Types of Charter Parties in Shipping: How Voyage, Time, Bareboat and COA Structures Really Work

In chartering, the name of the contract matters because it tells you where the commercial risk sits. The same bulk carrier can be fixed on voyage charter today, time chartered tomorrow and later bareboat chartered to another operator — yet the allocation of fuel, port costs, vessel time, operational control and market exposure changes fundamentally in each case.

For anyone working in chartering or operations, the useful question is not simply “what type of charter is this?” It is: what is the owner promising, what is the charterer buying, who controls the vessel commercially, who pays the voyage costs, and which party carries the consequences when time or markets move against the fixture?

Types of Charter Parties in Shipping: The Practical Distinction

The market generally starts with three core chartering structures: voyage charter, time charter and bareboat or demise charter. Around those sit important variations and programme structures such as trip time charters, Contracts of Affreightment, consecutive voyages and sub-charters.

These are not all interchangeable labels. A trip time charter is still a time charter. A Contract of Affreightment is primarily a cargo programme rather than the hire of one particular ship. A sub-charter describes a second contractual layer beneath a head charter. Treating all of them as seven identical “types” misses the commercial point.

Voyage Charter: The Owner Prices the Voyage

Under a voyage charter, the owner agrees to carry a specified cargo from the contractual load port or range to the contractual discharge port or range. The charterer pays freight, commonly expressed in USD per metric tonne or as a lump sum.

Commercially, the owner is not simply quoting a freight number. The owner is pricing a voyage. That means estimating the ballast leg, laden distance, expected speed and consumption, bunker price, port disbursements, canal dues, agency costs, expected waiting time, cargo-operation time, commissions and the vessel’s opportunity cost.

If the freight is fixed at USD 20/mt for 50,000 mt, the gross freight is USD 1 million. Whether that fixture produces an attractive return depends on what the voyage actually costs and how long the vessel remains committed.

This is why voyage-charter operators spend so much time on voyage estimates. A freight rate that appears strong can become poor very quickly if bunkers rise, congestion develops, the ballast leg has been underestimated or port expenses turn out materially higher than expected.

What normally remains with the owner?

Under conventional voyage-charter economics, the owner normally provides the ship, Master and crew and remains responsible for technical operation. Bunkers and ordinary voyage expenses are normally for the owner’s account, although the charterparty can shift individual cost items.

Cargo-handling terms are a good example. FIO, FIOS and FIOST wording can move loading, discharging, stowing or trimming costs away from the owner. A broker or operator therefore never stops at “voyage charter = owner pays everything”.

Where does time risk sit?

At the load and discharge ports, voyage charters normally allocate cargo-operation time through laytime. The contractual chain is familiar:

The details, however, are entirely clause-driven. Whether the vessel is an arrived ship, whether NOR is valid, whether time is reversible, whether SHEX or SHINC applies, whether weather interruptions count and whether “once on demurrage, always on demurrage” applies are all separate commercial questions.

For the detailed mechanics, see Tide Signal’s Laytime and Demurrage in Shipping guide.

Typical standard form

BIMCO’s GENCON 2022 is the general-purpose voyage charterparty most often used as the reference point when discussing dry-bulk voyage fixtures. In practice, fixtures can contain substantial rider clauses and amendments, so the printed form is only part of the contractual picture.

Time Charter: The Charterer Takes the Commercial Employment

A time charter works differently. The charterer is not buying one agreed cargo movement. The charterer is paying hire for the commercial use of the vessel for an agreed period or trip, within the charterparty’s trading, cargo and geographical limits.

The owner retains the ship as an operating asset: the Master and crew remain the owner’s, and technical management, maintenance and seaworthiness obligations remain within the owner’s sphere. The charterer, however, determines the vessel’s commercial employment within the contract.

That separation between commercial employment and navigation/technical management is fundamental. A charterer can order the ship to proceed to a lawful port within the charter limits, but the Master does not surrender navigational responsibility or the duty to protect the vessel and crew.

What does the charterer normally pay?

Under a conventional time charter, the charterer normally provides bunkers and bears voyage expenses such as port charges and canal dues because those costs arise from the charterer’s chosen employment of the vessel.

The owner normally carries crew wages, maintenance, stores, class, technical management and the vessel’s ordinary operating expenses.

This is why a time charterer needs a genuine operating desk. The charterer must think about bunkers, routing, port rotations, agencies, weather, voyage duration, cargo programme and the earnings achievable from the ship relative to the daily hire being paid.

Hire is not demurrage

Under time charter, the charterer is paying for elapsed vessel time. If the vessel spends five days waiting because the charterer’s cargo is not ready or the port is congested, the fact that the delay is expensive does not by itself stop hire.

Off-hire depends on the actual clause and the event. It is not a general label for “the vessel lost time”.

The standard dry-bulk reference is BIMCO’s NYPE 2015.

For the full commercial comparison, read Voyage Charter vs Time Charter.

Trip Time Charter: One Trip, Time-Charter Risk

Trip time charters create confusion because the fixture describes one geographical trip. For example, delivery may be in the Mediterranean with redelivery in the Far East after a single laden employment.

The important point is that the contract is still a time charter if the vessel is employed on time-charter terms.

A trip time charter therefore normally revolves around hire, delivery and redelivery, bunkers, trading limits, speed and consumption and off-hire — not around the head-owner voyage-charter structure of freight, laytime and demurrage.

That distinction matters when comparing two competing offers. A voyage-charter quote of USD/mt and a trip-time-charter rate of USD/day are not comparable until the charterer has converted the time-charter option into a full voyage estimate including bunkers, ports, canal costs and expected duration.

Bareboat or Demise Charter: The Charterer Takes Possession

Bareboat charter sits much further along the control spectrum. Here, the charterer takes possession and operational control of the ship for the charter period.

In practical terms, the bareboat charterer moves much closer to the position of an operating owner. Crew, fuel, maintenance, repairs, insurance and day-to-day operation are generally for the charterer’s account, subject to the contract.

This is fundamentally different from time charter. Under time charter, the owner remains the technical operator and keeps the Master and crew. Under bareboat, the charterer takes over the operating responsibility.

BIMCO’s standard bareboat form is BARECON 2017.

Contract of Affreightment: The Contract Is About Cargo Capacity

A Contract of Affreightment, or COA, should not be treated as simply another way of hiring one vessel. The commercial commitment is to transport an agreed quantity and type of cargo over a period, normally through a series of shipments.

A typical structure might be:

The ship performing the first cargo does not necessarily have to perform the second, third or tenth cargo. The key obligation is the transportation programme.

For an owner with fleet flexibility, this can be commercially attractive because suitable tonnage can be nominated across the programme. For the charterer, a COA secures transport capacity without necessarily fixing one named vessel for the entire period.

BIMCO’s modern forms include GENCOA A 2022 and GENCOA B 2022. GENCOA A operates as a framework alongside voyage charter terms, while GENCOA B provides an integrated structure.

Consecutive Voyages: Repeating the Voyage-Charter Model

A consecutive voyage arrangement is closer to voyage chartering than a COA. The parties agree that the vessel will perform a series of successive voyages, commonly on the same or a similar trade.

For example, one vessel may be fixed for six consecutive coal voyages from Indonesia to China. Freight is earned under the agreed voyage terms, and the contractual laytime and demurrage provisions are applied to each voyage as provided by the charterparty.

COA vs consecutive voyages

Sub-Chartering: Where Operators Make — and Lose — Money

Sub-chartering is not a separate basic charter type. It is the commercial reality created when a charterer uses the rights obtained under one charter to fix the ship downstream under another.

This is the classic operator position. The operator may charter the vessel in at USD 18,000/day and then employ her under voyage charters. If the voyage market produces an equivalent return materially above the charter-in hire and voyage expenses, the operator earns the spread.

But the operator also carries mismatch risk.

The vessel may remain fully on hire under the head time charter while the voyage sub-charterer’s laytime clock is suspended. The operator may owe hire upstream but be unable to recover an equivalent amount downstream. A head charter and a sub-charter are separate contracts; their time and liability regimes do not automatically align.

This is one of the most important differences between textbook chartering and actual trading.

Who Pays What? A More Useful Comparison

This table is only a starting point. A professional fixture review always goes back to the actual charterparty wording.

What a Chartering Desk Actually Looks at Before Fixing

The contract type tells you the framework. The fixture details determine the result.

On a voyage fixture, the desk will focus on cargo quantity, freight, laycan, load/discharge rates, ports, cargo-handling terms, demurrage, despatch, commissions, bunker assumptions, port costs and voyage duration.

On a time-charter fixture, the desk shifts attention to hire, duration, delivery/redelivery range, bunkers on delivery and redelivery, speed and consumption, trading limits, cargo exclusions, off-hire wording and performance.

On a bareboat fixture, the analysis becomes more asset- and operation-driven: condition, maintenance obligations, insurance, class, redelivery condition, financing and long-term operational exposure.

Common Errors in Charterparty Analysis

1. Comparing USD/mt freight directly with USD/day hire. One is a voyage price; the other is a time price.
2. Assuming the time charterer controls navigation. Commercial employment does not replace the Master’s navigational responsibility.
3. Calling every one-trip fixture a voyage charter. Trip time charters remain time charters.
4. Assuming the owner always pays every voyage-charter cost. Cargo-handling and rider clauses can change the allocation.
5. Assuming any delay is off-hire. It is not.
6. Treating a COA as the charter of one named ship. The commercial commitment is the cargo programme.
7. Ignoring the head/sub-charter mismatch. Operators trade the spread between two different contracts and therefore carry contractual basis risk.
8. Reading the form name but not the riders. The printed form may be heavily amended.

Frequently Asked Questions