How a Nation Should Benefit from Ship Chartering? - Here are Your Answers

The shipping industry is continually changing and adapting to meet the needs of the commercial marketplace, so that it can become more competitive and cost-effective. It is a huge and complex industry, which is constantly being affected by global trends.

In this industry ship chartering is an important agreement where a shipowner agrees to rent out his ship to a cargo owner to move cargoes from one place to another. Hence this refers to the rental contracts for agreements that allow for the rental of a ship to move cargoes. In this process the shipowner is defined as a legal entity officially registered as the legal owner of the ship and the charterer will be defined as the company which hires the ships for transporting the cargoes.

There is a huge list of shipping companies in India, and more or less every company one of them is known for ship chartering works. In simple words, this is nothing other than renting or leasing. The ship chartering can be carried out in different ways.

The simplest approach is known as “bare boat charter” and means the provision of the pure vessel, whereby the charterer must also act as shipowner. In other words, the charterer has to provide the crew as well as take care of all maintenance and repairs and, of course, provide sufficient fuel.

The price for this form of ship charter or ship chartering is usually fixed as per day. It is also possible to use it for a limited period of time, for example when goods have to be brought from A to B and this is not like regular transports.

It is a worldwide work, though there is a question on is ship chartering insured? The question of insurance for ship charters cannot be answered in a general way.

However, it is usually the case that a ship is “off hire” in the event of damage that makes it impossible to continue the journey. If this period is longer than ten to 14 days, the “Loss of Hire Insurance” takes effect and replaces the rate which is due per day.

Research papers say the top ten shipping companies in India are getting benefits with the ship chartering method and earning huge amounts of money every year. In other words, the shipowner receives fixed income by chartering out his ships and can use this income to cover the running costs of the ship, repairs, etc., and to pay interest and repay the loan. To ensure that this always works, there are also insurances that cover the costs in case of a defect or breakdown.