Key issues with vessel chartering And How To Solve Them
Vessel chartering can be tricky. It demands attention to detail. It is imperative for a charter to have the knowledge to be able to make well informed decisions.
One mistake can be costly for traders. Vessel chartering is a huge domain. It varies by industry depending upon the terms and conditions.
It is advisable to be mindful and have specific knowledge of the process to avoid losses.
This article reviews some of the most vital areas of vessel chartering and how to resolve key issues.
Efficient inventory management
This is basic but most important. If you’re in vessel chartering, you must ensure your inventory is in place. That includes fuel, water and lube, for example.
It is important to check how inventory is being consumed throughout the journey. It must err on the surplus side to ensure the safe and smooth transport of goods.
Lower vessel rate
This is an extremely competitive industry. It is important to have the upper hand in terms of pricing. Rates are the decisive factor because of the cost of vessel chartering. The role of the intermediary has increased as a result.
Prompt availability of a vessel
The maritime industry is complex and competitive. Faster delivery is one of the primary objectives. Time can be more valuable than money. Delays in operations and logistics can lead to large losses.
If exporters can secure a vessel easily or they have it at their disposal, it helps them meet their business objectives. Charters must be well organized and prompt in terms of vessel availability.
Better availability is vital. It expedites the process and accelerates trade.
Paying attention to market issues
The person in charge of vessel chartering must be mindful of volatile market levels. It is always unpredictable. The market is affected by a host of factors such as crude oil and freight shipping. Shipping is considered a commodity and as a result, it is constantly fluctuating.
Assessing your counterpart
This is a fundamental part of vessel chartering. Running a credit check is paramount. Before shipping, ensure the buyer is capable of payment.
As an importer, it is important to check whether the hired company is capable of carrying goods safely and delivering on time. It is also vital to do a thorough inspection of the vessel.
Verifying the charter party
It is crucial to read and understand every detail of the agreement. This is because it contains essential information such as the day rate, demurrage and dispatch. Omitting any of these vital aspects can seriously damage the contract.
Seaworthiness of a vessel
The ship must be fit for carrying goods. It must withstand harsh weather circumstances during the course and should be able to deliver goods in pristine condition.
The other important aspects to assess are the efficiency and sufficiency of fuel and a crew. It is also advisable to make sure that a ship is exclusively chartered for your business purpose only.
No deviation from the decided route
Under the contract, everything is defined including the route of the trade. It must be pre-defined. Both parties must be aware and clear about port loading and discharge.
There must be no deviation from the agreed route other than what is defined in the agreement. In cases where goods are prone to damage and the safety of the crew is at stake, the route may be deviated with mutual agreement.
The safety of the port
The port is decided depending upon the type of a charter. The time period starts from the time of entry to the port to the departure. Charter nominates the safest port, considering every factor including loading, discharging and the safe departure of a ship.
In international trade, it is vital to understand the challenges of vessel chartering. It is as important as every aspect of trade.
As a trader, the first and foremost responsibility is to clarify and confirm the rights, liabilities and obligations of the charter in the contract to avoid future miscommunications and misunderstandings. There are other obligations also and every condition pertaining to the trade must be clearly expressed in the contract.