Chartering of Ships

When the senders of goods have very large shipments to make, especially when it concerns bulk cargoes, it is of greater advantage to them to have a whole ship at their disposal. They do not need to buy the ship but can hire it, and this is called " chartering".

The chartering of ships, being a highly specialized business, is usually done through the intermediary of brokers. In London, for example, there is a special center called the Baltic Exchange¹ where the brokers operate, in much the same way as stock and share brokers on a stock exchange.

Ship brokers have an expert knowledge of rises and falls in rates for chartered ships, and the trends of the market. This is a very competitive business and there are no fix rates in it as in the case of the line companies²: tramp³ rates fluctuate very rapidly, depending upon supply and demand.

The contract between the shipowner and the charterer is called a charter party⁴, and it is a long and rather complicated document. A charter party may be for the carriage of goods from one specified port to another, and is known as a voyage charter⁵, or it may cover a period of time and is known as a timecharter⁶.

Much of business of chartering is done regularly by cable or fax. The following is an example of letter written from charters to brokers:

...We have signed the contract for the supply of computers, over the next seven months, to South America, and shall be glad to know if you can fix us a time charter for a suitable vessel.

The question of speed must be considered as the ship should be able to make five voyages in the time, allowing three days for loading and unloading on each voyage.

In view of the general slowness of the market at the moment we hope that you can get us a really good offer.

Some very large enterprises have their own fleet of ships, especially when they need to ship their raw material regularly from another part of the world; this is also the case when they specialize in one type of commodity, such as oil or coal.

It is obvious that such specific cargoes as oil, coal or grain, require special vessels for their transport. Grain in bulk, for example, is carried in ships that can be loaded and unloaded by special apparatus - pouring the grain into the holds of the ship and sucking it out for unloading, which avoids the long process of loading and unloading sacks. For loading and unloading of ships, ship agents - who are connected solely with ships (unlike forwarding agents) may offer their services.

The following is an example of offer of services from ship agents:

...We see from Lloyd’s List that your M.V.Saturn is expected to discharge at their port next week, and we would be very happy to offer you our services as agents.

Our firm has had considerable experience, having been established here for 50 years, and we are acting as agents to all Anglo-Saxon chartered vessels calling at this port.

You can rely on us to provide your vessel a quick turnround⁷, and we might also mention that we can deal. with all matters concerning crews.

If you decide to have us as agents we are sure you will be fully satisfied with the results.