Fri, Oct

COA (Contract of Affreightment)


COA (Contract of Affreightment). Originally, contracts for the carriage of goods by sea, such as voyage charters and time charters, were termed "contracts of affreightment".

Some textbooks still call charters by this term. However, charters are for one named ship carrying out one or more voyages or let on hire or leased out for a period. When a contract comes into existence usually to carry a large volume of cargo over a period of time between named ports or regions, the named ship may be unable to carry the cargo over the necessary number of consecutive voyages .If the ship could carry out consecutive voyages it would most probably have to return to the loading place in ballast and this would increase the freight the owner would have to charge to make an acceptable return on his investment.

In the late l960s and early 1970s the party which had control over quite a volume of specific cargo may have wanted it moved in mare than one shipment over a long period. He would enter into a contract with another party (who did not have to be a shipowner) to carry the complete (or a very large quantity of) cargo within the agreed period. For example, one party (perhaps a shipowner) may agree to carry all logs produced for export by a timber mill operator during 1990 and 1992. The cargo interest would guarantee that each year there would be, say, 10 shipments each of . . . tonnes. The ports of loading and discharging do not have to be specified but it is most likely that the cargo movement would be between agreed ports. The ship used for the carriage is not named, provided it meets the general description specified by the cargo owner. As each shipment is made, a new voyage charter may be entered into between the two parties. If the original ship which the shipowner, if he has entered into a COA, is unable to make the next voyage, the shipowner can go to the spot market to charter-in tonnage. This gives the shipowner considerable flexibility.

There are two main types of standard-form COAs:

VOLCOA, the "Standard Volume Contract of Affreightment for the Transportation of Bulk Dry Cargoes", published by BIMCO in 1982; and,

INTERCOA 80, the "Tanker Contract of Affreightment", published by INTERTANKO (and adopted by BIMCO) in 1980.

While the COA is not a charter (for a named ship), it can be considered to be a "hybrid" contract to carry goods by sea. It is still a relatively new development in shipping and there are still areas where problems can occur because users are not totally familiar with the issue. One problem that can arise is to use individual charterparties for each shipment but these charterparties may not cover the points contained in the COA.