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Charter

CHARTERER - It is a person or company who hires a vessel for a specified voyage or a specified period of time. 

There are three types of chartering:

  1. Voyage charter
  2. Time charter
  3. Bareboat charter

VOYAGE CHARTER:
  • A voyage charter is the hiring of a vessel and crew for a voyage between a load port and a discharge port. The charterer pays the vessel owner on a per-ton or lump-sum basis. The owner pays the port costs (excluding stevedoring), fuel costs and crew costs. The payment for the use of the vessel is known as freight. A voyage charter specifies a period, known as laytime, for loading and unloading the cargo. If laytime is exceeded, the charterer must pay demurrage. If laytime is saved, the charter party may require the shipowner to pay despatch to the charterer.
  • In a voyage charter, laycan days are given to the owner. Laycan is a period of lay days plus canceling date. During this period vessel must arrive and be presented at the load port/place. If the vessel arrives before that date the charterer need not accept her until the commencement of the agreed lay days.
  • In case of any machinery breakdown takes place during the voyage and because of that if the vessel is not present at agreed port or place, the charterers are entitled to reject the vessel and cancel the charter.
  • So, it is the duty of chief engineer to check the main engine rpm so that vessel should be present at the port or place as specified in charter party and between laycan days.
  • Master can take the appropriate route to reach the port without the permission of charterer.
TIME CHARTER:
  • A time charter is the hiring of a vessel for a specific period of time; the owner still manages the vessel but the charterer selects the ports and directs the vessel where to go. The charterer pays for all fuel the vessel consumes, port charges, commissions, and a daily hire to the owner of the vessel.
  • In time charter vessel speed and fuel consumption are mentioned and agreed in the charter party.
  • As fuel is supplied by the charterer, so any deviation in case of fuel or speed, the owner has to pay the compensation to the charterer.
  • So, chief engineer has to maintain charterer required rpm to get the speed as specified in the charter party.
  • Master has to take permission from charterer before diverting the route. Route of the voyage should be approved by the charterer.
  • Similarly, the cargo operation time is also mentioned in the charter party.
  • And if it deviates from this, the vessel will be off hired for that particular period of time.
BAREBOAT CHARTER:
  • The charterer obtains possession and full control of the vessel along with the legal and financial responsibility for it. The charterer pays for all operating expenses, including fuel, crew, port expenses and P&I and hull insurance.
  • In case of the bareboat charter, all responsibilities regarding navigation, propulsion, and maintenance of shipboard machineries remain with the charterer itself.
  • The shipowner receives lower hire payment, because of lower exposure to risk.
  • Bareboat chartering is a financial tool, designed to help investors purchase ships. These investors then leave the operation and management of their ships to the experts in the shipping business.
  • Most often the contract is signed in BARECON standard charter party form. Charterer may have a purchase option at the end of the contract.

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