CHARTER PARTIES

GENCON - Clause 1

Freight Rates

In the well known book “Scrutton on Charter Parties and Bills of Lading” the following definition of the term “Freight” is given:

"Freight in the ordinary mercantile sense, is the reward payable to the carrier for the carriage and arrival of the goods in a merchantable condition, ready to be delivered to the merchant".

See also: Mocatta, A., Mustill, M. and Boyd, C., Scrutton on Charterparties and Bills of Lading London, Sweet & Maxwell, 1984, 331.

Wildiers makes a difference between the chartered freight, which is the freight paid under a charter party and the bill of lading freight, which is the freight paid under a bill of lading. (Wildiers, P., Le contrat d'affrètement maritime, Anvers, Editions Lloyd Anversois, 1969, 49.)
The bill of lading freight is of course the freight which is charged by the Owner when the goods are carried under the terms of a bill of lading and not under the terms of a charter party.

The freight can be determined in several ways:
- by weight;
- by volume;
- by value;
- per unit;
- by lump sum
- on intaken weight;
- on delivered weight;

When the freight is given by the weight, it is important to stipulate which type of tons are used: metric tons, long tons or short tons.

Example: "X $ per metric ton"

When the freight is indicated by volume, it is expressed in cubic meter or in ton-volume of 40 cubic foot.

In the liner shipping, where of course the bill of lading freight is applied, the freight is given by weight, W; or by measurement, M, or by weight or measurement, W/M. Heavy goods will, of course, be quoted by weight and light goods by volume (measurement). The Ship Owner has the right to choose how freight will be calculated and he will take of course the most advantageous freight. In their tariffs, which are classified alphabetically, beside each product the mode in which freight is quoted is indicated; hence: the letter W (weight), the letter M. (measurement) or the letters W/M (weight/measurement) which allows the Owner the most advantageous choice.

Example

For a lot which weighs 5,500 kilograms and measures 38.387 cubic meters, a freight of $ 98.00 W/M applies. The Owner will apply the freight on the volume which will produce him $3761.05 where the freight by weight would only have produced him $ 539.

The freight according to the value is only applied for precious goods. Nowadays precious goods are exclusively carried in container so that the freight is calculated per container or part of a container with minimum of one cubic meter.

For more details concerning freight calculations in the liner shipping, see Tramping Markets Bills of Lading.

The freight per unit is generally applied for general cargo also called break bulk cargos or for particular cargos (cars, tractors, barrels, etc.).

Example: "X $ per tractor".

The lump sum freight is a fixed amount for the transport of a party of goods independently of the weight or of the volume. The Charterer has the right to load the entire ship (cf. a "full and complete cargo"); however, it is good to indicate in the charter party a maximum quantity to avoid that the Charterer will load more than the allowed deadweight of the ship. If the Charterer does not make use of the full ship, he will nevertheless have to pay the complete lump sum.

With charter agreements where the voyages are carried out by several ships, which are generally not yet known at the moment of the negotiations, the freight is usually expressed per ton deadweight of the ship.

Example: X $ per deadweight ton

In order to eliminate any doubt whether loaded or discharged quantities are considered, this must be clearly indicated in the charter party (in box 12).

Example: X $ per metric ton intaken weight

As already mentioned before, the” bill of lading freight” is imposed by the Conferences, while the “chartered freight” comes into being on the free market in pursuance of the law of supply and demand.

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