Charterparties: contracting the ship

A charterparty is the contract between the cargo interest (the charterer) and the shipowner for the use of a vessel. Which type you use decides who controls the ship and who pays each cost. Getting this right is central to a trade's economics.

Voyage charter

Hire a ship for one specific voyage. Owner runs the ship and pays voyage costs (fuel, port charges); charterer pays freight per tonne of cargo. Laytime and demurrage apply.

Time charter

Hire the ship for a period (months/years). Charterer directs employment and pays hire per day plus bunkers and port costs; owner crews and maintains the vessel.

Bareboat (demise) charter

Charterer takes the bare ship and operates it entirely — crew, maintenance, insurance — like a long lease.

Contract of Affreightment (COA)

A commitment to move a series of cargoes over time, with vessels nominated for each lifting.

Standard forms and key clauses

Charters are negotiated on standard forms — GENCON for dry voyage charters, NYPE for time charters, ASBATANKVOY and SHELLVOY for tankers — then amended with a 'rider' of negotiated clauses. As an operator the clauses you watch most are:

• Laycan — the window (e.g. 5–10 March) within which the vessel must arrive and be ready, or the charterer can cancel.
• Freight — the rate and when it's payable.
• Laytime — the time allowed to load and discharge (next lesson).
• Demurrage / despatch — penalty for being slow / reward for being fast.
• Off-hire — when the charterer stops paying hire because the ship can't perform (time charters).
• Safe port / safe berth — the charterer warrants the ship can get in and out safely.