chartering practices, tramp, linear,

1. SHIPPING SYSTEMS
(CHARTERING)
Jubin Baby(18382020)
Kaavya (18382021)
Ramakrishna (18382022)
conference

2. CHARTERING
• Chartering is a term used in shipping for hiring a
ship.
• A charter party is an agreement between two
parties regarding lease of a cargo or a vessel.
• One party offers to lease its vessel or cargo to
another party at stipulated rate or under decided
conditions.
• It is a legal contract, made under the laws
governing the shipping world between a cargo
vessel owner and a charterer

3. Types of Chartering Contracts

4. “Voyage Charter” Contract
• A Voyage Charter Contract is the hiring of a vessel and crew for a voyage between a load port and a discharge
port. This is the most commonly used Charter Party.
• Under this particular agreement, the owner of the ship agrees to lease the cargo to the charterer for a particular
voyage.
• The cost paid for such a lease includes costs like fuel, loading and unloading of the cargo etc.
• The vessel owner supplies the charterer with the vessel and sometimes the crew for a voyage to a designated port.
However, there is a specific time limit under this kind of contract.
• The time mentioned in the lease contract includes the time needed for loading and unloading of the cargo,
exceeding which may need the charterer to remunerate the owner in terms of compensation charges. Also, the
charterer remains responsible for any incidental charges
• Normally the cargo expenses are borne by the chartered / shipper/ receiver and hence the freight rate is expressed in
FIO i.e. „Free In and Out‟.

5. The Contract of Affreightment (COA)
• This type of charter party particularly suits to bulk cargos that often need more than one voyage for
complete shipment.
• Under this contract, the owner offers to carry the mentioned cargo at a price decided at rate of per
tonnage or per voyage.
• This type of contract is especially found in industrial cargos like that of coal, stones, building material,
metallurgical materials etc.
• The Contract of Affreightment (COA) is a little more complicated.
• It is a negotiated contract under which the ship owner agrees to carry a series of cargo parcels for a fixed
price per unit/volume, generally without specifying the precise ship in which the cargo will be carried.
• However, the ship-owners will be under obligation to provide the necessary cargo carrying capacity to
serve the agreed cargo volume and destinations.

6. Time Charter Party
• A time charter is the hiring of a vessel for a specific period of time often confused with the
previous charter party, this charter party refers to lease of a vessel by the owner to a charterer for
a specified period of time.
• The owner only offers his vessel at a predetermined rate. The charterer agrees to bear all the
expenses incurred on running of the vessel in return of availability of vessel for that time.

7. The Bareboat Charter Contracts
• This is a typical agreement where there is no maintenance liability or any kind of claim on the
vessel by the owner for the period of lease of the vessel.
• The owner agrees to lease the vessel without any administration, financial or technical
responsibility for it.
• The charterer acts as the sole owner of the ship and is responsible for all the maintenance and
functioning costs of the vessel including fuel, crew maintenance, repair, custom duties, port
expenses etc for that time.
• It is the most suitable for tankers and bulk carriers

8. • This type of contract is made on the basis of the port or dock where the vessel is received by the
charterer upon leasing or the owner while returning.
• The exchange happens in areas which are essentially suited to the size of vessel and are called
commercial area of the port.
Dock Charter Party

9. Forms of Shipping Services ( Chartering Practices)

10. Liner Shipping Services
• A liner service implies a fleet of ships, under common ownership or management, which
provides a fixed service, at regular intervals, between named ports, and offer themselves as
general carriers of any goods requiring shipment between those ports.
• A fixed itinerary, inclusion in a regular service and the obligation to accept cargo from all
comers and to sail, whether filled or not, on a date fixed by a published schedule; these, and not
the size and speed of the ship are what distinguish the “liner” from the “tramp” – the ship which
can be hired as a whole, by the voyage or the month, to load such cargo and to carry it between
ports as the charterer may require.

11. Special Features of Liner Shipping
• Segment of the trade
• Fixed schedules
• Freight rates
• Departure and the arrival

12. Factors to be considered while selecting the Liner Ship
• Regularity of Sailing (timing, frequency, name of port etc.,)
• Carriage on liner terms
• Liabilities of the carrier operating liner vessels
• Conference membership for stability of freight rates
• Classified vessels with appropriate classification society
• Insurance approved vessels
• Check letter of credit for age of vessels
• Vessels do not call at any prohibited ports
• Nationality of the vessels should not under any UN sanction
• Sensitive/perishable cargo-desire facilities on vessel
• Availability of reefer plugs at pre-stack and on vessel

13. Tramp Shipping Services
• The dry bulk and liquid cargoes are generally referred as “Tramp
Trades” and the vessels used to transport these cargoes are called
“Tramp Ships”.
• Tramp services will not have a fixed route. The ship goes from one
port to another depending up on the cargo availability.
• Tramps are those ships which are usually used for transportation of
homogenous cargo which is moved in bulk quantities.

14. Special features of Tramp Shipping
• Engaged for the carriage of cargo.
• Tramp trade does not have any fixed ports of loading and discharge.
• Tramp ship owners are always looking for ports where profitable cargo is
likely to be found.
• Tramp ships loadability is often subjected to seasonal or periodic variations.
• The freight rate/hiring charge in tramp ship is generally decided by the laws
of supply and demand of tonnage/cargoes and various other technical and
commercial parameters

15. Conference Shipping Services
• A group of shipping lines which have associated to offer regular service on
specific routes at publicly announced prices.
• It generally offer specific rebates for regular or high-volume shipments.
• The lines operating within that Conference maintain a full monopoly on that
trade route.
• Shipping lines which are not members of a Conference for a particular route
are known as outsiders, independent lines,or non-conference lines.

16. Special features of Conference Shipping
Services
• Uniform rate.
• Control of supply of shipping space through regulation of trade. Participation
of each member such as sailing, tonnages and port restrictions.
• Loyalty arrangement with shipper such as contractual discount service
contracts.
• The elimination of competition between members lead to service competition
like upgradation of equipments of cargo handling.
• No discrimination between shippers served by conference.

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