Berth Charter

What it does

A berth charter is a voyage charter in which the agreed destination is a particular berth rather than the port at large. The significance lies in when the ship counts as having arrived: under a berth charter the vessel generally becomes an arrived ship, and can tender a valid notice of readiness, only once it has reached the named berth, not merely on entering the port. Until then the laytime clock usually cannot start to run.

This contrasts with a port charter, where arrival at the port itself is enough. The distinction is one of the most consequential in voyage chartering because it decides who carries the risk of congestion. If berths are full and the ship must wait at anchor, a berth charter leaves that waiting time with the owner unless the charter adds wording, such as a time-lost or whether-in-berth-or-not clause, to shift it.

Commercial effect

The berth-or-port distinction allocates the cost of port congestion before a single tonne is loaded. Under a berth charter the owner bears the wait for a free berth, because laytime does not begin while the ship sits at anchor unable to reach the named berth. In a congested trade that exposure can be large, so owners price it into the freight or resist berth terms outright.

For the charterer, a berth charter is attractive precisely because it keeps the congestion risk with the owner and starts laytime only when the ship is where cargo can actually be worked. The choice between berth and port terms therefore sits at the centre of the fixture negotiation, and it is routinely modified by additional clauses that move the arrival point or count the waiting time regardless.

Owner's perspective

The owner is wary of a plain berth charter because it ties the start of laytime to a berth the owner cannot control once the ship arrives. If the berth is occupied, the vessel waits unpaid, and in a busy port that can mean days of lost time before laytime even begins. The owner therefore seeks to convert or soften the berth basis wherever congestion is a realistic risk in the trade.

The usual remedies the owner pursues are a whether-in-berth-or-not provision, a time-lost-waiting-for-berth clause, or a reachable-on-arrival undertaking, each of which detaches the start of counting from actually reaching the berth. Failing those, the owner prices the congestion risk into the freight, treating the berth basis as a cost it must recover rather than a neutral term.

Charterer's perspective

The charterer generally prefers a berth charter, because it keeps the risk of a full port with the owner and ensures laytime runs only when the ship has reached the point at which the charterer can actually load or discharge. For a charterer routinely fixing into congested terminals, the berth basis is a meaningful protection against paying for delay it cannot prevent.

The charterer resists the owner's attempts to bolt on whether-in-berth-or-not, time-lost, or reachable-on-arrival wording, since each of those returns some or all of the congestion risk to the charterer. Where it must concede such a clause, it negotiates limits, for example excluding waiting caused by the owner or confining the shifted risk to defined circumstances.

Negotiation points

• Whether the fixture is on a berth or a port basis, which sets the default arrival point.
• Whether whether-in-berth-or-not, time-lost-waiting-for-berth, or reachable-on-arrival wording is added to shift congestion risk.
• How the named berth is identified, and what happens if it is unavailable or changed.
• Whether shifting time between an initial waiting place and the berth counts as laytime.

Common variations

• A plain berth charter, with the ship an arrived ship only on reaching the named berth.
• A berth charter qualified by whether-in-berth-or-not, allowing NOR before berthing.
• A berth charter with a time-lost-waiting-for-berth clause counting the wait.
• A berth charter with a reachable-on-arrival undertaking obliging the charterer to provide an accessible berth.