Types of Charter Party Agreements:
At Ametheus, we arrange flexible oil tanker and dry bulk charters around your cargo, route, timing, and commercial risk. Four structures are used in practice. The right one depends on volume, how often you ship, and how much operational control you want to keep.
1. Voyage Charter (VC)
You hire the vessel for one voyage from load port to discharge port — like booking a taxi for a single trip.
Best suited for:
- One-time or irregular shipments
- Traders and buyers with a known cargo quantity
- Spot-market requirements
How it works:
- You pay freight (per metric tonne or lumpsum; tankers often on Worldscale)
- The shipowner bears fuel, crew, and vessel maintenance
- You load and discharge within the agreed laytime
Key benefit: Predictable cost for a single shipment, with low operational involvement.
2. Time Charter (TC)
You hire the vessel for a defined period and control its commercial employment — like renting a car for weeks, months, or years.
Best suited for:
- Regular or repeating shipments
- Companies with ongoing supply contracts
- Hedging against freight-market swings
How it works:
- You pay a daily hire rate
- You cover voyage expenses (bunkers, port charges, cargo handling)
- The shipowner remains responsible for crew and technical upkeep
Key benefit: Commercial control and flexibility for a medium- to long-term cargo programme.
3. Bareboat Charter (BBC) / Demise Charter
You take possession of the vessel and operate it as if it were your own.
Best suited for:
- Long-term fleet needs (typically 1–10+ years)
- Large industrial users or shipping companies
- Situations that require full operational control
How it works:
- You pay a fixed daily (or periodic) hire
- You meet crew, fuel, maintenance, insurance, and operating costs
- The owner provides only the vessel
Key benefit: Maximum operational freedom, with possible accounting advantages.
4. Contract of Affreightment (COA)
The owner or carrier agrees to move an agreed volume, or to perform an agreed number of liftings, over a set period. No ship is named in advance; a suitable vessel is nominated for each lifting.
Best suited for:
- Repeated liftings over months or years
- Traders, refiners, or terminals with a cargo programme
- Parties who want rate certainty without hiring a named ship full-time
How it works:
- Freight is agreed in advance (often per tonne or per lifting)
- The owner nominates a suitable vessel for each cargo
- You get guaranteed liftings instead of returning to the spot market each time
Key benefit: Locked-in capacity and freight for a programme of shipments, without the commitment of a time charter.
A COA is not a single voyage charter and not a time charter. It sits between the two. Use it when you have a programme of repeated liftings but do not need a named ship for a continuous period.
Quick Comparison
| Particulars | Voyage Charter (VC) | Time Charter (TC) | Bareboat Charter (BBC) | Contract of Affreightment (COA) |
|---|---|---|---|---|
| Duration | Single voyage | Months to years | Long term (years) | Agreed period / number of liftings |
| Payment | Freight (per tonne or lumpsum) | Daily hire | Daily hire / lease | Agreed freight (per tonne or per lifting) |
| Control of vessel | Limited | Commercial control | Full control | None (owner nominates vessel) |
| Who pays fuel & ports | Shipowner | Charterer | Charterer | Typically owner (voyage basis) |
| Operational responsibility | Low | Medium | High | Low |
| Ideal for | Spot / one-off shipments | Regular cargo programmes | Long-term fleet needs | Repeated liftings without a named ship |
Negotiations & Worldscale
Tanker fixtures are usually quicker than dry-cargo fixtures, but the same commercial points apply: freight or hire, cargo quantity, laydays/cancelling, demurrage, and load/discharge ports.
Most oil-industry voyage fixtures use Worldscale — a standardised freight scale based on a notional 75,000 DWT tanker. Rates are quoted as a percentage of the base (for example WS 100, WS 175, or WS 75). Dry bulk is typically quoted in USD per tonne or as a lumpsum.
Payment Terms
Voyage charter
(Owner provides vessel and crew and covers voyage costs)
| Payment term | Short code | Description |
|---|---|---|
| Freight Prepaid | FPP | Full freight paid before cargo loading |
| Freight Payable on Discharge | FPD | Payment due after cargo discharge |
| Freight Payable at Sight | FPS | Payment on presentation of shipping documents |
| Before Breaking Bulk | BBB | Full freight paid before discharge begins |
| Cash Against Documents | CAD | Payment on presentation of B/L and invoice |
| Letter of Credit (Sight / Usance) | SLC / ULC-30/60/90 | Sight LC pays immediately; usance allows 30/60/90 days |
| Net terms after discharge | NET-30 / NET-60 / NET-90 | Payment 30/60/90 days after discharge |
| Payment Against Sales Proceeds | PASP | Payment only after the buyer sells the cargo |
Typically more comfortable for charterers: FPD, NET-90, ULC-90, PASP (cash is held longer).
Typically more protective for owners: FPP, BBB, CAD, sight LC.
Time charter
(Charterer pays daily hire and covers bunkers and port costs)
| Payment term | Short code | Description |
|---|---|---|
| Hire Payable in Advance | HPA | Hire paid before delivery or at the start of each hire period |
| Hire Payable in Arrears | HPR-15 / HPR-30 | Hire paid 15 or 30 days after the hire period |
| Hire Payment Against Invoice | HPI | Payment after invoice (often every 15/30 days) |
| Bank Guarantee Secured Hire | BGH | Bank guarantee supports timely payment |
| Letter of Credit for Hire | LCH | Hire secured by sight or usance LC |
Typically more comfortable for charterers: HPR-30, HPI, LCH.
Typically more protective for owners: HPA, BGH, sight LCH.
Bareboat / demise charter
(Charterer takes full control and pays all operating costs)
| Payment term | Short code | Description |
|---|---|---|
| Lease Payment in Advance | LPA | Paid before vessel delivery |
| Lease Payable in Arrears | LPA-30 / LPA-90 | Paid every 30 or 90 days after use |
| Balloon Payment at Lease End | BPLE | Larger amount due at the end of the term |
Typically more comfortable for charterers: LPA-90, BPLE.
Typically more protective for owners: LPA in advance, with security.
How we help you choose
Our chartering desk reviews cargo type, trade route, volume, timing, and budget, then recommends the structure that is most cost-effective and protective of your position. We work to keep contract terms clear, balanced, and commercially workable — whether the fixture is a single tanker voyage, a dry-bulk programme, a period time charter, or a COA.
Ready to charter?
For competitive fixtures, market updates, and support on voyage, time, bareboat, or COA terms:
- Email: [email protected]
- CC: [email protected], [email protected]
Preferred communication timings (IST)
- Calls: 9:00 AM – 7:00 PM. Please do not call after 7:00 PM.
- WhatsApp: texts until 10:00 PM; we reply within that window where possible.
- Email: send at any time; we reply during working hours.
