In the chartering market, the block trading is usually done through brokers. They possess wide business connection channels, they are able to provide advisory information for the owners of shipping, and provide vessels for the charterers, so as to promote both sides to choose suitable negotiators. Once the transaction succeeds, the broker will get paid. Except ship chartering business, the ship broker also takes agency of shipping deals, shipping agency and other businesses. Their main function is to provide the most appropriate and the best business for the client, to provide market condition, the credit of party and the response to the client"s consultation, to solve difficulties for mediation between both parties.
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It has the following characteristics:
(1)It is tramp ships, which has no fixed lines, loading and discharging port as well as sailing schedule.
(2)It has no fixed freight rates.
(3)The bill of lading in charter transportation is not an independent file. The bill of lading issued by the ship is generally the short form bill of lading with front contents only, and it is indicated with "ALL TERMS ANDCONDITIONS AS PER CHARTER PARTY" or "FREIGHT PAYABLE AS PER CHARTER PARTY".This kind of bill of lading is bound by charter party. Unless specially stipulated in the credit, banks are unwilling to accept this kind of bill of lading.
(4)During the process of charter transportation, shipping port fees, handling charges and shipment delay are divided and calculated according to the contract, while regular operation costs in liner transport are all paid by the ship owner.
(5)Charter ships are mostly used for transportation of large cargo in international trade.
1. Ship Chartering Market
Ship chartering is mostly made in Chartering market. In Chartering market, all ship owners are suppliers of ships, while lessees are ships" demanders. In the age of developed communication technology, ship chartering business made by the two parties are mainly made through telephone,telex, telegram, fax or other modern means of communication.
2. Ship chartering broker
In the international chartering market, deals of ship chartering are usually not negotiated by the ship owner and the lessee in person, but handled and signed by the authorized chartering brokers. The chartering agents, who know the chartering market very well, are proficient in the chartering business and have rich knowledge and experiences in chartering as well, serve as a link intermediary over the entire chartering transaction process and play an important role in putting through the deal.
3. Chartering Inquiry
Inquiry can also be called enquiry. Normally, it means the lessees apply for the shipping charter in chartering market through chartering brokers according to the lessees" demand of cargoes transport or lessees" special demand of shipping. Inquiries are mainly offered in written forms such as telegram, telex and so on. The expected conditions of the lessee should generally include: The type and quantity of the accepted freight, the port of loading and the port of discharging, time of shipment, means or terms of the chartering, the expected level of the freight rate (rent) and the detailed description of the wanted ship, etc. Inquiry can also be firstly issued by the owner of the ship for canvass cargo through ship chartering brokers to the ship chartering market. The content of the inquiry issued by the owner of the ship should includes the name, nationality and size of the chartered ship, the bulk capacity and packaging capacity of the ship, available chartering time, the wanted type of the accepted goods, etc.
4. Chartering Price
Quotation can also be called offer. After the ship owner receives the inquiry of lessee from the chartering broker, and through cost estimation or comparison with other inquires, the owner issues the shipping condition and freight rate or rental rate that he/she could offer to the lessee through the chartering broker.
The main content of quotation, except for the reply and requirement to the enquiry, is primarily about the rent (freight rate) level and the selected contract of renting boats and the modification and supplement of the clause. The quotation can be divided into "hard quotation" and "conditional quotation". "Hard quotation" is an unchangeable quotation in quotation conditions. The inquirer must give a reply of renting acceptance to the quotation of the offerer within the limited time, when the valid time expires, which shall be null and void. On the contrary, "conditional quotation" is a quotation in which quotation conditions can be changed.
5. Chartering Counter-bid
Counter-bid is also called the counter offer. It refers to that in the case of conditional quotation, the lessee makes modifications or additions and deletions to the unacceptable conditions of the quotation conditions with the ship owner, or proposes his own conditions. Counter-bid means that the inquirer refuses the quotation of the offerer and starts a new quotation. Therefore, the shipowner may accept all counter-bids of the charterer, or may accept parts of counter-bids and makes counter-bid or new quotation for the disagreed parts. Such a reply or a new quotation to the counteroffer conditions is called recounter offer or anti-offer.
6. Firm Offer for Chartering
During a chartering transaction, through several counter offers and recounter offers, if both parties agree with the chartering contract clause, one party in the form of firm offer can require the other party to make a decision whether they can conclude a deal or not. During the process of firm offer, the necessary clauses in the chartering contract shall be listed, and the clauses agreed by both parties and conditions which are not yet finalized shall be confirmed in the firm offer. At the same time, the valid period shall be specified in the firm offer, and requirement on whether to accept the firm offer or not should be made for counterpart and reply should be made within the specified valid period. If no reply is made within the valid period, the quoted firm offer shall be null and void. Likewise, during the valid period, the party who gives a firm offer cannot cancel or change it, and cannot also give a firm offer to the third party at the same time.
7. Booking Acceptance
Acceptance is also called the acceptance of offer. It refers that one party makes a clear promise to the conditions listed in the firm offer within the valid period. Hereto, the chartering contract is made. In principle, acceptance is the last stage of the chartering procedure. After acceptance, a chartering negotiation shall come to an end.
Chartering Confirmation Letter
Chartering Acceptance is the last stage of chartering program, and after that a chartering business shall clinch a deal. Usually, both parties shall sign a "fixture note". The "fixture note" has no unified format, but its content shall list the main clauses in detail promised by the shipowner and the lessee during the negotiation. After the fixture note is signed by the both concerning parties, both parties shall keep one for future reference.
8. Chartering Contract
The formal chartering contract is actually compiled after the contract is already made. The fixture note signed by both parties is essentially a simple chartering contract performed by both parties. After signing the fixture note, the shipowner compiles the formal chartering contract according to the agreed contents, and sends it to the lessee for examination and verification through the chartering agent. If the charterer has no dissent to the compiled contract, he can make a signature.
Standard Chartering Contract Model
When the ship company operates aperiodic ships, each contract is required to be signed with the lessee for each transaction. For their respective interests, it is necessary for both parties to deliberate the clauses of the chartering contract item by item when concluding a contract. In this way, it is bound to cause a time-consuming negotiation, which is not conducive to promote to make a deal. In order to simplify the procedure of signing of chartering contract, and quicken the signing process as well as save costs caused by signing the chartering contract, and also to list some clauses of one"s own self-interest into the contract so as to maintain one"s interest, in the international shipping market, some shipping monopoly groups, large shipping companies, or shipper monopoly organizations, successively compile the chartering contract models which are available to the charterers for choice and serve as the basis for negotiation contract clauses. Main clauses which were drawn up in advance are listed in chartering contract model. In order to bring convenience to both parties of the chartering contract for deleting, adding, modifying and supplementing the clauses listed in the model through correspondence, every chartering contract model sets a code for its model name, compiles a code for each clause, and composes a line sequence number before(or after) each line of text. So in the process of negotiating a ship chartering contract, it is only needed to simply specify the code of the chosen model and the opinions to increase, delete and change the content of line x, article x in the correspondence. So the clauses agreed by both parties can be made more rapidly. Although adopting chartering contract form facilitates greatly drafting of chartering contract articles, the forms are mostly made unilaterally by the Shipping party or some shpping monopolies representing interests of the Shipping party, thus many articles would not be in favor of the Lessee, which must be considered in chartering contract norm selection. There are many ship chartering contract models: standard voyage chartering contract representative template "GENCON", fixed-term chartering contract representative template "NYPE", bareboat chartering contract representative template "BARECON".
