Freight
The vessel is half the trade.
On most cargoes we move, freight is a larger number than the margin on the commodity itself. Chartering sits inside the trading floor rather than beside it, and the operator who will execute a fixture is in the room before it is agreed.
Overview
Who charters, and why it matters.
Who charters is decided by the contract, not by preference. Selling CFR or CIF, we take the vessel; buying on the same terms, the counterparty does. The first question on any enquiry is which side of that line it falls on, because it determines who carries the freight market between fixture and discharge.
The desk fixes directly with owners on the routes we run repeatedly, and works competitive brokers for coverage everywhere else. Brokers hold the position lists — which vessels open where, and when — and that information is the real scarcity in this market. Owners are paid by us and their recourse is to us, whether or not a broker introduced the fixture.
Freight is a position like any other. We hold time-chartered tonnage against routes we know we will need, and clear the balance on the spot market rather than assuming a rate we have not fixed.
The fixture
From requirement to charter party.
Five steps, in this order. Nothing later in the sequence can repair a decision taken badly earlier in it.
Requirement
The cargo is defined before we look for a ship: quantity and tolerance, load and discharge ports, the laycan window, load and discharge rates, and the charter party form the fixture will sit on. A requirement left vague here is paid for in demurrage later.
Tonnage
The requirement is circulated against position lists for vessels opening near the load port inside the laycan. Owners come back with indications; on repeat routes we go straight to owners we already carry a relationship with.
Main terms
Freight rate, laycan, demurrage rate, laytime and load and discharge terms, then commission. Main terms are agreed before anyone drafts a clause, and they are where the commercial outcome is actually decided.
Subjects
Terms are agreed subject to vetting, sanctions clearance and stem confirmation. Owner, manager, beneficial owner and flag are screened; the vessel is checked against the discharge terminal's age, dimension and rating requirements. Subjects that cannot be lifted end the negotiation.
Recap and charter party
Once subjects are lifted the recap binds both sides. The formal charter party follows on the agreed form — Gencon, Synacomex or Norgrain on dry cargo, Asbatankvoy on wet — with rider clauses negotiated in the details.
Structures
How the vessel is contracted.
| Structure | What it is | Where we use it |
|---|---|---|
| Voyage charter | A single cargo from load port to discharge port at a rate per tonne. The owner carries bunkers, port costs and the voyage risk. | Most spot cargoes, and any trade where we want the freight cost fixed at the moment the sale is priced. |
| Time charter | The vessel is hired for a period at a daily rate. We direct employment and pay bunkers, port charges and canal dues. | Held against routes we run continuously, and taken ahead of a season where we expect tonnage to tighten. |
| Contract of affreightment | A series of cargoes over a defined period at an agreed rate, without naming vessels in advance. | Sits behind term supply contracts where we owe monthly tonnage and need the freight cost known across the term. |
| Part cargo | A share of a vessel's capacity, loaded alongside other charterers' parcels. | Lots below a full stem — concentrates, alloys and smaller product parcels that do not justify a whole ship. |
Tonnage
The segments we fix.
Dry and wet, from transhipment barges to VLCC. Segment follows the cargo, the load port draft and the discharge terminal, in that order.
| Segment | Size | Typical employment |
|---|---|---|
| Handysize and Supramax | 28,000 – 63,000 dwt | Geared tonnage into ports without shore cranes; chrome, manganese and alloys |
| Panamax and Kamsarmax | 68,000 – 82,000 dwt | Ores and thermal coal into South and East Asia |
| Capesize | 150,000 – 210,000 dwt | Iron ore fines and bauxite on the long haul, draft permitting at both ends |
| Barge and coaster | 3,000 – 12,000 dwt | Indonesian transhipment to anchorage and short-sea distribution |
| MR tanker | 45,000 – 55,000 dwt | Clean product — gasoil, VLSFO and bunker supply into hub markets |
| LR1 and LR2 | 75,000 – 115,000 dwt | Long-haul clean product east and west of Suez |
| Suezmax and VLCC | 150,000 – 320,000 dwt | Crude from West Africa and the Arabian Gulf into Europe and Asia |
| Vegetable oil parcel tanker | IMO 2, 5,000 – 45,000 dwt | Coated or stainless segregated tanks; previous cargoes checked against the FOSFA list |
| Pressurised LPG | 3,500 – 8,000 cbm | Propane and butane parcels into regional import terminals |
Pricing
What a rate is quoted against.
Dry bulk is quoted either as a rate per tonne or as a daily time charter equivalent, referenced against published route indices — C5 for West Australia to Qingdao, C3 for Tubarão to Qingdao, and the Panamax and Supramax routes we run most often. The headline index is a poor guide to any single fixture; the route is what we price against.
Tankers are quoted on Worldscale, a percentage of a published flat rate for each voyage, so the same route reads as WS 85 in one market and WS 140 in another. Comparing two tanker fixtures means converting both back to a daily equivalent.
Forward freight agreements on the same routes let us fix the freight cost independently of the physical vessel. We hedge freight as a matter of policy rather than carrying an open rate into a priced sale.
Economics
What is actually paid on a fixture.
The freight rate is one line of several. These are the others, and they are settled at main terms rather than discovered at invoice.
- 01Address commission and brokerage
- Freight is quoted gross. Address commission is deducted by the charterer for its own account and brokerage is paid to the brokers who worked the fixture, so a gross rate and a net rate are not comparable numbers. Both are agreed at main terms and shown separately in our own calculation.
- 02Freight payment
- On voyage charters the bulk of freight, less commissions, falls due within a few banking days of signing and releasing bills of lading, with a retained balance settled after discharge against final outturn figures and the demurrage or despatch account.
- 03Stem tolerance and deadfreight
- The owner holds an option on quantity within an agreed tolerance. Where we fail to supply the cargo the vessel could have lifted, freight is still payable on the shortfall as deadfreight — which is why the stem is matched to the load port's actual availability rather than to the contract's headline figure.
- 04Bunkers and speed
- Under a voyage charter the owner carries bunkers and the voyage risk inside the rate. Under a time charter we buy the fuel against the vessel's consumption and speed warranties, so bunker price becomes our exposure and steaming speed becomes a commercial decision.
- 05War risk, canal and port costs
- Additional war risk premium, crew bonuses, canal dues and any transit deviation are allocated at main terms. On exposed routes these are not marginal items — they can outweigh the base freight difference between two candidate vessels.
- 06Carbon cost
- EU ETS allowances are priced into fixtures touching the EEA — the full verified emissions on intra-EEA voyages and half on voyages to or from a third country, with the surrender obligation now fully phased in — alongside the FuelEU Maritime compliance balance. Allocation follows the emissions clause agreed in the charter party.
Laytime
Demurrage is decided before the ship sails.
Laytime is the time the charter party allows for loading and discharging. Beyond it, demurrage accrues at a daily rate, pro rata to the hour. It is the largest recurring source of dispute in physical trade, and almost all of it is created before the vessel sails.
Laytime does not begin when the vessel arrives. It begins when a valid notice of readiness has been tendered and the agreed period has run — commonly a fixed number of hours after tender, or on berthing, depending on whether the fixture is written whether in berth or not. Whether the ship had arrived for the purpose of tendering is the question most demurrage arguments actually turn on.
How the clock runs is negotiated, not standard: weather working days, whether Sundays and holidays are excepted, and whether laytime is reversible across load and discharge. Where despatch is agreed for time saved it is usually at half the demurrage rate, so the two sides of the clock are not symmetrical.
We write the sale contract's laytime terms back-to-back with the charter party wherever the counterparty will accept it. Any gap between the two is not a paperwork problem — it sits on our own book, and it is closed at negotiation rather than argued after discharge.
Notices of readiness, statements of fact and pumping logs are collected by our agents at both ends and reconciled by the operator who executed the fixture, not by a separate claims team reading the file cold.
Demurrage claims are time-barred. Charter parties routinely require the claim, with every supporting document attached, inside a fixed window after completion of discharge — and a claim presented late, or presented without the notice of readiness and statement of facts behind it, is lost on its merits whether or not the time was used. We work the file to that deadline from the day the vessel sails.
Vetting
What is checked before subjects are lifted.
- Owner, manager, beneficial owner, flag and charterer screened against consolidated sanctions lists at every fixture, not only at onboarding
- AIS continuity reviewed over the preceding voyages, with unexplained dark periods treated as disqualifying
- RightShip rating on dry bulk tonnage; SIRE 2.0 on tankers, and CDI where the cargo requires it
- Vessel age, dimensions and gear checked against the discharge terminal's acceptance criteria before subjects are lifted
- P&I cover confirmed with an International Group club, and hull and machinery cover evidenced
- Voyage emissions accounted on chartered tonnage and weighed against the fixture alternatives
Freight enquiries
Owners and brokers with tonnage on our routes are welcome to send positions directly to the chartering desk.