Ship Chartering: From Enquiry to Fixture

Between "we have a cargo" and "the ship is fixed" there is a sequence that hardly varies, whether the parcel is three thousand tonnes of bagged cargo or a shipment of harbour cranes. Knowing the sequence is useful on both sides of the table: it tells a charterer what will be asked for and when, and it shows where a shipment is genuinely blocked rather than simply waiting.

What follows is the process as it actually runs in dry bulk, breakbulk and project chartering — the stages, who moves at each one, and roughly how long each takes.

1. The enquiry

Everything downstream is built on this message. A complete enquiry names the commodity and its specification, the quantity and in whose option the tolerance sits, the loading and discharging ports or ranges, the laycan, the loading and discharging rates and terms, and — for anything that is not a homogeneous bulk — dimensions and weights per unit.

An incomplete enquiry still gets an answer. It simply gets a cautious one, because every gap is priced as risk. The most common omissions are the stowage factor, the discharge rate and the draft at the receiving berth, and each of them can move a rate by more than the difference between the offers eventually received.

2. Screening the market

The broker now works in two directions at once. Against the cargo: which vessel sizes can physically do this, what the draft and the berth allow, whether gear is needed. Against the market: which ships are open in the right area in the right window, what similar cargoes have fixed at recently, and where the tonnage list is tight or long.

The output is a shortlist rather than a single answer — usually a handful of candidates spanning different owners, sizes and positions, because the strongest position in a negotiation comes from having genuine alternatives.

Typical time: same day to two days.

3. Freight indication

An indication is the level at which the cargo is likely to fix, given the information available now. It is used for budgeting, for comparing against other transport modes, and for deciding whether the shipment is worth pursuing at all. It is not binding, and it moves with the market, with bunker prices and with vessel positions.

The distinction between an indication and a commitment is the single most frequent misunderstanding in chartering, and it is set out in detail in Freight Indication vs Firm Freight Offer.

Typical time: hours to a day.

4. Firm offer

When the shipment is real — cargo confirmed, dates confirmed, ports confirmed — the market is approached for firm offers. A firm offer names a specific vessel with her particulars, a freight figure, the main terms, and a validity, often measured in hours rather than days.

That validity is not a formality. Tonnage is being offered to several cargoes at once, and an offer allowed to lapse is frequently gone. This is the stage at which a charterer needs to be able to answer quickly, which in turn is why the preparation belongs earlier.

5. Negotiation on main terms

Offer and counter move through the broker, each round narrowing the gap. The freight is only one line. The list that actually gets negotiated normally includes:

• freight, and whether it is per tonne or lumpsum;
• quantity and tolerance, and whose option it is;
• laycan and the cancelling date;
• loading and discharging rates and terms;
• how laytime is counted, and when notice of readiness may be tendered;
• demurrage and despatch;
• freight payment terms;
• hold cleanliness standard and any inspection;
• the charter-party form and the clauses to be attached;
• commissions.

Agreement here is agreement "on subjects" — the terms are settled, but the fixture is still conditional.

Typical time: one to three days.

6. Subjects and the recap

Subjects are the conditions that remain: shippers' or receivers' approval, stem confirmation, management or board approval, occasionally a vessel inspection. They carry a deadline, and they are lifted or the fixture falls away.

Once subjects are lifted, the broker circulates the recap — the complete agreed terms in one message. From that moment the parties are bound, and the recap is what will be read if anything is later disputed. It is worth the fifteen minutes it takes to check line by line, because the charter party that follows is drawn from it.

7. Charter party

The recap is written up on a standard form with the agreed riders attached. In dry bulk that is usually Gencon; grain trades often use Synacomex; tanker and specialist trades have their own forms. Our reference pages on Gencon and Synacomex set out what each form assumes by default.

The document should match the recap exactly. Where it does not, the discrepancy is raised now rather than at the discharge port.

8. Operations

With the fixture concluded, the work becomes operational: the vessel's itinerary and notices, the agent's appointments at both ends, notice of readiness, the start and counting of laytime, the statement of facts, bills of lading, and the handling of anything unexpected — congestion, weather, a shortfall, a shifted berth.

This is where a broker who stays with the voyage is worth having. Most disputes are created in the first two days of a port call, by a notice tendered at the wrong moment or a statement of facts signed without comment.

9. After discharge

The voyage is not closed when the cargo is out. The laytime calculation is prepared from the statements of facts, demurrage or despatch is agreed, and freight and any balance are settled. A clean settlement here depends almost entirely on how carefully the terms were written at stage five.

How long the whole thing takes

For a straightforward dry bulk parcel with a complete enquiry, from first message to recap is commonly three to seven days. Project and breakbulk shipments run longer — two to four weeks is normal — because the cargo documentation, the stowage study and sometimes a surveyor's review sit inside the negotiation rather than after it.

The variable is almost never the market. It is how complete the cargo information was on day one.

Who pays the broker

In voyage chartering, brokerage is a commission on freight, paid by the owner out of the freight and stated in the recap. It is customary and it is disclosed. The charterer does not pay the broker separately, which is worth saying plainly because it is often assumed otherwise.

What we do at each stage

Kiev Shipping Ltd has worked as an independent shipbroker since 2000, with more than 350 voyages fixed. We have no fleet of our own, so the vessel proposed is the one that suits the cargo rather than the one that needs employment. Our work covers the whole sequence above: preparing the enquiry, screening the market, negotiating terms, drawing the charter party from the recap, and following the voyage through to the laytime settlement.

We charter dry bulk, breakbulk, project, bagged and general cargo, and selected liquid bulk parcels, typically between 3,000 and 50,000 tonnes, from China, South Korea, Japan, India and other Asian origins to Europe, the Mediterranean, the Black Sea, the Baltic, the Red Sea and the Persian Gulf.

Service overview: Ship Chartering Services.

See also: Ship Chartering: Why the Freight Rate Is Not Enough · Charter-Party Support · How to submit a chartering enquiry · more in Ship Chartering.