Who is a Ship Operator? Ship Operator as Freight Market Practitioner

Who is a Ship Operator? Ship Operator as Freight Market Practitioner

Ship Operator, can also be used in plural as Ship Operators. This name rarely appears in a Charter Party except sometimes as a signatory.

In a Charter Party, one party can only be an owner or charterer. Ship Operator is someone who is speculating on the direction of the freight market.

Ship Operator charters in ship at cheap levels before the market rises and/or Ship Operator will take in cargoes under the form of a COA (Contract of Affreightment) at hopefully higher equivalent levels.

In theory, the ships should always have contracts to go in ballast (empty) to a port of loading and then carry that loaded (laden) cargo. In practice, ships go out of position and expected dates of cargo readiness change. Therefore, depending on the size of Ship Operator, i.e. the number of ships on time charter and number of cargoes under control, the Ship Operator may come into the freight market either:

  1. Ship Operator looks for a ship from the market that will carry a spare cargo. In this case, if a ship is chartered in, then under that relevant Charter Party the Ship Operator will become charterer and the true owners of the chartered vessel will be the Actual Shipowners (Head Owners or Beneficial Owners)
  2. Ship Operator looks for employment from the market for a spare ship within his chartered fleet. In any resulting Charter Party, the ship operator who has the ship on period Time Charter (T/C) (as charterers) becomes the owners for the Re-let Voyage or Time Charter Trip (TCT). Ship Operators who have become owners are sometimes called Disponent Owners or Time Charter Owners and the original owners, who still own the ship and pay for its upkeep and for the crew, are called Head Owners or Beneficial Owners.

These terms are often used in shipping conversations and it can become confusing, so it is important to be precise which type of owners are meant. Good examples of Ship Operators are Cobelfret, Bocimar or Kleimar. Ship Operators can sometimes have limited financial strength, since effectively they are performing a balancing act between chartering in and out. Ship Operators may be less financially secure than an owner who owns ships or a charterer who owns coal mines. However, many operators are very substantial. Some even move into buying ships such as Bocimar. In this case, these Ship Operators are called Owner Operators.