Freight Cargo

It is a sad fact of life that there are rare occasions when a time charterer will concede a particularly attractive rate during negotiations, take the ship on, pay the first hires with impeccable promptness, load the ship with a full cargo and issue ‘freight paid’ bills of lading, pocket the freights so collected (which will amount to several months’ hire) and disappear.  No matter how unfair it may seem, the ship is obliged to carry such cargo to its proper destination without any recourse to the cargo owners and so the venture will be at a considerable loss to the owners. There is no easy answer to this problem, this is what skill and experience (especially in the chosen chartering broker) are all about because it is only market skill which will detect the warning signs and ensure that greed does not overcome prudence. This is the income derived from a voyage charter or from liner operations.  Whereas time charter hire is an agreed sum for the use of the entire ship and based upon the period of employment, freight is essentially paid for the carriage of a quantity of cargo from one place to another. Freight rates are almost invariably expressed as so many dollars (or occasionally another currency) per ton of actual cargo carried. The exception is in the case of a lump sum freight, where an agreed amount is paid in exchange for allowing the charterer to load as much (or as little) as he wishes within the limits set by the cubic capacity of the holds and the ship’s dead weight cargo carrying capacity. In the case of liner freights, the situation can be extremely complex because the vessel will carry many hundreds or even thousands of individual consignments during the course of the voyage.  Freight is generally charged on each container carried and while there has been considerable simplification in liner tariffs in recent years there will be many different rates according to the nature of the cargo carried often linked with special contract arrangements with regular shippers. Container services add further complications in that the agreement with the shipper/consignee may or may not include a door to door element which can mean the line becoming involved in inland rail or road haulage.