8. Chartering

Chartering is hiring a ship to carry a cargo for freight. The Charter Party is a contract by wich the Owner of a ship on one hand and the charterer (Hirer) on the other hand come to an agreement about the hire of the vessel. Such contract contains number of clauses, concerned a future hire. For example requirements to a vessel, period of a contract and responsibility of the contract's sides. They can be different because there are several principal methods of chartering a tramp ship.

1) The voyage charter. A ship is chartered for one-way voyage between specified ports , with a specified cargo. The charterer provides the cargo for loading within an agreed range of dates. At the same time owner is responsible for the vessel's prepares for loading and the voyage. After the the cargo is transported to the port of destination the vessel is free for a future contracts. The freight rate is expressed in terms of so much per ton of cargo delivered.

2) Time charter. The charterer undertakes to hire the vessel for a stated period of time or for a round-trip voyage. Charter uses the vessel like it is his own, however, there are some clauses about a cargo and ports of loading. In such tipe of chartering there are two main groupes of charges – operational and maintenance. First such as fuel, stores, loading and discharging and some other are paid by charterer. At the same time repair and constant expenses are on owner's account. The freight rate being expressed in terms of so much per ton dead weight per month.

3) Bareboat charter This method is less frequently used in ordinary commercial practice, the owner of the ship delivers it up to the charterer for the agreed period without crew, stores, insurance, or any other provision, and the charterer is responsible for running the ship as if it were his own for the period of the contract.

4) The contract charter (contract of affreightment). If a large amount of cargo – too much for a single ship - is going to be shipped this method usually employed. The shipowner agrees to undertake the shipment over a given period at a fixed price per ton of cargo, but not necessarily in any specified vessel, although he generally uses his own ship if they are available.

Normally in line service no charter party is concluded, but here the so called “slot charter “ agreement may be used. Under this agreement a certain amount of liner ship's cargo space is chartered to carry containers.

The most disputable question is a freight rate. First of all it must be obtained so that all expenses are covered, with a remainder sufficient for the returns on investment. Actual freight rates are set by market conditions and fluctuate during the life of a ship.

In many instances the services of a ship which can carry a variety of cargos between a variety of ports are matched with cargoes by brokers , who meet face-to-face on trading floor. An environment of it analogous to a stock exchange. That is why a contract by which a ship is chartered in time of low freight rates can be resold when rates have risen, like an ordinary commodity.