WHAT IS CHARTER SHIPPING

Charter shipping is a tramp service. The term tramp, as used in the ocean shipping, refers to a cargo ship not operating on regular routes and schedules, and picking up cargo only when it is chartered (hired) from the ship operator.

While conference and non-conference shipping are for general cargoes, charter shipping usually is for bulk cargoes like oil, coal, ore, and grain. Charter shipping has the lowest freight rate per unit of weight or measure.

A charter party is required in charter shipping. A charter party---charter party contract---is a written contract between the ship operator and the charterer (shipper). The contract normally includes the ports, freight rate and time involved in the voyage(s).

The ship operator issues a charter party bill of lading. Unless a letter of credit (L/C) permits or calls for a charter party bill of lading, the bank will reject such transport document in the L/C negotiation.

Some trade terms used specifically in charter shipping are as follows:

FI
Free In

The word "free" as used in the charter shipping term means not including. FI is a pricing term indicating that the charterer of a vessel (i.e., the shipper) is responsible for the cost of loading goods onto the vessel.

FO
Free Out

FO is a pricing term indicating that the charterer of a vessel (i.e., the shipper) is responsible for the cost of unloading goods from the vessel.

FIO
Free In and Out

FIO is a pricing term indicating that the charterer of a vessel (i.e., the shipper) is responsible for the costs of loading goods onto the vessel and unloading goods from the vessel.

Please see International Commercial Terms for the different trade terms used in exporting-importing.

Voyage charter
The ship is chartered for a single journey and it may involve more than one port of call. The ship operator crews and operates the ship and it is the operator's own ship's master in control of the ship. This type of charter shipping is analogous to the limousine service where the driver, who is in control of the car in a journey, is provided by the car operator.

Time charter
The ship is chartered for a period of time. This type of charter shipping is similar to a voyage charter in the crewing and operating of the ship. The contract may call for a specific or unlimited number of voyages within the agreed time.

Bareboat charter
The term bareboat means a ship without a crew and ship's master. The charterer (shipper) is in charge of crewing and operating the ship within a period of time, usually a number of years. This type of charter shipping is analogous to a car leasing where the lessor (the car operator) provides the car only and the lessee provides his/her own driver.