A charter party has to be prepared by the broker as soon as the chartering negotiations are successfully concluded. The chartering process begins when the two parties (shipowner and charterer) enter the market to identify suitable counterparties for doing business. The charterer in need of a ship enters the market with an order, and the shipowner seeking cargo enters the market with a position. The negotiations end after a firm offer
is accepted, and the charter party is then agreed. The content of the charter party will by and large be a reflection of what has been agreed during negotiations. The parties will be engaged in the process through the use of chartering-specific notation, and the fixture will be reported in the press.
A charterer will enter the market with an order. An order is a specialized request for quote (RFQ) in shipping. The order will be either a firm order or an indication and will typically contain the following information:
• The charterer’s name and domicile
• Type of cargo
• Volume of cargo and stowage factor (SF)
Ports of loading and discharge • Loading window/laycan – the dates when the vessel is expected to be ready for loading
• Loading/discharge rates (desired) and terms • Freight indication • Charter party form to be used • Commission payable by owner • Other information
The order may contain certain words or phrases that will qualify it in accordance to the predisposition of the charterer (e.g., prospective order, or order not yet definite). The broker can add his or her comment,
if he or she knows the charterers, with words like first class charterers. In placing the order, a charterer has to have a good indication of
how much cargo he or she would like to carry, the type of cargo, and the deadweight of the ship. It is important to note that the deadweight of the ship (DWT) does not determine the carrying capacity of the ship (DWCC). The so-called summer deadweight of the ship indicates the maximum tonnage a ship can carry provided that the cargo to be loaded does not fill up the holds of the ship.
The maximum weight (usually in tons) that can be loaded is de termined by the ship’s deadweight (DWT) or summer deadweight
(SDWT). Summer deadweight is determined by the loadline (Plimsoll
line) on the side of the ship’s hull, as indicated in Figure 2.1. When the ship is full, the level of water must not exceed the respective loadline(s). In some cases, the DWT is reached and there is still space in the ship.
However, it is not always the case that the ship can load its full DWT. In some cases, there is not enough space. Based on the cargo’s stowage factor (SF), the assessor checks that there will be enough space in the holds. Each cargo needs to be assessed so that the weight does not exceed DWT and that there is enough space in the holds. Ideally a ship would want to carry cargo with weight equal to deadweight.