A charter, in shipping, is a booking of a ship to transport cargo. It is analogous to car rentals on land. There are many different types of charters such as spot charters, time charters, bareboat charters etc.
Time Charter: This is the charter booked for a specified period of time. The charterer becomes responsible for the cargo being loaded as well as bunkering (fuel) and any disbursements. The navigation and operations of the ship itself remain the responsibility of the shipowner.
Voyage Charter: Under this contract, the charterer pays for the use of a ship's cargo space for one voyage. The shipowner handles the operating costs of the ship while port charges and cargo handling charges are handled as agreed by both parties. Freight rates are paid per ton of cargo. If laytime is exceeded, demurrage is due by the charterer to the shipowner. If loading and unloading is done before laytime, the shipowner may have to pay despatch to the charterer.
The diffferencce between a voyage charter and a time charter is that in a voyage charter, the charter is booked for one voyage but in a time charter, if there is time left, the vessel can be used for another voyage as well.
Bareboat Charter: With this type of charter, the shipowner only provides the vessel while the charterer provides the crew, the food supplies, the ship's bunkering and pays all the operating costs. The shipowner essentially provide a "bare" boat.
Demise Charter: A type of bareboat charter where the charter period lasts for many years and may end up with the charterer acquiring ownership of the vessel.
Back-to-Back Charter: Essentially meaning that when one charter ends, another begins with the same terms and conditions as the previous charter (head charter) between the charterer and the shipowner.
Contract of Affreightment: A contract between the shipowner and the charterer that specifies that a certain type and quantity of cargo can be carried on the vessel covering two or several shipments for a longer period of time.
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