Chartering is an activity within the shipping industry whereby a shipowner hires out the use of their vessel to a charterer. The contract between the parties is called a charterparty (from the French "charte partie", or "parted document"). The three main types of charter are: demise charter, voyage charter, and time charter.


In some cases, a charterer may own cargo and employ a shipbroker to find a ship to deliver the cargo for a certain price, the freight rate. Freight rates may be on a per-ton basis over a certain route (e.g. for iron ore between Brazil and China), in Worldscale points (in case of oil tankers). Alternatively may be expressed in terms of a total sum, normally in US dollars, per day for the agreed duration of the charter.

A charterer may also be a party without a cargo that takes a vessel on charter for a specified period from the owner and then trades the ship to carry cargoes at a profit above the hire rate or even makes a profit in a rising market by reletting the ship out to other charterers.

Depending on the type of ship and the type of charter, a standard contract form, called a charter party, is normally used to record the exact rate, duration and terms that are agreed between the shipowner and the charterer.

Time charter equivalent is a standard shipping industry performance measure and is used primarily to compare period-to-period changes in a shipping company's performance despite changes in the mix of charter types.

Charter types

There are three main types of charter:

Variations on those types include:

Charterers' Liability Insurance

Charterers' Liability Insurance is a type of insurance meant to protect shipping businesses from certain risk or liabilities.[3] That could include fines and breaking of a law, cargo or vessel damage and physical injuries including and up to death.

Coverage of a Charterers' Liability Insurance can vary, based on the charter-party type and additional inclusions or exclusions that are arranged prior to the purchase of the insurance.

See also


  1. ^ Maritimeknowhow website: voyage charter Archived July 14, 2011, at the Wayback Machine
  2. ^ Time charter ”trip”case
  3. ^ "Charterers Legal Liability Coverage | Insurance Glossary Definition |". Retrieved 2020-10-25.

Further reading