How to charter a ship for your cargo, step by step
Chartering a ship for the first time can feel like a closed club with its own language. The process itself is logical. Here are the steps a cargo owner goes through, and what to prepare at each one.
1. Prepare the cargo order
Everything starts with a clear order. Brokers circulate it to owners, so missing details slow everything down.
- Commodity and quantity, with tolerance and whose option it is (for example 10% MOLOO)
- Load and discharge ports, or ranges
- Laycan
- Load and discharge rates and terms (for example 5,000 mt SHINC)
- Stowage factor and any special requirements: gear, max age, hold cleanliness
- Freight idea, if you have one, and payment terms
2. Choose the charter type
For a single parcel most cargo owners take a voyage charter: one freight per tonne, no bunker risk. Regular volumes may justify a contract of affreightment. Traders with shipping expertise sometimes take a ship on trip time charter to control the voyage.
3. Appoint a broker
Tell the broker exactly what you want and agree on what basis they act for you. A broker who knows the trade will already know which ships are open near your load port and what they have been fixing.
4. The market is worked
The broker circulates the order, collects indications from owners and screens the ships: size and intake against the stem, gear, age, draft, laycan feasibility and the owner's reputation.
5. Offers and counters
When a ship looks right, firm offers and counter-offers are exchanged on main terms: freight, laycan, laytime and demurrage, commissions and the charter party form. Offers are usually made 'subject to' conditions such as the charterer's approval of the vessel or the shipper's or receiver's approval.
6. Subjects lifted, fixture made
When both sides lift their subjects, the ship is fixed. The broker sends the fixture recap listing every agreed term, and the charter party is drawn up from it.
7. Voyage instructions and nominations
The charterer gives voyage instructions, nominates agents where the charter allows, and the owner sends notices of expected arrival. The laycan may be narrowed if the charter provides for it.
8. Loading, the voyage and discharge
On arrival the master tenders notice of readiness, laytime counts under the charter terms, and the statement of facts records every event in port. Bills of lading are issued after loading. Freight is paid as the charter says, often on signing bills of lading or before discharge.
9. Laytime and final accounts
After discharge, laytime is calculated from the charter terms, the NOR and the statements of facts, and demurrage or despatch is settled. Keep the documents: many charters time-bar late demurrage claims.
Frequently asked questions
- How long does it take to charter a ship?
- For a straightforward voyage charter with an open market, a fixture can be agreed in a day or two once the order is complete. Tight laycans or unusual cargoes take longer.
- What does 'subjects' mean in chartering?
- Conditions attached to an offer, such as approval of the vessel or of the charter party details. The deal is only binding once all subjects are lifted.
- What information do I need to charter a ship?
- Commodity, quantity and tolerance, load and discharge ports, laycan, load and discharge rates, and any special requirements. That is enough for a broker to start working.