There are several ways a ship owner can earn revenue, each of which brings a different

distribution of risk between the ship owner and the charterer and a different apportionment of
cost. Discuss the revenue the ship earns.

The classification of revenue

In the global maritime context, a shipowner might collect revenue in a variety of methods,
each of which has a different risk and costs between the owner and the charterer. The risks
are shipping market risk which is concerned with cargo availability and the freight rate
charged, and operational risk which is concerned with the ship's capacity to fully complete
the voyage.

Voyage charter:

The maritime freight rate is paid per unit of cargo transported, for example R2 000 per ton.
Therefore, revenue depends on the quantity of cargo and rate per unit of cargo. Under
Voyage charter, the shipowner pays all the port expenses such as fuel and crew, except the
cargo handling, and is responsible for managing the running of the ship and for the planning
and execution of the voyage. The shipowner takes both the operational and the shipping
market risk. For example, if no cargo is available, if the ship breaks down, or if it has to wait
for cargo he loses out.
Time charter:

The charter hire is specified as a fixed daily, weekly or monthly payment for the hire of the vessel for
specific trip, for example R15,600 per day. Here, revenue depends on hire rate, duration and off-hire time.
Under this arrangement, the owner still takes the operational risk, since if the ship breaks down he does not
get paid. Voyage expenses such as daily fee for hiring, port charges and fuel
costs incur by the vessel are all on the charterer who takes on the market risk.