Welcome to daily logistics.
In this video, we are going to talk about the charter party Contract.
without further due let's get started.
What is Chartering?
In general, you know how cargo moves
via sea with the support of the carrier.
If the shipper has cargo to fill the entire vessel
it’s not ideal for the shipper to hand over
goods to the intermediary parties for shipping.
Further, a party may wish to become an NVOCC
yet be unable to buy a vessel.
Or even a carrier can be there wish to hire a vessel
instead of buying.
In such situations, the best option for a shipper
is to hire an entire vessel to carry cargo from a shipowner.
So, the party that requires a vessel hires a vessel
from a vessel owner.
This process calls the vessel chartering the
Charter Party Contract or Charter party agreement.
What is the Charter Party?
For vessel chartering, there should be an agreement
between the parties to charter the vessel.
This calls as the charter party or the
charter party agreement.
This is a maritime contract on vessel leasing.
What are the Types of Charter Party?
There are three types available
Bare Boat Charter Party| Demise Charter Party
Time Charter Party
Voyage Charter Party
The Charter Party in Detail
Voyage Charter Party
In the voyage charter party,
as the name reflects vessel charter
for a specific voyage.
Here carrier agrees to carry, a specified quantity of cargo.
The parties can agree on the loading and discharging
ports too.
During this agreement, the vessel owner
should provide the vessel crew, t
ake care of the operational matters,
and navigational matters.
The charterer only pays the agreed
freight rate for the voyage.
Here parties agree on a time duration
for cargo loading and discharging
which can define as the Lay Time.
If the charterer enjoys more time for
loading and discharging than agreed,
the ship owner can charge on that
which is the demurrage charge.
Under the contract,
the charterer has minimum control over the vessel.
Time Charter Party
The hiring of a vessel for an agreed time
period is the time charter party.
For each hire, the charterer has to arrange the payments to the shipowner.
This payment is for the time period from
the date of vessel delivery to the
date of vessel redelivery.
Here, the charterer bears all the time
losses as the vessel is under the charterer’s disposal.
There can be time periods where vessel
operation has to suspend for repairs.
As such, the charterer does not have to pay the shipowner.
Such time calls as off-hire time.
The charterer should arrange the hire in
agreed time intervals during the time charter.
Yet, the ship crew hires by the shipowner.
Bare Boat or Demise Charter Party
Here, ship lease to the charterer who enjoys
total control of the vessel for an agreed period.
There is no involvement of the shipowner
during the time period.
The charterer is responsible including but
not limited to hiring the ship crew, ship equipment,
navigational and operational matters too.
This is the only charter party contract that
allows the charterer to act as the owner of the ship.
During the demise charter, the party charterer
can even paint the ship as per the charter’s preference.
Normally a demise contract is long term contract.
What is the Difference Between the
Time and Demise Charter Party?
Both charter parties are for an agreed time period.
But, in the bareboat, the charterer act as the
owner of the ship, and the whole control of the ship
lies with the charters during the agreed time period.
In time charter party it is not the same as that.
The charterer has limited rights over
the vessel and the ship crew also acts as
the assistants of the ship owner.
What is the Dispatch?
Dispatch is the payment from the ship owner
to the chartered. Normally, dispatch pays
if the charterer takes time,
less than the agreed for loading and discharging.
In general, dispatch is half of the demurrage charge.
What are your thoughts about this?
Comment below.
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