Terminology

Maritime charterers, Shipowners role in shipping industry?

In this blog, we have briefly discussed the main parties involved in the Shipping industry. The origin of the shipping industry is centuries ago. So the terms such as Sellers, Buyers, maritime charterers, Shipowners are as old as the shipping industry.


Ships transport 90% of the global cargo every day.

Ships are the transportation mode of cargo, which are traded by International Sellers and Buyers.

A seller is the one who sells a product or gives service to another party for money.

The buyer is the one who purchased a product or receives a service.





Seller and buyer

So the ship act as the intermediate party involved in the business between the seller and buyer.



Shipper/ Ship-owner

A shipper is the one who searches for cargo space on a ship to transport his/her cargo.

When the seller is searching for a ship to transport his cargo, he is the shipper.

Also, we can call the buyer as the shipper, if he is searching for the ship to receive his cargo.

Ship-owner is the one who owns the ship and provides the space of the ship to carry the cargo.

Contract of carriage


For example, if there is a cargo to be transported from Shanghai to Le Havre, the shipper (seller/buyer) who wants the cargo to be transported finds a ship-owner, who can provide cargo space.

Then shipper hires the cargo space and signs a contract with the ship-owner.

It is known as the ‘Contract of carriage’.





Charterer

The charterer is the party that hires the ship entirely.

Also, we can call the charterer the “middle man”.

Charterer (middle man)

A ship will start a voyage when the cargo space of the ship is fully occupied.

The maritime charterer’s job is to find a vessel for the cargo they have from the different shippers and maximize the ship’s space.

For example, if there is a ship that can carry 100,000 tons, a shipper who has 10,000 tons’ cargo won’t hire the entire ship, he would only hire the specific cargo space which the cargo can occupy.

So the charterer who has hired the ship will find more shippers to fill the remaining 90,000 tons of cargo space.

If a shipper has 100,000 tons of cargo that can fully occupy the ship, he won’t find a charterer but can directly contact the ship-owner.



Charterers’ job

If a shipper hires a ship entirely we can call him a ‘charterer’.

However, the charterer will have to sign the ‘charter party agreement’ with the ship-owner.




Different types of maritime charterers

Voyage charterer – Voyage charterer hires a ship for a one voyage (e.g. Shanghai to Le Havre)

Time charterer – The time charterer is the one who has agreed to hire the ship for a certain period of time.

Bareboat charterer (Demise charterer) – Demise charterer is the one who hires and runs the vessel as the owner.

There are more intermediate persons, companies that we can find until the owner of the cargo receive it.

E.g. Shipbrokers, Shipping agents in the port, consignor, consignee, etc.

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