The three structures
| Structure | What is chartered | Who bears bunker/port cost risk |
|---|---|---|
| Voyage charter | One vessel, one voyage, one (or a defined) cargo | Owner |
| Time charter | One vessel, for a period of time, charterer directs employment | Charterer |
| Contract of Affreightment (COA) | A defined cargo quantity over a period, across multiple voyages/vessels | Owner (typically), per voyage |
The right structure depends on what the charterer actually needs: a single move (voyage charter), operational control of a vessel over time (time charter), or a reliable multi-shipment supply commitment without needing to name a specific vessel for every lift (COA).
Voyage charter in practice
Under a voyage charter, the owner is paid freight (a rate per tonne, or a lumpsum) for carrying an agreed cargo between named ports, and bears the cost and risk of bunkers, port disbursements and voyage time — subject to laytime and demurrage provisions that allocate cargo-handling delay risk to the charterer beyond an agreed allowance.
Time charter in practice
Under a time charter, the charterer pays hire (typically a daily rate) for the use of the vessel over an agreed period, directs where it trades within the charter's limits, and bears bunker cost directly. The owner retains responsibility for crewing, maintenance and the vessel's seaworthiness throughout.
COA in practice
A contract of affreightment commits an owner (or a pool of vessels) to carry an agreed total cargo quantity over a defined period — useful for a charterer with recurring shipment needs who wants price and capacity certainty without administering a separate fixture for every single voyage.
Frequently asked questions
What is the main practical difference between time charter and voyage charter?
Under a voyage charter, the owner controls the voyage and bears bunker and port cost risk in exchange for a freight payment. Under a time charter, the charterer directs the vessel's employment and pays for bunkers directly, in exchange for a daily hire rate to the owner.
When would a charterer use a COA instead of individual voyage charters?
When they have a recurring cargo shipment need over an extended period and want committed capacity and pricing certainty without negotiating and fixing a separate vessel for every individual shipment.
Who pays for bunkers on a time charter?
The charterer, directly, since they control the vessel's employment and speed during the charter period. On a voyage charter, bunker cost and consumption risk sit with the owner as part of running the voyage.