Definition: Contract of Affreightment

A contract of affreightment is a contract between a ship-owner and charterer i.e. person interested in hiring ship to
carry its goods, in which the ship-owner agrees to carry goods for the charterer, or to give the charterer the access
of the whole or part of the ship's cargo-carrying space to transfer goods for a specific journey or for a specific time.
The charterer agrees to pay an agreed price, called freight, for services provided by ship owners.
Ship owner will be liable for payment whether or not the cargo is ready for shipment at time agreed. This contract
addresses issues such as its crew, the routes, and other issues associated with vessel.
The main purpose of Contract of Affreightment is to put onus(obligation) on carrier to transfer a certain amount of
goods in certain time. Usually, contract talks in terms of journeys not limited to particular vessel. Price is decided
based on quantity of goods with fines on carrier for delay.

Example- Iran is one of the major exporters of crude oil to India. Exporters in Iran can sign such contracts with
shipping company. A fixed quantity of oil should reach Indian ports every month for next 2 years.

Hence, this concludes the definition of Contract of Affreightment along with its overview.
disponent owner - a person or company which has commercial control over a vessel's operation without owning
the ship as in a bareboat charter

Disponent owner: This term refers to a person or company, which "displaces" or takes the place of the legal,
registered owner. In chartering many examples can occur.
For instance, if a vessel is bareboatchartered by its owner to a demise Charterer, the latter can take over complete
control of the vessel and its commercial operation, as if he is the actual owner. Also, both voyage charters and time
charters usually captain a clause allowing the Charterer to "relet", "sub-let" or "subcharter" the ship to another
user, a "subcharterer". The first Charterer, who is commonly called a "head Charterer", is acting as if he was the
actual owner; he can be referred to as the "disponent owner".

beneficial owner- the registered owner of a vessel who can charter the vessel out to others

mport Containers
Demurrage
Demurrage fees are charged when import containers are still full and under the control of the shipping line. In this
situation, the container has not yet been picked up by the consignee, and the free time for pick up set by the ocean
line has expired for the container. The free period starts when the container has been discharged from the vessel to
the terminal. Demurrage charges are applied for storage of containers while in the steamship lines terminal, rail
terminal, inland depot, or container yard. Demurrage is applied after the free time has expired, and ends the day
when the container has been picked up and out gated from the terminal.

Detention
Detention occurs when the consignee holds onto the carrier’s container outside of the port, terminal, or depot
beyond the free time that is allotted. Detention is charged when import containers have been picked up, but the
container (regardless if it’s full or empty) is still in the possession of the consignee and has not been returned
within the allotted time. For example, let’s assume a period of 5 free days is provided to return an empty import
container to the steamship line after pick up. If the consignee takes 7 days to return this container, the steamship
likely will charge for 2 days of Detention.
Export Containers
Demurrage
Demurrage charges occur after the loaded export container has been returned to the possession of the steamship
line but cannot be shipped out due to non-carrier related errors once the allotted free time has expired. For
example, if the exporter fails to provide required export information or documentation in a timely manner, the
steamship will be unable to load the container onto the originally scheduled vessel and will roll the container to a
new vessel. Demurrage charges would apply for the additional storage period until the container is shipped on
board the next vessel.

Detention
Detention is charged for export containers in which the empty container has been picked up for loading, and the
loaded container is returned to the steamship line after the allotted free time. Steamship lines typically provide 5
free days for the shipper to pick up the empty container, load it, and return it full to the port. If the container is not
returned during this free time, the line will charge detention for the additional days the container is in the
possession of the consignee.

Demurrage and detention are two terms that often confuses people in global trade, shipping, freight and
logistics.. This has also lead to several financial losses many a time.. Is there a difference between demurrage
and detention..

Demurrage and Detention in the context of container shipments..

 Demurrage relates to cargo (while the cargo is in the container)

 Detention relates to equipment (while the container is empty after unpacking or before packing)

Lets see how it works..

Imports – A container is discharged off a ship on the 2nd July – Consignee approaches the shipping line to take
delivery of the cargo around 12th July.. Working off a standard 7 free days from date of discharge, the line free days
(different to port free days) expires on the 8th July.. So, the line will charge the consignee DEMURRAGE for 4 days
from 9th to 12th July at the rate fixed by the line..
After the full container has been picked up by the client, for example if they take another 7 days to return the
empty container, then it is known as DETENTION which again will be charged at the rate fixed by the line..
So basically before the full container is picked up, Demurrage is charged (after expiry of free days) and after the
container has been picked up, till the time the empty is returned to the lines nominated depot, Detention is
charged..
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 Exports : In the case of exports, normally lines give about 5
free days within which the shipper has to pick up the empty, pack it and return it full to the port.. In case of delays
more than 5 days, the line charges Detention (generally same tariff as import detention) for the days that the
empty is kept with the client as empty or full..
Once the container is packed and say for example the shipper is unable to ship the same due to any reason, then
the Demurrage will be charged at the rate fixed by the line till the full container is shipped out..

What I have mentioned above is the generic and most common form of use of these two terms.. There however is
a difference in the usage of these terms by various shipping lines in various countries..

Some countries call it combined demurrage/detention in some countries, whereas in some countries it is shown
separately..

Notice of Readiness
The Notice of Readiness (NOR) is the document used by the captain of the ship, in the event of voyage chartering,
to notify that his ship is ready, in every respect, to load and/or unload the goods.
In the event of voyage chartering, the charterer has a certain term within which the loading and unloading
activities must be carried out: the lay days.

** Laytime” is the term used to refer to the time allowed to the charterers to load/discharge cargo in
return for payment of freight to the owners.In a case of invalid NOR, the vessel might not be considered
as arrived ship and therefore all waiting time until berthing will be refuted in the demurrage claim.

When exceeding the lay days, the charterer must pay the shipowner compensation (demurrage). Depending on the
moment when the NOR is issued, the lay days count start.

In the event of a weather-sensitive cargo (e.g. grains that must be kept dry), the term “weather lay day is used” or
“weather working days”. In that case, periods of weather unsuitable for loading or unloading do not count.