Voyage Charter

Malcolm Maclachlan
What is a voyage charter?
• Agreement between a shipowner and a
charterer for carriage by a named vessel of a
specified quantity of a specified commodity
from a named place(s) to another named
place(s), in return for agreed sum of freight.
• Shipowner pays all vessel operating expenses
(“running costs” and voyage expenses, except
where otherwise agreed (e.g. FIO terms).
• Similar to taxi-cab hire.
• Also called spot charter.
Shipowner’s obligations
1. Bring ship to agreed loading place by midnight on
cancelling date.
2. Tender NOR as specified in Notice of Readiness Clause
within agreed lay/can period.
3. Keep ship available to charterer during agreed laytime
period (for charterer’s port operations).
4. Load and carry cargo with “all possible despatch” to
agreed destination.
5. Tender NOR on arrival at agreed destination if required
by C/P.
6. Deliver cargo to receiver on presentation of an original
B/L.
7. Pay all vessel operating expenses and voyage
expenses except whether otherwise agreed.
Charterer’s obligations

• Provide agreed quantity of agreed

commodity for loading at agreed place.
• Pay freight as per C/P.
• Pay demurrage as per C/P if loading or
discharge time exceeds agreed laytime.
• Pay deadfreight on any short-loaded
quantity, if demanded.
Notice of Readiness (NOR)

• Notice given by master (or, if C/P allows,

his agent) in accordance with C/P to
charterer (or his agent) that vessel is at
destination specified in C/P and is in every
respect ready to load/discharge.
• Valid NOR triggers start of laytime.
• Usually in writing, but check NOR Clause!
Laytime
• Period of time agreed between shipowner and
charterer during which shipowner will make and
keep vessel available for loading or discharging
without payment additional to freight.
• Conditions for commencement:
1. Vessel is an “arrived ship” (i.e. at destination specified
in C/P, depending on whether it is a Port C/P or Berth
C/P)
2. Vessel is fully at charterer’s disposal (i.e. all hold/tank
preparations complete).
3. C/P NOR provisions have been complied with.
Laytime exceptions &
interruptions
• Laytime exceptions: Periods agreed not to be
counted as laytime, e.g.:
– Shifting from waiting area or berth to final loading berth;
– Waiting for first suitable tide;
– Bad weather or sea conditions which prevent vessel’s
loading, discharging or shifting between berths;
– SHEX: Sundays and holidays excepted; FHEX;
– Rain periods - if laytime specified as “weather permitting”.
• Laytime interruptions: Events which suspend
running of laytime, e.g. pump- or hatch-cover failure.
(If FIO, breakdown of shore equipment does not stop
laytime.)
Demurrage & despatch
• Demurrage: Sum of liquidated damages payable by
charterer to shipowner for each day (or part thereof if
stipulated), during which ship is detained beyond expiry
of laytime.
• Rate per day specified in C/P, e.g. $17,000. Payable pro
rata for part of a day.
• Despatch money: Reward paid by shipowner to
charterer, ONLY if provided for in C/P, where time used
for cargo ops was less than laytime allowed.
Traditionally half the demurrage rate.
Statement of facts
• Document produced by port agent (from agent’s port
log) on completion of ship’s port operations.
• Contains all facts needed for calculation of
demurrage (or, if applicable, despatch).
• Includes times of arrival, berthing, tendering NOR,
commencement & completion of loading, stoppages
due to weather or other reasons.
• Signed by each party (agent + master +
shippers/receivers).
• Enables agent to compile a Laytime Statement
(showing any demurrage or despatch money due).
FIO – “free in and out”
• Shipowner is free of responsibility for, and
costs of, loading and discharge.
• Charterer benefits from reduced freight
rate.
• Usual in dry bulk trades, since cargo
loading & discharge equipment, personnel,
etc. is arranged by shipper, consignee or
charterer – not by shipowner.
Port & berth charterparties
• Port C/P: Terms provide that vessel shall tender Notice of
Readiness at a specified port but does not nominate a
particular berth in that port.
• Obliges the vessel to reach jurisdictional limits of specified
port before she can be considered an arrived ship.
• Better for shipowner than a Berth C/P!
• Berth C/P: Terms provide that vessel shall tender Notice of
Readiness at a specified berth or “one safe berth” at a
specified port or place.
• Puts risks of delay (e.g. due to port congestion) onto
shipowner.
• Less favourable to shipowner.
• Look for “wipon, wibon, wccon, wifpon” in NoR Clause!
Wipon, wibon, wccon,
wifpon
• May appear in NOR clause, e.g.: “Notice of
readiness may be given on any day at any time
wipon, wibon, wccon, wifpon”.
• Means NOR can be given whether in port or not,
whether in berth or not, whether customs
cleared or not, whether in free pratique or not.
• Where inserted in NOR clause in a Berth C/P,
effectively converts it to a Port C/P: better for
shipowner!