What Are The Pros And Cons Of Charter Shipping Market?

Shipping by chartering, also known as tramp pport, means charter or part of the shipping space.

Generally, the whole ship is leased.

Another way of operation of ocean going vessels is regular shipping.

It is different from liner shipping, there is no prefabricated schedule, there is no fixed route, the port is not fixed, there is no fixed rate.

The operation of a ship is arranged according to the charter party signed by the owner and the owner of the ship.

The fundamentals of charter pportation

(1) charter pport is organized according to the charter party, and the terms of the Charter are mutually agreed between the shipowners and the tenant.

(2) generally speaking, the shipowners and the tenant negotiate the chartering business through their respective or common chartering agents.

(3) indefinite route, uncertain sailing date.

The shipowner determines the ship's route, navigation time and cargo type according to the requirements of the charterer, and provides the corresponding ships, and arranges the arrangement with the consent of the charterer.

(4) the rental rate or freight rate is determined according to the market of the charter party.

(5) the expenses involved in the operation of a ship depend on the sharing of the different modes of chartering by the shipowner and the tenant, and specified in the terms of the contract.

For example, loading and unloading clause FIO indicates that the charterer is responsible for loading and unloading charges. If Liner Term is stated, the shipowner is responsible for loading and unloading charges.

(6) chartering pport is suitable for bulk cargo pportation.

(7) all charter parties have corresponding standard form of contract.

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Charter procedures and chartering

The charter is carried out through the Chartering Market.

In the charter market, the shipowner is the supplier of the ship, and the lessee is the demand side of the ship.

In today's highly developed communications technology, most of the Charter businesses engaged by both parties are negotiated by modern means of communication, such as telephone, telex, telegram or fax.

(1) chartering broker.

In the international charter market, charter trade is not usually done by ship owners and lessees in person, but by chartering agents.

Chartered brokers are very familiar with the market of chartering, master the chartering business, and have rich knowledge and experience of charter. They play a role as bridge and intermediary in the whole tenancy paction process, and play a very important role in smooth paction.

(2) chartering inquiry.

Enquiry is also known as enquiry.

Generally speaking, the lessee is required to hire a ship in the chartering market according to his own requirements for the pport of goods or special requirements for the ship.

Enquiries are mainly written in telegraph or telex.

The contents of the lessee's expected conditions generally include: the types and quantities of goods that need to be carried, the port of loading and unloading port, the time limit for shipment, the way or time limit for chartering the ship, the level of the expected freight rate (rent), and the detailed description of the ship to be used.

Enquiries can also be made by ship owners for shipment and first issued to the chartering market through chartering agents.

The contents of the inquiry sent by the shipowner shall include the name of the vessel, nationality, ship shape, bulk and volume of the ship, the time available for hire, and the type of goods to be contracted.

(3) charter price.

Quotation is also known as offer.

When the owner of the ship gets the inquiry of the charterer from the shipping broker, after the cost estimate or other inquiry conditions, he can propose to the lessee the shipping situation and the freight rate or the rental rate he can provide through the chartering broker.

The main contents of the quotation, besides answering and asking for the contents of the inquiry, are mainly about the level of the rent (freight rate) and the selected model of the charter party, as well as the amendment and Supplementary Clauses to the model provisions.

The quotations are divided into "hard quotes" and "conditional quotations". "Hard quotes" are quotations for quotations that cannot be changed under the conditions of quotations, which are accepted by the buyers.

On the contrary, conditional quotations are quotations that can change the terms of offer.

(4) charter party counter-offer.

Counter-offer is also known as counter offer. In case of conditional quotation, the tenant and the shipowner shall make amendments or additions and deletions to the conditions which are not acceptable in the quoted price conditions.

The counter-offer means the refusal of the inquirer to the offeror and the beginning of the new offer.

Therefore, shipowners may accept all the bargaining of the Charterers, or may accept part of the counter-offer.

Such a reply to the counter-offer conditions or a new quotation is called Recount Offer or counter counter offer.

(5) a charter party's firm offer.

In a chartering paction, after repeated counter-offer and counter counter-offer, if the parties agree on the terms of the charter party, one side can ask the other party to make a decision on whether to make a deal in the form of a firm offer.

When making a firm offer, we should list the necessary clauses in the charter party, and confirm the terms and conditions that have been agreed by both parties and the conditions that have not yet been finalized in the firm offer.

At the same time, it is necessary to stipulate the validity period in the firm offer, ask the other party to answer whether to accept the firm offer, and reply within the prescribed period of validity.

If a reply is not made within the validity period, the firm offer will be invalid.

Similarly, during the validity period, a party who offers a firm offer cannot revoke or modify the firm offer, nor can it make a firm offer to the other third parties when asked (Firm Offer).

(6) accept the booking (Acceptance).

Acceptance of a rental is also known as acceptance, indicating that the parties expressly commit themselves to the conditions listed in the firm offer during the validity period.

So far, the charter party has been established.

In principle, the acceptance of rent is the last stage of the Charter process.

After a subscription is made, a charter negotiation ends.

(7) confirmation of rent.

The confirmation of rental is the last stage of the Charter process, and a charter business is concluded.

The usual practice is to sign a "Fixture Note".

There is no uniform form for the confirmation of rent confirmation, but its contents should specify in detail the main terms of mutual commitment between the shipowner and the lessee in the process of rent negotiation.

The booking confirmation book shall be kept for reference after signing by both parties.