Legal Definitions - affreightment

Affreightment refers to a legal contract where a shipowner or operator agrees to transport goods (known as cargo) for another party, such as a merchant or shipper, in exchange for payment. Essentially, it is the process of making an agreement to use a vessel, or a specific portion of its capacity, for the purpose of carrying freight by sea.

Here are some examples to illustrate how affreightment works:

• Example 1: A large automotive manufacturer needs to ship thousands of newly assembled cars from its factory in Japan to dealerships across North America. They enter into a contract with a major shipping company to reserve an entire car carrier vessel for this specific voyage. This agreement outlines the type of cargo, the route, the delivery schedule, and the payment terms.

  Explanation: This scenario demonstrates affreightment because the manufacturer is contracting for the use of an entire ship to transport its cargo, establishing a formal agreement for maritime transport.

• Example 2: A company specializing in importing exotic fruits from Central America regularly needs to transport refrigerated containers of produce to various ports in Europe. Instead of chartering an entire ship, they book space for multiple containers on a liner vessel that follows a fixed schedule and route, operated by a global shipping line.

  Explanation: This is an example of affreightment where the importer is contracting for a specific amount of space on a ship to carry their goods, even though they are not hiring the entire vessel. The agreement covers the terms of carriage for their specific containers.

• Example 3: A mining corporation has a long-term agreement with a shipping firm to transport bulk quantities of iron ore from its mines in Australia to steel mills in China. This contract specifies the volume of ore to be shipped over several years, the frequency of voyages, and the rates for each shipment, ensuring a steady supply chain.

  Explanation: This illustrates affreightment in a long-term context. The mining corporation has entered into a comprehensive agreement to secure the necessary shipping capacity for its ongoing cargo transportation needs, defining the terms for multiple future voyages.