CHARTERING

Parties involved

The Freight

The freight is the remuneration which the Charterer has to pay to the Owner for the use of the ship.

Under the voyage charter this is indicated by the term "freight"; under the time charter the term "hire" is used.

The freight under a voyage charter is paid at loading or at destination. The different payment agreements of the freight under the voyage charter are discussed in detail in the paragraph dealing with the voyage charter (see also Payment or Freight).

The hire, under a time charter is usually a fixed amount expressed in Dollars, Pound Sterling, Euros, etc., per day and is usually paid in advance per calendar month or pro rata of a calendar month.

The freight can be expressed:

by unit of weight: in long tons (2,240 lbs or 1016 kilograms), in short tons (2,000 lbs or 907 kilograms) or in metric tons of 1000 kilograms (currently nearly always metric measures are used).
by unit volume: in cubic foot, in cubic meter, in bushels, in hectolitre (for the transport of grain), etc.

Although the freight is fixed per transported unit, its settlement can be done in different ways:

according to the intaken quantity;
according to the delivered quantity;
against a lump sum (fixed price);
according to other ways to be mutually agreed (see further The Voyage Charter).

Against a lump sum, the Charterer binds himself to pay a fixed sum independently of the loaded quantity. The charter party must however state how much the Charterer plans to load, usually with a margin of 5 or 10% more or less at the Charterer's option.

To avoid possible arguments, re the number of tons of bulk cargo handled, the loading (and discharging) of the ship is often preceded by a so-called "draft survey" i.e. the determination of the quantity of goods loaded (or discharged) in function of the draught of the ship and this according to the deadweight scale.

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