For shippers with repeat volumes, the COA converts a series of spot negotiations into one structured relationship. Its value lies in the details.
A contract of affreightment commits an owner or operator to lift an agreed quantity of cargo over an agreed period, across multiple shipments, at pre-agreed rate mechanics. The shipper secures capacity and rate visibility; the carrier secures a book of employment worth planning tonnage around.
The clauses that carry the weight
Quantity flexibility, shipment scheduling and nomination procedure, rate escalation or index linkage, and substitution rights decide whether a COA survives contact with a real trading year. A well-drafted nomination clause, in particular, is what prevents the contract from becoming a monthly renegotiation.
Rate mechanics deserve equal care. Fixed rates give budget certainty and carry market risk; index-linked rates track the market and surrender certainty. Many programmes blend the two, fixing a core volume and floating the balance.
Where broking adds value
Because a COA binds parties for seasons rather than voyages, counterparty assessment matters more than on any single fixture. Screening performance history, understanding the carrier's access to suitable tonnage, and stress-testing the schedule against port realities are exactly the work a professional intermediary is for.
General information, not a forecast, quotation, or investment advice. For a live view on your own stem or tonnage, put it in front of the desk.