracts of Affreightment (COA)

Another type of contract is the COA. Under this contract the Owner agrees to provide his vessel or vessels to the Charterers for a series of voyages to carry a pre-specified amount of cargo, or to perform a pre-specified number of voyages. In this case the C/P terms will remain the same for each voyage with perhaps only the freight rates being adjusted for the prevailing market conditions.

Hierarchy of C/P’s

The Master must be aware that there can be chains of charterers. Example:- If a voyage charter is involved then it will always be the last in the chain. The Master is to be guided by the head charterparty terms only and is advised that any subsequent sub charterparties received from charterers are to be used only for guidance. Any conflicting clauses are to be brought immediately to the attention of his commercial operator. This is also important because the Master will be required to sign for items such as Pilotage, tugs, canal dues, lashing material, etc., which although services supplied to the ship are, because of the Charterparties, a liability of one or other of the Charterers.

Our additional pages contain somewhat larger lists of resources where you can find useful informations

  1. Dry Cargo Charterparties

  2. There are numerous various forms, but to give a taste of dry cargo time charters, two types that are commonly used are: - New York Produce Exchange (NYPE 93) Baltic and International Marine Council (BALTIME 1939 (amended 2001)....

  3. Tanker Time Charters

  4. Specific information such as, parties to the contract, where and when the vessel will be delivered, rates of hire, general permitted cargoes, general trading range etc. ....

  5. Commercial VoyageManagement
  6. Time Charters and Pools have very strict off-hire clauses designed to compensate the Charterer for unavailability or under-performance of the vessel. It is important that off-hire is minimised wherever possible and that all opportunities for maintenance during waiting or idle time are utilised.

  7. Documentation & notices

  8. When a vessel is on Time Charter, bunkers and the majority of port services and costs, etc., are to the account of Time Charterers. However, should Time Charterers default on payment, then these charges may fall on Owners and there will then be a serious risk of the vessel being arrested for debts incurred by the Time Charterer. ....

  9. Function of bill of lading

  10. The Bill of Lading is one of the most important documents that the Master will sign and therefore strict controls on how it is issued are required. Although the B/L is usually drafted by the Shipper and presented to the Master for signature, it is an Owners document. One of its three functions is to act as a receipt for the cargo, so therefore the Master must make sure that the quantity and description of the goods is accurate as he will be expected to deliver the same to the Receiver.....

  11. Port of refuge

  12. A port or place of refuge is a port or place to which a vessel proceeds in consequence of an accident, sacrifice or other extraordinary circumstance. The loading port or discharge port/place can be the port/place of refuge. In case of deviation to a port/place of refuge, the Master must send (in addition to the previously mentioned information) the following to :.....

  13. Seaworthiness for cargo ship, international navigational condition & procedure for Insurance claim

  14. Insurance premiums amount to a very large proportion of the ship’s running costs. Whilst the owner insures his ship against certain risks and may present a claim which will recuperate at least part of his losses, the effect of submitting many claims will have the effect of increasing the insurance premiums for the next year. It is therefore in everyone’s interest to ensure that risks are not taken, that the ship operates safely and that accidents and incidents are avoided....

  15. Masters obligation to follow charterers routeing advise - The Hill Harmony case

  16. The Hill Harmony case involved a vessel on time charter trading trans-Pacific. The Charterers had engaged a weather routing service and the Master was advised to take the shortest northern great circle route, however he deemed it safer to take a more southerly rumb line route. The Charterers were eventually able to prove that the great circle route had been suitable for safe navigation and that the extra steaming time was for the Owners account....

Other info pages !

Ships Charterparties Related terms & guideline
Stevedores injury How to prevent injury onboard
Environmental issues How to prevent marine pollution
Cargo & Ballast Handling Safety Guideline
Reefer cargo handling Troubleshoot and countermeasures
DG cargo handling Procedures & Guidelines
Safety in engine room Standard procedures
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