Shipping Liner and Charter Ships: How It Works

Ocean Freight, broadly defined as all ocean-related business activities. But up to now, when we mention shipping, it generally means maritime transportation, such as bulk cargo transportation, container transportation, and port-to-port maritime transportation. According to the operation mode of the ship, it can be divided into 10 types: 

· Liner Transport

· Shipping by Chartering

· Voyage Charter

· Single Voyage Charter

· Round Trip Charter

· Consecutive Trip Charter

· Trip Charter on Time Basis

· Contract of Affreightment

· Time Charter

· Bare Boat Charter

Liner Transport

Ships along a fixed route, through a fixed port, transport the goods according to the fixed shipping schedule announced in advance, and charge the freight at the rate announced in advance. The cargo is loaded and unloaded by the carrier, and the loading and unloading costs of the cargo are already included in the freight rate. Both the carrier and the shipper do not count demurrage and dispatch charges. Due to timing, route, port and pricing, the uncertainty of liner shipping is relatively small. In order to ensure the sailing schedule, the liner ships are generally well-equipped and in good condition. The docks where the liner docks all have their own dedicated docks for the liner company, and the quality of freight is guaranteed. The goods are generally small-value trade goods, and now most of them are containers as the transport unit, and the bill of lading is the main transport document.

Shipping by Chartering

Shipping by Chartering, also known as non-scheduled shipping, does not have a predetermined schedule, route, port, and the ship completes the transportation service according to the terms of the charter contract signed by the charterer and the owner. According to the agreement, the shipowner leases the ship to the charterer to complete specific freight tasks and collect freight at the agreed freight rate. The goods transported by chartered ships are mainly low-value bulk goods, such as coal, ore, grain, fertilizer, cement, timber, oil, etc. Generally, the whole ship is shipped, and the transportation volume is large. The transportation volume of chartered ships accounts for about 80% of the total sea freight volume. The freight rate is relatively low, and the freight rate fluctuates with changes in the market conditions. There are mainly three types of boat charter: Voyage Charter, Time Charter and Bare Boat Charter.

Voyage Charter

Voyage Charter, also known as voyage charter, is a voyage-based charter method. Under this method of chartering, the ship owner must complete the cargo transportation service according to the voyage stipulated in the charter contract, and be responsible for the operation and management of the ship and all the expenses of the ship during the voyage, and the charterer pays the freight according to the agreement. Voyage Charter's contract specifies the laying period or laying rate, and calculates demurrage and dispatch charges. Voyage Charter can be divided into 5 types: Single Voyage Charter, Round Trip Charter, Consecutive Trip Charter, Trip Charter on Time Basis, and Contract of Affreightment:

Single Voyage Charter

Single Voyage Charter is also known as a single voyage charter, that is, the chartered ship only ships one voyage, and the charter party ends when the voyage ends. The freight is negotiated by both parties according to the market conditions of the chartering ship, and the calculation method is generally calculated by multiplying the freight rate by the number of loaded or unloaded goods or calculated according to the whole ship's lump-sum freight.

Round Trip Charter

Round Trip Charter is also known as round-trip voyage charter, that is, the charter party stipulates that after completing a voyage task, a return cargo will be shipped, and sometimes the freight will be calculated separately according to the round-trip cargo.

Consecutive Trip Charter

That is, several voyages are shipped consecutively on the same route. Usually, the freight volume is large, and when one voyage cannot be completed, such a chartering method can be adopted. In this case, the average voyage rent is lower than that of a single voyage.

Trip Charter on Time Basis

Trip Charter on Time Basis is also called time charter voyage charter. The charter of the ship adopts the voyage charter method, but the rent is calculated based on the time (days) required for the voyage. This method of chartering does not include demurrage and dispatch costs, and the ship owner is not responsible for the operation and management of cargo transportation.

Contract of Affreightment

The shipowner will send a number of ships within the agreed time limit to transport a large number of goods from one port to another according to the same charter conditions. The number of voyages is not specified, and the contract is for the goods to be transported. This method of chartering can reduce the pressure of chartering. For shipowners, it is more flexible in operation. They can use their own ships to carry the goods, or they can rent other ships to complete the specified freight tasks; one ship can be used for multiple times. Round-trip transportation can also be carried out by several ships at the same time. Cargo shipped under a contract of carriage is usually a bulk low-value bulk cargo.

Time Charter

Time Charter is referred to as time charter, which refers to the chartering method based on the lease term. During the lease period, the charterer pays the rent according to the agreement to obtain the right to use the ship, and is also responsible for the dispatch and management of the ship. Time charter hire is generally specified as a certain monthly amount per deadweight ton of the vessel. The charter period can be as long or as short as a few months, or as long as five years or more, or even until the ship is scrapped. The object of time chartering is the whole ship. The route and port of call of the ship are not specified, but only the scope of the navigation area. Therefore, the charterer can choose the route and the port of call according to the freight needs, which is convenient for the use and operation of the ship. Time charter also does not make specific provisions on the cargo carried by the ship, and any suitable cargo can be selected; the charterer has the right to dispatch the ship and is responsible for the operation of the ship, paying for marine fuel, various port charges, taxes, cargo handling and other expenses. There is no demurrage clause.

Bare Boat Charter

Bare Boat Charter is also a time charter boat. The difference is that the owner does not provide crew, but only gives an empty boat to the charterer for use. For shipowners, it is generally uneasy to hand over the ship to the charterer; for the charterer, it is very complicated to hire and manage the crew, and the charterer rarely adopts this method. Therefore, the Bare Boat Charter format is rarely adopted in the charter market.