Charterparties are contracts for the hire of a vessel (or part of, or space onboard, a vessel). Bareboat, or ‘demise’, charters are a type of charterparty where the charterer hires the vessel for a period of time and just hires the ship ‘bare’; in other words without a Master or crew. The charterer staffs the boat, supplies bunkers and is generally free to decide where to take the vessel and what to do with it (within the contractual limits set out in the charter).
Often this is done as an alternative to buying a ship, whch can be a huge commitment. Say if a small shipping company is receiving more demand than it’s current fleet can supply, it may not want to order a new build ship or obtain a ship mortgage to buy a second hand vessel as both are very long term commitments and there is no guarantee that the demand will be sustained. Instead they may choose to pay six months’ or a year’s hire for a ship, crew it and capitalise on the upturned interest in this way. If the market remains high they can always increase the charter period or even make an offer to purchase the vessel, and if the interest fades then they can merely return the ship with no further commitment (and not suffering from any loss in hull value due to depreciation or lower freight rates).
Indeed, some shipping companies will never purchase their own fleet, preferring to hire vessels on long-term bareboat charters. In these companies it is not uncommmon for them to be allowed to paint the ship in their own livery whilst it is on charter so it does appear that they do in fact own it.
Many of the standard forms of time charterparty contain the prefix ‘bare’ (BARECON for example), which gives a clue as to the type of charter they relate to, but a more extensive list of the main forms of bareboat charter is set out below:
BARECON 2001
