Concept of Charter

Most commercial vessels, boats, or other ships are under private ownership. And a large part of these are individual owners who see these as investments. They have no shipping or ferrying requirements from these.

Rather than using the boats themselves they lease it out to third parties, who actually need the ships for a wide range of applications. In maritime terminology, this lending procedure is called Chartering. Moreover, the complexity of the process makes getting services like TRANS-series useful for maritime businesses.

Since the number of individual owners are increasing, chartering has emerged as a popular trend in the global seafaring industry.

There are different types of charters. However, two of these are most common and important, namely:

• Voyage Charter
• Time Charter

In this article, we will discuss both these types in detail.

Under this charter type, the charterer has to pay for using the cargo space on the vessel. It can be for either one or multiple trips to the stated location. In case of multiple voyages, the income of the owner will depend on the cargo quantity brought on the ship. However, it may be deposited as a lump sum amount, regardless of the cargo quantity.

Directives to Remember:

• The Operator should clearly state the following details to the vessel owner by a telegram or email. This should be done immediately after the charter party has completed their negotiations. Stating the information may seem repetitive, in some cases, but it is equally important. As an Operator, you will have to provide:
• Charterer
• Agents
• Tendering of Notices
• Cargo
• Laydays
• Ports
• Load/Discharge Rates
• Bunker Arrangements
• And any other important data that might be related to the cargo and voyage
• On the receipt given to the Charter party, Operators should double-check the advance details against the Charter. If they find any differences, they may discuss it with their clients before sending a copy of this document to the Owner.
• In case the Charter party is unavailable, then the Operator is also responsible for forwarding and sharing any information about the contract to the client or Charter.
• If the Charterer or their agent state any requirements to the Owner, then they should convey these to their Operators properly.
• And all the documents and paperwork should be neatly kept in the Voyage File. Our TRANS-series services will help you in efficiently managing all these instructions.

Time Charter

The second type of charter is Time Charter where the Owner of the boat gets paid on the basis of the duration the Charter requires it. It is easy to understand why it is different from Voyage Charter, as the latter owner has to leave complete equipment, crew, and boat in the hands of the Charterer.

On the other hand, in Time Charter, Charterer gains complete control over the vessel and gets a say in related decision-making during the trip. He is obliged to take care of handling operations, port expenses, and even arranging bunkers. To effectively manage this, you should consider getting our TRANS-series services!

On/Off Hire Surveys:

In Time Chartering, the Operator is responsible for organizing off-hire and on-hire surveys as required while keeping their client’s requirements in mind. They also have to give their best in ensuring that these surveys are completed at low expenses. For this, they can either coincide on previously done off-hire surveys or share the charges with the Charterer.

Party Obligations

Time Charter Parties:

Time Charter contracts ensure that the control over technical operations of the vessel remain with the Owners. While the Charterer has to handle all the commercial operations of the boat.

In this type of agreement, the shipowner has to oversee all expenses related to ship maintenance, insurance, and crewing. However, port charges and fuel intake of the vessel will be paid by the Charterer.

Voyage Charter Parties:

On the other hand, in Voyage Charter, the contract specifies that all commercial and technical management of the boat will be done by the Owner. They will not only have to focus on getting insurance for their boat and its complete maintenance.

But, they will also have to take up expenses related to the crew recruiting, port charges, bunkers, and other expenditures. Need a little help in managing these accurately? Then check out our TRANS-series services that will get you finest Charter Management support.

Evaluating Contract Amount

Time Charter Parties:

As stated above, for Time Charter contracts, the Charterers have to pay based on the total duration of the vessel hire. Hence, the Owner gets the income based on the daily hire charges of his boat.

Voyage Charter Parties:

In Voyage Charters, the Charterers are required to pay complete freight to the vessel Owner. The freight charge is computed by assessing the amount paid to the shipper for chartering the boat, regardless of the cargo size. Or you can also calculate it by taking the total weight of the cargo being transported through the ship.

Duration of Contract

Time Charter Parties:

These agreements are signed only for a limited time 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.

Voyage Charter Parties:

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 completes, the contract is automatically terminated.