Chartering of ships

Chartering is a highly specialised business. When the senders of goods have very large shipments to make, and especially when bulk cargoes are concerned, it may be of greater advan­tage to them to have a whole ship at their disposal. They do not have to buy the ship but can hire it, and this is called 'chartering'. (The same word is also used for the hiring of a freight plane for the transport of merchan­dise.)

The chartering of ships is usually done through the intermediary of brokers, and in London there is a special centre called the Baltic Exchange* where the brokers operate, in much the same way as stock and share brokers on a stock exchange.

Ship brokers have an expert knowledge of rises and falls in rates for chartered ships, and the trends of the market. This is a very competitive business and there are no conferences to fix rates as in the case of the line companies: indeed, tramp rates fluctuate very rapidly, according to supply and demand. The tramp market may be compared with the liner trade in much the same way as one can compare the cost of raw materials with a finished product; for example, the price of raw sugar varies almost daily whereas the price of a packet of manufactured sugar remains constant until the raw price becomes so high or so low that the retail price of sugar has to be altered.

The contract between the shipowner and the charterer is called the charter party, and it is, understandably, a long and rather complicated document. To facilitate cable communication, code names have been devised to indicate the type of trade concerned and the part of the world it relates to. For example: 'BALTCON' for Baltic & White Sea Conference Coal Charter. (These code names are listed in any book of shipping terms.)

A charter party may be for the carriage of goods from one specified port to another, and is known as a voyage charter, or it may cover a period of time and is known as a time charter. In the case of a voyage charter there is, on the back of the charter party, a form of the bill of lading, to cover the shipment of the cargo. In some cases the charterers may not need the complete space in the vessel and may agree to carry cargo also for other shippers.

It is obvious that certain cargoes, such as oil and coal, require special vessels for their transport. Grain in bulk is carried in ships that can be loaded and unloaded by special apparatus—pouring the grain into the holds of the ship and sucking it out for unloading, which avoids the lengthy process of loading and unloading sacks (though this is still done sometimes).

Much of the business of chartering is done regularly by cable. The following are examples of the type of letters that would be required.

[9] From charterers to brokers

We are able to secure an order for 2,000 tons of coal and coke mixed, shipment Grimsby/Abo early next month. Please advise us of the lowest rate for a suitable fixture.

[10] The broker's reply

We thank you for your letter of 15 March, and confirm our cable of today reading as follows:

MV SCANDINAVIAN READY TO LOAD EARLY APRIL FULL CARGO AT £3.25

GRIMSBY ABO PLEASE CONFIRM CHARTERING IMMEDIATELY

As soon as we receive your instructions we shall be pleased to go ahead with the fixture.

[11] From charterers to brokers

We have entered into a contract for the supply of motor vehicles and parts, over the next six months, to West Africa and shall be glad to know if you can fix us a time charter for a suitable vessel.

The question of speed must be considered as the ship should be able to make 3 voyages in the time, allowing... days for loading and unloading on each voyage.

In view of the general slackness of the market at the moment we hope that you can get us a really good offer.

[12] Reply from the brokers

In confirmation of our cable to you today, a copy of which we enclose, we are pleased to say we have found what we think should be a very suitable vessel for your purpose: the M.V. Mercury, cargo capacity... tons, average speed... knots. She is, perhaps, a little larger than you require, but the owners are prepared to consider a special rate for a time charter.

Mercury has just completed a charter and can therefore be at Liverpool dock and ready to load by the end of next week.

We hope this fixture will suit you, and as soon as we receive your confirmation we will prepare the charter party.

There is also a considerable business in the buying and selling of ships;

the following letter is an example of such transactions.

SHIP AGENTS

Ship agents—that is to say agents connected solely with ships, not for­warding agents—may offer their services for the loading and unloading of ships; the following is an example of this type of letter.

[13] Offer of services from ship agents

We see from Lloyd's List that your M. V. Orion is expected to discharge at this port about the middle of next month, and we are writing to offer you our services as agents. Our firm has had considerable experience, having been established here for 30 years, and we are acting as agents to all Anglo-Saxon chartered vessels calling at this port. We are also agents to a large number of European owners, as you will see from the enclosed list.

You can rely on us to secure your vessel a quick turn round, and we might also mention that we can deal with all matters concerning crews, in accordance with... Articles.

If you decide to let us have the agency we are sure that you will be fully satisfied with the results.

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