LaycanDeskContract of Affreightment (COA)
Monthly liftings over 6–12 months, one contract, one freight basis, the ship nominated lift by lift. Contracts of affreightment for repeat liftings, typically 45,000 tonnes a month over six to twelve months, priced against the spot market for the period, with nomination windows, substitution rights and laytime and demurrage settled per lifting, and worked only once the shipper, the signatory, the sale terms and the first month's receiver are known.
A contract of affreightment commits an owner or operator to carry a series of cargoes over a period, a lifting a month for six or twelve months in the common shape, at a freight agreed once for the whole programme. The owner is free to nominate any suitable ship for each lifting and to substitute her within agreed limits; the charterer gives a nomination window for each month and declares the quantity within a tolerance. Owners price a COA against what they expect the spot market to do over the period, so a flat rate carries a view on the market, and they discount for the certainty of employment and load for the risk that the charterer's ports or cargo turn out to be slower than described. Laytime and demurrage are settled lifting by lifting, on the same terms for every voyage, and the contract stands or falls on who signs it: a trading house with a sale contract, a producer, or a receiver buying delivered.
The shape we see most is a bulk commodity, rock salt from Egypt to Canada is a recent example, at around 45,000 tonnes a month for a season or a year. Before any owner sees a COA we ask four things: the shipper and the loading berth with its rates and draft; who signs the contract; whether the cargo is sold FOB or CFR, since that tells us which party actually holds the freight; and the first month's laycan and receiver. Those answers decide whether the programme is real and who the charterer of record is, and the charterer is screened before the enquiry goes further. With them we put the programme to the owners and operators whose tonnage fits the lane and come back with a freight idea, nomination and substitution terms, and the laytime basis. Positions from owners looking for period employment go on the board against open programmes. Everything runs on email.
The four things we ask first
- Shipper and loading berth, with load rate and draft
- Who signs the contract of affreightment
- FOB or CFR: which party holds the freight
- First month's laycan and the receiver
How owners price a COA
- Against their view of the spot market over the period
- A discount for certain employment, a premium for port or cargo risk
- Flat rate, or a rate tied to an index with a floor and ceiling
- Quantity per lifting with a tolerance, and whose option it is
Terms that move the number
- Nomination window: how many days' notice the owner gets each month
- Substitution: which ships the owner may nominate and how late
- Laytime and demurrage per lifting, on identical terms
- Minimum and maximum quantity over the contract
- What happens to a missed lifting on either side
Ships that carry it
The cargo itself, on Commbril
Questions charterers and owners ask
What is a contract of affreightment?
A contract under which an owner or operator carries a series of cargoes over a period, at a freight agreed once for the programme, nominating a suitable ship for each lifting. The charterer commits the cargo; the owner commits the carriage, not a particular ship.
How do owners price a COA against spot?
They take a view of where the spot market will be over the period, discount for the certainty of employment and add for the risk in the ports and the cargo. A flat rate carries that view for the whole contract; an index-linked rate with a floor and ceiling shares it between the two sides.
Who should sign the COA?
The party that holds the freight: the seller if the cargo is sold CFR, the buyer if it is sold FOB. A trading house with the sale contract, a producer, or a receiver buying delivered can all sign; a party with no sale contract behind it cannot. That is why we ask FOB or CFR and who signs before anything goes to owners.
What do you need before an owner sees a COA?
Shipper and loading berth with rates and draft, the signatory, FOB or CFR, and the first month's laycan and receiver. The signatory is screened on those answers. An owner hears about the programme only once they are in hand, and the exchange runs on email.