The Chartering market

At a general level there are two types of charterer.

Those that are involved in shipping because they make money from ships and those that have to use ships as part of their business. The first type is an operator who deploys an asset to make money and the second is a miner, grower or manufacturer who must use shipping to aid their supply chain.

 

Operators

The operators are generally professional shipping companies who use their market knowledge to sit between a shipowner and the voyage charterer to make a small turn on the voyage based on their ability to maximise vessel usage and deploy the vessel effectively and with minimum spend on bunkers. They generally have staff that understand shipping and the terms and procedures around shipping but have a requirement to maximise profit.

 

The Cargo Charterer

The cargo charterers are generally shipping people by default, they have had to learn the trade to get materials into their supply chain or product to market. They are no less skilled but shipping is not core to their business other than one of many tools to make money.

 

Time charters and Voyage charters

They operator would normally time charter a vessel or take it on time charter trip. The cargo charterer is more likely to voyage charter so only uses the vessel for a specific voyage. The risks under both types of charter are real but the cargo charterer can narrow their risk because they are dealing with specific ports and commodities and can contract accordingly; the time charterer generally has to allow for as many options on trade and cargo as the owner will allow.

 

The Charterparty

Neither want to be involved in shipping incidents or delay but it’s a factor of the business, weather, conditions, mistakes, wear and tear, human error can all lead to claims and the charterparty whether voyage or time will determine where the cost of loss sits.

Not every loss is insurable and routine delay such as congestion is often just a commercial loss that cannot be passed to a third party insurer. Claims for cargo damage, stevedore damage, groundings, collisions, pollution can however lead to the charterer and through the charterparty chain to both the operator and the cargo charterers.

 

Charterers Insurance

An experienced operations, claims and legal team that can support Charterers when problems occur is essential tool in the armoury of all charterers. Liability Insurance includes damage to hull and cargo cover and is essential in transferring risk and Class I or Defence cover assists a Charterer in defending or pursuing claims for economic loss regarding performance of shipping contracts.

Charterers should be protected and a strong safe policy with good support is essential to ensuring that assets are insured and unexpected problems mitigated. The Charterers P&I Club with its AA- Standard and Poors rating is the obvious home for those who wish to insure charterers risk.