Charter service refers to a transportation arrangement where a vehicle, ship or aircraft is contracted for exclusive use for a pre-determined period of time. It allows the charterer flexibility, convenience and control over the transportation. Charter services are commonly used for cargo shipping, cruises, corporate events and leisure travel. In this article, we will understand charter services in detail.
What is Charter Service?
Charter service can be defined as:
- A transportation service provided to a client on a temporary basis. The client contracts for exclusive use of a vehicle, ship or aircraft to transport cargo or passengers.
- A group of people who have contracted the use of a vehicle for a certain amount of time, with a detailed itinerary, at a fixed rate.
In short, charter service allows the client to have exclusive access to the entire transportation vehicle based on a contractual agreement for a specific time period.
Types of Charter Services
There are four main types of charter services:
1. Voyage Charter
- In a voyage charter, the ship-owner places the ship at the charterer’s disposal for a single voyage between specified ports.
- It is the most common method for chartering a tramp ship. The charterer pays an agreed sum of money per ton of cargo.
2. Time Charter
- In a time charter, the charterer leases the ship for a specific period of time. The owner still manages the vessel but the charterer determines the ports and directs the vessel where to go.
- The charterer pays for the fuel costs, port charges, commissions etc. The ship-owner pays the crew costs.
3. Bareboat Charter
- In a bareboat charter, the charterer rents the ship for a period without crew, provisions or fuel.
- The charterer pays all operating expenses and manages the vessel completely. The owner provides only the barge.
4. Contract of Affreightment
- It is an agreement between shipper and ship-owner to transport a specified quantity of cargo over a period of time.
- The owner is obligated to provide a vessel to handle the cargo and receive payment. The shipper is obliged to provide the volume of cargo promised.
Examples of Charter Services
- A corporate event chartering a yacht for a private cruise.
- A group booking a small aircraft for a one-way flight.
- An exporter chartering a vessel to transport cargo overseas.
- A travel agency chartering a coach for a city tour.
- A company chartering a cargo plane to transport equipment interstate.
Charter services allow flexibility in transportation by leasing entire vehicles for exclusive use. The four main types are voyage, time, bareboat and contract charters. Charter services are commonly used for cruises, corporate events, leisure travel and cargo shipping. They provide tailored transportation solutions to meet specific client requirements.