How Charterers are Exposed to Financial Losses

As well as indemnity claims for damage to hull, cargo, pollution, personal injury, wreck removal and various P&I Risks that a charterer faces under charterparties such as NYPE incorporating the Interclub agreement, Gencon, Asbatime, Shellvoy, Shelltime, Asbatankvoy, Bezai, Fertivoy etc; a charterer is exposed to the risk of financial loss through their shipping operations.

Frequent disputes flow through charterparties for claims for time, bunker consumptions, performance, speed and bunker quality as well as demurrage, laytime, detention etc. These claims impact the charterers financial viability and profit once they have determined the voyage costs which are broken down into hire rates or freight costs.


Port Delays

If the vessel does not perform, the port is congested or the cargo is not ready for loading the charterer can end up spending much more money on their shipping costs than they have budgeted. The charterer can protect themselves by taking out FD&D, Freight demurrage or Defence, legal costs cover which means that the charterer has access to a team of lawyers who can give them guidance and support on shipping terms.


FD & D

The support and guidance can be with advice on clausing all the way through to arbitration and dispute resolution on LMAA terms or through the courts so settle a matter. Shipowners have this guidance through their P&I Club and Charterers need to be put on equal terms by having their own dedicated FD&D department who can support them in the event of claims.

A claims may cost as much as USD 100,000 to take through arbitration and the FD&D or Freight Demurrage and Defence Insurance covers the Charterer against these costs which otherwise the charterer would have to find out of the voyage costs.


Lawyers are expensive and the Charterers insurer is well placed to assist the charterer with the ability to service and provide guidance with commercial shipping problems. FD&D is an extraordinary tool which is very valuable to most charterers when defending themselves against shipping problems that occur when a charterer is exposed to problems at sea and with counterparties.

The more serious problems involve bankruptcy, lien and other issues that impact the charterer especially of they have paid freight to a party that they believe is their counterparty.

Cover with a specialised charterer friendly insurance such as the Charterers P&I Club managed by the MECO Group should be the first contact point.

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