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Wednesday, April 08, 2009

Dry Bulk Ship Chartering In Depth Part 2

In my last article, I wrote a little about Ship Chartering which was quite popular. So here is the next series in this In Depth look at Chartering.


You can easily complement this article with Chartering Terms to give you a better overall understanding of Ship Chartering




Shipping trade is divided into two categories as (a) Liner Trade and (b) Tramp Trade.


    Vessels employed in liner trade are known as liner vessels or liners. In liner trade or liner shipping vessels sail/arrive on notified dates; ply on predetermined trade-routes and prefixed programme and itineraries, well advertised schedule of services and frequencies of sailing and lift a variety of cargoes from one or more ports of loading for delivery/unloading at one ore more ports of discharge or destination. The ship owner charge freight based on the conference rates.

    Vessels employed in tramp trades are called tramp vessels or trampers .In tramp trade or tramp shipping, the sailings is itinerant. Mostly, vessels under tramp trade carry homogeneous bulk cargoes loose or bagged, in full shiploads, if possible. A ship picks up the cargo from one or two ports, unload it as undertaken and on vessel after completion of discharge again seeks employment or cargo from any port to any port subject to economy and viability of voyages.




Charter Party agreement which fulfils the requirements of law of contracts involves and holds bound together legally, at least two parties, namely, a ship owner, on the one hand and a charterer/merchant shipper, on the other. Chartering involves a ship, a ship owner, goods, goods owner and/or a charterer/an operator.


The charter party will stipulate a reporting date and a canceling date, which is known as laydays - 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 canceling date, the charterer is not obliged to accept her. However, on mutual consultation laydays can be revised.


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.




It is essential that particulars of the performing ship and description are included in the charter party agreement. This includes name of the vessel, type of vessel , Gross Registered Tonnage (GRT), Net Registered Tonnage(NRT), Dead Weight Tonnage ( DWT), Length Over All (LOA), Breath of the Ship(Beam), draft (immersion of the vessel in the water) and call sign (Registered Code of the ship). GRT/NRT of a vessel is relevant for port disbursement calculations and dead weight for indicating the carrying capacity. The "Call Sign" is required for contacting the ship for sending messages/instructions to Master. In case of COA contracts where more than one parcel is involved, the Charter Party may provide for a series of voyages where the performance may not necessarily be limited to a single ship. In such an event the owners have to indicate the type and size of the ships only at the time of actual nomination in for each voyage.


The ship owner has to state about the condition of the vessel, which mainly pertains to cargo worthiness, and seaworthiness of the ship engaged. The position is generally stated that the ship is tight, staunch and in every way fitted to perform the voyage or some familiar phraseology. It may be mentioned that according to the "Hague Rules" there is no absolute undertaking by the carrier about seaworthiness but ship owner is bound, before and at the beginning of the voyage to exercise due diligence to make the ship seaworthy. For any claim arising due to unseaworthiness of the ship, the burden of proof is on the ship owner that he has exercised due diligence to make the ship seaworthy before and at the beginning of the voyage.