I have covered what is chartering, what is time chartering and voyage chartering in short, today lets cover bareboat chartering in short. Suppose you own 2 cars of which 1 you use regularly and another is just lying around without any use. When a car is standing still and not in operation it draws more expenditure than a running car. You know a guy who wants to start his own taxi business but getting a car is a big investment for him. He approaches you and asks for the car for which he will pay you a monthly rent. Normally it’s very hard to trust a person with your own car as your car is very dear to you. Now you know this person and trust him and in this case, the guy will take good care of your car as if it is his own car.
Bareboat or demise charter acts almost as an owner of the ship while paying hire to the owner. In a bareboat charter, the charterer equips the vessel and takes full responsibility of ships navigational and management operations. The charterer acts as the owner of the vessel for the hired period without actual ownership of the vessel. In some cases of foreclosures, the bank or the financial institution ends up owning the ship, but these institutions do not have the expertise to manage the ship. The ship’s management and operations are with the charterer while the ownership title remains with the financial institutions.
The bareboat charter party commonly used is the standard Barecon charter party. The important features are:
- Description of the vessel, such as size, speed, fuel consumption, loading capacity, etc. on which its performance will depend.
- A survey is carried out on delivery and re-delivery.
- Inventories of stores, during delivery and re-delivery.
- The charter period usually a provision is included giving the charterer the option of extending the validity of the charter by a specified period.
- The rate of charter hire and mode of payment. This is usually calculated based on the deadweight tonnage of the vessel and is payable every month in advance.
- Maintenance and operation during the period of the charter. The vessel has to be at the disposal and under the complete control of the charterer, who will be responsible for the supply of crew, officers, stores provisions, bunkers, etc. and for all other items of operational costs including insurance.