Introduction to chartering

 Chartering is nothing but an

engagement of a fleet for
transportation of goods or passenger
traffic.
 Way back in the 17th century, ship's
captains met merchants in coffee
houses/pubs of those days bargaining
and haggling for cargoes. London
being the hub of all shipping activities
including chartering.
 definition
 Chartering, is bringing together an owner of
a vessel, which he seeks to let on hire or for
which he seeks an employment and an
owner of goods, a merchant-shipper or a
charterer who needs a ship for carriage of
goods by sea, into a contractual relation and
commitment, setting forth their respective
duties and obligations as terms and
conditions under which they remain legally
bound with legal consequences.
 cp
 The instrument or document of the
contract is called a "Charter-Party"
and a "Charter party" is defined as a
CONTRACT OF AFFREIGHTMENT.
Thus, there must be a contract and
there must also be an affreightment.
 CHARTERING MODE
 Voyage Charter
 Time Charter
 Bareboat Charter
 Voyage Charter
 In a voyage charter a ship owner places his
vessel at the disposal of the charterer for
loading a full/part cargo as agreed from a
port or two for discharge at one or two ports,
as named or nominated in the Charter Party.
 It can be for one single voyage or a series of
voyages - consecutive voyages.
 owner gets freight per weight tonne of cargo
actually loaded on board the vessel.
 Generally freight is paid on "right & true
delivery".
 Time charter
 Where a charterer hires a vessel for
a period, say, 3 months or one year,
the vessel is said to be on time-
charter. The owner gets an agreed
"Hire" per day or per dead weight
tonne (DWT) per month on her
summer loadline. This hire is payable
in advance.
 time-charterer
 The vessel will be required to be delivered and
redelivered at agreed places. Subject to
satisfactory "On hire" survey
 a delivery certificate will be signed in token of
the vessel having been placed at the disposal of
the time-charterer. The charter hire will
commence to count thereafter.
 On expiry of the time-charter period, the vessel
will be again subject to "Off Hire" survey and a
"Re-delivery" certificate will have to be signed
by the parties whereby the vessel will revert to
her original owners.
 "On hire" and "Off-hire" surveys help
establish that the condition of the
vessel at the time of delivery and re-
delivery is practically unchanged and
remains the same barring ordinary
wear and tear.
 On time chartered vessel, the
charterer will have to bear
 the cost of bunkers,
 port disbursements including agency
commission and brokerage,
 stevedoring-loading-discharging,

 dunnage,

 cleaning holds or in lieu of payable to

owners as agreed.
For the owner's account will be officer's/crew
wages, stores and provisions, ship
maintenance depreciation etc.
 BAREBOAT CHARTER
 Bareboat charter, as also known as demits
charter or charter by demise
 vessel offered just "Bare" and charterer must
take the vessel in full control,
 The charterer virtually becomes the defacto
owner and manages and controls the vessel.
 vessel surveyed on delivery and re-delivery.
 The owner collects from the charterer a certain
rate per DWT ton on summer loadline capacity
per calendar month, in advance.
 The charterer has to meet all the costs and
charges. Owner has practically nil expenses and
is not the carrier.
 The details of charter party
 1. Ship and the contracting parties
 2.Description of cargo
 3 terms of cargo
 lay date
 lay time
 cancelling date
 Loading port
 Discharge port
 Demurrage
 despatch
 Payment of loading and discharge expenses
 Details continued
 Statement of facts.
 Deadfreight
 Safe port
 Notice of readiness
 Arrived ship
 dates
 The charter party will stipulate a
reporting date and a cancelling date,
which is known as lay days - within
which the vessel must arrive at the
port of loading.
 In both cases, where a vessel arrives
before the reporting date or after the
cancelling date, the charterer is not
obliged to accept her.
 on mutual consultation laydays can be
revised.
 LAYDAYS
 Laydays are calculated by dividing
the total quantity loaded or
discharged by the rate of loading or
discharging as stated in the Charter
Party agreement. Laydays represent
free period allowed to commence
and complete loading or discharge
by a vessel. A day is a day of 24
consecutive hours.
 LAYTIME
 Laytime is the time allowed to the charterer by
the ship owner for loading and discharging
cargo at the loading and discharging ports.
 For any extra time taken by the charterers,
demurrage has to be paid to the ship owner.
 if these operations are completed before the
expiry of the time allowed then the ship owner
pay despatch to the charterers.
 The rate of despatch is generally half the rate
of demurrage.
 LAYTIME
 The periods which are excluded from the
computation of laytime are generally holidays
(SHEX), bad weather periods and periods of
strikes or lockouts.
 COULD BE (SHINC)
 There is also an accepted principle for
computation of demurrage - once on
demurrage always on demurrage. In other
words, once a vessel is on demurrage then all
periods thereafter are counted other than the
stoppages attributable to the ship.
 Notice of Readiness
 Master's advice to the effect that his vessel
has arrived at the port limits at such time and
date and is ready in all respects to commence
loading or discharging is known as "Notice of
Readiness".
 The master of the vessel will have to tender a
"Notice of Readiness" to the
charterer/shipper/receiver as the case may be,
both at the load-port for loading and discharge
port for unloading.
 NOR
 Master must serve Notice of Readiness on the
Charterers/ Agents/Receivers, subject to the
following pre requisites:-
  Vessel must have arrived within the port limits.
  Vessel must have been entered through the
Customs.
  Vessel must be in free Pratique .
  Vessel must be actually ready in all respects to
commence loading/or discharge.
  Notice of Readiness can be tendered during
official working hours only.