All about Vessel Chartering

It has been 26 years since Clarion started its voyage crossing the shores, waves and continents. We know that we are not carrying just commodities, but a part of your great venture. So, it’s our responsibility to deliver your materials safely and with the highest care. Ship chartering or Vessel chartering is a crucial operation in sea freight service to get the cargo delivered safely in a cost-effective way.

What is Vessel Chartering

Vessel chartering often called ship chartering is a contract between the ship owner who hires out the ship and the Cargo owner who charters the ship for the transportation of goods. The treaty between the charterer and ship owner is known as the ‘charterparty’. The agreement covers the cost, tenure and terms and conditions.

How does ship chartering operate?

A ship can be chartered in three different ways.

• A voyage charterer
• A time charterer
• A bareboat charterer/demise charterer

A voyage charterer is a common practice in which the ship is hired out for a single voyage between predetermined ports. According to this agreement, the charterer pays the shipowner on a basis of per ton (based on the agreed quantity) or lump sum (regardless of tonnage), while the shipowner covers all operational costs of the ship, including crew, fuel, and port costs.

A time charter is the rental of a vessel for a specific period of time. In this case, the owner still oversees the ship, but the charterer chooses the ports, decides the itinerary, and maintains complete operational authority over the ship for the life of the agreement. He pays commissions, a daily hire fee, port taxes, fuel costs, and cargo handling costs.

In a bareboat charter, also referred to as a demise charter, the charterer has total control over the boat. Except for the capital cost of building the vessel, which is the owner’s obligation, the charterer is responsible for all costs, including fuel, labour, port fees, and insurance.

The charterer is in charge of the vessel’s financial and legal obligations. Contracts for long-term charters that extend for many years are permitted under the demise clause.

What are the benefits of vessel chartering?

Greater adaptability & risk management:

The main benefit of chartering a ship is flexibility. Any business that has to be able to scale up or down in response to demand will find chartering to be a desirable choice. All businesses can reduce their risk exposure to the macroeconomic environment by using chartering. Due to the short duration of charter agreements, the company employing the vessel is not burdened by the cost and overhead of owning a vessel during a protracted economic slump.

Reduction of tax and debt:

Most often the income statement classifies charter payments as an expense, enabling your company to deduct the full cost of the payments from income and lowering the net cost of the vessel. By giving the charterer the tax benefits, which in turn lowers the interest rate and further decreases your net cost, chartering may also enable you to strategically manage your tax status. Due to the minimal upfront fees, most businesses are able to pay for chartering without using their current lines of credit.

Enhanced cash flow & strengthened balance sheet:

Typically, only the first payment is expected at the beginning of a charter agreement, allowing you to save money for investments in other areas of your company. When credit is required, the company is more appealing to traditional lenders because a charter is not regarded as a long-term debt or liability and does not appear as debt on your financial statement.

In the area of logistics, Clarion Shipping Logistics has a solid reputation and is well-known. In order to meet or surpass our client’s operational and commercial requirements, we strive to identify the correct vessel the first time, every time, using a vast network of owners and brokers. We provide our vessel chartering services for dry and liquid break bulk shipments to various destinations.

What is covered under Clarion Charter Service?

• Oil Rigs ( 15,000cbm-full charter)
• Pressure Vessel Columns – 425MT single piece
• Urea Mixer – 525MT single unit
• Mobile Rigs
• Plant & Machinery
• Pipes – full charter
• Armoured Vehicles
• KOC Rigs
• SNC Lavlin, SGS, etc

Due to the prompt and safe delivery of the shipments, our chartering services are the most in-demand ones on the market. With the help of a network of our associates, we are connected to the largest ship owners worldwide. We are supported by a group of professionals who effectively communicate with clients and work in accordance with their schedules to provide a complete guarantee of secure cargo dispatch. Our chartering services improve the value of customer shipments by:

• Finds the best match between the cargo and the vessel by searching the market. Offering charters based on trip length, and time frame.
• Tracking the movements of vessels and voyages
• Checking the ship to see if it complies with the demands of the charter party.
•  Managing post-fixture and account tracking.
•  Demurrage consign calculations.
•  An examination of the entire voyage’s results.
•  Current market intelligence, including data on ports.

The years of experience and solid relationships with the core carriers enable us to provide our customers with infallible customized solutions. The full range of logistical services we provide, from planning to execution, makes us the top UAE logistics provider in this decade.