What you should know about chartering

The origins of chartering are related to commercial trade activities in ancient Greece, the Phoenician civilization, and Egypt.

This figure of the shipping law is one of the oldest. According to BIMCO, “The chartering of a ship, in its simplest terms, is a rental agreement in which a charterer agrees to hire a ship from its owner. Typically it is the charterer who will be the owner of the cargo, which he needs to move to some other part of the world, and unless he has ships of his own, he will depend on others to move the cargo for him. The hire money for this transaction is known as “freight” and is the reward to the ship-owner for the use of his vessel.”

The contract can arrange the complete use of the vessel or just a space on it, for a single voyage or many, or for a long term.

Types of chartering

-Bareboat charter (by demise): According to the United Nations Convention on Conditions for Registration of Ships, celebrate in Geneva, 7 February 1986:

 Bareboat charter” means a contract for the lease of a ship, for a stipulated period of time, by virtue of which the lessee has complete possession and control of the ship, including the right to appoint the master and crew of the ship, for the duration of the lease.

-Time charter: A charter under which the shipowner hires out a ship for a specified period with the ship-owner providing the crew and paying ship operating expenses while the charterer is responsible for paying the voyage expenses and additional voyage insurance. (http://www.globalshiplease.com)

– Voyage Charter: A charter under which a shipowner hires out a ship for a specific voyage between the loading port and the discharging port. The ship-owner is responsible for paying both ship operating expenses and voyage expenses. Typically, the charterer is responsible for the cost of any delay in the loading or discharging ports. The ship-owner is paid freight based on the cargo movement between ports. (http://www.globalshiplease.com)

The obligations of the parties vary depending on the type of contract, but there are some general obligations:

Obligations of the charterer:

• Reasonable conditions corresponding the cargo and the contract.
• The cargo must be placed at the place of loading.
• The payment of the freight, among others.

Obligations of the ship’s Captain:

• Cargo reception and stowage.
• Delivery of Bill of Lading.
• Handling and maintenance of the cargo and delivery to final destination.

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Other sources:

https://www.bimco.org/Education/Seascapes/Questions_of_shipping/2014_02_04_How_does_chartering_work.aspx