Chartering practice

Chartering practice Seaborne Unit Banpu Public Company Ltd.

Chartering practice (12 hr) ◼ Chartering routines ◼ Laytime and demurrage calculation ◼ Freight calculations ◼ Charter party

The Freight market ◼ The dry cargo market ◼ The tanker market ◼ The reefer market ◼ The car carrier market ◼ The passenger market ◼ The sale and purchase market

The dry cargo market ◼ Bulker ◼ Tweendecker ◼ Container ◼ Ro/ro ◼ Liner ◼ Small ship ◼ special

The state of the market ◼ Open freight market ◼ 70% of the volume of the goods ◼ Spot market (5-10% of the total open market volume) ◼ Law of supply and demand ◼ Liner-bound freight market



Shipowning conditions and market activities ◼ Securing employment for owned vessels from the open market ◼ Full or part cargo ◼ Voyage by voyage basis ◼ Long range contract engagements ◼ Securing booking of so-called parcels ◼ Time chartering tonnage to obtain maximum efficiency over a period

◼ time chartering tonnage on a voyage- by-voyage basis ◼ To let (time charter out) owned or time- chartered tonnage to other owners or operators for longer or shorter period ◼ Ordering new buildings or buying second-hand tonnage and selling vessel or scrapping

Information channels ◼ The exchange of information for ◼ Chartering and shipping departments ◼ Brokers ◼ Agents ◼ Supply and demand of sea transport services ◼ The continuous flow, treatment and evaluation of information

Order ◼ “open A/C New Zealand charterers with following contract: Lyttleton/vancouver 1 million tons p.a. bulk limestone monthly shipments commencing june firm indication FIOT 2000/5000 Gencon C/P 3.75 pct pastus Require geared tonnage”

◼ “ Our direct chrtrs saguenay/alcan open for T/D 350.000 Bale with min 25 t H/L del Hamburg 15/16 April for trip to westindies”

“ have interested up to 24 mos T/C period: thermaicos gulf – del ex yard 6/87 T/D, flush tweens abt 16000 mt dw on 8.9 m abt 770.000 cuft gr in holds + abt 40000 cuft in bleeding upper side tanks, 4 ho/ha (12,16,17.60,16 all by 11.20 m) – derr 8x15 ts up 5 tons 1x60 ts (serving holds 3,4) abt 15 knts on abt 25 tns FO+1.5 Do grain fitted/self timmer/cotton fitted/co2 fitted/lakes fitted Owner can fix arround usdlr 7,500 dely suth japan laycan 25 june/20 july Pse propose “

◼ “nordic wasa 26.000 t cargo capacity open blsea end march. What can you propose?”

◼ Market reports ◼ Freight negotiations ◼ General information ◼ Costs for the operation and despatch of vessel ◼ Information centres ◼ London, New York and Tokyo – information centres ◼ Oslo, Hamburg, Paris and Piraeus – shipping information



◼ The Baltic Exchange/ BIFFEX ◼ BIMCO (the Baltic and International Maritime Council) ◼ Information network and coverage ◼ Means of communication ◼ The role of the broker and the agent





Various forms of tramp shipping ◼ Voyage charter (single or consecutive) ◼ Time charter (short or long term) ◼ Bareboat charter (demise)



Operating costs Labour costs Repair and maintenance costs Insurance costs stores, supplies and lubricating oils management overhead, including administration

Voyage costs Fuel costs Port costs

Chartering routes ◼ The stage of investigation ◼ The stage of negotiation ◼ The follow-up stage

The period of investigation ◼ When a charterer directly or through a broker enters the market with an order ◼ The charterer want to enter immediately negotiation “ Firm order, Charterers are now firm as follows …, firm and ready to go firm with letter of credit (L/C) in order

◼ The charterer does not want to enter into immediately firm negotiations “Indications only, please indicate, or please propose”

◼ The charterer requires a freight quotation “prospective order, order expected to become definite, order not yet definite”

◼ The charterer only wish to make a general investigation of the shipping possibilities “ Possibility only, Charterers have a possibility to work up following business”

Voyage charter order ◼ Charterer’s name ◼ Cargo quantity and description ◼ Loading and discharging ports ◼ Lay/Can ◼ Loading and discharging rates and terms ◼ Any restrictions regarding type or size of ships ◼ Charter party form ◼ commissions

Time charter order ◼ Same ways of voyage chartering ◼ Exception detail of ◼ Cargo ◼ Ports ◼ Loading and discharging rates and terms ◼ Required ◼ About the intended trade ◼ Time charter period ◼ Places for delivery and redelivery

Liner booking ◼ Simple as traffic ◼ Freight & conditions in the line’s printed tariff ◼ Standard terms of the Line or the conference (Liner Booking Note)

The reaction of the shipowner ◼ If an order is “firm and ready to trade” the owner offer right away ◼ Another way shipowner present the ship to meet requirement of order or some freight idea in order to start negotiation

The period of negotiation ◼ Main terms ◼ detail

Main terms in voyage chartering ◼ The shipowner’s name ◼ The ship’s name and particulars ◼ Cargo quantity and description of the commodity ◼ Loading and discharging ports and berths ◼ Laydays/cancelling day

◼ Loading and discharging rates and terms ◼ Demurrage and despatch rates ◼ Freight amount and conditions for payment of freight ◼ Clause covering time counting, Ice clause, War Risk clause, Bunker clause, clause covering extra insurance premiums, taxes and dues, etc ◼ Charter-party form ◼ commissions

Main terms in time chartering ◼ The shipowner’s name ◼ The ship’s name and particulars ◼ Description of the time charter engagement ◼ Place of delivery and redelivery ◼ Laydays/cancelling day for the delivery ◼ Intended trade with geographical limits and other trading limits

◼ Quantity and price for bunkers on board on delivery and redelivery ◼ Hire and conditions for hire payment ◼ Other clauses which the owner wishes to negotiate as main terms ◼ Charter-party form ◼ commissions

◼ The detail of vessel ◼ Vessel’s name ◼ Year built ◼ Flag ◼ Deadweight ◼ Cargo space cubic ◼ Number of hatches and holds

◼ “charterers accept owners’ offer, except……..” ◼ “charterers decline owners’ offer and offer firm as following…………..” ◼ “charterers decline owners’ offer without counter”

details ◼ The second phase of the negotiating stage ◼ Additional points and terms which have to be fully clarified before charter completed

The period of follow up ◼ The charterers, or the broker, draw up, copy, and distribute the charter party ◼ The charter party to be signed ◼ Mutually acceptable solutions