Voyage Chartering
A contract for the carriage by a named ship, of a specified amount of cargo between named ports or places. It could be a “single journey” or a series of “several consecutive journeys”, as in the case of a consecutive voyage charter. The owner of the ship agrees that he will present the specifically-named ship for loading at the mutually agreed place, within a period of time and, after loading, responsibility for which will be agreed in-between the parties, will carry the cargo to the mutually-agreed place, where he will deliver the said cargo.
The charterer could wear different hats: (i) the cargo owner ; (ii) chartering for the account of another party, such as the shipper, or the receiver and agrees to provide for loading, within the pre-agreed period of time, the pre-agreed quantity of the pre-agreed goods, for an agreed amount of freight, for taking delivery of the cargo at the destination.
The charterers hire the cargo capacity of the ship, and, not the entire ship. Control of the ship’s operation, remains in the hands of the ship owner.
The ship owner must provide the Master and crew, discharge the functions of a carrier and pay all running (i.e. crewing, storing, ship-maintenance, insurance, administration, and are the responsibility of the ship owner or ship-manager) and voyage (bunkers, port and canal dues, pilotage, tug-hire, agency fees, costs incurred in loading and discharging, and, are the responsibility of the ship’s commercial operator. If the ship is on a voyage charter, the charterer is liable for the voyage costs) costs, unless the charter party mentions anything to the contrary.
In a voyage charter, vessels are employed for a single trip, loading cargo from one or more load ports and discharging to one or more discharge ports. The ship owner’s reward on completing the contract successfully is the payment of freight for the cargo carried.
Freight can be paid on a lump sum basis; more commonly, it is pro-rated. Lump sum freight does not depend on cargo quantity (this is generally the norm for packaged cargo), but pro-rated freight depends on the exact amount of cargo loaded (usually the norm for bulk cargoes).
As the vessel’s earning capacity is fixed in this type of employment contract, the charterer is only allowed a negotiated amount of time called ‘laytime’ for loading and discharging the vessel. If laytime is exceeded, the charterer pays demurrage as a penalty; this is a pro-rated amount, as negotiated. However if the charterer completes loading and discharging before laytime finishes, he is entitled to ‘despatch’ a reward.
The vessel is given a date window to present itself at the load port at the beginning of the charter, to start the contract. This ‘window’ is called ‘lay/can’. ‘Lay’ stands for ‘laytime not to commence before’, while ‘Can’ is the cancelling date. The days that fall in between this time window from the ‘lay’ date to the ‘can’ date are called ‘laydays’. A vessel must present itself at the load port within this time window when starting a voyage contract.
In a voyage charter the owner retains operational control of the vessel and is responsible for all operating expenses such as port charges, bunkers, extra insurance (required if the vessel is to sail outside the limits of her insurance policy in the negotiated voyage contract), taxes, etc. The charterer’s costs are those relating to cargo. Loading and discharging costs are negotiated and could be to either the charterer’s account or the owner’s account.
It is a contract to carry a specified quantity of cargo (normally full cargo) by a named vessel between a named ports at an agreed freight rate.
- The ship owner remains responsible for the operations of the ship and the cost involved but the charterer sometimes pays for the stevedoring rates.
- The contracts are normally drawn up using standard charter party forms amended as required by alterations and additional clauses by the brokers representing each party. The additions are called ‘rider clauses’ or ‘side clauses’. And the two parties are referred to as owners and charterers. If the owners are not the actual owners but a party already hiring ship from another party then they are called “Disponent owners”.
Charterers normally make arrangement for bringing cargo forward and for payment of all discharging and loading cost in which case, C/P terms are called FIO (Free In and Out) Consecutive VoyagesWhen a vessel is employed for two or more consecutive voyages from, for e.g., port “A” to port “B”, the contract is called ‘consecutive voyages’.
The modus operandi in this ship employment method is as follows: a vessel loads at Port “A’ and discharges at port “B”, and then proceeds directly back to port “A” to load again. This load/ discharge sequence continues till the number of consecutive voyages as negotiated is completed.
A vessel is not allowed to renege on her commitment. Reneging would mean going to port “C” to load cargo, and then discharge at port “D”, before going to port “A” to load again; this is not allowed.
The reward for completing each contract voyage successfully is by payment of freight. Demurrage/despatch payments are calculated for each voyage separately, as is freight, which could vary as the freight amount could sometimes be negotiated separately for each voyage. The cargo quantity loaded for each voyage could also vary.
