Types of Charter Arrangements

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Types of Charter Arrangements

Chartering in the logistics industry is an activity usually connected with shipping. Charter may own cargo in some cases and look for a shipbroker to help them find a ship, to deliver their cargo for the decided price or called freight rate. The freight rate varies from certain route to pay per day for the decided and agreed duration of the charter. A charter can be a party without a cargo and takes vessel on a charter for a specific duration and trades ship to carry cargoes at a higher price or even makes more money by re-letting the ship to other charterers.

A standard contract form called a charter party used to record the exact rate, terms and conditions agreed between the charterer and the shipowner, depending on the type of ship and also the charter type.

Now the types of charter arrangements:

• The hiring of a vessel is done in a way that no administration or any kind of technical maintenance is included in the agreement, this is known as a bareboat charter.
• Operating expenses including port expenses, fuel, crew, etc. are paid by the owner. The charter period usually ends with the charter taking the ownership in the hull.
• A time charter is a type of charter in which vessel is hired for a specific period of time, although the owner manages the vessel still ports and directions are decided by the charterer. The crew cost and ports costs are paid by the owner only.
• A demise charter- in this the charter leaves the possession and control, while the charterer takes the full control and the legal and financial responsibility of the vessel.
• Vessel and crew for the voyage are hired between the load and the discharge port in a voyage charter. The owner pays the port, fuel cost, and the crew cost. While the charter pays the vessel owner in lump-sum basis or on a per ton basis.