Have you heard about vessel chartering? Vessel chartering, also known as ship chartering, is the process of shipowners renting out their vessels to charterers. The charterers rent the vessels for various purposes, such as carrying passengers and transporting cargo. For those who have a business related to marine and ships, you can look at vessel charters Malaysia as they offer various services about shipping! 

Back to our topic, what are the things and details that a charterer needs to figure out?

• The vessel’s name and its IMO number
• Commencement date as well as the end of the charter
• The port range in which the charter begins and will end
• Laycan date, in which the timeline that the vessels need to be at a particular place, and already ready to get loaded or discharged
• Cargos to be transported
• Insurance details as it is essential as preparation if something happens to the vessels
• Agreement of laytime

These are some definitions that you might have never heard.

• Laycan

Laycan is the date range in which a vessel must be in a specific location (as agreed in the partnership agreement) to begin the charter process and be available to sail. If the ship fails to arrive on time, the charter can be terminated or renegotiated. If the vessel comes early, the vessel owner must pay all the costs starting from the day it arrives until the charter time. 

• Laytime

Laytime is the agreement of periods of the vessels to load or discharge. If the process takes more time than the agreement, the charterer needs to pay the vessel owners some fines per hour. However, if the delays are caused by other factors unrelated to the charterer, the charterer does not have to pay for the fine. Examples of unrelated factors include rain or strike among shoreside teams. 

• Demurrage

In the shipping industry, demurrage means the charges that the charterer needs to pay to the vessel owners for breaching the laytime as stated in the agreement between both parties. 

• Despatch

Despatch is the inverse of demurrage. If the charterer uses the vessels less time than the laytime that has been agreed, the charterer may ask the vessel owner to pay despatch for the time that the charterer has managed to save. 

Do you know that there are a few types of vessel chartering?

• Demise Charter

In this process, the charterer is given a chance by the vessel owner to have complete control of the vessel, so all the costs of operations like fuel, vessel crews, port fees and hull insurance will be responsible by the charterer. Usually, the period of this kind of charter can go up to many years, and at the end, the vessel will be purchased by the charterer and he would become the owner of that vessel. 

• Time Charter

Time Charter involves the rental of a vessel for a specific time. The vessel owner supplies the vessel and the crews, but the charterer can select the ports, as well as the route and the vessel’s pace. The charterer is responsible for all vessel fuel, port taxes, commissions, and the vessel owner’s daily usage charge. In other words, the charterer is the one who takes the full commercial operation of the vessel for the period of the charter.