In the field of commercial shipping, there are mainly two categories and they are passenger shipping and cargo shipping. The key parties that run this multi-billion-dollar industry are the shipbuilders, ship owners, charterers, buyers and sellers, and ship brokers.
Everything about shipping industry involves big money. Shipbuilders, who of course builds ships, may not get orders for building these expensive ships one after the other. To keep their company running, they make ships and get into deals with ship owners who run the ships and payback the ship builder over a period of time from the revenue generated by operating the ship on terms similar to hire purchase. Ship owners, on the other hand, depend on ship chartering services to arrange business to operate the ship and generate revenue. Buyers and sellers sublet the ships from the charterers and operate the ship for a shorter period to undertake small assignments. Shipbrokers are the connecting link between all these parties. Shipbrokers keep their fingers on the pulse of world trade and pass on credible trade-related information to either of these parties in such a way that a deal can be brokered that benefits all parties involved.
Talking about ship chartering services, there are many types of charters, which the parties mentioned above may opt and make a profitable business out of an opportunity. A Ship Chartering Service company will be in a position to arrange all types of vessels, of all sizes, and of different lifting capabilities to meet any of these demands.
The different types of charters offered by ship chartering services are:
Voyage Charter – The vessel and its crew are hired by the charterer to ship cargo between a load port and the discharge port. Voyage charter is for a very specific period called ‘laytime.’ The charterer will have to pay ‘demurrage’ charges if the period hired exceeds the laytime and conversely, if the charterer saves on laytime, the ship owner pays ‘despatch’ charges to the charterer. Sea ‘freight’ companies pay freight charges to the ship chartering services to use their vessel to transport various cargo between ports. In fact, Sea Freight Companies do the logistics to fill up every available square inch of loading space on board the ship.
Affreightment – This charter is used when the ship owner gets a contract to transport large volume cargos between two ports within a short period. For this, the ship owner may use multiple ships to transport the load.
Standard Time Charter – The ship is hired for a short period of time by the charterer, yet with all ownership rights remains with the owner. Charterer directs the ship to any number of ports of his choice to ship the cargo any number of times, but the charterer pays for all the port charges, fuel charges, commissions. Charterer pays the owner daily hire charges.
Trip Time Charter – This charter is a comparatively shorter form of time charter where the route is limited.
Bareboat Charter – In this charter, the charterer gets full legal and financial ownership of the vessel and the charterer bears all the expenses of operating the ship.
Demise Charter – This is another subtype of bareboat chartering where the charter period would last for many years after the duration of which the charterer may gain full ownership of the vessel. This charter is commonly used for tankers and bulk carriers.
Passenger Cruise Ship Charter – In this charter, the cruise ship would sail through its routine course and ports, but is hired for a limited period of time with all amenities open to the exclusive group of people. This charter could be for a marriage, charity fund raising, business conferences, etc.
In the passenger shipping segment, ship chartering services also arrange bareboat yacht charters for a group of people who would like to hire yachts for leisure. This group would have a ‘skipper’ who would be the master entrusted with all legal responsibilities. This is a trend that began in the 1990s when the demand from leisure seekers who could not afford to own a luxurious yacht seeking such services peaked. These charters offer personalized service replete with base managers, skippers, personal chefs, and dock hands at your service.