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Shipping cargo from point A to point B Charter ship

What do we consider a charter ship?

A charter ship is a vessel used to ship cargo from point A to point B. Most charters start with a trade: the sale of goods from one side of the world to another. The owner of the ship signs an agreement with a party that wants to ship cargo. In other words: the owner agrees on renting out his ship to the owner of the cargo. When transporting cargo there are multiple parties that have interest in the process. We now know what we consider a charter ship in short, but let’s dive in deeper. In this article we will have a look into the parties that are involved in the shipping of cargo and why a charter ship is the one of the most commonly used ways.

What parties are involved in shipping cargo using a charter ship?

When shipping cargo using a charter ship there are at least two parties involved. On one side you have the owner of cargo who is in need of a ship to transport their goods under the terms of sale. On the other hand there is the ship owner looking for cargo. These two parties conclude the charter in a charter party. In this agreement the two parties include topics such as liability, damage to hull, damage to cargo and so on.

There isn’t just one way to charter a ship. In fact, there are two ways to charter a ship. Let’s look into these two ways below.

How to charter a ship

Voyage charter

You, as a party looking for a ship to transport your cargo, can charter a ship on voyage charter. You charter the ship to carry an agreed quantity of cargo from point A to point B at a fixed price. This form of transportation is called: freight.

Time charter

You can charter a ship on time charter. This means that you agree on renting the ship for a certain amount of time. This amount varies from one month to even multiple years. Within this period you can trade the ship within the trade limits you agree on with the ship owner and you pay per day the ship is deployed.

Risks of transporting goods using a charter ship

Numerous risks come into play when transporting goods around the globe. All risks have to be taken into account. Nevertheless, there are some risks which can’t be influenced.

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