The Real Difference between charter party and bill of lading

But if you are involved in transferring goods internationally, then understanding the difference between a charter party and bill bill can save you from thousands. I have seen that many businesses are not caught.

1. It all comes down what you are trying to do

Its heart, the difference is simple:

• A charter party is what you use when you need to hire an entire ship (or a big chunk of one)

• A bill of lading is what you get when you're just shipping some cargo on someone else's vessel

Imagine you're moving house:

• Charter party = hiring the whole removal van just for your stuff

• Bill of lading = booking a few boxes on a shared delivery truck

2. Who Actually Uses These Things?

From my experience in the industry:

• Charter parties are mainly used by:

  • Commodity traders (shipping oil, grain, coal)

  • Big manufacturers (moving massive equipment)

  • Governments (for military or aid shipments)

• Bills of lading are used by pretty much everyone else:

  • Retailers importing goods

  • Small manufacturers

  • Online sellers shipping overseas

3. The Different Flavours of Charter Parties

There's not just one type each suits different needs:

A) Voyage Charter

• What it is: Hiring a ship for a single journey

• Good for: One-off bulk shipments

• Watch out for: "Demurrage" charges if loading/unloading takes too long

• Real example: A coffee importer chartering a ship to bring 20,000 bags from Brazil

B) Time Charter

• What it is: Renting a ship for a set period (weeks/months)

• Good for: Ongoing shipping needs

• Watch out for: Maintenance clauses

• Real example: An oil company chartering a tanker for 6 months during peak season

C) Bareboat Charter

• What it is: Full control charter (you even provide the crew)

• Good for: Shipping companies expanding their fleet

• Watch out for: All the operational responsibility

• Real example: A new shipping startup chartering ships to build their business

4. Bills of Lading Aren't All the Same Either

Here's where things get interesting:

A) Straight Bill of Lading

• Non-negotiable only the named consignee can collect

• Used when: The goods are pre-paid

• Risk: If the buyer doesn't pay, you can't redirect the goods

B) Order Bill of Lading

• Negotiable can be bought/sold while goods are at sea

• Used for: Commodity trading

• Benefit: Allows for letters of credit financing

C) Sea Waybill

• Not a document of title

• Used for: Trusted relationships where no financing is needed

• Advantage: Faster release at destination

5. The Legal Stuff That Actually Matters

Having dealt with disputes on both sides, here's what really counts:

Aspect	Charter Party	Bill of Lading
Main Purpose	Ship hire contract	Receipt + ownership proof
Who's Involved	Owner + Charterer	Shipper + Carrier + Consignee
Transferable?	Only if agreed	Depends on type
Payment Terms	Usually lump sum	Often tied to letter of credit

6. When Things Go Pear-Shaped

From my files:

Charter Party Disasters

• Case 1: A charterer got slapped with £50,000 in demurrage because their loading crew showed up late

• Case 2: A shipowner had to pay damages when their vessel couldn't fit the promised cargo

Bill of Lading Nightmares

• The case of the missing "L": One missing letter in a consignee name held up a £1.2m shipment

• The photocopy that cost £800k: A forged bill of lading led to a massive insurance claim

7. How to Choose What You Need

Simple flowchart:

1. Are you shipping enough to fill most of a ship? → Charter party

2. Just sending some containers/boxes? → Bill of lading

3. Somewhere in between? → Consult a shipping expert

8. Why This All Matters to Your Business

Get this wrong and you could face:

• Goods stuck at port (costing you £1,000s per day)

• Payment delays

• Legal disputes

• Insurance claims being rejected

9. Common Pitfalls I've Seen

For Charter Parties:

• Not checking the ship's actual capacity

• Vague laytime calculations

• Unclear maintenance responsibilities

For Bills of Lading:

• Misspelled consignee names

• Incorrect INCOTERMS

• Missing endorsement signatures

10. Practical Tips From 15 Years in Shipping

1. Always triple-check names and addresses

2. For charters, get an independent ship inspection

3. With bills of lading, use order B/Ls unless you're certain of payment

4. Keep digital and physical copies

5. Build relationships with trusted freight forwarders

Understanding these documents is not just about paperwork it is about protecting your cash flow and goods. Whether you send some pallets or charting an entire vessel, hit documentation save time, money and headaches on the line.

Need Specific Advice? 

Each shipment is different. If you are unsure about your specific situation, it is worth consulting a shipping lawyer or an experienced freight farwarder. I've seen many companies try to cut songs here just to pay much later.