Vessel Chartering usually falls into three categories, each distinguished by the degree of operational control over the vessel which the charterer exercises. There are three basic types of vessel charters: voyage charter, time charter and bareboat charter. In each case, the contract between the shipper (or charterer) and the ship-owner is called the charter party. " When an organization ships goods on a vessel operated by a common carrier, the open cargo policy may be the only ocean marine policy the organization needs. In a voyage charter, the vessel is chartered for a one-way voyage (or a series of consecutive voyages) between specified ports at a negotiated freight rate. The charterer agrees to have the cargo available for loading at the place and time agreed, and the ship-owner agrees to have the vessel available for loading at the same place and time.
A bareboat charter (or demise charter) is very different from a voyage or time charter. Under a bareboat charter, the ship-owner delivers the vessel to the charterer for a specified period of time without crew, stores, insurance or any other provisions. The charterer is then responsible for navigating, crewing, and insuring the vessel as if it were owned by the charterer. Bareboat chartering is much less common in commercial shipping than are voyage and time chartering. Because bareboat charterers actually operate the chartered vessel, they usually purchase a full-fledged protection and indemnity (P&I) policy to cover their liabilities arising out of operating the vessel, just as they would if they owned it.
A vessel charterer faces many of the same exposures to liability as the Vessel Owner does, as well as specific obligations to the Owner. In certain jurisdictions even the pollution liability and fines falls on the charterer. Also are the liabilities to the cargo and to anything caused due to negligence. The charterer can face enormous liabilities and risk of financial loss even when he is only tangentially involved in the event which gave rise to the claim. The charterer also has a long list of obligations and exposures to the Vessel Owner. Charterers Liability insurance can provide protection to the charterer in much the same way Protection and Indemnity insurance shields the Vessel Owner from potentially catastrophic loss.
Most new building programs were completed by taking delivery from a well-established Korean yard, all of which we immediately chartered out at fixed rates for periods that range between 7 and 10 years. These charters have been agreed on a bareboat basis, which not only reduces the long-term market risk relating to the vessels, but also eliminates any operational risk for that period. These vessels were product tankers and their daily cost, taking into account lease hire payments and operating expenses, was significantly higher than the market rates that have been prevailing in the product tanker segment.
Today there are millions of people employed with jobs varying from processing frozen barracuda, squid and mackerel which are the predominant species caught by charter vessels. Companies pay taxes on the profits it earns from charter vessels, as does any other company that uses charter vessels to catch quota. The many suppliers that service charter vessels also pay taxes. Foreign crew are employed much like seasonal workers on orchards and chartering vessels makes it affordable to fish for low-value species because companies don’t have the big capital outlay on a vessel that would be tied up for part of the year. If charter vessels were banned there would be a loss in tax revenue not a gain.
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