In a voyage or time charter the charterer charters the ship (or part of it) for a particular voyage or for a set period of time. A voyage charter is the hiring of a vessel and crew for a voyage between a load port and a discharge port. The charterer pays the vessel owner on a per-ton or lump-sum basis. The owner pays the port costs, fuel costs and crew costs. In these charters the charterer can direct where the ship will go but the owner of the ship retains possession of the ship through its employment of the master and crew. Whereas in a bare-boat or demise charter, the owner gives possession of the ship to the charterer and the charterer hires its own master and crew.
Chartering is an activity within the shipping industry. In some cases a charterer may own cargo and employ a shipbroker to find a ship to deliver the cargo for a certain price, called freight rate. Freight rates may be on a per-ton basis over a certain route or alternatively may be expressed in terms of a total sum – normally in U.S. dollars – per day for the agreed duration of the charter. There are hundreds of voyage charter brokers or agent companies. These companies offer yacht finding and travel organisation services similar to travel agent only more specialized. Their purpose is to use their experience and networks to locate a client’s ideal vessel in terms of price and location.
A charterer may also be a party without a cargo who takes a vessel on charter for a specified period from the owner and then trades the ship to carry cargoes at a profit above the hire rate, or even makes a profit in a rising market by re-letting the ship out to other charterers. Depending on the type of ship and the type of charter, normally a standard contract form called a charter party is used to record the exact rate, duration and terms agreed between the ship-owner and the charterer.
There has been increasing demand for voyage vacations. While both the international leisure travel industry (particularly outdoor activities based vacations) and the boating industry has both boomed in the last decade, so too has the voyage charter industry which incorporates both of these pursuits.
In a voyage charter, the charterer hires the vessel for a single voyage, and the vessel’s owner provides the master, crew, bunkers and supplies. The voyage charter is a contract for the carriage of a stated quantity and type of cargo, by a named vessel between named ports against an agreed price, called freight. It is the most wide spread form of chartering. Several possibilities can occur, an entire ship maybe chartered for the transport of a full cargo, for a well determined voyage, or for a voyage to go and return, or for a series of specific voyages, or for a round trip with different harbors and the right for the charterer to load and discharge. Sometimes a part of the ship is chartered for the transport of a certain shipment or part cargo.
If the ship is chartered entirely, this agreement will usually be noted by a charter party, although, under certain legislations, this agreement may also be materialized by other means, even by testimony. Usually, under a voyage charter both the fixed costs and the variable costs are at the expense of the ship owner. In the contract of affreightment it is clearly stipulated who must pay the cargo handling costs.