Dry Cargo Chartering Market

I caught the Lalbagh Express at 0630 from Bangalore to Chennai. Reached at around 1200hrs.

Today the lecture was on Introduction to Shipping - Dry Cargo Chartering Market, delivered by Mr Sukumar.

• The different sectors within the shipping business are usually referred to as markets. 
• The bulk trades are essentially driven by the laws of supply and demand on a global basis. Thus they are usually referred as perfect competition.
• The shipping hire charges depends on the market, the rates are fixed differently for various commodities.
• There was a time when the only significant market place for dry cargo chartering was London and it was known as Baltic Exchange.

The chartering is the formal agreement between the ship owner, or its agent, and the merchant or the shipper. There are two ways of chartering a ship.

Voyage Charter

In this mode of charter, the merchant charters the ship to carry an agreed quantity of cargo from port A to port B. Payment is by means of freight rate which is usually expressed by Dollars per tonne, or it may be for a lumpsome amount rather than on per tonne basis. The rate may be arrived at by negotiation, it also depends of the strength or weakness of the prevailing market. The voyage charter may be for a single voyage or multiple voyages of the same ship on a consecutive voyage basis. This is called as contract of affreighment.

Time Charter

In this type of charter, the charterer hires the vessel for a period of time instead of paying a rate of freight/tonne. In other words, its an agreed rate per day. The ship owner will operate the ship and also arrange for the crew. The charterer usually decides the port of call. The charterer pays for all the fuel and the expenses incurred during the voyage. He becomes a disponent owner.

The advantage of time charter is flexibility

Another type of charter is Bare Boat Charter where the ship owner does not take part in operating the ship.