A contract of affreightment, usually shortened to COA, is one of the less visible but widely used tools in dry bulk chartering. Where most fixtures cover a single cargo on a single voyage, a COA is built around repetition: the same cargo, the same or similar route, moved in instalments over an agreed period. For charterers with regular supply commitments, and for owners able to offer tonnage on a recurring basis, the COA offers a way to lock in the commercial relationship without tying either side to one specific ship for the whole duration. This article sets out what a COA is, why it is used, and how it differs from a voyage charter.
What Is a Contract of Affreightment?
A COA is an agreement between a charterer and an owner (or operator) to carry an agreed total quantity of cargo, in a series of shipments, over a defined period, rather than in one single movement. The parties agree the cargo type, the loading and discharging ranges, the total quantity or number of shipments, and the spread of dates over which those shipments will take place. What they do not agree, at the outset, is which specific vessel will perform each shipment.
That last point is the defining feature of a COA. It is a cargo-based commitment, not a ship-based one. The owner undertakes to provide suitable tonnage for each shipment as it falls due, nominating a vessel closer to the time, while the charterer undertakes to tender the agreed cargo quantities within the agreed windows. Each individual shipment is then usually performed under its own voyage charter terms, often incorporated by reference into the COA itself.
Why a COA Is Used for Recurring Cargo
COAs tend to appear where a charterer has a cargo programme that repeats: a producer with regular export volumes, a buyer with scheduled import requirements, or a trading house servicing a term supply contract. Fixing each shipment separately on the spot market is possible, but it leaves the charterer exposed to finding suitable tonnage, and willing owners, shipment after shipment, with no continuity between them.
A COA addresses that by giving the charterer assured carriage capacity across the whole programme, agreed once rather than renegotiated for every lot. The owner, in turn, gains a known flow of business rather than having to compete afresh in the open market for each cargo. Neither side is obliged to use the same vessel throughout, which gives the owner flexibility to allocate tonnage across its fleet and commitments, while the charterer still has the certainty that cargo will move within the agreed schedule.
COA vs Voyage Charter: Where the Line Sits
The distinction between a COA and a voyage charter is really a distinction of scope. A voyage charter, as explained in our article on voyage charter vs time charter in dry bulk, covers one cargo on one named vessel for one voyage, with freight, laytime and demurrage terms agreed for that specific fixture. A COA sits above that level: it is the framework that governs a series of such voyages, with each individual shipment still performed, in practice, as a voyage charter once a vessel is nominated.
Put differently, a COA is not an alternative way of chartering a ship, it is an alternative way of committing to cargo volume over time. The underlying carriage of each shipment still relies on voyage charter mechanics: a vessel is nominated, a charter party is signed or deemed to apply, laytime runs, and freight is paid per shipment. The COA simply sets the commercial umbrella, total quantity, shipment spread, nomination procedure and pricing mechanism, under which those individual voyage charters are performed.
COA vs Time Charter
This is also where a COA differs from a time charter. A time charter hires a specific vessel for a period, with the charterer directing its employment throughout. A COA makes no such commitment to a specific ship at all; it is entirely cargo-led, and the owner retains discretion over which vessel services each shipment, subject to meeting the agreed specification and dates.
How a COA Is Structured
A typical COA sets out the total contract quantity, which may be expressed as a fixed tonnage or as a range with minimum and maximum tolerances, the number and size of individual shipments, and the period over which they are to be performed. It will specify the load and discharge ranges, the cargo description, and the vessel specification that any nominated ship must meet, such as size category, age, or gear requirements.
The contract will also address how and when vessels are nominated for each shipment, including notice periods and any right for the charterer to reject an unsuitable nomination. Freight is usually agreed on a rate basis applicable across all shipments, sometimes with a mechanism for adjustment if market conditions or the parties' agreement allow for it. Many of the terms governing each individual shipment, including laytime and demurrage, are often incorporated from a standard charter party form, such as those discussed in our article on GENCON and NYPE charter party forms, with the COA itself adding the overarching quantity and scheduling framework.
Because a COA runs over an extended period and multiple shipments, it will also typically address what happens if a shipment is missed, delayed, or cancelled, and how disputes over individual shipments are to be handled without necessarily unwinding the whole contract.
Points Worth Considering Before Entering a COA
A COA suits a charterer with a genuinely recurring cargo flow and the administrative capacity to manage a programme of shipments rather than a single fixture. It is less suited to a one-off cargo movement, where a straightforward voyage charter remains the simpler route. Owners considering a COA need confidence that they, or tonnage they can access, will be available to meet nominations throughout the contract period, since failure to perform a shipment can have consequences across the wider agreement, not just that one lot.
Both sides also need clarity on how flexible the quantity and scheduling terms are intended to be in practice, since the value of a COA lies largely in the certainty it provides. Commercial practice varies between trades and counterparties, and the precise allocation of risk depends on the wording agreed; it is always worth checking the specific terms of the contract rather than assuming a standard approach applies.
A contract of affreightment can bring useful stability to a cargo programme that would otherwise mean renegotiating terms shipment by shipment, but it is a commercial structure that needs careful drafting to match the realities of the trade it serves. Our chartering desks at ER Drybulk regularly advise on how COA terms compare with straightforward voyage fixtures, and are glad to talk through which approach fits a given cargo programme.