A ship charterer is a person or company who enters into an agreement with a ship owner for the hire of a ship either for the carriage of passengers or cargo on a particular voyage to one or more places or until the expiration of a specified time. This article explains the five (5) common mistakes made by ship charterers and how to avoid them.
The five common mistakes made by ship charterers include:
- Not paying attention to market issues: A ship charterer should be aware of recent happenings in the market including the current market levels and the price of sea freight shipping. Therefore, it will be possible to identify the best moment to issue an order of need or search for a ship, as well as putting cargo on the market.
- Making mistakes when calculating the loading and unloading boards: A charterer must pay attention to the boards and to the loading and unloading rhythms, as well as to the length of stay, the possible occurrence of holidays, and other details that may lead to an excess of demurrage.
- Lack of due diligence on the ship: In chartering, it's fundamental to conduct due diligence on the ship and the company or person you are negotiating with. Therefore it is necessary to run a background check on the ship and ship owner to ascertain that they have the full capacity to carry on with the contract.
- Disregarding the importance of the shipping agent: A charterer needs a shipping agent in order to avoid these mistakes. A good shipping agent will keep the charterer up-to-date with the most realistic port costs and port restrictions, arrival queues for the vessels, and updates about the ship hired.
- Not having a charter party contract: A charter party is a maritime contract between a shipowner and a charterer for the hire of a ship either for the carriage of passengers or cargo on a particular voyage to one or more places or until the expiration of a specified time. Most charterers enter into verbal/oral agreements with ship owners. It is very important that a charterer insists on executing a charter party and gets legal advice while doing so. Before executing the charter party, a charterer should engage the services of a lawyer to review the contract and look out for unconscionable terms.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.