Ship Chartering Process

Chartering Negotiation Procedure

A Charter Party is formed within the Chartering Market, where commercial terms are strongly influenced by supply, demand, ship availability, cargo volume, market sentiment, and timing. The bargaining position of Shipowners and Charterers changes according to market conditions. In a strong Freight Market, Shipowners may have greater leverage, while in a weak market Charterers may be able to demand more favorable terms. Within the limits of mandatory law and commercial practice, the parties are generally free to negotiate their own contractual terms. In most cases, negotiations begin with a Standard Charter Party Form, which is then amended through rider clauses, additions, deletions, and special provisions to suit the particular Fixture.

The negotiation methods used in dry cargo chartering and tanker chartering are broadly similar, although the speed and style of negotiations may differ. Tanker negotiations often move more quickly, especially where cargo stems, laycans, vetting requirements, and market opportunities require rapid decision-making. Dry bulk negotiations may involve more extended exchanges of offers and counter-offers, particularly where the cargo, ship position, loading rate, discharging terms, and port conditions require detailed evaluation. Chartering in the Open Market is also very different from liner booking. In Liner Shipping, a Shipper normally books cargo space under the Carrier’s established service terms, Freight structure, schedule, and documentation requirements. In the Open Chartering Market, by contrast, nearly every important point may be negotiated between the parties, including Freight, laycan, loading and discharging rates, Demurrage, cargo description, port range, commissions, exceptions, and Charter Party wording.

The Chartering Negotiation Procedure in the Open Chartering Market can generally be divided into three main phases: the Investigation stage, the Negotiation stage, and the Follow-Up stage. These stages are closely connected. A weak investigation may lead to poor negotiation, and incomplete follow-up may create disputes after the Fixture has been concluded. Shipbrokers play an important role throughout the process by circulating market information, presenting cargoes and ships, managing offers, recording terms, clarifying subjects, and helping the parties move from commercial discussion to a binding Fixture.

Stages of Chartering Negotiation Procedure:

1. Investigation
2. Negotiation
3. Follow-Up

1- Stage of Investigation

The Investigation stage begins when a Charterer, either directly or through a Shipbroker, introduces a Cargo Order into the Chartering Market. The Cargo Order indicates that the Charterer is seeking a ship for a particular cargo, trade, loading area, discharging area, laycan, and charter type. Similarly, a Shipowner may enter the market through a Shipbroker by circulating a Position List, showing the ship’s name, type, size, current or expected position, open date, cargo suitability, trading limits, and preferred employment. This exchange of cargo orders and ship positions allows both sides to evaluate possible matches before entering serious negotiations.

The nature of the investigation may differ depending on whether the underlying cargo transaction has already been concluded. If the cargo has been sold or purchased and transport must be arranged, the Charterer may be ready to negotiate firmly. If the sales contract is still being discussed, the Charterer may only need a Freight indication in order to calculate the overall commercial position. If the cargo is only a possibility, the order may be exploratory and not yet suitable for firm negotiation. The wording of the order usually indicates the seriousness of the Charterer’s position and whether the market should treat the order as firm, indicative, prospective, or merely possible.

Before releasing the order, the Charterer must decide whether to open immediate firm Freight negotiations with a Shipowner or whether to test the market first. If the Charterer is ready to negotiate immediately and has the necessary commercial backing, the order may include expressions such as:

• FIRM
• FIRM ORDER
• CHARTERERS ARE NOW FIRM AS FOLLOWS
• DEFINITE, FIRM AND READY TO GO
• FIRM WITH LETTER OF CREDIT IN ORDER

These expressions indicate that the Charterer is prepared to proceed with serious negotiations and that the cargo requirement is not merely theoretical. They also signal to Shipowners that it may be worthwhile to spend time preparing voyage calculations, checking port restrictions, reviewing cargo requirements, assessing the ship’s itinerary, and submitting a firm proposal.

Where the goods have been sold or the cargo requirement is relatively serious, but the Charterer is not yet ready to begin firm negotiations, the order may still be described as FIRM or DEFINITE but accompanied by language showing that the Charterer is seeking guidance rather than a binding negotiation. Common expressions include:

• INDICATIONS ONLY
• PLEASE INDICATE
• PLEASE PROPOSE

These phrases invite Shipowners or Shipbrokers to provide market indications, Freight ideas, or possible ship proposals without necessarily creating an immediate negotiating commitment. They are useful when the Charterer wants to understand the Freight Market, compare available tonnage, or prepare internal calculations before deciding whether to enter a firm negotiation.

If the purchase or sale of the cargo is still under negotiation and the Charterer needs Freight information only for costing, planning, or quotation purposes, the order should be introduced more cautiously. In such cases, expressions such as the following may be used:

• PROSPECTIVE ORDER
• ORDER EXPECTED TO BECOME DEFINITE
• ORDER NOT YET DEFINITE

These expressions warn the market that the cargo is not yet fixed or fully committed. Shipowners may still respond with Freight indications, especially if the cargo is likely to become firm, but they will normally treat the order with caution. A prospective order may become important later if the cargo sale is completed, the Letter of Credit (L/C) is arranged, and the Shipper and receiver are ready to proceed.

Where the Charterer is only exploring possible business and has no firm cargo commitment, the order may be introduced with even more limited wording, such as:

• POSSIBILITY ONLY
• CHARTERERS HAVE A POSSIBILITY TO WORK UP FOLLOWING BUSINESS

This type of wording makes clear that the Charterer is not yet in a position to fix a ship. It may be used for market research, budgeting, tender preparation, customer quotation, or strategic planning. Shipowners and Shipbrokers may still provide information, but they will usually give priority to firm cargoes and more advanced negotiations.

It is also common for Charterers to circulate an order without revealing their identity at the first stage. The Charterer may ask the Shipbroker to keep the origin of the order confidential until serious tonnage proposals are received. This may be done to protect commercial strategy, avoid market speculation, prevent competitors from identifying cargo movements, or maintain negotiating leverage. Where the Shipbroker knows the Charterer directly and considers the Charterer reliable, the broker may describe the order using expressions such as FIRST CLASS CHARTERERS (FCC), A1 CHARTERERS, or DIRECT FIRST CLASS CHARTERERS. These expressions should only be used by brokers who genuinely know the Charterer and can stand behind the description. A broker who merely passes on the order without knowing the Charterer’s identity should not use such wording, because it may mislead Shipowners about the commercial standing of the party behind the order.

The minimum information required in a Voyage Charter cargo order must be sufficient for Shipowners to assess the business and prepare a proper voyage calculation. At a basic level, the order should identify the cargo, quantity, loading port or range, discharging port or range, laycan, loading and discharging rates, Freight basis, commission, Charter Party form, special requirements, and any restrictions affecting the ship. Without this information, a Shipowner cannot accurately estimate voyage duration, bunker consumption, port costs, canal dues, cargo intake, stowage requirements, waiting risk, or likely profit.

A well-prepared cargo order is therefore an essential part of the chartering process. It saves time, improves market response, reduces misunderstandings, and allows Shipowners to decide quickly whether the cargo is suitable for their ship. A vague or incomplete order may lead to inaccurate Freight ideas, wasted negotiation, or later disputes over cargo quantity, laycan, port nomination, loading terms, or Charter Party conditions. For this reason, professional Charterers and Shipbrokers normally give careful attention to the wording and completeness of the Cargo Order before introducing it into the Open Chartering Market.

• CHARTERER’S NAME AND DOMICILE
• CARGO QUANTITY AND DESCRIPTION OF THE COMMODITY
• LOADING AND DISCHARGING PORTS
• THE PERIOD WITHIN WHICH THE SHIP IS TO BE PRESENTED FOR LOADING (LAY/CAN)
• LOADING AND DISCHARGING RATES AND TERMS
• ANY RESTRICTIONS CONCERNING SHIP TYPE, SIZE, AGE, FLAG, OR TECHNICAL FEATURES
• C/P FORM ON WHICH THE CHARTERER WISHES TO BASE THE TERMS AND CONDITIONS
• COMMISSIONS TO BE PAID BY THE SHIPOWNER

If essential information from this checklist is missing, Shipowners may be reluctant to respond because they will not have enough detail to calculate the voyage properly or assess whether the business is suitable for their ship. An incomplete or poorly drafted cargo order may therefore be ignored, even where the cargo itself could be attractive. It can also create a weak professional impression in the market, suggesting that the Charterer or broker has not prepared the order carefully. In some cases, the Charterer may also include an approximate Freight Level as a starting point for negotiation. This is often called the Charterer’s Freight Idea. However, Charterers frequently omit this figure at the first stage in order to preserve negotiating flexibility and test the Shipowner’s own Freight expectations.

An example of a Cargo Order in a Voyage Charter is:

FCC CHRTS REQUESTS OWNER’S COMPETITIVE RATES FOR THE FOLLOWING FIRM ORDER: 50,000 MTS 5% MOLOO BULK PHOSPHATE SF ABOUT 0.90 POL ANNABA (ALGERIA) POD QINGDAO (CHINA) LAYCAN 3–9 MARCH 2025, TRY SHIP’S DATES IN MARCH LD/DIS RATE 9,000 MTS WWD FHEX UU/ 15,000 MTS WWD SHINC GRAB FITTED FREIGHT INVITE OWNERS BEST FIOT GENCON ’94 CP COMM 1.25%.

This cargo order sets out a First-Class Charterer’s (FCC) requirement for a geared supramax bulk carrier to perform a Voyage Charter carrying about 50,000 metric tons of bulk phosphate. The quantity is subject to 5% More or Less in Owners’ option (MOLOO), and the cargo has an approximate stowage factor of 0.90. The loading port is Annaba in Algeria, and the discharging port is Qingdao in China. The ship must be presented for loading within the laycan of 3–9 March 2025. If the ship is not ready within that period, the Charterer may have the right to cancel the Charter Party.

The order also provides important operational details. The loading rate is 9,000 metric tons per weather working day, with Fridays and holidays excluded from Laytime unless used. The discharging rate is 15,000 metric tons per weather working day, with Sundays and holidays included in Laytime. The cargo operation requires the use of the ship’s gear, and the ship must be grab fitted. The Charterer is inviting Shipowners to submit their best Freight proposal on FIOT terms, meaning that loading, discharging, and trimming costs are for the Charterer’s account rather than for the Shipowner’s account. The Charter Party is to be based on the GENCON ’94 form, and the Shipowner is to pay 1.25% commission. Since the order is presented as a firm order from First-Class Charterers, the market should understand that the Charterer is ready to enter immediate Freight negotiations.

Another Cargo Order example for a Voyage Charter is as follows:

FCC (FIRST CLASS CHARTERERS) REQUESTS OWNER’S PROPOSAL FOR: 10,000 METRIC TONS OF SULFURIC ACID FROM ZOUSHAN (CHINA) TO SAFI (MOROCCO) LOADING END JANUARY 2025 LOADING RATE: 500 METRIC TONS PER HOUR, INCLUDING SUNDAYS AND HOLIDAYS IN LAYTIME DISCHARGING RATE: 500 METRIC TONS PER HOUR, EXCLUDING FRIDAYS AND HOLIDAYS FROM LAYTIME THE SHIP MUST HAVE A STAINLESS STEEL HULL SUGGESTED FREIGHT IS $63 USD PER METRIC TON PLEASE PROPOSE CHARTER PARTY TERMS COMMISSION: 1.25% (COMM: 1.25%)

This order describes a First-Class Charterer’s (FCC) requirement for a chemical carrier capable of carrying about 10,000 metric tons of sulfuric acid from Zhoushan in China to Safi in Morocco. The intended loading period is at the end of January 2025, and the Charterer may have the right to cancel the Charter Party if the ship cannot be presented within the required loading window. Because sulfuric acid is a specialized chemical cargo, the ship must have a stainless steel hull or suitable stainless steel cargo tanks, depending on the technical requirements of the trade and cargo specification.

The order gives a loading rate of 500 metric tons per hour, with Sundays and holidays included in Laytime, and a discharging rate of 500 metric tons per hour, with Fridays and holidays excluded from Laytime. The Charterer has suggested a Freight level of $63 USD per metric ton and has asked Shipowners to propose Charter Party terms. This wording indicates that the Charterer is seeking proposals and may still be open to negotiation on the form, clauses, and commercial details. Although the order comes from First-Class Charterers, the phrase “REQUESTS OWNER’S PROPOSAL” suggests a less immediate negotiating position than a fully firm order inviting competitive rates on fixed terms.

An order for a Time Charter usually follows the same commercial logic as a Voyage Charter order, but the focus changes. Instead of concentrating mainly on cargo, loading port, discharging port, and Freight per ton, a Time Charter order emphasizes the ship’s type, the intended trade, the charter period, the place of delivery, and the place of redelivery. Since the Charterer pays Hire for the use of the ship over time, Shipowners need enough information to determine whether the employment is suitable, profitable, and within the ship’s trading capability.

In a Time Charter cargo order, the essential details needed to interest a Shipowner include:

• CHARTERER’S NAME AND DOMICILE
• PLACES OF DELIVERY AND REDELIVERY OF SHIP
• THE TIME CHARTER PERIOD
• DETAILS ABOUT THE INTENDED TRADE
• ANY PREFERENCES OR RESTRICTIONS CONCERNING SHIP TYPE, SIZE, AGE, CLASS, FLAG, OR TECHNICAL FEATURES
• C/P FORM ON WHICH THE CHARTERER WISHES TO BASE THE TERMS AND CONDITIONS
• COMMISSIONS TO BE PAID BY THE OWNER

In a Time Charter order, the Shipowner will also usually want to understand the Charterer’s intended cargoes, trading limits, excluded countries, war risk exposure, ice trading possibilities, sanctions restrictions, redelivery range, expected employment pattern, and whether the ship will be used for one trip, a round voyage, or a longer period. The Shipowner must calculate not only the proposed Hire but also the commercial risk of the employment, the possible redelivery position, bunker arrangements, port exposure, and whether the ship will be returned in a commercially useful area. A clear Time Charter order therefore helps Shipowners decide quickly whether to offer the ship and at what Hire level.

 

An example of a Cargo Order at a Time Charter is as follows:

Account “HANDYBULK” is open for the following details: T/C PERIOD: 9 months, 15 days -/+ CHOPT SIDBC/TWEEN MPP - 18,000 to 24,000 DWT Maximum age 20 years - well equipped with gear Delivery location: any port in the BLACKSEA Redelivery locations: MEDSEA or PERSIAN GULF (P.G) CHOPT LAYCAN: 30 JUNE 2025 TRADING AREAS: MEDSEA, REDSEA, P.G., excluding IRAQ IRAN (EII) and EAST AFRICA Cargo mainly includes STEEL, bulk or BGD MINERALS, and general, lawful, non-dangerous goods. HIRE is based on the ship’s consumption and speed, with bunker clauses to be mutually agreed. Commission: 3.75% TTL ADDCOM Otherwise as per NYPE.

This Time Charter order concerns the account “HANDYBULK” and indicates that the Charterer is seeking a suitable single deck bulk carrier (SIDBC) or tween deck multi-purpose ship (TWEEN MPP) in the range of 18,000 to 24,000 DWT. The ship should not be more than 20 years old and should be properly equipped with cargo gear. The requested charter period is 9 months, with a tolerance of 15 days more or less at the Charterer’s option (CHOPT). Delivery is required at any port in the BLACKSEA, while redelivery is to take place in the MEDSEA or PERSIAN GULF (P.G), also at the Charterer’s option.

The laycan is fixed for 30 JUNE 2025, meaning the ship must be ready for delivery by that date, failing which the Charterer may have a right to cancel depending on the wording of the final Charter Party. The permitted trading areas include the MEDSEA, REDSEA, and P.G., while IRAQ, IRAN (EII), and EAST AFRICA are excluded. The intended cargoes are mainly STEEL, bulk or bagged MINERALS, and other general, lawful, non-dangerous cargoes. The Hire level is to be assessed according to the ship’s speed and consumption performance, with bunker adjustment clauses to be mutually agreed. A total address commission of 3.75% is payable, and the remaining terms are to be based on the NYPE form unless the parties agree otherwise.

This order gives Shipowners the main commercial information needed to assess whether their ship is suitable for the proposed employment. The trading areas, cargo description, delivery and redelivery ranges, charter duration, age limit, gear requirement, Hire basis, and Charter Party form are all relevant to the Shipowner’s decision. Because this is a Time Charter order, the Shipowner will also pay close attention to the ship’s likely redelivery position, bunker exposure, permitted cargoes, excluded areas, and the risk of being redelivered in a less attractive market or geographical location.

Another example of a Cargo Order at a Round Voyage Time Charter is as follows:

FCC requests offers for a suitable ship for the following order: Needs SUPRAMAX TC round trip starting and ending at SAMARINDA (INDONESIA) Cargo: COAL Quantity: approximately 50,000 MT Loading port: SAMARINDA (INDONESIA) Discharge port: QINGDAO (CHINA), with a LAYCAN of 26-30 JUNE 2025 Loading and discharging rates are 10,000/15,000 MT respectively. ADDCOM: 3.75% Otherwise as per NYPE

This order describes a First-Class Charterer’s (FCC) requirement for a suitable supramax ship for a Round Voyage Time Charter. The commercial employment begins and ends at SAMARINDA (INDONESIA), which is important because the Shipowner can assess the round voyage result without separately pricing a distant redelivery position. The cargo is approximately 50,000 MT of COAL to be loaded at SAMARINDA and discharged at QINGDAO (CHINA). The ship must be available within the laycan of 26-30 JUNE 2025, and the Charterer may be entitled to cancel if the ship cannot be delivered within that period.

The order states loading and discharging rates of 10,000 MT and 15,000 MT respectively. These rates are important because, even though the structure is a Time Charter, the commercial result is still strongly affected by how long the ship remains in port. The Charterer is asking for offers under NYPE terms, with 3.75% address commission. Since the order is issued by First-Class Charterers and requests offers for a defined round voyage employment, it suggests that the Charterer is ready to receive serious proposals from Shipowners with suitable ships.

A Round Voyage Time Charter resembles a Voyage Charter in its commercial purpose because the ship is intended to perform a specific cargo movement from one loading area to one discharging area and then return to the starting region. However, payment is made as Hire rather than Freight. This means the Charterer assumes the time risk during the agreed employment, while the Shipowner remains responsible for the ship’s technical performance, crewing, maintenance, and seaworthiness. For this reason, the ship’s speed, consumption, bunker prices, port time, and cargo-handling rates all affect the final economics of the Fixture.

The minimal information that should be included in a cargo order for a COA (Contract of Affreightment) charter includes:

• CHARTERER’S NAME AND DOMICILE
• CARGO QUANTITY, BOTH TOTAL QUANTITY AND QUANTITY PER SHIPMENT, TOGETHER WITH THE DESCRIPTION OF THE COMMODITY
• LOADING AND DISCHARGING PORTS OR PORT RANGES
• SPECIFIED PERIODS DURING WHICH THE SHIP MUST BE AVAILABLE FOR LOADING
• LOADING AND DISCHARGING RATES AND TERMS
• C/P FORM ON WHICH THE PARTIES WISH TO BASE THE TERMS AND CONDITIONS
• COMMISSIONS PAYABLE BY THE SHIPOWNER

In a Contract of Affreightment (COA), the cargo order must be more detailed than a simple single-voyage order because the parties are not merely negotiating one shipment. They are agreeing on a continuing transport program over a defined period. The total cargo quantity, shipment size, frequency of shipments, nomination procedure, laycan spread, tonnage suitability, Freight adjustment mechanism, loading and discharging terms, and applicable Charter Party form must be clear. Without these details, the Shipowner cannot properly evaluate fleet commitment, tonnage availability, bunker exposure, ballast risk, port rotation, and expected profitability over the life of the contract.

An example of a cargo order under a COA is as follows:

FCC is seeking firm offers for: 500,000 MT of IRON ORE (SF 0.40) Route: AUSTRALIA/CHINA 50,000–55,000 MT per shipment, with a LAYCAN of 26–30 JUNE 2025 Contract basis: GENCOA C/P Commissions: ADDCOM 1.25% + COMM 1.25%

This order involves a First-Class Charterer (FCC) seeking firm offers for a Contract of Affreightment (COA) covering 500,000 MT of IRON ORE with a stowage factor of about 0.40. The cargo is to move from AUSTRALIA to CHINA, with each shipment expected to be in the range of 50,000 to 55,000 MT. The laycan for the relevant shipment is 26–30 JUNE 2025. The contractual basis is GENCOA, which is a recognized form for Contracts of Affreightment, and the Shipowner is expected to pay total commissions of 2.5%, consisting of 1.25% address commission and 1.25% commission.

The order indicates a substantial transport program rather than a single isolated voyage. Because the total cargo quantity is 500,000 MT, the Shipowner must consider whether the cargo program can be performed with owned tonnage, chartered-in tonnage, or a combination of both. The Shipowner must also evaluate whether suitable ships can be made available on the required shipment dates and whether the Freight level can protect against changes in bunker prices, port costs, ballast positioning, and market fluctuations. Since the Charterer is seeking firm offers, the order suggests that the Charterer is ready to enter detailed negotiations with Shipowners capable of performing the full COA program.

Another COA cargo order example is:

FCC seeks firm offers for: A 1-year COA starting 1ST JUNE 2025 Ship type: Tanker for CRUDE PALM OIL Cargo/Qty: Approximately 35,000 MT +/- 5% MOLOO, 1–3 grades heated to 55°C Owners may later nominate similar or better ships from their fleet. Shipment: Monthly, approximately 35,000 MTS Loading port: Port Klang Discharging port: Istanbul Laytime: 190 MTPH for both loading and discharging Loading/discharge terms: SHINC reversible Freight rate: USD 79 PMT, consistent across all voyages No deadfreight charges if minimum quantity supplied Contract basis: INTERCOA C/P Commission: 1.25% brokerage

This order concerns a First-Class Charterer (FCC) seeking firm offers for a one-year Contract of Affreightment (COA) beginning on 1ST JUNE 2025. The required ship type is a tanker suitable for the carriage of CRUDE PALM OIL. Each shipment is expected to be approximately 35,000 MT, with a 5% More or Less in Owners’ option (MOLOO). The cargo may consist of 1–3 grades and must be carried heated to 55°C, which makes the technical suitability of the tanker particularly important. The Shipowner may later nominate similar or better ships from the fleet, provided that the nominated ships satisfy the contractual and cargo requirements.

The COA provides for monthly shipments of approximately 35,000 MT from Port Klang to Istanbul. The loading and discharging rate is 190 MTPH at both ends, and the laytime is stated to be SHINC and reversible. This means Sundays and holidays are included in Laytime, and time saved at one end may be applied against time used at the other end if the reversible Laytime wording is properly drafted. The Freight rate is fixed at USD 79 per metric ton for all voyages, creating rate certainty for the Charterer and revenue visibility for the Shipowner. The order also states that no Deadfreight will be charged if the minimum cargo quantity is supplied, which is an important commercial protection for the Charterer.

The proposed contractual basis is INTERCOA C/P, with a 1.25% brokerage commission payable by the Shipowner. Since the order is described as firm and contains detailed commercial and technical terms, it indicates that the Charterer is ready to negotiate immediately with Shipowners able to provide suitable tanker tonnage. The Shipowner must carefully assess the heating requirements, tank suitability, cargo compatibility, cleaning requirements, monthly scheduling, port restrictions, bunker exposure, and the risk of committing ships to a fixed Freight level for a full year.

This type of COA is particularly useful for cargo programs involving regular monthly movements of liquid bulk cargo. It gives the Charterer reliable transport capacity while allowing the Shipowner some flexibility to nominate suitable ships from the fleet. However, the success of such a contract depends on precise drafting. The parties should clearly define the cargo grades, heating obligations, tank condition, nomination procedure, loading and discharging terms, Freight payment, Laytime calculation, Deadfreight position, substitution rights, cargo tolerance, and consequences of delay or non-performance. In liquid bulk trades, even small technical details can have major commercial consequences, especially where cargo temperature, tank coating, cleaning standards, pumping rates, and port restrictions affect performance.

Essential details to be included in the cargo order for a Bareboat Charter are:

• CHARTERER'S NAME AND DOMICILE
• SHIP DELIVERY AND REDELIVERY LOCATIONS
• CHARTER PERIOD
• INTENDED TRADE DETAILS
• ANY PREFERENCES OR RESTRICTIONS CONCERNING THE SHIP’S TYPE, SIZE, AGE, FLAG, CLASS, OR TECHNICAL FEATURES
• CHOSEN C/P FORM FOR TERMS AND CONDITIONS
• COMMISSIONS PAYABLE BY THE OWNER

A Bareboat Charter order must contain enough information for the Shipowner to evaluate not only the commercial opportunity but also the long-term operational and legal consequences of transferring possession and control of the ship to the Charterer. Unlike a Voyage Charter or Time Charter, a Bareboat Charter gives the Charterer much wider responsibility for the ship’s operation, crewing, maintenance, insurance, trading, and regulatory compliance. For this reason, the Shipowner will normally examine the Charterer’s financial standing, technical capability, intended trade, flag requirements, insurance arrangements, maintenance obligations, and redelivery terms before deciding whether to enter firm negotiations.

An example of a cargo order for a Bareboat Charter is as follows:

FCC is seeking firm offers for a multi-purpose ship (MPP), not overaged, for a Bareboat Charter period of 3 years with an option for an additional year at Charterer’s option. Delivery is to be anywhere in China between 15-30 January 2025. The ship may be redelivered anywhere within global trading limits. The cargo will consist of non-dangerous general goods under a BARECON Charter Party. A total commission of 3.75% is applicable.

This order concerns a First-Class Charterer (FCC) seeking to take a non-overaged multi-purpose ship (MPP) on Bareboat Charter. The proposed period is three years, with an additional one-year option exercisable by the Charterer. This structure gives the Charterer long-term control over the ship while preserving flexibility to extend the employment if the commercial performance of the ship remains attractive. The ship is to be delivered anywhere in China, and the laycan is stated as 15-30 January 2025. If the ship is not available within that delivery window, the Charterer may have the right to cancel the agreement, depending on the final wording of the Bareboat Charter Party.

The proposed redelivery is within the ship’s global trading limits, which gives the Charterer broad operational freedom during the charter period. The intended cargoes are lawful, non-dangerous general goods, which helps define the commercial employment contemplated by the Charterer and reduces the risk of the ship being exposed to prohibited, hazardous, or technically unsuitable cargoes. The contractual basis is BARECON, the standard BIMCO form commonly used for Bareboat Chartering, and the Shipowner is to pay a total address commission of 3.75%. Since the order is presented as a firm request from First-Class Charterers, it indicates that the Charterer is prepared to begin serious negotiations with Shipowners offering suitable tonnage.

For the Shipowner, the main points requiring careful assessment are the Charterer’s ability to operate and maintain the ship, the proposed trading area, the duration of the commitment, the technical condition required at redelivery, and the insurance arrangements during the charter period. In a Bareboat Charter, the Shipowner gives up direct possession and daily operational control of the ship, so the financial strength and operational competence of the Charterer are essential. The Shipowner will also want to ensure that the ship remains properly classed, insured, maintained, crewed, and operated in accordance with flag state, port state, classification society, and mortgagee requirements.

Moreover, the preliminary information typically required during the investigation phase of a charter, whether introduced by a Shipowner directly or through a Shipbroker, includes:

• SHIPOWNER’S NAME AND DOMICILE
• SHIP DESCRIPTION
• AVAILABILITY PERIOD OF THE SHIP
• TYPE OF CHARTERING SOUGHT, SUCH AS VOYAGE, CONSECUTIVE VOYAGES, TIME, BAREBOAT, OR COA
• LOADING AND DISCHARGING RATES AND TERMS, WHERE RELEVANT
• RESTRICTIONS OR PREFERENCES CONCERNING THE CARGO TYPE
• C/P FORM DESIRED FOR THE TERMS AND CONDITIONS OF CARRIAGE
• COMMISSIONS PAYABLE BY THE OWNER

A Ship Position List is the Shipowner’s equivalent of a cargo order. It introduces the available ship to the Chartering Market and gives Charterers enough information to decide whether the ship is suitable for their cargo, trade, laycan, and commercial requirements. The quality of the information provided is important. A clear and complete position list allows Charterers and Shipbrokers to conduct voyage estimates, assess cargo intake, check port restrictions, review loading and discharging suitability, and compare the ship with competing tonnage. A vague or incomplete position list may reduce market interest or lead to inaccurate offers.

An example of a Ship Position List is as follows:

The SHIPOWNER is seeking charter proposals for the below ship available for Voyage Charter:

• Available at RIZHAO, CHINA, between 26-30 JUNE 2025
• Ship: MV HANDY HANDAN, 80,000 DWT
• Preferences: Open to any suitable employment, preferably FEAST direction
• Type: Gearless, single deck, self-trimming bulk carrier
• Summer DWT: Approximately 80,856.6 MT on 14.450 M - TPC about 71.7
• Built: May 2020 by COSCO SHIPPING HEAVY INDUSTRY ZHOUSHAN
• Flag: LIBERIA
• Dimensions: LOA 229.0 M, Beam 32.26 M
• Holds/Hatches: 7/7
• GRT/NRT: About 44,076 / 27,310
• Hold Grain Capacity: About 96,828.3 CBM, with breakdown per hold available
• Speed and Consumption:
  • Ballast: About 14.0 KTS on about 25.6 MT LSIFO
  • Laden: About 13.0 KTS on about 28.5 MT LSIFO
  • ECO Modes: Lower speeds and reduced consumptions available for both ballast and laden conditions
• Additional terms include:
  • Port Consumption: About 4.4 MT LSIFO (380 CST)
  • Adjustments for weather and sea conditions as specified
  • Ship operations may include IFO and/or MGO consumption under different operational conditions, including ballast exchange at sea and maneuvering in restricted waters

This Ship Position List presents MV HANDY HANDAN as an 80,000 DWT gearless, single deck, self-trimming bulk carrier open at Rizhao, China, between 26-30 JUNE 2025. The ship is described as suitable for Voyage Charter employment and is preferably seeking business in a FEAST direction, although the Shipowner remains open to other suitable cargo opportunities. The position list provides the essential technical description required by Charterers and Shipbrokers, including deadweight, draft, TPC, builder, flag, dimensions, number of holds and hatches, and grain capacity.

The technical details are commercially important because they allow potential Charterers to assess whether the ship can load the required cargo quantity, enter the nominated ports, comply with draft restrictions, and handle the cargo safely. For example, the ship’s gearless configuration means that the loading and discharging ports must have suitable shore equipment, floating cranes, or terminal facilities. The seven holds and seven hatches may be relevant for cargo segregation, trimming, loading sequence, and discharge planning. The grain capacity figure helps Charterers assess suitability for bulk commodities with different stowage factors, including grain, coal, fertilizers, minerals, and other dry bulk cargoes.

The speed and consumption figures are also central to the commercial assessment. Voyage estimates depend heavily on expected ballast speed, laden speed, fuel consumption, port consumption, bunker prices, and the route to be performed. A small difference in daily consumption or speed may significantly affect the voyage result, especially on long-haul routes. ECO mode figures may be useful where Charterers or Shipowners are considering slower steaming to reduce bunker cost, improve emissions performance, or comply with operational efficiency requirements.

The position list also mentions adjustments for weather and sea conditions, as well as fuel use during special operations such as ballast exchange at sea and maneuvering in restricted waters. These details are important because disputes over speed, consumption, performance warranties, and weather allowances are common in chartering. A well-prepared position list should therefore present the ship’s performance figures accurately and avoid overstatement. If the figures are unrealistic or misleading, the Shipowner may later face claims concerning underperformance, increased bunker consumption, delayed arrival, or breach of description.

From the Charterer’s perspective, a position list of this kind provides the first basis for deciding whether to engage in negotiations. If the ship’s open date, location, size, cargo capability, route preference, technical specification, and performance profile match the cargo order, the Charterer may request a Freight indication or invite the Shipowner to offer firm. If the ship is unsuitable because of size, gear, age, flag, draft, trading limits, fuel consumption, or commercial direction, the Charterer can reject the position quickly and avoid unnecessary negotiation.

In practice, the investigation stage depends on the effective matching of cargo orders and ship position lists. The Charterer introduces cargo requirements to the market, while the Shipowner presents available tonnage. Shipbrokers compare these two sides, identify possible matches, test market interest, and guide the parties toward negotiations. Accurate information at this stage reduces wasted time, improves the quality of offers, and helps both Shipowners and Charterers understand the commercial value of the proposed Fixture before entering firm negotiations.

This position list shows that the Shipowner is looking to employ a kamsarmax bulk carrier on a Voyage Charter basis. The ship is open at RIZHAO, CHINA, between 26-30 June 2025, and the Shipowner has also made clear that dangerous goods will not be accepted for carriage on this ship. Such a position list allows Charterers and Shipbrokers to assess whether the ship’s availability, location, size, cargo suitability, and trading preference match an existing cargo order before entering into detailed negotiations.

2- Stage of Chartering Negotiation

After reviewing a cargo order that appears suitable, whether received directly from a Charterer or through a Shipbroker, the Shipowner normally responds through the Shipbroker who first introduced the business. Where several Shipbrokers are circulating the same or similar order at the same time, the Shipowner will usually choose the broker who is closest to the Charterer, has the strongest authority, or is best placed to negotiate effectively. The Shipowner may show interest by presenting the ship’s relevant capabilities, explaining how the ship fits the cargo requirement, and providing an initial Freight Indication. This Freight Indication gives the Charterer an idea of the Shipowner’s starting position, but it is generally non-binding unless it is clearly expressed as a firm offer.

The Charterer then compares the Freight Indication with the Charterer’s own Freight expectation, internal voyage calculation, cargo sale economics, and other proposals received from the market. An initial Freight Indication is often given without a firm reply time or binding commitment. This allows the Shipowner to refine the calculation and later submit a formal offer, either on the same level or on terms that are more attractive to the Charterer. In other cases, the Shipowner may provide only a preliminary idea to test whether there is a realistic basis for negotiation. This may be described as a Freight Idea, meaning that the level is open to further discussion and subject to more detailed voyage estimation, bunker pricing, port cost checking, and operational review.

This preliminary proposal, Freight Idea, or market indication helps the Charterer compare available tonnage and identify which Shipowners may be suitable negotiation partners. The Charterer may discuss the business with several Shipowners before selecting one ship for serious negotiations. Once the Charterer decides that a particular ship is suitable, the Charterer may invite the Shipowner to submit a firm offer based on the initial indication or on later discussions. In some cases, the Charterer may respond to the Shipowner’s indication by making a firm counterproposal directly.

If the Charterer’s order is clearly firm and the trade is straightforward, the Shipowner may decide to submit a firm offer immediately. This is more likely where the ship matches the order closely, Freight levels are well understood, port costs are predictable, and the market is competitive or weakening. In a falling Freight Market, a Shipowner may prefer to move quickly with a Firm Offer before the Charterer secures another ship at a lower rate. The first formal proposal in Chartering Negotiations is usually called the Firm Offer, although the Charterer may also begin the firm negotiation by putting forward a binding proposal. The negotiation stage begins when a Firm Offer is made and continues through a sequence of Offers and Counter-offers until the parties either reach agreement or negotiations fail.

An Offer that is accepted fully and without qualification forms a contract, provided all necessary conditions for contractual agreement are satisfied. If the receiving party rejects the Offer and proposes different terms, that response is not an acceptance but a new Offer. If the response accepts some terms but changes others, it is a Counter-offer. This distinction is important because a Counter-offer normally replaces the previous Offer and shifts the negotiating position. For that reason, Shipbrokers and principals must use precise wording and must clearly state whether a message is an Offer, Counter-offer, indication, proposal, or acceptance.

Most negotiations are conducted through Competitive Shipbrokers, although many large Shipowners, Charterers, commodity companies, and operators maintain internal chartering departments staffed by In-house Shipbrokers. Whether negotiations are handled externally or internally, accuracy is essential. Chartering negotiations involve high-value commitments, tight time limits, market exposure, and complex legal consequences. Small wording differences concerning Laytime, Demurrage, Freight payment, safe ports, cargo quantity, cancellation rights, or commissions can later produce significant disputes.

Chartering Negotiation of Main Terms

The first part of the firm negotiation usually concerns the Main Terms of the Charter. These are the principal commercial and operational terms without which the Fixture cannot be properly understood. During this phase, the Charterer’s Shipbroker presents the desired Charter Party to the Shipowner’s Shipbroker, who then discusses the proposal with the Shipowner. The parties negotiate the core terms first, including the ship, cargo, loading and discharging ports, laycan, Freight or Hire, Laytime, Demurrage, loading and discharging terms, commissions, Charter Party form, and any major special conditions.

After Main Terms are agreed, the negotiation often moves to details, rider clauses, and the wording of provisions not fully addressed in the first exchange. These details may include sanctions clauses, war risk clauses, ice clauses, strike clauses, bunkering provisions, taxes, dues, extra insurance, Bills of Lading (B/L), agency, notices, arbitration, law and jurisdiction, cargo exclusions, and operational requirements. A legally binding Charter Party generally requires agreement on all terms that the parties have made subject to negotiation. If important subjects remain open, the parties may not yet be fully fixed, even if the Main Terms appear commercially agreed.

Firm Offer Considerations

A Firm Offer should be clear, complete, timely, and capable of acceptance. It should identify the terms on which the offering party is prepared to be bound and should normally include a reply time. In chartering practice, a Firm Offer may be made on Main Terms, with certain subjects reserved for later agreement. However, any subjects must be stated clearly because uncertainty over whether an agreement is “subject details,” “subject stem,” “subject receivers’ approval,” “subject management approval,” or “subject Charter Party details” can determine whether a binding Fixture has been concluded.

The Firm Offer for a Voyage Charter typically includes:

• THE SHIP’S NAME AND PARTICULARS
• NAME OF THE SHIPOWNERS
• CARGO QUANTITY AND DESCRIPTION OF THE COMMODITY
• LOADING AND DISCHARGING PORTS AND BERTHS
• LAYDAYS/CANCELLING DAY, INCLUDING THE EARLIEST DATE ON WHICH LOADING MAY BEGIN AND THE DATE AFTER WHICH THE CHARTERERS MAY CANCEL IF THE SHIP IS NOT READY
• LOADING AND DISCHARGING RATES AND TERMS, INCLUDING HOW LAYTIME WILL COUNT, SUCH AS 12,000/9,000 SHEX
• DEMURRAGE AND DESPATCH RATES
• FREIGHT AMOUNT AND PAYMENT CONDITIONS
• CLAUSES DEALING WITH TIME COUNTING, LAYTIME COMMENCEMENT, BUNKER SPECIFICATIONS, EXTRA INSURANCE PREMIUMS, TAXES, DUES, AND SIMILAR COST ITEMS
• CHARTER PARTY FORM
• TOTAL COMMISSIONS
• REPLY TIME

The ship’s name and particulars are essential because the Charterer must know which ship is being offered and whether that ship is technically and commercially suitable for the cargo. The offer should include relevant details such as DWT, draft, holds and hatches, gear, flag, class, age, speed, consumption, current position, and estimated arrival at the loading port. If the Shipowner offers a substitute ship or reserves a substitution right, this should be stated clearly.

The cargo quantity and commodity description must also be accurate. The Shipowner needs this information to calculate intake, stowage, trimming, stability, cargo compatibility, loading method, discharge method, and voyage economics. If the cargo has special characteristics, such as being hazardous, moisture-sensitive, corrosive, dusty, heated, bagged, palletized, or requiring grabs, this should be identified from the outset. Ambiguous cargo descriptions can lead to disputes over suitability, dangerous cargo, Deadfreight (DF), stowage factor, or cargo-handling responsibility.

Loading and discharging ports, berths, or ranges are equally important because they determine port costs, voyage distance, bunker consumption, draft restrictions, waiting risk, safe port exposure, and operational feasibility. If the Charterer has the right to nominate a port later, the offer should define the range clearly. If the berth is to be nominated by the Charterer, the safe berth obligation should be addressed. Where a port or berth involves congestion, draft limitations, tidal restrictions, ice risk, sanctions exposure, war risk, or special terminal requirements, those matters should be considered during the offer stage.

Laydays and the Cancelling Date define the period within which the ship must be presented for loading. The first date protects the Shipowner from being required to load before the agreed commencement of Laytime, while the cancelling date protects the Charterer if the ship arrives too late. The laycan is therefore one of the most commercially sensitive parts of the Firm Offer. It must be consistent with the ship’s current position, expected itinerary, bunker availability, weather risk, canal transit, port congestion, and any previous employment.

Loading and discharging rates determine how much time the Charterer has for cargo operations. The wording must specify whether time counts as weather working days, running days, working days, Sundays and holidays included or excluded, Fridays and holidays excepted, unless used, reversible, non-reversible, per hatch, per ship, or by another agreed formula. These expressions directly affect Laytime and Demurrage exposure. A small difference in time-counting wording can change the commercial result of a Voyage Charter significantly.

Demurrage and Despatch rates must also be stated clearly. Demurrage compensates the Shipowner if the Charterer uses more than the agreed Laytime, while Despatch rewards the Charterer if cargo operations are completed faster than the allowed time, provided Despatch has been agreed. The offer should specify whether Despatch is payable at half Demurrage, whether it applies to all time saved or only working time saved, and whether it applies at both loading and discharging ports.

The Freight amount and payment conditions are central to the economics of the Fixture. The offer should state whether Freight is payable per metric ton, per long ton, per cubic meter, as a lump sum, or by another agreed basis. It should also specify when Freight is earned and payable, whether Freight is prepaid, payable upon signing Bills of Lading (B/L), upon sailing, upon arrival, upon right and true delivery, or within a stated number of banking days. If Freight is non-returnable, deemed earned on shipment, or subject to deduction, this should be expressed clearly.

Additional clauses on time counting, Laytime commencement, bunkers, extra insurance premiums, taxes, dues, war risks, ice, strikes, port charges, agency, and other expenses may be necessary to protect the parties from later uncertainty. The Charter Party form must be identified because it supplies the legal structure behind the Main Terms. If the parties intend to use GENCON, NYPE, BARECON, ASBATANKVOY, SHELLVOY, or another form, this should be stated together with any standard amendments or rider clauses. Finally, commissions and reply time must be included so that the offer is commercially complete and so that both sides understand how long the proposal remains open for acceptance.

 

When it comes to Tanker Chartering on a Voyage Basis, there are notable differences from the aforementioned details:

• The loading and discharging rates are often expressed as one combined Laytime allowance covering both loading and discharging operations, usually stated in a total number of days or hours for all purposes.
• The Freight Rate is commonly calculated or quoted by reference to Worldscale rates rather than only as a simple lump sum or rate per metric ton.

Tanker Voyage Chartering has its own commercial rhythm and terminology. Unlike many dry cargo Voyage Charters, where loading and discharging rates are often stated separately, tanker charters frequently use an overall Laytime allowance for the full cargo operation. This reflects the nature of tanker trading, where loading and discharging are often controlled by terminals, pipelines, pumping arrangements, cargo grades, documentation, inspections, ullaging, sampling, and safety procedures. The use of Worldscale also gives tanker market participants a common reference system for Freight assessment, allowing rates to be quoted as a percentage of a published flat rate for a particular route.

Traditionally, Shipbrokers recorded the progress of Chartering Negotiations in a Day Book. The Day Book served as a practical record of the offers, counter-offers, agreed Main Terms, outstanding subjects, reply times, and unresolved points. Such records could become important if a dispute later arose about whether a Fixture had been concluded or what terms had actually been agreed. In modern chartering offices, physical Day Books have largely been replaced by emails, instant messages, broker platforms, internal systems, and other digital records. Nevertheless, the underlying principle remains the same: negotiation records should be preserved carefully for a reasonable period, ideally until the Charter Party has been fully drawn up, performed, and all related commercial matters have been settled.

Good record-keeping protects Shipbrokers, Shipowners, Charterers, operators, and legal teams. Chartering negotiations can move quickly, and a single phrase such as “firm,” “subject details,” “accept,” “except,” “counter,” or “lift subjects” may have serious legal consequences. For this reason, all written communications should be clear, dated, traceable, and consistent. Digital communication may be faster than traditional paper correspondence, but it can also increase the risk of confusion if messages are fragmented across email, messaging applications, telephone notes, and broker recaps.

Below is an Offer Check List for a Voyage Charter, showing alternative wording and common subjects that may be used during negotiations:

Offer / Indication (Main Terms)

VOYAGE CHARTER

Offer/Indication from: We/Account indicate/offer firm as follows:

Offer/Indication to: Account Charterers/Owners, whom please name in full on replying, for Owners’/Charterers’ approval.

Ship: Ship/s “………….” or Owners’ option to substitute, “as described”, with details stated “about”, including year built, flag, DWT, grain/bale cubic capacity, gear, holds/hatches, class, draft, speed, consumption, and any other relevant particulars.

Ship subjects: Subject to rearranging schedules, availability of bunkers, completion of previous employment, or other stated operational conditions.

Cargo: Full or part cargo, approximately minimum/maximum tons or metric tons, with 5% or 10% MOLOO where applicable, commodity description, stowage factor, packing details, dangerous cargo status, and any special handling requirements.

Loading: At one or two good and safe berth/s, one or two good and safe port/s, in rotation, or within the agreed loading range.

Discharge: At one or two good and safe berth/s, one or two good and safe port/s, in rotation, or within the agreed discharging range.

Conditions: Ports and berths to be always accessible and the ship to remain always safely afloat, unless otherwise expressly agreed.

Laydays: Laycan as specified, identifying the earliest date for loading and the cancelling date.

L/D terms: Loading and discharging rates stated in tons or metric tons daily, per hatch, per working hatch, per day of 24 running hours, or under agreed SHEX, FHEX, SHINC, FHINC, scale load, unless used, even if used, weather permitting, reversible or non-reversible terms. Any time lost waiting for berth, whether in or out of port, may count as loading or discharging time if expressly agreed. Shifting costs and shifting time between berths should be allocated clearly between Charterers and Owners.

Freight: Freight may be stated as a rate per ton, metric ton, lump sum, cubic meter, or other agreed basis, on FIOS, FIOT, liner terms, gross, net, intaken quantity, Bill of Lading (B/L) weight, cubic measurement, or other commercial formula. Any additional Freight, bunker adjustment, Freight scale, or special Freight clause should be stated clearly.

Payment: Freight to be prepaid in whole or in part on signing or releasing Bills of Lading (B/L), within a stated number of banking days after issuing Bills of Lading (B/L), on sailing, on arrival, on right and true delivery, or with balance payable upon completion, depending on the agreed terms.

Taxes/dues: Taxes and dues on cargo, Freight, ports, berths, canal transit, loading, discharging, or Freight tax to be for Charterers’ or Owners’ account as expressly agreed.

Dem/Desp: Demurrage payable per day or pro rata. Despatch, if agreed, may be payable at half Demurrage or another agreed rate, on working time saved or all time saved, at one or both ends.

Agents: Owners’ agents or Charterers’ agents at loading and discharging ports, or as otherwise agreed.

Spec. clauses: War risk clauses, sanctions clauses, ice clauses, strike clauses, force majeure-type clauses, piracy clauses, BIMCO clauses, or other special clauses to apply in full where agreed.

C/P form: Charter Party form to be named clearly, with the Fixture subject to all further details where applicable.

Commission: Total commission payable, including address commission and brokerage commission, should be stated precisely.

Subjects: Subject to specified conditions, such as management approval, stem, receivers’ approval, shippers’ approval, charterers’ board approval, details, or lifting of subjects within a stated time.

Reply: This offer is firm for reply within the specified number of hours, by the stated local time and date.

Date: Date of the offer or indication as noted.

END OF OFFER

NOTES: Comments, qualifications, clarifications, or additional instructions from Shipbrokers, Owners, or Charterers should be recorded separately and carefully distinguished from the binding Main Terms.

A firm offer in a Time Charter typically includes the following essential information:

• THE SHIP’S NAME AND DETAILED IDENTIFIERS
• ADDITIONAL SHIP DETAILS, INCLUDING TOTAL DWT, GRAIN AND BALE CUBIC CAPACITIES, NUMBER OF DECKS, HOLDS AND HATCHES, DERRICK OR CRANE CAPACITIES, SPEED, AND DAILY FUEL CONSUMPTION BY FUEL TYPE
• NAME OF THE SHIPOWNERS
• DETAILED DESCRIPTION OF THE TIME CHARTER EMPLOYMENT
• SPECIFIC PLACE OF DELIVERY OF THE SHIP TO THE CHARTERER AND PLACE OF REDELIVERY TO THE SHIPOWNER, OFTEN STATED AS A PORT, RANGE, OR GEOGRAPHICAL AREA
• LAYDAYS/CANCELLING DAY FOR DELIVERY, INCLUDING THE EARLIEST DELIVERY DATE AND THE CHARTERERS’ RIGHT TO CANCEL IF THE SHIP IS DELIVERED AFTER THE AGREED DATE
• INTENDED TRADE, INCLUDING GEOGRAPHICAL LIMITS, TRADING LIMITS, EXCLUDED AREAS, AND CARGO RESTRICTIONS REQUIRED BY THE OWNER
• QUANTITY AND PRICE OF BUNKERS ON BOARD AT DELIVERY AND REDELIVERY
• HIRE DETAILS AND HIRE PAYMENT CONDITIONS, INCLUDING PAYMENT FREQUENCY AND WHETHER HIRE IS PAYABLE IN ADVANCE
• ADDITIONAL CLAUSES THAT THE OWNER WISHES TO NEGOTIATE AS MAIN TERMS
• CHARTER PARTY FORM TO BE USED
• TOTAL COMMISSIONS
• SPECIFIED REPLY TIME

A Time Charter Firm Offer must be drafted with particular care because the commercial risk differs from a Voyage Charter. In a Voyage Charter, the parties focus on the cargo movement, Freight, Laytime, and voyage costs. In a Time Charter, the Charterer pays for the use of the ship over a period and therefore needs reliable information about speed, consumption, cargo capacity, trading limits, delivery range, redelivery range, bunkers, and performance warranties. The Shipowner, in turn, must protect the ship against unsuitable trades, unsafe ports, excluded cargoes, sanctions risks, war risks, excessive wear, and commercial employment that falls outside the agreed Charter Party limits.

The ship description is especially important in a Time Charter because Hire is agreed on the basis of the ship’s stated capability. If the ship fails to perform according to the warranted speed and consumption, the Charterer may bring a performance claim or deduct sums depending on the Charter Party wording. For this reason, speed and consumption figures should be realistic and should be qualified by weather conditions, sea state, draft, hull condition, currents, engine performance, and any agreed good weather criteria.

Bunker provisions also have major commercial importance in Time Chartering. The parties must agree the quantity and price of bunkers at delivery and redelivery, the fuel grades to be used, the method of valuation, and any minimum or maximum bunker quantities required at redelivery. Since bunkers may represent a substantial cost, unclear bunker clauses can create disputes, particularly where market prices move sharply during the charter period or where the ship is redelivered with quantities different from those expected.

Delivery and redelivery provisions must also be precise. The place of delivery determines when the Charterer begins paying Hire and takes commercial control of the ship. The place of redelivery determines where the Shipowner receives the ship back and can affect the Shipowner’s next employment opportunity. A redelivery range that is too broad may expose the Shipowner to an unattractive final position, while a narrow redelivery range may restrict the Charterer’s commercial flexibility. The parties therefore negotiate these provisions carefully according to market conditions and expected trading patterns.

Below is an Offer Checklist for a Time Charter, including alternative wording options commonly used when negotiating Chartering Terms.

Offer/Indication (Main Terms)

TIME CHARTER

Offer/Indication from: We/Account indicate/offer firm as outlined:

Offer/Indication to: Account Charterers/Owners, please name in full upon reply for Owners’/Charterers’ approval.

Ship: Ship/s “…………………………………………………….” or Owners’ option to substitute, “as described”, with all relevant particulars, including year built, flag, DWT, summer freeboard/summer winter marks where applicable, grain and bale cubic capacity, gear, holds/hatches, class, speed, consumption, fuel grades, and any other details required for the intended employment.

Employment: For one T/C trip, round voyage Time Charter, or Time Charter period through specified ports, ranges, or trading areas, as agreed between the parties.

Trading: Intended cargoes and trade to be clearly described, including any excluded cargoes, excluded countries, sanctions restrictions, war risk areas, ice limits, or other operational restrictions.

Duration: Duration to be stated as a specified number of days, without guarantee, or as a defined period with plus/minus days at Charterers’ or Owners’ option, depending on the commercial arrangement.

Limits/Exclusions: Employment to remain within agreed trading limits and to comply with Institute Navigation Limits (INL), ITF requirements or equivalent arrangements, ISM requirements, flag state rules, class requirements, and any blacklisting, sanctions, cargo, or geographical exclusions stated in the Charter Party.

Delivery: Delivery to take place at the agreed port, berth, anchorage, pilot station, passing point, or delivery range, any time day or night, Sundays and holidays included (SHINC), where so agreed.

Redelivery: Redelivery to take place at the agreed port, range, dropping outward pilot point (DOP), passing point, or geographical area, within the contractual limits and in accordance with the redelivery notice provisions.

Laydays: Laycan or delivery window to be stated clearly, including the earliest delivery date and the cancelling date.

Hire: Hire to be stated per day, per month, or on another agreed basis, calculated by reference to DWT, cubic capacity, or commercial agreement, with overtime included or excluded as agreed. Hire is usually payable monthly, semi-monthly, or pro rata in advance.

Bunkers: Bunker quantities and prices at delivery and redelivery to be agreed for FO/DO/MGO/VLSFO/LSMGO or other fuel grades, with clear provisions ensuring that quantities, prices, specifications, and redelivery requirements are consistent.

Specific Clauses: Any clauses agreed as main terms should apply in full, including off-hire, speed and consumption, bunker adjustment, war risk, sanctions, ice, piracy, trading limits, performance, hull fouling, and environmental compliance clauses.

C/P Form: Charter Party form to be specified, subject to all further details where applicable.

Commission: Total commission to be stated clearly, including brokerage commission and any address commission.

Subjects: Subject to Charterers’ approval of plans, inspection, management approval, board approval, receivers’ approval, or any other expressly stated conditions.

Reply: Offer to remain firm for reply within the specified number of hours, by the stated local time and date.

END OF OFFER

NOTES: Any comments, qualifications, clarifications, or additional observations from Shipbrokers, Owners, or Charterers should be recorded separately and should not conflict with the agreed Main Terms.

A Time Charter offer must be sufficiently detailed because the Charterer is not simply paying for one voyage but for the commercial use of the ship over a period. The ship’s speed, consumption, cargo capacity, trading limits, delivery position, redelivery range, bunker quantities, and technical condition all affect the value of the Fixture. If these points are unclear, disputes may arise over performance, Hire deductions, off-hire, bunker settlement, cargo exclusions, or redelivery obligations. For this reason, the Time Charter offer should give both parties enough information to understand the commercial risk before subjects are lifted.

A firm offer in a Bareboat Charter typically encompasses the following information:

• THE SHIP’S NAME AND SPECIFIC DETAILS (DESCRIPTION)
• NAME OF THE CHARTERERS
• OUTLINE OF THE BAREBOAT CHARTER ENGAGEMENT
• DESIGNATED PLACE OF DELIVERY OF THE SHIP TO THE CHARTERER, USUALLY A PRECISE LOCATION, AND THE PLACE OF REDELIVERY TO THE SHIPOWNER, OFTEN A PORT RANGE OR AGREED TRADING AREA
• LAYDAYS/CANCELLING DAY FOR DELIVERY, INCLUDING THE EARLIEST DELIVERY DATE AND THE DATE AFTER WHICH THE CHARTERERS MAY CANCEL IF DELIVERY HAS NOT OCCURRED
• INTENDED TRADE, INCLUDING GEOGRAPHICAL LIMITS AND OTHER TRADING LIMITS REQUIRED BY THE OWNER
• HIRE DETAILS AND PAYMENT CONDITIONS, INCLUDING WHETHER HIRE IS PAYABLE MONTHLY, SEMI-MONTHLY, OR OTHERWISE, AND WHETHER PAYMENT MUST ALWAYS BE MADE IN ADVANCE
• MAIN TERMS WITHIN THE NEGOTIATED CLAUSES
• CHARTER PARTY FORM TO BE USED
• TOTAL COMMISSIONS
• INSURANCE CLAUSE
• REPLY TIME

A Bareboat Charter offer requires particular care because possession and operational control of the ship will pass to the Charterer for the agreed period. The Shipowner must therefore assess the Charterer’s financial strength, technical ability, insurance arrangements, intended trading pattern, crew management capability, maintenance system, class compliance, flag requirements, and redelivery obligations. Unlike a Time Charter, where the Shipowner normally remains responsible for crewing and technical operation, a Bareboat Charter places much broader responsibility on the Charterer. The offer must therefore address not only commercial terms but also the long-term preservation of the ship as an asset.

Below is an offer checklist for a Bareboat Charter that provides alternative phrasing for negotiating the main charter terms:

Offer/Indication (Main Terms)

BAREBOAT CHARTER

Firm for reply by: [Specify time and date for response]

For account of: [Charterer’s full name and domicile] as Charterers.

Name of ship: [Ship name]

Description of ship: [Full technical and commercial details, including type, year built, flag, class, DWT, dimensions, machinery, gear, trading certificates, class status, survey position, and any other relevant particulars]

Delivery port/area: [Specified port, berth, anchorage, yard, or geographical area for delivery]

Redelivery port/area: [Specified port, berth, anchorage, yard, range, or geographical area for redelivery]

Laydays/Cancelling date: [Specified delivery window and cancelling date]

Position and expected date of readiness to deliver: [Current position of the ship and expected readiness date]

Duration of Bareboat Charter: [Period of charter, including any extension option, purchase option, or early termination provision]

Trading limits permitted: [Geographical limits, excluded areas, sanctions restrictions, flag limitations, ice limits, war risk limits, cabotage restrictions, and other operational boundaries]

Cargo exclusions/permitted cargoes: [Permitted cargoes and excluded cargoes, including dangerous goods, hazardous cargoes, military cargoes, sanctioned cargoes, or cargoes requiring special approval]

Rate of Hire: [Amount per day, month, or other agreed period]

When/how payable: [Payment frequency, advance payment requirement, currency, bank details, default consequences, grace period, and withdrawal rights]

Bunker quantities/prices on delivery/redelivery: [Fuel grades, quantities, prices, specifications, and settlement method]

Form of Charter Party: BARECON or other agreed Bareboat Charter form.

Commission: [Percentage] % total commission, including [Percentage] % address commission where applicable.

Subjects: Subject to Charterers’ approval of plan, inspection, management approval, board approval, financing approval, mortgagee approval, class review, insurance approval, or other stated conditions.

Reply: This offer is firm for reply within [hours] hours of our time, on [date].

END OF OFFER

NOTES: Comments from Shipbrokers, Owners, Charterers, financiers, managers, or insurers should be recorded separately and should be distinguished from the binding Main Terms.

This structure ensures that the essential elements of a Bareboat Charter are addressed from the beginning of negotiations. It also helps the parties identify whether additional documents are required, such as ship management agreements, mortgagee consent, insurance undertakings, class confirmations, flag state approvals, maintenance obligations, purchase option terms, or redelivery condition schedules. In Bareboat Chartering, the legal and financial consequences are often long-term, so the clarity of the initial offer is especially important.

A firm offer in a Contract of Affreightment (COA) charter should typically include the following essential details:

• THE CHARTERER’S FULL NAME AND DOMICILE
• THE SHIPOWNER’S OR CARRIER’S FULL NAME AND DOMICILE
• TOTAL CARGO QUANTITY TO BE CARRIED UNDER THE CONTRACT
• QUANTITY PER SHIPMENT, INCLUDING MINIMUM AND MAXIMUM PARCEL SIZE
• DESCRIPTION OF THE COMMODITY, INCLUDING STOWAGE FACTOR, SPECIAL HANDLING REQUIREMENTS, TEMPERATURE REQUIREMENTS, DANGEROUS GOODS STATUS, OR OTHER TECHNICAL DETAILS
• LOADING PORTS, DISCHARGING PORTS, OR AGREED PORT RANGES
• SHIPMENT PERIOD, FREQUENCY OF SHIPMENTS, AND NOMINATION PROCEDURE
• TYPE, SIZE, CLASS, AGE, FLAG, OR TECHNICAL STANDARD OF SHIPS TO BE NOMINATED
• LAYCAN ARRANGEMENTS FOR EACH SHIPMENT
• LOADING AND DISCHARGING RATES, LAYTIME TERMS, DEMURRAGE, AND DESPATCH PROVISIONS
• FREIGHT RATE, FREIGHT PAYMENT TERMS, AND ANY BUNKER OR COST ESCALATION CLAUSE
• DEADFREIGHT, MINIMUM QUANTITY, AND FAILURE TO PROVIDE CARGO OR TONNAGE PROVISIONS
• SUBSTITUTION RIGHTS AND NOMINATION RIGHTS FOR SUITABLE SHIPS
• CHARTER PARTY FORM OR COA FORM TO BE USED
• TOTAL COMMISSIONS
• SUBJECTS AND REPLY TIME

A Contract of Affreightment (COA) offer differs from a single Voyage Charter offer because it is concerned with a cargo program rather than one isolated voyage. The parties must therefore define the total commitment, shipment schedule, tonnage nomination system, and commercial consequences of non-performance. The Shipowner must know whether the Charterer is obliged to provide the full quantity or only cargoes as required, while the Charterer must know whether the Shipowner is obliged to nominate suitable ships within each shipment window. Clear wording on nomination notices, substitution rights, Freight adjustment, bunker escalation, strikes, force majeure, sanctions, port restrictions, and cargo tolerances is essential.

COA offers are particularly important in trades involving regular movements of raw materials, coal, iron ore, grain, petroleum products, chemicals, fertilizers, cement, bauxite, alumina, steel products, and other bulk cargoes. Because a COA may run for months or years, both parties are exposed to changes in bunker prices, port costs, market Freight levels, currency rates, weather patterns, regulatory requirements, and political risk. For that reason, the Main Terms should be commercially complete and supported by detailed rider clauses before the parties consider the contract fully fixed.

• NAME OF THE CHARTERERS
• CARGO QUANTITY AND DESCRIPTION OF THE COMMODITY
• LOADING AND DISCHARGING PORTS AND BERTHS
• LAYDAYS/CANCELLING DAY, STATING THE EARLIEST DATE ON WHICH LOADING MAY COMMENCE AND THE CHARTERERS’ OPTION TO CANCEL IF THE SHIP IS NOT AVAILABLE BY THE AGREED DATE
• LOADING AND DISCHARGING RATES AND TERMS
• DEMURRAGE AND DESPATCH RATES
• FREIGHT AMOUNT AND CONDITIONS FOR FREIGHT PAYMENT
• CLAUSES DEALING WITH LAYTIME COMMENCEMENT, BUNKER ADJUSTMENTS, EXTRA INSURANCE PREMIUMS, TAXES, DUES, AND OTHER IMPORTANT TERMS REQUIRED BY THE OWNER
• CHARTER PARTY FORM TO BE USED
• TOTAL COMMISSIONS
• REPLY TIME

The following offer checklist for a Contract of Affreightment (COA) provides practical wording alternatives that may be used during negotiations. Because a COA normally covers a transport program rather than a single voyage, the offer should be drafted with enough precision to identify the total cargo commitment, shipment schedule, ship nomination procedure, Freight basis, Laytime arrangements, and the consequences of non-performance by either party.

Offer/Indication (Main Terms)

COA CHARTER

Reply by: [Specify deadline]

For account of: [Charterer’s full name and domicile] as Charterers.

Type of ship and particulars: [Required ship specifications, including ship type, size, class, age, flag, cargo gear, tank or hold suitability, draft restrictions, and any technical requirements relevant to the cargo and trade]

Cargo quantity: [Total quantity under the COA and quantity per shipment, including any minimum and maximum parcel size]

Cargo description: [Full commodity description, including stowage factor, grade, packing, heating requirements, dangerous goods status, moisture limits, cargo compatibility, or other special handling requirements]

Rate of Freight: [Freight rate per metric ton, lump sum, Worldscale basis, or other agreed calculation method]

Where and how paid: [Freight payment terms, currency, timing of payment, bank charges, deductions, and whether Freight is prepaid, payable on shipment, payable on completion, or payable within a stated number of banking days]

FIOS/FIOT/FIO SPOUT TRIMMED: [Cargo-handling terms, including responsibility for loading, discharging, stowage, trimming, spout trimming, terminal costs, and related cargo operation expenses]

Loading port(s): [Named loading port, safe port, berth, anchorage, or loading range]

Discharging port(s): [Named discharging port, safe port, berth, anchorage, or discharging range]

Laydays/Cancelling: [Laycan for each shipment or shipment period, including cancelling rights and nomination deadlines]

Position and expected date of readiness to load: [Expected availability of nominated ship or nomination procedure for each shipment]

Loading rate/Discharging rate or days permitted: [Loading and discharging rates, Laytime allowance, reversible or non-reversible terms, SHEX, SHINC, FHEX, FHINC, weather working day wording, or any other time-counting formula]

Demurrage/Despatch: [Demurrage rate, despatch rate if agreed, whether despatch is payable on all time saved or working time saved, and whether rates apply per shipment or across the program]

Dues/taxes: [Specify whether port dues, cargo dues, Freight tax, taxes on cargo, taxes on Freight, berth dues, or other charges are for Owners’ or Charterers’ account]

Agents: Owners or Charterers to appoint or nominate agents at loading and discharging ports, as agreed.

Extra Insurance: [State whether additional insurance premiums, war risk premiums, piracy premiums, ice premiums, or other special insurance costs are for Owners’ or Charterers’ account]

Total commission including address: [Total percentage, including brokerage commission and address commission]

Form of Charter Party: GENCOA or another agreed COA form, subject to all further details where applicable.

Commission: [Percentage] % total commission your end, including [Percentage] % address commission, if applicable.

Subjects: Subject to [management approval, board approval, stem, receivers’ approval, shippers’ approval, financing approval, details, or any other agreed conditions]

Reply: This offer is firm for reply within [time frame], our local time, on [date].

END OFFER

NOTES: Any comments, qualifications, clarifications, or reservations from Shipbrokers, Owners, or Charterers should be recorded separately and should not conflict with the Main Terms unless expressly incorporated into the offer.

Description of Ship's Particulars

During chartering negotiations, the Main Terms usually include a description of the ship. These particulars allow the Charterer to decide whether the ship is suitable for the intended cargo, ports, route, Laytime terms, and commercial purpose. They also allow the Shipowner to present the ship accurately to the market and avoid later disputes over capacity, performance, or technical suitability.

• Ship’s name
• Year built
• Flag
• Classification society
• Deadweight, which may be expressed as DWCC, DWAT, Summer Deadweight, or another recognized deadweight description
• Cargo space cubic capacity, usually stated as both grain and bale capacity where relevant
• Number of hatches and holds
• Cargo gear
• Speed
• Bunker consumption, including FO and DO figures where applicable, especially in Time Charter negotiations
• Other relevant particulars required for the intended cargo, trade, port restrictions, or charter type

In practice, ship particulars are often not treated as exact guarantees. They may be qualified by expressions such as ALL DETAILS ABOUT, indicating that the figures are approximate and should be understood with a reasonable commercial margin. Shipowners’ tonnage lists, websites, and circulars also frequently include wording such as ALL DETAILS GIVEN WITHOUT GUARANTEE BUT GIVEN IN GOOD FAITH AND BELIEVED TO BE CORRECT. This type of wording reflects the market understanding that many ship particulars are provided honestly but may still require verification. Nevertheless, the legal effect of words such as “about” or “without guarantee” depends on the circumstances, the importance of the detail, the reliance placed on it by the Charterer, and the applicable law.

The description of the ship can have serious commercial consequences. If the ship’s DWT, cubic capacity, draft, speed, fuel consumption, gear, hold condition, or cargo suitability is overstated, the Charterer may suffer loss through reduced cargo intake, higher bunker consumption, missed Laycan, port unsuitability, or cargo-handling difficulties. Conversely, if the Charterer relies on approximate figures without seeking clarification, the Charterer may face difficulty later if the discrepancy falls within a reasonable commercial tolerance. For this reason, both Shipowners and Charterers should ensure that ship particulars are carefully checked before a Firm Offer is made or accepted.

SHIP CHARTERING NEGOTIATIONS

Every offer and counter-offer should clearly state the reply time, reply date, and the time zone or place by reference to which the deadline is calculated. In chartering practice, reply periods are often short, sometimes only a few hours, because Freight Markets can move quickly and ships or cargoes may be fixed elsewhere. However, the time allowed must still be sufficient for the Shipbroker to pass the offer to the principal, obtain instructions, and respond properly. The deadline must be precise. Expressions such as “Immediate Reply” or “Prompt Reply” should generally be avoided because they are too vague and may create uncertainty over whether the offer was accepted in time. An offer or counter-offer remains open only until the stated reply deadline, unless the offering party extends it or renews the proposal.

One of the most important commercial issues in any chartering negotiation is the Freight Level. The agreed Fixture Rate is not determined by one factor alone, but by a combination of market conditions, ship availability, cargo demand, voyage economics, risk allocation, and the bargaining strength of the parties. The Freight or Hire finally agreed must compensate the Shipowner for the use of the ship and the risks assumed, while remaining commercially acceptable to the Charterer in relation to the cargo value, sale contract, market alternatives, and transport budget.

In Voyage Charter negotiations, the Freight Level is influenced by the ship’s current position, ballast distance to the loading port, expected voyage duration, bunker prices, port charges, canal dues, loading and discharging terms, cargo quantity, stowage factor, draft limitations, weather exposure, congestion risk, and the availability of competing ships. A ship already close to the loading port may be able to offer more competitively than a ship requiring a long ballast voyage, but if the nearby ship has better market alternatives, the Freight Level may still remain firm. Similarly, a cargo moving on a difficult route or to a less attractive discharge area may require higher Freight because the Shipowner must consider the ship’s next employment after discharge.

In Time Charter negotiations, the Hire level depends heavily on the ship’s description, speed and consumption, delivery position, redelivery range, expected trading pattern, cargo exclusions, bunker prices, market direction, charter duration, and the Charterer’s reputation. A longer period may provide income stability to the Shipowner but may also expose the Shipowner to opportunity cost if the market rises. A shorter Time Charter may be more flexible but may provide less security. The Charterer will assess whether the expected earnings from sub-employment justify the Hire payable to the Shipowner, while the Shipowner will compare the proposed Hire with alternative voyage or period employment.

In a Contract of Affreightment (COA), the Freight Level must reflect not only one voyage but the whole cargo program. The parties must consider the number of shipments, total quantity, shipment intervals, port rotation, nominated ship requirements, bunker escalation, currency risk, seasonal restrictions, terminal productivity, and the possibility of market changes during the contract period. A COA Freight rate that appears attractive at the start may become unprofitable if fuel prices rise, port costs increase, or market rates move sharply. For this reason, COA negotiations often include escalation clauses, bunker adjustment mechanisms, nomination rules, and provisions dealing with failure to provide cargo or tonnage.

Negotiating parties also consider the credibility and financial strength of the counterparty. A high Freight or Hire level may be less attractive if the Charterer is unknown, financially weak, or associated with payment delays. Similarly, a Charterer may prefer a reliable Shipowner with a well-maintained ship, strong operational record, and good claims reputation, even if another ship appears cheaper. In chartering, the lowest rate is not always the best commercial result. Reliability, performance, documentation, safety, and dispute risk all affect the real value of a Fixture.

Subjects are another central part of Chartering Negotiations. Offers may be made subject to management approval, board approval, stem, receivers’ approval, shippers’ approval, inspection, Charterers’ approval of plans, details, or other conditions. These subjects must be clearly stated and later lifted before the parties can say that the Fixture is fully clean, unless the legal effect of the subject wording provides otherwise. Ambiguity over subjects is one of the most common causes of disputes in chartering negotiations. Shipbrokers should therefore record exactly which subjects remain open, when they must be lifted, and whether the parties intend to be bound before or only after those subjects are removed.

Accurate recap preparation is also essential. Once Main Terms are agreed, the Shipbroker usually prepares a recap summarizing the agreed terms and outstanding subjects. The recap becomes the practical foundation for the Charter Party. If the recap is incomplete, inconsistent, or unclear, the later Charter Party drafting process may become difficult. The recap should therefore state the parties, ship, cargo, ports, laycan, Freight or Hire, payment terms, Laytime, Demurrage, Despatch, commissions, Charter Party form, special clauses, subjects, reply deadlines, and any agreed amendments to standard wording.

Successful Ship Chartering Negotiations require speed, accuracy, market knowledge, and disciplined communication. The parties must move quickly enough to secure the commercial opportunity, but not so quickly that important terms are left unclear. A professionally conducted negotiation reduces the risk of later disputes and produces a Charter Party that reflects the actual commercial bargain. In a market where ship availability, cargo demand, fuel prices, port conditions, and geopolitical risks can change rapidly, careful negotiation remains one of the most important skills in Shipbroking and chartering practice.

• Type, age, and condition of the ship;
• Current condition of the Freight Market for the relevant tonnage;
• Market expectations of Shipowners and Charterers;
• Length and nature of the charter period, bearing in mind that Voyage Charter rates usually react more sharply to market movements than Time Charter rates;
• Total cost of making the ship available and performing the employment;
• Relative negotiating strength of the parties;
• Ship’s present and expected position;
• Chartering policy, fleet employment strategy, or wider marketing considerations.

The Freight Level or Hire level agreed in a Fixture is therefore the result of several commercial pressures acting at the same time. A modern, fuel-efficient ship in good condition may command a stronger rate than older or less efficient tonnage, especially where Charterers are sensitive to fuel consumption, emissions performance, port requirements, or cargo reliability. The ship’s geographical position is equally important. A ship already close to the loading area may be more attractive to the Charterer and may reduce ballast costs for the Shipowner. However, if the Freight Market is strong and suitable ships are scarce, the Shipowner may still be able to demand a premium. Conversely, if many ships are open in the same area, Charterers may have greater leverage and can push for lower Freight or better terms.

Market expectations also play a major role. A Shipowner expecting the Freight Market to rise may resist fixing at a low level or may prefer short employment so that the ship can return to the market quickly. A Charterer expecting the market to strengthen may try to secure tonnage early or fix for a longer period. In a weakening market, the opposite may occur. Shipowners may prefer to fix quickly before rates fall further, while Charterers may delay negotiations in the hope of obtaining cheaper tonnage. These strategic expectations often influence not only the rate itself but also the charter duration, reply time, subjects, cancellation dates, and willingness to accept additional clauses.

In practice, it is unusual for a party to respond to an initial offer with a “Clean Accept.” Typically, responses to offers include:

• "Accept your last offer, except..." meaning that the receiving party accepts part of the previous offer but proposes changes, deletions, qualifications, or additional terms.
• "Decline your last offer and offer firm as follows..." meaning that the previous offer is rejected completely and replaced by a new firm proposal on different terms.
• "Decline your last offer without counter" meaning that the offer is rejected and the party does not wish to continue negotiations on a counterproposal at that stage.
• "Repeat our last offer, except..." meaning that the party rejects the latest counter-offer and restates its previous position, subject to the stated amendments.

These expressions are important because chartering negotiations develop through a precise sequence of offers, counter-offers, acceptances, rejections, and qualifications. A Clean Accept means that the offer is accepted exactly as made, without alteration or condition. This is relatively uncommon because most charter negotiations involve at least some adjustment to Freight, Laytime, Demurrage, cargo quantity, commissions, subjects, or Charter Party wording. Where a party responds with “accept except,” the response is usually a Counter-offer rather than a final acceptance, because the terms have been changed. Careless wording can therefore create uncertainty over whether the parties are fixed or whether negotiations remain open.

Offers and counter-offers frequently contain a reservation or Subject Clause. A Subject Clause prevents the Fixture from becoming fully binding until the relevant subject has been satisfied, lifted, waived, or otherwise dealt with according to the parties’ agreement. Common types of “Subjects” include:

• Subject Stem (Subject To Enough Merchandise): Confirms that sufficient cargo is available at the loading port and that the cargo program can proceed.
• Subject Sale: Allows the Charterer to complete the underlying sale or purchase of the goods before becoming fully committed to the charter.
• Subject Details: Reserves agreement on secondary or remaining Charter Party terms, certificates, operational clauses, or other details not yet fully negotiated.
• Subject Survey: Gives the Charterer the right to inspect the ship’s condition, particularly in Time Charter or Bareboat Charter negotiations where the ship’s technical condition is commercially important.
• Subject Free, Open, or Unfixed: Indicates that the Shipowner may still be negotiating with others and that the Fixture will only proceed if the ship remains available and uncommitted.
• Subject Shippers' or Receivers' Approval: Requires approval that the ship, expected arrival date, cargo capacity, terminal suitability, and operational details meet the requirements of Shippers or receivers.
• Subject to Management Approval: Allows the relevant management team to review the ship, Shipowner, Charterer, performance history, risk profile, and commercial terms before final commitment.
• Subject to Approval of Charterers by Owners: Allows Shipowners to assess the Charterer’s financial standing, payment record, operational reputation, and market reliability.
• Subject Head Charterer’s Approval: Used where the cargo or ship is being relet or sublet and approval is required from the head Charterer or another contractual party higher in the charter chain.
• Subject Board Approval: Used where a principal’s Board of Directors or senior corporate authority must approve the Fixture before the contract becomes final.
• Subject Charterer’s Reconfirmation: Allows Charterers to reserve the opportunity while checking cargo, market movement, receiver approval, or cheaper tonnage, but it can expose the Shipowner to considerable uncertainty if no clear time limit or objective condition is stated.

Subject Clauses should be drafted carefully and tailored to the real commercial issue that remains unresolved. General or vague subjects create uncertainty and may allow one party to withdraw without a clear reason. A properly drafted subject should identify what approval, event, document, inspection, or confirmation is required; who must provide it; when it must be lifted; and what happens if it is not lifted by the agreed deadline. Clear subject wording protects both parties and reduces the risk of later disputes over whether a binding Fixture existed.

The Chartering Negotiations continue through successive offers and counter-offers until the parties reach agreement on the Main Terms. Once those Main Terms are agreed, the Fixture may still remain subject to details or other conditions. The final stage is often expressed through a Confirm. If the last communication from either the Shipowner or the Charterer states wording such as CONFIRMS HEREBY THE FIXTURE SUBJECT TO DETAILS, the receiving party will normally be expected to issue a reconfirmation or otherwise respond clearly to confirm whether the Fixture is accepted on that basis.

At this point, the Charterers or their Shipbrokers usually prepare a complete summary of all terms agreed during the negotiation. This summary, known as the RECAP , is sent to the Shipowner or the Shipowner’s representative and should be checked promptly by both sides. The recap is one of the most important documents in the post-negotiation stage because it records the commercial bargain before the formal Charter Party is drawn up. It should accurately set out the parties, ship, cargo, ports, laycan, Freight or Hire, loading and discharging terms, Laytime, Demurrage, Despatch, commissions, Charter Party form, subjects, special clauses, and any agreed amendments to standard wording.

Because chartering negotiations often move under tight time pressure, offers and counter-offers usually contain short reply deadlines. Wording such as “THIS IS FIRM FOR REPLY HERE XX HOURS OUR TIME TODAY” or “THIS IS FIRM FOR IMMEDIATE REPLY” is common, although the latter should be used cautiously because it may be less precise than a stated time and time zone. As negotiations approach conclusion, the final exchanges may take place by telephone between the Owners’ and Charterers’ Shipbrokers, while both brokers remain in direct contact with their principals. Even where telephone discussions are used for speed, the terms should be confirmed in writing as soon as possible.

All parties involved in Chartering Negotiations should keep careful notes and organized records of every material communication from the beginning of the investigation stage until the Fixture is concluded and documented. This includes emails, messages, telephone notes, offer sheets, counter-offers, fixture recaps, Charter Party drafts, and comments on rider clauses. Chartering negotiations often use expressions such as Accept/Except (A/E) and Repeat Last. These phrases may have important legal and commercial consequences, so the record should show exactly what was offered, what was rejected, what was accepted, and what remained subject to further agreement.

Ideally, the first full round of commercial discussions should be recorded by email or another reliable written system, and the recap should be issued immediately after the parties are Fixed Sub Details. Shipbrokers should maintain a day book, digital negotiation log, or firm offer checklist that can be updated throughout the process. This practice protects the Shipbroker’s position, assists the principals, supports accurate Charter Party drafting, and provides evidence if a dispute later arises over whether the parties were fixed, which terms were agreed, or whether subjects had been lifted.

Good negotiation records are not merely administrative. They are a practical safeguard in a market where rates change quickly and the legal consequences of a few words can be significant. A properly maintained record helps prevent misunderstandings, supports professional accountability, and ensures that the final Charter Party reflects the actual agreement reached between the Shipowner and the Charterer.

Chartering Negotiation of Details

After the Main Terms have been agreed, the parties must complete the detailed negotiation of the Charter Party. This second phase focuses on the additional wording, operational provisions, legal clauses, and amendments required before the Fixture can be treated as fully complete. The essential commercial points should already have been settled as Main Terms, but the negotiation may still become difficult if the parties cannot agree on important Charter Party details. In principle, details should not be used as an artificial excuse to withdraw from a bargain where the real disagreement concerns market movement or a change in commercial preference. However, if genuine outstanding terms remain unresolved, the Fixture may not yet be final.

During the negotiation of Main Terms, the parties usually identify the Charter Party form that will serve as the basis of the contract. This may be a standard form published by BIMCO, ASBA, Intertanko, or another recognized organization, or it may be a private standard form developed by Charterers, Shipowners, oil majors, commodity companies, or industrial cargo interests. Even where the Main Terms have been agreed, the parties commonly remain “Subject to Details” until the full Charter Party wording has been reviewed, amended, and accepted.

The negotiation of details is usually more detailed and less formal than the exchange of firm offers and counter-offers on Main Terms. Instead of short reply-time offers, the parties often exchange suggested amendments, deletions, rider clauses, and wording proposals. Expressions such as “CHARTERERS SUGGEST THE FOLLOWING AMENDMENTS TO…” are commonly used. These exchanges may be lengthy, especially where the standard form is heavily amended or where the trade involves complex risks such as sanctions, war risks, ice, dangerous cargo, environmental compliance, electronic Bills of Lading (B/L), or special cargo-handling arrangements.

Modern Charter Parties often contain extensive Additional Clauses and Amendments (Rider Clause). These clauses may be circulated by email, fixture platforms, messaging systems, or other digital methods. Rider Clauses can deal with matters such as Freight payment, Hire payment, Laytime, Demurrage, despatch, bunkers, Bills of Lading (B/L), agency, cargo handling, safe ports, speed and consumption, off-hire, sanctions, war risks, piracy, emissions regulation, ice, force majeure-type events, arbitration, law and jurisdiction, and documentary requirements. Until the final wording is agreed, each party may still propose changes, although constant changes of position can damage credibility and suggest that the party is negotiating without proper internal authority or commercial discipline.

Once all details have been agreed, the parties usually confirm the conclusion of the Fixture with wording such as “HEREBY CONFIRM/RECONFIRM THE FIXTURE.” At that point, any remaining conditions or subjects must be clearly declared, lifted, or dealt with before the ship is considered definitively fixed. When consensus is reached, a RECAPITULATION (RECAP) is exchanged among the parties. The recap should summarize the final agreement and include all agreed Main Terms, relevant details, subjects lifted, Charter Party form, amendments, commissions, and special clauses.

When the details of the Fixture and the wording of the relevant clauses have been agreed, the RECAPITULATION (RECAP) is prepared by the Charterer’s Shipbroker and sent to the Shipowner or the Shipowner’s Shipbroker for checking and comments. Both sides should review the recap immediately and carefully. In prompt spot business, the ship may proceed to load very soon after the Fixture is confirmed. At that stage, the absence of a signed or fully typed Original Charter Party does not usually prevent the commercial agreement from operating, provided that the recap has been properly agreed and the parties have reached a clean Fixture.

In some cases, a FIXTURE CONFIRMATION may be required before a particular SUBJECT can be lifted. This often arises where the Fixture remains subject to STEM, RECEIVERS’ APPROVAL, shippers’ approval, management approval, or another external confirmation. Shipowners may protect themselves by insisting on wording such as “SUBJECT TO STEM/RECEIVERS’ APPROVAL TO BE LIFTED WITHIN XX HOURS AFTER CONFIRMATION OF FIXTURE.” Under such wording, the Fixture remains provisional until the subject is lifted within the stated time. If the Charterers fail to secure the cargo, or if receivers reject the ship or terms, the Fixture may fail. If the party responsible for lifting the subject does not do so within the agreed period, the counterparty may be released from the commitment.

Where time limits apply, the parties should handle deadlines with precision. This applies to deadlines for declaring STEM or RECEIVERS’ APPROVAL in order, as well as deadlines for lifting management approval, board approval, inspection subjects, or other conditions. The parties may mutually agree to extend the deadline, but any extension should be clearly recorded in writing. The date of the Charter Party is normally treated as the date on which the parties reach a clean Fixture, meaning that the last outstanding subject has been lifted and no further condition remains to prevent the Fixture from becoming final.

An important legal point concerns the difference between English and American approaches to “Subject Details” or “SUB DETAILS.” Under English law, where agreement is subject to details and the details are not agreed, the contract may be treated as not concluded. Under American law, acceptance of an offer “Subject to Details” may more readily be treated as creating a binding agreement requiring the parties to negotiate and finalize the remaining terms. However, uncertainty often arises because the distinction between Details and Main Terms is not always clear. Terms with significant financial or operational consequences, such as crew war bonuses, extra insurance, sanctions clauses, war risk costs, cargo exclusions, or special port requirements, should normally be treated as Main Terms rather than left vaguely as details.

For clarity, the parties should avoid ambiguous shorthand where possible. Instead of relying only on “sub details,” it may be safer to use wording such as “subject mutual agreement of all outstanding Charter Party terms.” This makes clear that all remaining terms must be agreed before the Fixture is treated as fully binding. Careful wording is especially important in international negotiations where parties, brokers, lawyers, and principals may be working under different legal assumptions.

3- Follow-up stage

In the follow-up stage, once the Fixture has been concluded, the main task is to prepare the formal Charter Party. The Charterer’s Shipbroker will usually draft the Charter Party and send it to the Shipowner’s Shipbroker for review. The typed Charter Party should include the selected standard form, all agreed amendments, and the Additional Clauses (Rider Clauses) negotiated between the parties. The draft must accurately reflect the recap and the final agreed terms. Any inconsistency between the recap, rider clauses, and printed form should be corrected before signature.

If an error is discovered before the Charter Party has been signed, the Shipbrokers may correct the wording so that the document reflects the actual Chartering Negotiation and agreed recap. If the Charter Party has already been signed by one or both parties, or by Shipbrokers acting on their behalf, no alteration should be made without the mutual consent of the parties. Changes to a signed Charter Party must be treated carefully because unauthorized alterations may create evidential problems, contractual uncertainty, or allegations that the document no longer reflects the agreement. The Charterer’s Shipbroker is normally responsible for circulating the corrected Charter Party and ensuring that all relevant documents are properly signed and distributed.

Preparation of the original signed Charter Party may sometimes take time, especially where the principals wish to sign the document personally rather than allowing the Shipbroker “As Agents Only” to sign on their behalf. In the meantime, the Shipowner may instruct the Shipowner’s Shipbroker to prepare a working copy or Proforma Copy of the Charter Party and send it directly to the Ship Master for guidance. This enables the Ship Master and operations team to understand the essential terms affecting the voyage, cargo, Laytime, notices, Bills of Lading (B/L), port rotation, loading and discharging obligations, and any special instructions before the final signed document is available.

During the follow-up stage, the Shipowner’s Shipbroker also keeps the Charterer informed about the ship’s position, expected arrival time, estimated readiness, and progress toward the first charter port. This operational communication is important because delays, changes in itinerary, weather, congestion, bunkering, canal transit, or previous employment may affect the ship’s ability to meet the laycan. Clear updates help both parties prepare cargo, terminal arrangements, agents, documents, and operational instructions.

If the parties agree to amend a Charter Party term after the Fixture has been concluded, the change should be recorded in an Addendum. The addendum must be signed by both parties and attached to the Original Charter Party. If several amendments are agreed at different times, the addenda should be numbered consecutively and dated according to the date on which the new terms were mutually agreed. Properly numbered and dated addenda prevent confusion and ensure that the contractual record remains complete.

Addenda may be used for many reasons, including changes to laycan, loading or discharging ports, Freight or Hire payment terms, cargo quantity, Demurrage rate, routing, agency, bunker arrangements, trading limits, sanctions wording, or operational instructions. Because a Charter Party may pass through many hands during performance, including operations departments, agents, Masters, insurers, lawyers, and accounting teams, every amendment must be clear and traceable. Informal verbal changes should be confirmed in writing as soon as possible.

BIMCO (Baltic and International Maritime Council) provides commercial guidelines for the chartering business and recommends adherence to established practices:

Such guidance reflects the importance of professional conduct, accurate documentation, clear communication, and disciplined negotiation in chartering. The commercial value of a Fixture depends not only on the rate agreed but also on the quality of the contractual record supporting it. A well-managed follow-up stage reduces the risk of disputes, improves operational performance, and ensures that the Charter Party accurately records the bargain made between the Shipowner and the Charterer.

• Use suitable and established contract forms that are appropriate for the specific trade and chartering business.
• Rely on proven clauses wherever possible. Quickly drafted clauses often become expensive "dispute-breeders."
• Remember that clauses appearing minor during negotiation may become decisive when unexpected problems arise.
• Compare similar clauses used in different contract forms in order to understand their advantages, weaknesses, and practical consequences.
• Be cautious when changes to the printed wording are proposed, and always ask why the change is needed and which party benefits from it.
• Make proper use of Shipbrokers who have real experience in the relevant chartering field.
• Recognize that experience remains one of the strongest safeguards against costly mistakes.
• Combine routine practice with commercial creativity, since both are valuable in professional chartering.
• Always distinguish between ordinary shipping documents, such as Timesheets, and a Bill of Lading (B/L), which may operate as a Document of Title (DOT) with major legal and financial value.
• Preserve mutual trust in international shipping, because the market depends heavily on commercial reliability and professional conduct.
• "Fraud prevention" should be treated as a practical discipline, not merely as a slogan.
• The integrity and reliability of a contract partner are more important than attractive commercial terms that may later prove unsafe.

Most Charter Parties and many other international trade contracts are governed by English Law. In some cases, the contract also provides that disputes will be heard by English courts or resolved through London arbitration. In other cases, a court or tribunal in another jurisdiction may apply English law because the parties have selected it as the governing law. Legal advice on such matters should be obtained from qualified practicing lawyers, especially where the wording of the Charter Party, the applicable law, or the dispute resolution clause may affect the parties’ rights and remedies.

In Charter Party agreements, the parties generally have wide freedom to negotiate the terms they consider appropriate for the transaction. The important point is that the agreed wording should be clear, consistent, and free from ambiguity. If a dispute later reaches a court or arbitration tribunal, the decision will usually be based on the meaning that the contract would reasonably have conveyed to the parties at the time of agreement. Through such decisions, common law continues to develop and adapt to the changing needs of maritime commerce. A contractual term may be classified as:

• A Condition, where breach gives the innocent party the right either to terminate the contract and claim damages or to continue the contract and claim compensation.
• A Warranty, where breach gives the innocent party the right to claim damages but not normally the right to terminate the contract.
• An Innominate Term, where the effect of breach depends on the seriousness of the consequences and on the proper interpretation of the contract in the circumstances.

The distinction between these types of contractual terms is important in chartering because not every breach has the same legal effect. A late payment of Hire, an incorrect ship description, unsafe port nomination, failure to provide cargo, breach of trading limits, or delay in loading may have different consequences depending on the wording of the Charter Party and the seriousness of the breach. For this reason, key obligations should be drafted carefully, and the parties should understand whether a clause is intended to give a right of termination, a right to damages only, or a remedy depending on the practical effect of the breach.

Special Ship Chartering Routines

Tender business is handled differently from ordinary chartering practice. In chartering terminology, tenders generally appear in two main forms, and each form affects the negotiation process in a different way.

In the first type, there may be no real Chartering Negotiations in the normal open-market sense. Instead, Charterers, often governmental bodies, semi-governmental organizations, public agencies, large industrial buyers, or institutional cargo interests, issue a chartering order on fixed terms. The order is presented on a “take it or leave it” basis and is described as a tender or tender business. It states the final date and time for submissions, the required ship or cargo service, the applicable Charter Party terms, and the conditions that the Shipowner must accept. The Shipowner must then submit the lowest or most competitive Freight Quotation while accepting the Charterer’s required terms, often contained in a standard pro forma Charter Party.

After the tender deadline has passed, the Charterers examine the offers received and select the Shipowner who satisfies the tender conditions and provides the most favorable Freight Quotation. In many cases, the lowest acceptable Freight will win the business, although technical suitability, delivery position, ship age, flag, compliance, financial standing, and past performance may also be considered. Once the successful Shipowner is notified, the Fixture is normally concluded on the tender terms. Such Freight Tender arrangements can be demanding for Shipowners because the contractual terms may be strict, the scope for negotiation may be limited, and the risk allocation may be unfavorable. A Shipowner may therefore quote a higher Freight than would be required in a more balanced open-market negotiation in order to compensate for the additional contractual risk.

The second type is a “Cargo Tender.” In this situation, an exporter or seller participates in a tender for the sale and transportation of goods requested by a buyer. The exporter acts as Charterer or prospective Charterer and includes firm chartering terms as part of the sales offer. When this order is introduced into the chartering market, it is clearly identified as tender-based. Normal Chartering Negotiations may then take place between the exporter and Shipowners, but the Fixture will usually remain subject to the tender being awarded. If the exporter wins the cargo tender, the Shipowner who agreed the terms with the exporter may automatically secure the charter on the agreed basis.

Several Charterers or exporters may participate in the same cargo tender, and a Shipowner may negotiate or even conclude conditional Fixtures with more than one exporter, provided the position is handled honestly and transparently. Ultimately, only the exporter awarded the cargo tender will have the underlying cargo business. For this reason, Shipowners must pay close attention to the wording of subjects, tender award conditions, reply times, cancellation rights, and the consequences if the tender is not awarded. Tender business can therefore create attractive employment opportunities, but it also requires careful control of contractual exposure and commercial timing.

Rules of Chartering Negotiation: Baltic Code of Ethics

The Baltic Exchange’s motto, "Our Word Our Bond," reflects the importance of trust, honesty, and reliability in the shipping market. Chartering business often begins with oral exchanges, telephone discussions, instant messages, or short written communications before the terms are formally recorded in a recap and Charter Party. Members of the Baltic Exchange therefore rely on each other, and on the principals they represent, to honor commitments made during negotiations. The integrity of both spoken and written agreements is central to the market, and ethical conduct is not optional but a professional obligation. The Baltic Exchange emphasizes several standards that should guide its members and, more broadly, all participants in the chartering market:

• All participants in the shipping market should perform their contractual obligations promptly and in accordance with the agreement reached.
• Shipping professionals should exercise proper care in their work, avoid misrepresentation, and act with honesty, fairness, and commercial integrity.
• A Shipbroker should offer or seek a ship or cargo only when properly authorized by a principal or by another Shipbroker acting with authority from a principal. Shipbrokers must not claim authority they do not have, and they must not alter the scope of authority given by a principal without consent.
• A Shipowner or Shipowner’s Shipbroker should offer a ship firmly for only one cargo at a time. Likewise, a Charterer or Charterer’s Shipbroker should offer a cargo firmly to only one ship at a time.
• A principal who receives more than one firm offer for a ship or cargo should make clear whether the ship or cargo is already committed elsewhere at the time each offer is considered.
• An unsolicited offer or proposal does not automatically establish the negotiating channel or give the sender control over the business.
• Before doing business with an unfamiliar principal, a Shipbroker should make reasonable checks on that principal’s background, reputation, financial standing, and market conduct. If such checks cannot be completed before negotiations proceed, this should be made clear to the counterparty.
• Full transparency is required in relation to Shipbroker commissions. If commissions are to be deducted from Hire and paid to the Shipbroker by the Charterer, this arrangement must be clearly recorded in both the Recap and the Charter Party. Any later change to the commission arrangement should be documented in the same way.
• Shipbrokers acting as Baltic panelists must comply strictly with the Baltic Guide’s instructions on the production, handling, reporting, and benchmarking of market information, maintaining the highest standards of honesty and integrity.

The purpose of these ethical rules is to preserve confidence in the chartering market. Shipowners, Charterers, Shipbrokers, operators, cargo interests, and financial institutions all rely on accurate information and honest negotiation. If ships are offered without authority, cargoes are misrepresented, commissions are hidden, or firm commitments are made to more than one counterparty at the same time, the reliability of the market is damaged. In a business where Fixtures may involve millions of dollars and where decisions are often made within hours, professional ethics are a commercial necessity.

The Baltic Code of Ethics also reinforces the importance of disciplined communication. Offers, counter-offers, subjects, acceptances, and recaps should be expressed clearly and recorded accurately. Shipbrokers must avoid exaggeration, concealment, unauthorized commitments, or misleading market descriptions. Principals must also act responsibly by giving clear instructions to their brokers and by honoring the commitments made on their behalf. Ethical negotiation supports efficient chartering, reduces disputes, and protects the reputation of all parties involved.

Ultimately, successful chartering depends not only on market knowledge and negotiating skill but also on trust. A profitable Fixture with an unreliable counterparty may become more costly than a less attractive Fixture with a reputable and dependable partner. For this reason, the integrity of the parties, the accuracy of the documents, and the honesty of the negotiation process remain as important as Freight, Hire, Laytime, Demurrage, or any other commercial term.

Unacceptable practices include:

• Offering named tonnage against a tender without clear authority from the Shipowner or Disponent Owner is not acceptable.
• Falsely stating that a ship or cargo is held firm or exclusively in order to obtain market reactions from other parties is improper.
• Holding a ship on “Subjects” merely to test the direction of the market is unacceptable. Cancelling a ship on “Subjects” for that reason is a serious breach of professional conduct.
• Using “Subjects” in the physical chartering market to influence, distort, or manipulate prices in the FFA (Freight Derivatives) market is never permissible.
• Deducting or setting off unrelated claims against Hire or Freight payments is not allowed unless the Charter Party expressly permits such a deduction.
• Particular care is required where a principal’s subsidiary has a name similar to the parent company, as this may create a misleading impression in the market. If there is concern that the subsidiary may not be able to perform its obligations while the parent company could do so, a performance guarantee from the parent company may be required.
• Withholding payment of undisputed amounts, including Shipbrokers’ commissions, is unacceptable.
• A Charterer must not arrange two or more ships for the same cargo and then keep those ships delayed on “Subjects.”
• Using or distributing Baltic Exchange panel route rates or index information for pricing charters or contracts without proper remuneration to a Baltic Shipbroker is not acceptable.
• Redelivering a ship from a Time Charter before the agreed minimum charter period without the prior agreement of both parties is improper.
• Failing to nominate cargoes or ships as required under a COA (Contract of Affreightment) is unacceptable.

Failure to comply with these principles and practices under the Baltic Code may lead to disciplinary action by the Baltic Exchange. Depending on the seriousness of the conduct, the Directors may censure, suspend, or expel a member or company from the Exchange. These disciplinary powers reflect the importance of confidence, transparency, and reliability in the chartering market, where commercial commitments are often made quickly and where trust between principals and Shipbrokers remains essential.

Ship Chartering Process

Process of Chartering Ships takes place in the charter market when two commercial needs meet: Charterers enter the market because they require transport capacity, while Shipowners enter the market because they have ships available for employment. The result is a negotiated commercial arrangement under which a ship is used to carry cargo, perform a voyage, trade for a period, or support a longer transport program.

Ship Chartering Process is usually assisted by intermediaries known as Shipbrokers. Shipbrokers connect cargo interests with available ships, circulate market information, negotiate Main Terms, record offers and counter-offers, prepare recaps, and help the parties move from market discussion to a binding Fixture. In many cases, the quality of the Shipbroker’s market knowledge, communication, and documentation directly affects the success of the chartering transaction.

Shipowners are the owners or commercial controllers of merchant ships that offer sea transportation services in return for Freight, Hire, or another agreed form of remuneration. A Shipowner may be an individual owner of one ship, a large fleet-owning group, an investment-backed shipping company, a shipping pool, or a Disponent Owner controlling tonnage without being the registered owner. Whatever the structure, Shipowners must earn enough revenue to cover capital costs, operating expenses, voyage costs, financing obligations, insurance, maintenance, and commercial risk, while still producing a profit.

Charterers are parties that need transport capacity. They may own cargo and require a ship to carry that cargo safely, efficiently, and on time to the agreed destination at the most competitive Freight level available. Charterers may be commodity traders, mining companies, oil companies, grain houses, steel producers, industrial users, government agencies, logistics providers, or other cargo interests. Their objective is normally to secure reliable carriage at a Freight or Hire level that supports the economics of the underlying sale, purchase, or supply contract.

A Charterer does not always own cargo. Some Charterers take ships on Time Charter in order to trade them commercially in the market. In that situation, the Charterer pays Hire to the Shipowner and attempts to employ the ship at Freight or sub-hire levels that produce a profit above the cost of the Time Charter. Charterers may therefore range from small trading firms to major international commodity houses, energy companies, governments, shipping operators, and other shipping companies that charter in tonnage and then charter out the same ship or use it for their own cargo programs.

Intermediaries between Shipowners and Charterers, or between buyers and sellers of ships, are known as shipbrokers. Shipbrokers may work in-house for a Shipowner, Charterer, commodity group, or shipping company, or they may operate as competitive independent Shipbrokers in the open market. Their role is not merely to pass messages. A competent Shipbroker understands market levels, ship positions, cargo requirements, charter forms, port restrictions, Freight calculations, Laytime implications, counterparty reputation, and the practical risks that may affect a Fixture.

The charter market functions through the interaction of supply and demand. Shipowners seek cargoes that can be loaded close to the ship’s current or expected position and that provide the highest possible return. Charterers seek suitable ships at the lowest commercially achievable Freight or Hire level. Shipbrokers help align these competing objectives by identifying suitable cargo and ship matches, testing market interest, and guiding negotiations toward workable terms. This process creates a market structure that can resemble perfect competition, especially where many ships and cargoes are available and market information circulates quickly.

The Ship Chartering Process is one of the central procedures in the business of shipping. It is as important as the physical transportation of cargo itself because the Charter Party determines how the ship will be employed, who bears the main costs, who carries the principal risks, how Freight or Hire will be paid, and how disputes will be handled if performance does not proceed as expected. A well-negotiated charter can protect both parties and produce a profitable voyage or period employment. A poorly negotiated charter can lead to financial loss, delay, claims, and legal disputes.

Chartering may take the form of a short-term agreement for a single voyage, where the Shipowner agrees to carry an agreed cargo from one port or range to another for a fixed Freight. This is known as a Voyage Charter. Freight is commonly calculated in dollars per metric ton, dollars per long ton, a lump sum, or another agreed basis. Voyage Chartering is especially common in dry bulk, tanker, gas, project cargo, and other tramp shipping trades where ships are fixed cargo by cargo and voyage by voyage.

Time Chartering is a period-based arrangement under which the Charterer hires the commercial use of the ship for an agreed time. Instead of paying Freight for one cargo movement, the Charterer pays Hire, usually expressed as an amount per day and commonly payable in advance. Under a Time Charter, the Shipowner usually remains responsible for the crew, technical operation, maintenance, insurance, and seaworthiness of the ship, while the Charterer directs the ship’s commercial employment within the agreed trading limits and cargo restrictions.

Trip Chartering (TCT) is used for a single trip or round voyage, but its payment structure and many of its terms resemble Time Chartering rather than Voyage Chartering. The Charterer pays Hire for the time used, even though the commercial purpose may be to move one cargo from one area to another. A Trip Time Charter is therefore often viewed as a practical hybrid between Voyage Chartering and Time Chartering, allowing the parties to structure a voyage-like employment on a daily Hire basis.

A Contract of Affreightment (CoA) is used where the Shipowner or operator undertakes to carry a large quantity of cargo over a longer period, usually between agreed loading and discharging ports or ranges. Unlike a single Voyage Charter, a Contract of Affreightment (CoA) normally involves several shipments and may allow the Shipowner to nominate suitable ships rather than committing one named ship for the whole contract. The terms are often similar to Voyage Chartering because Freight, Laytime, Demurrage, loading rates, and discharging rates remain important, but the structure is broader because it covers a cargo program rather than one voyage.

The final major form is Bareboat Chartering, which is a long-term arrangement under which the Charterer takes possession and control of the ship without crew. Bareboat Charters often run for several years and may be connected with financing, leasing, purchase options, or sale-and-leaseback structures. Under a Bareboat Charter, the Bareboat Charterer may become the Disponent Owner of the ship for the charter period, assuming responsibility for crewing, maintenance, insurance, technical management, commercial operation, and many functions normally associated with ownership.

Standard Charter Party forms are widely used because they provide recognized contractual frameworks for different charter types and trades. Common examples include:

• Voyage Chartering: GENCON, OREVOY, COALVOY, and AUSTWHEAT
• Time Chartering: NYPE and BALTIME
• Contracts of Affreightment: VOLCOA
• Bareboat Chartering: BARECON

These standard forms are rarely used without amendment. In practice, Shipowners, Charterers, and Shipbrokers usually adapt them with rider clauses, special provisions, deletions, and negotiated amendments to reflect the cargo, ship, route, trade, market conditions, legal requirements, and commercial risk allocation of the specific Fixture. The selection of the correct form is therefore only the starting point. The final Charter Party must accurately express the full agreement between the parties and must be consistent with the way the ship will actually be used.