Voyage Charter Parties and Contracts of Affreightment: Under a voyage charter party, the shipowner undertakes to provide a ship for the carriage of specified goods for a voyage between named ports or between a range of named ports. The shipowner remains responsible for the operating expenses of the ship (crewing, stores, lubricants, repairs and maintenance, insurance, etc.) as well as the voyage expenses (fuel, port dues, pilotage, canal dues, etc.).
The cargo-handling expenses may fall upon the shipowner or the charterer, depending on the terms of the charter party. Usually this cost is undertaken by the charterer (hence the terms free-in out trimmed, or FIOT and free-in out stowed, or FIOS in the charter party contract). The shipowner is remunerated by way of freight paid on the quantity of cargo carried or paid on a lump-sum basis. The freight rate must take into account the expected length of the voyage, the type of cargo to be carried (the commodity), etc. In the event of a ship being delayed in port in excess of an agreed period of time (laytime), liquidated damages (demurrage) are paid to the shipowner. When the ship leaves the port before the laytime has expired, the shipowner is usually required to pay money (dispatch) to the charterer.
Under a consecutive voyage charter party, the ship is chartered for a series of voyages, for a stipulated number of voyages, or for as many voyages as can be completed in a given period of time. Each voyage is considered separately when calculating demurrage and dispatch.
A contract of affreightment is used when a shipper wishes to transport a given quantity (usually a very large quantity) of cargo over a given period of time. The contract is usually tailor-made to meet the charterer’s requirements (although there are standard form contracts of affreightment), with the shipowner being able to use his or her own or chartered ships to perform the terms of the contract. A contract of affreightment is similar in many respects to a voyage charter party.