Lecture 4: Types of Charter: VC, CVC, Slot and COA Flashcards
How does a Slot Charter work in container shipping, and why is it beneficial for small cargo volumes?
A Slot Charter allows a charterer to book space (slots) on a container vessel instead of hiring the entire ship.
It is beneficial for small cargo volumes as it reduces costs and provides access to liner shipping schedules.
What is the “No Deviation Rule” in a Voyage Charter? When can a vessel deviate from the agreed route?
means the vessel must follow the agreed route.
Deviation is allowed only in cases of emergencies, such as safety risks, mechanical failure, or saving lives at sea.
Explain why a shipowner might prefer a Contract of Affreightment (COA) over a Voyage Charter.
A COA provides long-term revenue stability and flexibility in vessel selection, reducing market risks.
In a Voyage Charter, who is responsible for loading and unloading costs? Under what conditions might this responsibility change?
Normally, the shipowner pays for loading/unloading costs.
However, in an FIO (Free In and Out) contract, the charterer covers these costs.
Describe the key difference between a Consecutive Voyage Charter (CVC) and a Contract of Affreightment (COA).
A CVC involves a fixed ship making multiple voyages.
A COA involves transporting a fixed volume of cargo, but the shipowner can use different vessels.
State two advantages and two disadvantages of a Voyage Charter.
Advantages:
1. Predictable cost since freight is agreed in advance.
2. Shipowner manages vessel operations, reducing charterer responsibility.
Disadvantages:
1. Charterers have no control over vessel operations.
2. Costs may be higher if market freight rates drop after the contract is signed.
What happens if a charterer completes cargo operations before laytime expires?
The charterer does not receive compensation, but the vessel can depart earlier, allowing for more efficient scheduling. ( or get despatch if stated in C/P)
Explain the concept of Laytime and Demurrage in a Voyage Charter.
Laytime is the agreed time for loading and unloading cargo.
Demurrage is the penalty paid by the charterer if loading/unloading exceeds the laytime.
Differentiate between a Voyage Charter and a Time Charter based on cost structure and responsibilities.
In a Voyage Charter, the charterer pays freight per ton or lump sum, while the shipowner covers operating costs, including bunkers and port charges.
In a Time Charter, the charterer pays a daily hire rate and covers variable costs like bunkers, while the shipowner handles vessel maintenance and crew wages.
Define ship chartering and name the key parties involved
Ship chartering is the process of hiring a vessel for cargo transportation under specific terms and conditions.
The key parties involved are:
Shipowner (who provides the vessel)
Charterer (who hires the vessel for cargo transport)
Broker (who facilitates negotiations between shipowners and charterers)
Which of the following best describes the revenue model for a Voyage Charter?
a) Freight per ton of cargo loaded or a fixed lump sum
b) Daily hire rate based on vessel operation time
c) Freight per slot in a container vessel
d) Fixed rate for an agreed number of shipments over a period
a)
What is a key advantage of a Contract of Affreightment (COA) for charterers?
a) No commitment to cargo volume
b) Freight rates are locked in, reducing exposure to market fluctuations
c) The owner bears all risks of delay, including cargo operations
d) Charterers can cancel shipments at any time without penalties
b)
Under a Contract of Affreightment (COA), what determines the choice of vessel?
a) A specific named vessel is used for all shipments.
b) Any vessel meeting the cargo volume and trade requirements can be used.
c) The charterer has full control over vessel selection.
d) The shipowner must always provide the same vessel for all voyages.
b)
Which of the following is a key disadvantage of a Slot Charter?
a) High long-term commitment
b) High market rate fluctuation
c) No control over vessel operations
d) Charterer must handle bunkers and port charges
c)
Which charter type provides the most flexibility in vessel selection for cargo transport?
a) Voyage Charter
b) Consecutive Voyage Charter
c) Contract of Affreightment (COA)
d) Time Charter
c)
What is “deadfreight” in a Voyage Charter?
a) A penalty for the charterer for not loading the full agreed cargo quantity.
b) A charge for delays caused by the shipowner.
c) A payment made when the vessel cannot complete the voyage.
d) A discount given when cargo is underloaded.
a)
In a Voyage Charter, who is responsible for paying for bunkers (fuel)?
a) Charterer
b) Shipowner
c) Broker
d) Port Authority
b)
What is the primary difference between a Voyage Charter and a Time Charter?
a) In a Voyage Charter, the ship is hired for a fixed period, while in a Time Charter, it is hired for a specific voyage.
b) In a Voyage Charter, freight is paid per ton or lump sum, while in a Time Charter, hire is paid daily.
c) In a Time Charter, the owner pays for bunkers, while in a Voyage Charter, the charterer pays for bunkers.
d) Both involve full operational control by the charterer.
b)
