Charter Party

Charter Party
Charter Party

Charter Party
Charter Party
The major operation under this function is

The major operation under this function is
to find continued and suitable employment
to find continued and suitable employment
for the ships to maximise revenue
for the ships to maximise revenue
earnings.
earnings.
These operations are therefore primarily

These operations are therefore primarily
concerned with finding suitable cargoes
concerned with finding suitable cargoes
for ships irrespective of whether the ships
for ships irrespective of whether the ships
are owned or are hired.
are owned or are hired.
These operations are concerned with

These operations are concerned with
evaluating intended voyages to maximise
evaluating intended voyages to maximise
earning so as to pay for the cost of ship,
earning so as to pay for the cost of ship,
cost of its operations and to make some
cost of its operations and to make some
profit.
profit.

Charter Party
Charter Party
There are many mutually agreed

There are many mutually agreed
arrangements between the owners of
arrangements between the owners of
cargo or shippers and the ship
cargo or shippers and the ship
owners or ship operators for
owners or ship operators for
transportation of cargoes.
transportation of cargoes.
The terms and conditions for carriage

The terms and conditions for carriage
of cargo can either be on liner terms
of cargo can either be on liner terms
or under different charter party
or under different charter party
terms that primarily depend upon the
terms that primarily depend upon the
types of ships and cargo.
types of ships and cargo.

Charter Party
Charter Party
Charter party is a contract between

Charter party is a contract between
the ship-owner and the Charterer.
the ship-owner and the Charterer.
Three important elements are;

Three important elements are;
a! "escription of the ship

a! "escription of the ship
b! "escription of the trade

b! "escription of the trade
c ! "escription of time period

c ! "escription of time period

Charter Party
Charter Party
Description of the Ship

The type of ship to be hired#chartered very

The type of ship to be hired#chartered very
much depends on the nature and
much depends on the nature and
whereabouts of the intended trade.
whereabouts of the intended trade.
$ts normal for owners to provide all the

$ts normal for owners to provide all the
details of the ship with a guarantee about
details of the ship with a guarantee about
its accuracy.
its accuracy.
%n example such as &hell time and $nter

%n example such as &hell time and $nter
tank having appropriate format which is
tank having appropriate format which is
re'uired to contain several pages of
re'uired to contain several pages of
information re'uired ship details
information re'uired ship details

Charter Party
Charter Party

(any Charterers re'uire the following

(any Charterers re'uire the following
plans to be supplied by the )wners;
plans to be supplied by the )wners;
*! +eneral %rrangement ,lan ,including

*! +eneral %rrangement ,lan ,including
loading scale
loading scale
-! "etailed Cargo manifold arrangement

-! "etailed Cargo manifold arrangement
"rawing
"rawing
.! ,umping %rrangement ,lan

.! ,umping %rrangement ,lan
/! ,lan of Cargo Tank 0entilating &ystem

/! ,lan of Cargo Tank 0entilating &ystem
1! (anufacturers Characteristics Curves

1! (anufacturers Characteristics Curves
of ,umps if centrifugal pumps are
of ,umps if centrifugal pumps are
installed.
installed.

Charter Party
Charter Party

Cubic Capacity
Cubic Capacity
&peed and Consumption

Constant 2eights
Constant 2eights

Charter Party
Charter Party
Description of the Ship Description of the Ship
These, apart from the name of the ship, include 3 These, apart from the name of the ship, include 3
year of built, flag, dead weight, maximum year of built, flag, dead weight, maximum
dimensions, maximum draught, fresh water dimensions, maximum draught, fresh water
allowance, speed, fuel consumption, cargo space allowance, speed, fuel consumption, cargo space
in bail and grain capacities, number of hatches in bail and grain capacities, number of hatches
and holds, type and safe working load of cargo and holds, type and safe working load of cargo
gear, compliance with international regulations gear, compliance with international regulations
for carriage of specialised cargo and such other for carriage of specialised cargo and such other
important details relevant for the intended cargo important details relevant for the intended cargo
and trade. and trade.
4or example some bulk cargoes may re'uire that 4or example some bulk cargoes may re'uire that
the holds be e'uipped with carbon-di-oxide fire the holds be e'uipped with carbon-di-oxide fire
protection system, or special re'uirement of protection system, or special re'uirement of
cargo securing in the holds. cargo securing in the holds.

Charter Party
Charter Party
Description of the Ship Description of the Ship
5ame of the &hip 5ame of the &hip
6ear of 7uild 6ear of 7uild
5ame and location of )wners 5ame and location of )wners
4lag 4lag
Class Class
Call 8etters Call 8etters
+9T#59T +9T#59T
&ummer "eadweight &ummer "eadweight
4resh 2ater %llowance 4resh 2ater %llowance
4resh 2ater %llowance 4resh 2ater %llowance

Charter Party
Charter Party

Cubic Capacity
Cubic Capacity

Constant 2eights
Constant 2eights

Charter Party
Charter Party
Description of the Trade

As much as Charterer is
As much as Charterer is
interested to know the details of
interested to know the details of
the ship in the same way the
the ship in the same way the
Owner is interested to know
Owner is interested to know
about the type of trade the ship
about the type of trade the ship
will be engaged in.
will be engaged in.
Owners will negotiate an entry

Owners will negotiate an entry
to that effect the berths and
to that effect the berths and
ports to which the vessel will
ports to which the vessel will
trade are safe and ship will
trade are safe and ship will
remain afloat.
remain afloat.

Charter Party
Charter Party

The Charter ,arty will guarantee that

The Charter ,arty will guarantee that
the vessel will trade within the
the vessel will trade within the
$nstitute 2arranty 8imits$.2.8!- a
$nstitute 2arranty 8imits$.2.8!- a
trading area defined by :nderwriters
trading area defined by :nderwriters
to prevent the more serious risk of
to prevent the more serious risk of
ship causality loss.
ship causality loss.
The dangerous areas such as war

The dangerous areas such as war
;ones and ice bound areas may be
;ones and ice bound areas may be
excluded from the charter party
excluded from the charter party
.
.

Charter Party
Charter Party

The Charter Party shall also

The Charter Party shall also
include certain eclusions for the
include certain eclusions for the
cargo to be loaded such as
cargo to be loaded such as
asphalt in bulk !pitch in bulk
asphalt in bulk !pitch in bulk
!livestock eplosives !fish meal
!livestock eplosives !fish meal
!scrap ! sulphur! and logs.
!scrap ! sulphur! and logs.
"n addition !a modern

"n addition !a modern
phenomena often included in the
phenomena often included in the
cargo eclusion clause is nuclear
cargo eclusion clause is nuclear
products.
products.

Charter Party
Charter Party
Description of the Period

Description of the Period
The period of charter commences

The period of charter commences
with vessel<s delivery to the
with vessel<s delivery to the
Charterers and ,like all charters with
Charterers and ,like all charters with
vessel<s delivery to the Charterers
vessel<s delivery to the Charterers
and like all charters, this delivery is
and like all charters, this delivery is
either spot
either spot

Types of Charter ,arties
Types of Charter ,arties
There are two types of charters, 5on-

There are two types of charters, 5on-
demise and "emise Charter. The charter
demise and "emise Charter. The charter
by demise is not very fre'uent in normal
by demise is not very fre'uent in normal
day-to-day business but a number of ships
day-to-day business but a number of ships
are chartered on a so-called =bareboat<
are chartered on a so-called =bareboat<
basis.
basis.
This kind of charter ordinarily means that

This kind of charter ordinarily means that
the vessel is put at the disposal of a
the vessel is put at the disposal of a
charterer with out any crew. The charterer
charterer with out any crew. The charterer
thus takes over almost all of the owner<s
thus takes over almost all of the owner<s
functions except for the payment of the
functions except for the payment of the
capital costs and the hull and machinery
capital costs and the hull and machinery
insurance premiums.
insurance premiums.

Type of Charter parties
9eason for "emise Charters 7are 7oat

9eason for "emise Charters 7are 7oat
Charters!
Charters!
"emise charters are created not so much

"emise charters are created not so much
with a view to the carriage of goods but
with a view to the carriage of goods but
more as part of a complicated financing
more as part of a complicated financing
arrangement ,often with the intention that
arrangement ,often with the intention that
the charterer should become the owner of
the charterer should become the owner of
the ship in due course.
the ship in due course.
Thus a contract for the purchase of a ship

Thus a contract for the purchase of a ship
by installments will often incorporate a
by installments will often incorporate a
demise charter into the contract.
demise charter into the contract.

Type of Charter Parties
Type of Charter Parties
"emise Charter
"emise Charter
% variant of this would be for a financing

% variant of this would be for a financing
bank lend the funds re'uired to buy the
bank lend the funds re'uired to buy the
ship ,the bank then ac'uiring the
ship ,the bank then ac'uiring the
ownership of the ship but demise
ownership of the ship but demise
chartering it to the borrower for the period
chartering it to the borrower for the period
of the loan.
of the loan.
This would enable the bank to avoid not

This would enable the bank to avoid not
only the operating costs but also the
only the operating costs but also the
liabilities which it would otherwise have to
liabilities which it would otherwise have to
bear in relation to the operation of the ship
bear in relation to the operation of the ship
under a mortgage.
under a mortgage.
"emise charters are also concluded

"emise charters are also concluded
between two associated companies for tax
between two associated companies for tax
or employment reasons.
or employment reasons.

Charter parties other than "emise;

Charter parties other than "emise;
There are two types;

There are two types;
*! Time Charters i.e. contracts for the use

*! Time Charters i.e. contracts for the use
of the ship and her crew for a specified
of the ship and her crew for a specified
period of time within agreed trading limits
period of time within agreed trading limits
as directed by the time charterer in
as directed by the time charterer in
consideration for the payment of hire;
consideration for the payment of hire;
-! 0oyage Charter contracts for the use of

-! 0oyage Charter contracts for the use of
the ship and her crew to carry an agreed
the ship and her crew to carry an agreed
cargo on an agreed voyage regardless for
cargo on an agreed voyage regardless for
the payment of freight and possibly other
the payment of freight and possibly other
remuneration such as demurrage if the
remuneration such as demurrage if the
loading#discharging is delayed beyond the
loading#discharging is delayed beyond the
time agreed for such operations!
time agreed for such operations!

0oyage Charter>
0oyage Charter>
0oyage charter is an engagement of a

0oyage charter is an engagement of a
vessel for a single voyage between
vessel for a single voyage between
declared ports to transport full shipload of
declared ports to transport full shipload of
cargo or a certain 'uantity of cargo. The
cargo or a certain 'uantity of cargo. The
freight is paid on per tonne of cargo "2T!
freight is paid on per tonne of cargo "2T!
bases or on lump sum basis.
bases or on lump sum basis.
The ship owner provides for all the ship<s

The ship owner provides for all the ship<s
costs with its crew, expenses for fuel,
costs with its crew, expenses for fuel,
water, canal dues, port dues, loading and
water, canal dues, port dues, loading and
discharging expenses etc. in return the
discharging expenses etc. in return the
charterer pays him the hire charges for
charterer pays him the hire charges for
carrying the cargo as per described or
carrying the cargo as per described or
utilised cargo capacity of the ship.
utilised cargo capacity of the ship.

0oyage Charter>
0oyage Charter>
To compensate for the delays that

To compensate for the delays that
may be encountered in cargo
may be encountered in cargo
loading#discharging operations, the
loading#discharging operations, the
=demurrage and despatch< clauses
=demurrage and despatch< clauses
for compensation to the affected
for compensation to the affected
parties are inserted in charter party.
parties are inserted in charter party.

#oyage Charterparty
#oyage Charterparty
$ist of Charterparty Clauses

%.Preamble&This can be
%.Preamble&This can be
etensive in some charterparties
etensive in some charterparties
."n the 'ultiform much of what
."n the 'ultiform much of what
may be found in preambles of
may be found in preambles of
certain forms is contained in
certain forms is contained in
clause %.
clause %.
There are two important of the

There are two important of the
brief 'ultiform preamble
brief 'ultiform preamble
however (the place and the date
however (the place and the date
of the charterparty.
of the charterparty.

#oyage Charterparty
#oyage Charterparty

Place This can be important as

Place This can be important as
!in the absence of a clause to the
!in the absence of a clause to the
contrary!the place where a
contrary!the place where a
contract is deemed to have may
contract is deemed to have may
govern the law which is to be
govern the law which is to be
applied to that contract in the
applied to that contract in the
event of dispute.
event of dispute.
Thus if the place is $ondon

Thus if the place is $ondon
!)nglish $aw may be very likely
!)nglish $aw may be very likely
prevail.
prevail.

#oyage Charterparty
#oyage Charterparty
Date e*ually important the date

Date e*ually important the date
to be shown is that which by
to be shown is that which by
fiture negotiations are
fiture negotiations are
concluded with all sub+ects
concluded with all sub+ects
lifted,in other words !when all
lifted,in other words !when all
negotiating formalities are
negotiating formalities are
complete.
complete.

#oyage Charterparty
#oyage Charterparty
Clause % &-ame and brief

Clause % &-ame and brief
description of vessel
description of vessel
The 'ultiform allows for a more

The 'ultiform allows for a more
complete vessel description in
complete vessel description in
the main !printed part of the
the main !printed part of the
form than many .e.g compare
form than many .e.g compare
with A'/)$S01.
with A'/)$S01.
The position of the vessel when

The position of the vessel when
the contract is negotiated is also
the contract is negotiated is also
important
important

#oyage Charterparty
#oyage Charterparty
Clause 2& Condition of vessel

Clause 2& Condition of vessel
"t is usual for a shipowner to

"t is usual for a shipowner to
confirm that a vessel is in a
confirm that a vessel is in a
suitable condition safely and
suitable condition safely and
properly to undertake the
properly to undertake the
contractual voyage.
contractual voyage.

#oyage Charterparty
#oyage Charterparty
Clause 2&
Clause 2&
Cargo description,Commodity
Cargo description,Commodity
and nature of the goods to be
and nature of the goods to be
carried eg bulk or bagged
carried eg bulk or bagged
stowage factor. eg about 33
stowage factor. eg about 33
cubic feet per tonne1 and either
cubic feet per tonne1 and either
minimum4ma *uantity or cargo
minimum4ma *uantity or cargo
si5e margins and in whose option
si5e margins and in whose option
. eg %2!666 tonnes!37 or less in
. eg %2!666 tonnes!37 or less in
owners option1
owners option1

#oyage Charterparty
#oyage Charterparty
Clause 2&
Clause 2&
$oading Places, -ames of

$oading Places, -ames of
loading place.s1 and or range .eg
loading place.s1 and or range .eg
8ordeau40amburg range1&
8ordeau40amburg range1&
mention of number of safe
mention of number of safe
berths4anchorages charterers
berths4anchorages charterers
entitled to use at each place&
entitled to use at each place&
whether vessel to remain always
whether vessel to remain always
afloat or safely aground
afloat or safely aground
maimum4minimum available
maimum4minimum available
drafts.
drafts.

Type of Charterparties
#oyage Charterparty
#oyage Charterparty
Clause 9&
Clause 9&
Discharging places and port

Discharging places and port
orders4rotation
orders4rotation
Clause :, $aydays and Cancelling

Clause :, $aydays and Cancelling
The spread of dates which a vessel is

The spread of dates which a vessel is
to present herself at the first .or sole1
to present herself at the first .or sole1
loading port .This spread should be
loading port .This spread should be
entered in a contract as well as
entered in a contract as well as
conditions under which the contract
conditions under which the contract
can be cancelled in the event that the
can be cancelled in the event that the
vessel is unable to meet those dates.
vessel is unable to meet those dates.

#oyage Charterparty
#oyage Charterparty
Clause 3&
Clause 3&
;reight the amount and currency

;reight the amount and currency
of freight to whom !where and
of freight to whom !where and
when payable .The risk of vessel
when payable .The risk of vessel
and 4or cargo loss on passage in
and 4or cargo loss on passage in
relation to freight should be
relation to freight should be
specified,ie whether freight is
specified,ie whether freight is
deemed earned as cargo is
deemed earned as cargo is
loaded or upon delivery.
loaded or upon delivery.

#oyage Charterparty
#oyage Charterparty
Clause <&
Clause <&
Cost of $oading4Discharging
Cost of $oading4Discharging
which of the parties to the
which of the parties to the
contract is to appoint and pay
contract is to appoint and pay
for cargo handling at each port.
for cargo handling at each port.
Clause =&
Clause =&
-otice of >eadiness4Time
-otice of >eadiness4Time
Counting,
Counting,
An important clause in the

An important clause in the
calculation of laytime.
calculation of laytime.

#oyage Charterparty
#oyage Charterparty
Clause ?&
Clause ?&
$oading4Discharging >ates, the speed

$oading4Discharging >ates, the speed
at which cargo,handling activities are
at which cargo,handling activities are
to be performed.
to be performed.
Clause @&
Clause @&
Demurrage4Despatch, daily amount of

Demurrage4Despatch, daily amount of
li*uidated damages .demurrage1
li*uidated damages .demurrage1
payable by a charterer in the event a
payable by a charterer in the event a
vessel is detained in port beyond the
vessel is detained in port beyond the
maimum permitted laytime as well
maimum permitted laytime as well
as any stipulations to despatch
as any stipulations to despatch

#oyage Charterparty
#oyage Charterparty
Clause %6&
Clause %6&
-otices, A shipowner4'aster
-otices, A shipowner4'aster
may be re*uired to give
may be re*uired to give
comprehensive notices of a
comprehensive notices of a
vesselAs epected arrival at the
vesselAs epected arrival at the
first .or sole1 loading port
first .or sole1 loading port
!failing which the shipowner may
!failing which the shipowner may
face a penalty in the form of
face a penalty in the form of
etra laytime allowed a
etra laytime allowed a
charterer.
charterer.

#oyage Charterparty
#oyage Charterparty
Clause %2&
Clause %2&
ShipAs Bear, A normal clause in

ShipAs Bear, A normal clause in
dry cargo shipping specifying
dry cargo shipping specifying
that a vesselAs gear will be
that a vesselAs gear will be
maintained to a high standard
maintained to a high standard
and specifying what happens in
and specifying what happens in
the event of gear breakdown
the event of gear breakdown
resulting in etra epense.
resulting in etra epense.

#oyage Charterparty
#oyage Charterparty
Clause %: C %3
Clause %: C %3
Brab discharge4Stevedore
Brab discharge4Stevedore
damage,
damage,
Owners normally confirm that a

Owners normally confirm that a
vessel is suitable for grab
vessel is suitable for grab
discharge and formalities need
discharge and formalities need
to be set out in the event that a
to be set out in the event that a
vessel suffers damage during the
vessel suffers damage during the
cargo handling processes.
cargo handling processes.

#oyage Charterparty
#oyage Charterparty
Clause %=&
Clause %=&
Overtime who is to pay for

Overtime who is to pay for
overtime.
overtime.
Clause %? C %@&
Clause %? C %@&
Shifting4Seaworthy trim ,/ho is

Shifting4Seaworthy trim ,/ho is
to pay shifting costs.if any1
to pay shifting costs.if any1
between berths also whether
between berths also whether
time so used is to count as
time so used is to count as
laytime The vessel is to be left in
laytime The vessel is to be left in
safe seaworthy condition
safe seaworthy condition
between the ports.
between the ports.

#oyage Charterparty
#oyage Charterparty
Clause %9 C %<&
Clause %9 C %<&
Cargo Separation and Tallying

Cargo Separation and Tallying
/here a vessel is to carry various

/here a vessel is to carry various
parcels of cargo!it may not be
parcels of cargo!it may not be
possible for al separations between
possible for al separations between
individual parcels to be natural.
individual parcels to be natural.
The tallying .checking1 of cargo as it

The tallying .checking1 of cargo as it
is loaded or discharged is fre*uently
is loaded or discharged is fre*uently
an epensive operation and cargo
an epensive operation and cargo
claims can arise for alleged short
claims can arise for alleged short
delivery !bad condition etc.
delivery !bad condition etc.

#oyage Charterparty
#oyage Charterparty
Clause 26&
Clause 26&
Dues and Taes (This clause specifies

Dues and Taes (This clause specifies
which party to the contract is
which party to the contract is
responsible for taes which may be
responsible for taes which may be
levied against the vessel and4or her
levied against the vessel and4or her
cargo and 4or the freight.
cargo and 4or the freight.
Clause 2%&
Clause 2%&
Port Agents, "n any charter party it is

Port Agents, "n any charter party it is
advisable that reference be made as
advisable that reference be made as
to which of the parties is responsible
to which of the parties is responsible
for the selection of an agent.
for the selection of an agent.

#oyage Charterparty
#oyage Charterparty
Clause 22 C 9:
Clause 22 C 9:
8ills of $ading,The of lading to

8ills of $ading,The of lading to
be presented to the 'aster or
be presented to the 'aster or
his4her agent upon completion of
his4her agent upon completion of
the loading .'aster or his4her
the loading .'aster or his4her
agent to sign the bill of lading
agent to sign the bill of lading
indicating the apparent
indicating the apparent
condition of the cargo.
condition of the cargo.

#oyage Charterparty
#oyage Charterparty
Clause 29&
Clause 29&
$ightening, where cargo

$ightening, where cargo
lightening is necessary a
lightening is necessary a
comprehensive clause covering
comprehensive clause covering
all facets of this sometimes
all facets of this sometimes
comple operation should be
comple operation should be
negotiated .The 'D$T";O>' and
negotiated .The 'D$T";O>' and
A/)$S0 clauses between them
A/)$S0 clauses between them
cover several of these facets but
cover several of these facets but
nearly all of them.
nearly all of them.

#oyage Charterparty
#oyage Charterparty
Clause 2<&
Clause 2<&
Beneral Average&
Beneral Average&
A clause specifying is to be
A clause specifying is to be
ad+usted and or paid irrespective
ad+usted and or paid irrespective
of the ports of call involved and
of the ports of call involved and
the laws relating to BA.
the laws relating to BA.
Clause 2=&
Clause 2=&
Strikes& 8oth parties to a

Strikes& 8oth parties to a
charterparty have risks and
charterparty have risks and
liabilities in the event of a strike.
liabilities in the event of a strike.

#oyage Charterparty
#oyage Charterparty
Clause 2?&
Clause 2?&
)ception, The rights of contracting

)ception, The rights of contracting
parties to cancel the charter parties
parties to cancel the charter parties
in case of events making its
in case of events making its
performance virtually impossible (eg
performance virtually impossible (eg
;orce 'a+eure or Acts of Bod.
;orce 'a+eure or Acts of Bod.
Clause 9%&
Clause 9%&
Commission, Specifies the amount

Commission, Specifies the amount
and to whom commissions and
and to whom commissions and
brokerages are payable !usually
brokerages are payable !usually
adding that commissions4brokerages
adding that commissions4brokerages
are payable on freight !deadfreight
are payable on freight !deadfreight
and demurrage.
and demurrage.

#oyage Charterparty
#oyage Charterparty
Clauses 92 C 99
Clauses 92 C 99
Protecting Clauses,A set of

Protecting Clauses,A set of
clauses commonly included in
clauses commonly included in
the printed form of a
the printed form of a
charterparty or as additional
charterparty or as additional
clauses .This also includes PC"
clauses .This also includes PC"
bunkering clause sets out
bunkering clause sets out
owners rights to deviate for
owners rights to deviate for
bunkers during the contractual
bunkers during the contractual
voyage.
voyage.

#oyage Charterparty
#oyage Charterparty
Clause 2:&
Clause 2:&
$ien and Cesser, 'ost charterparties

$ien and Cesser, 'ost charterparties
contain a cesser and lien clause and
contain a cesser and lien clause and
the 'D$T";O>' and A/)$S0 .clause
the 'D$T";O>' and A/)$S0 .clause
2<1 are no eceptions.
2<1 are no eceptions.
Clause 99&
Clause 99&
"ce, Depending on the trade involved

"ce, Depending on the trade involved
it may not be necessary for an ice
it may not be necessary for an ice
clause to be included in a charter
clause to be included in a charter
party !but where one is re*uired
party !but where one is re*uired
!great care should be taken over its
!great care should be taken over its
wording.
wording.

#oyage Charterparty
#oyage Charterparty
Clause 99&
Clause 99&
/ar >isks, /ar risks clauses should

/ar >isks, /ar risks clauses should
be eamined in detail as some are
be eamined in detail as some are
unfair to shipowners !others to
unfair to shipowners !others to
charterers and4or patently unsuitable
charterers and4or patently unsuitable
for the purpose intended.
for the purpose intended.
A war risk clause should provide a

A war risk clause should provide a
shipowner with the right to refuse to
shipowner with the right to refuse to
allow his vessel and her crew to enter
allow his vessel and her crew to enter
or to remain in an area which has
or to remain in an area which has
become dangerous due to warlike
become dangerous due to warlike
activity.
activity.

#oyage Charterparty
#oyage Charterparty
Signature,-o Charterparty is
Signature,-o Charterparty is
complete without the signatures
complete without the signatures
of or on behalf of the parties
of or on behalf of the parties
concerned.
concerned.

Time Charterparty
Time Charterparty
Preamble &The first page of the

Preamble &The first page of the
charterparty and covering a wide
charterparty and covering a wide
range of sub+ects within its tet
range of sub+ects within its tet
!not least the place where the
!not least the place where the
contract is made !the date of the
contract is made !the date of the
charterparty and the names and
charterparty and the names and
domiciles of the contracting
domiciles of the contracting
parties.
parties.

Time Charterparty
Time Charterparty
#essel Description &Depending

#essel Description &Depending
upon the compleity of the
upon the compleity of the
intended trade !the description
intended trade !the description
of the vessel may be more or
of the vessel may be more or
less as for voyage charterparties
less as for voyage charterparties
!with the important addition of
!with the important addition of
speeds and bunker
speeds and bunker
consumptions.
consumptions.

Time Charterparty
Time Charterparty
Duration of period &The duration

Duration of period &The duration
of a period time charter .The
of a period time charter .The
parties can agree an eact
parties can agree an eact
redelivery date !but in practice
redelivery date !but in practice
this is difficult to comply with
this is difficult to comply with
and !in the event of legal
and !in the event of legal
disputes.
disputes.

Time Charterparty
Time Charterparty
Clause <&
Clause <&
Trading "ntentions4limits ,The

Trading "ntentions4limits ,The
areas of the world in which the
areas of the world in which the
vessel is to be employed should
vessel is to be employed should
be entered,eg worldwide but
be entered,eg worldwide but
always within "nstitute /arranty
always within "nstitute /arranty
$imits and parts of the world
$imits and parts of the world
specifically ecluded from the
specifically ecluded from the
permissible trading area.
permissible trading area.

Time Charterparty
Time Charterparty
Clause %2&
Clause %2&
Cargo "ntention4eclusions, This

Cargo "ntention4eclusions, This
includes details of cargoes which
includes details of cargoes which
can and those which cannot be
can and those which cannot be
carried.
carried.
#essel condition,Eust as for

#essel condition,Eust as for
voyage charterparties an
voyage charterparties an
undertaking by the vesselAs
undertaking by the vesselAs
owners that the vessel is in good
owners that the vessel is in good
condition.
condition.

Time Charterparty
Time Charterparty
Clause %&
Clause %&
OwnerAs >esponsibilities,$ists
OwnerAs >esponsibilities,$ists
what an owner is to provide.
what an owner is to provide.
Clause 2&
Clause 2&
CharterAs responsibilities,$ists
CharterAs responsibilities,$ists
what a charterer is to provide.
what a charterer is to provide.

Time Charterparty
Time Charterparty
Clause 9&
Clause 9&
8unkers,"t is common practice for

8unkers,"t is common practice for
time charterers to take over and pay
time charterers to take over and pay
the owner for the bunkers remaining
the owner for the bunkers remaining
on board a vessel upon delivery on to
on board a vessel upon delivery on to
time charter !and for owners to act
time charter !and for owners to act
similarly upon redelivery !the
similarly upon redelivery !the
*uantities of fuel !diesel and4or gas
*uantities of fuel !diesel and4or gas
oil !and the prices per tonne of each
oil !and the prices per tonne of each
being negotiated when fiing.
being negotiated when fiing.

Time Charterparty
Time Charterparty
Clause :!3 and 2@&

Clause :!3 and 2@&
0ire,Amount when !where and to

0ire,Amount when !where and to
whom hire is payable and
whom hire is payable and
arrangements for other
arrangements for other
payments !less deductions for
payments !less deductions for
items such as port epenses and
items such as port epenses and
cash for master Agreement for
cash for master Agreement for
procedure incase of late
procedure incase of late
payment of hire.
payment of hire.

Time Charterparty
Time Charterparty
Clause %3&
Clause %3&
Off,0ire, Provisions leading to

Off,0ire, Provisions leading to
off,hire situations (eg poor
off,hire situations (eg poor
performance !strike of crew
performance !strike of crew
!drydocking etc, and appropriate
!drydocking etc, and appropriate
deductions form hire payments.
deductions form hire payments.
#essel performance,This
#essel performance,This
includes range of speed and
includes range of speed and
consumptions say from ? knots
consumptions say from ? knots
to %3 knots in both laden and
to %3 knots in both laden and
ballast conditions
ballast conditions

Time Charterparty
Time Charterparty
Cargo Claims &;or their mutual

Cargo Claims &;or their mutual
benefit it is important that the
benefit it is important that the
timecharterers and owners of
timecharterers and owners of
the time chartered vessels reach
the time chartered vessels reach
an undertaking on how cargo
an undertaking on how cargo
claims will be handled.
claims will be handled.

Time Charterparty
Time Charterparty
Clause ? C@&
Clause ? C@&
'aster4Officers,The duties of a
'aster4Officers,The duties of a
shipAs master are defined and it
shipAs master are defined and it
is spelt out that although a
is spelt out that although a
'aster is the ownerAs legal
'aster is the ownerAs legal
servant he must act under the
servant he must act under the
orders of the charterers as far as
orders of the charterers as far as
the employment is concerned.
the employment is concerned.

Time Charterparty
Time Charterparty
Clause %%&
Clause %%&
$ogbooks,The charterers normally

$ogbooks,The charterers normally
add this clause that they have the
add this clause that they have the
right to check a vesselAs performance
right to check a vesselAs performance
by reference to a specialised weather
by reference to a specialised weather
routing company eg Ocean routes and
routing company eg Ocean routes and
in the event that the log books and
in the event that the log books and
the independent reports disagree the
the independent reports disagree the
independent reports take precedence
independent reports take precedence
over the log books .This is important
over the log books .This is important
in respect of off,hre claims and
in respect of off,hre claims and
vesselAs performance.
vesselAs performance.

Time Charterparty Time Charterparty
Clause %6& Clause %6&
Supercargo4#ictualling,Spells out Supercargo4#ictualling,Spells out

chartererAs right to appoint a supercargo chartererAs right to appoint a supercargo
and the costs of eercising this right with and the costs of eercising this right with
regard to meals and accommodation. regard to meals and accommodation.
Clause 9?& Clause 9?&
Pollution,'any states are becoming Pollution,'any states are becoming

etremely conscious of pollution of their etremely conscious of pollution of their
waterways and coastlines and merchant waterways and coastlines and merchant
ship owners must ensure that their vessels ship owners must ensure that their vessels
comply with a host of international and comply with a host of international and
national legislation in connection with this national legislation in connection with this
sub+ect. sub+ect.

Time Charterparty Time Charterparty
Clause %@& Clause %@&
Salvage,"t seems fair that epenses and Salvage,"t seems fair that epenses and
rewards in cases of salvage should be rewards in cases of salvage should be
shared and this is normal practice. shared and this is normal practice.
Clause 9=& Clause 9=&
$aying up,Dnlike tanker time charterparties $aying up,Dnlike tanker time charterparties
it is only rarely that dry,cargo owner and it is only rarely that dry,cargo owner and
time charterers consider the risks of a time charterers consider the risks of a
vessel laying up through lack of vessel laying up through lack of
employment ./hat most dry,cargo time employment ./hat most dry,cargo time
charterparties do include !however is charterparties do include !however is
reference to what happens if a vessel is reference to what happens if a vessel is
detained in port for periods in ecess of 96 detained in port for periods in ecess of 96
days days

Time Charterparty
Time Charterparty
Clause %=&
Clause %=&
Arbitration
Arbitration
3an essential part of any
3an essential part of any
contract 4or example incase
contract 4or example incase
%&7%T$(? specifies 5ew 6ork since
%&7%T$(? specifies 5ew 6ork since
the charterparty is drafted and
the charterparty is drafted and
published by a body of resident in
published by a body of resident in
5ew 6ork.
5ew 6ork.

Time Charterparty
Time Charterparty
Clause %?&
Clause %?&
$ien,Eust as an element of
$ien,Eust as an element of
voyage charters each partyAs
voyage charters each partyAs
right of lien must be considered
right of lien must be considered
and stipulated.
and stipulated.
Clause %<&
Clause %<&
)ceptions,Similar to the voyage

)ceptions,Similar to the voyage
charter clause.
charter clause.

Time Charterparty
Time Charterparty
Clause ?&
Clause ?&
8ill of $ading,Specifies the manner in

8ill of $ading,Specifies the manner in
which bills of lading are to be drawn
which bills of lading are to be drawn
up !the signing of same and
up !the signing of same and
protection for an owner in case of
protection for an owner in case of
paper inconsistencies.
paper inconsistencies.
Clause 93&
Clause 93&
Stevedore damage,Provision for

Stevedore damage,Provision for
notification of stevedore damage and
notification of stevedore damage and
repairs.
repairs.
Signature &-ot to be forgotten.

Signature &-ot to be forgotten.

Time Charter>
Time Charter>
Time charter terms are for longer duration,

Time charter terms are for longer duration,
for a few months to over a year and in
for a few months to over a year and in
certain cases for a number of years. $n
certain cases for a number of years. $n
case of time charter the charterer takes a
case of time charter the charterer takes a
ship on daily hire basis for a specific time
ship on daily hire basis for a specific time
period and utilises it for number of
period and utilises it for number of
voyages in declared geographical range of
voyages in declared geographical range of
ports but is not bound to operate the
ports but is not bound to operate the
vessel on fixed routes.
vessel on fixed routes.
The charterer has to ensure that the

The charterer has to ensure that the
vessel is not re'uired to sail beyond the
vessel is not re'uired to sail beyond the
$nternational 2arranty 8imits or in war
$nternational 2arranty 8imits or in war
;ones without the owner<s knowledge.
;ones without the owner<s knowledge.


Time Charter Time Charter
"ecision for such operations is entirely the "ecision for such operations is entirely the
owner<s prerogative. The time charter hires are owner<s prerogative. The time charter hires are
payable in advance, generally on fortnightly payable in advance, generally on fortnightly
basis. ,erformance clauses are incorporated in basis. ,erformance clauses are incorporated in
time charter parties. time charter parties.
:nderperformance on account of speed, :nderperformance on account of speed,

excessive fuel consumption and deficiency in excessive fuel consumption and deficiency in
cargo handling rates make the owner liable for cargo handling rates make the owner liable for
compensation to the charterer. $n some charter compensation to the charterer. $n some charter
parties a certain time period may be allowed for parties a certain time period may be allowed for
the regular routine maintenance, beyond which the regular routine maintenance, beyond which
the vessel becomes =off hire<, and pro rata the vessel becomes =off hire<, and pro rata
deductions are made from the time charter hire. deductions are made from the time charter hire.


0ybrid Charter parties

$t is becoming increasingly common

$t is becoming increasingly common
to see charters which combine some
to see charters which combine some
of the aspects of both time and
of the aspects of both time and
voyage charters ,e.g.
voyage charters ,e.g.
*! Trip Charters i.e. Contracts

*! Trip Charters i.e. Contracts
obliging the charterer to pay hire for
obliging the charterer to pay hire for
the time taken by the ship to
the time taken by the ship to
complete a specified voyage e.g.
complete a specified voyage e.g.
round %tlantic voyage.
round %tlantic voyage.


.21 Consecutive voyage charter

.21 Consecutive voyage charter
parties e.g. four consecutive voyages
parties e.g. four consecutive voyages
between A and 8
between A and 8
.91 Slot Charters space sharing

.91 Slot Charters space sharing
agreements i.e. agreements which
agreements i.e. agreements which
enable liner operators to utili5e
enable liner operators to utili5e
empty space on their ships by
empty space on their ships by
allowing other operators to use some
allowing other operators to use some
of the empty capacity in their vessels
of the empty capacity in their vessels
in echange for the right to use an
in echange for the right to use an
e*uivalent amount of space on the
e*uivalent amount of space on the
ships of such other operators.
ships of such other operators.


&lot Charters This form of

&lot Charters This form of
arrangement is common in the
arrangement is common in the
container trade and remuneration is
container trade and remuneration is
a complicated e'uation often
a complicated e'uation often
calculated with regard to the net
calculated with regard to the net
profit over a period by all the
profit over a period by all the
operators who are part of the
operators who are part of the
arrangement.
arrangement.

Ship OwnerAs standpoint
4rom the ship-owners point of view a

4rom the ship-owners point of view a
charter provides income. @owever the
charter provides income. @owever the
owner has to decide his chartering
owner has to decide his chartering
strategy in order to maximi;e his income
strategy in order to maximi;e his income
.$f the ship is time chartered ,the income
.$f the ship is time chartered ,the income
of the ship is guaranteed at a fixed period
of the ship is guaranteed at a fixed period
without the need to repeatedly find new
without the need to repeatedly find new
employment.
employment.
@owever during that period the market

@owever during that period the market
rate of hire may go up or down .$f the
rate of hire may go up or down .$f the
market rate goes down then the )wner
market rate goes down then the )wner
will have benefited from the time charter.
will have benefited from the time charter.
@owever if the market rate has increased

@owever if the market rate has increased
,the time charter will prevent the )wner
,the time charter will prevent the )wner
from exploiting the higher market rate.
from exploiting the higher market rate.

The )wner may therefore prefer-if he

The )wner may therefore prefer-if he
feels that the market rate will
feels that the market rate will
improve in the future 3to avoid
improve in the future 3to avoid
committing his ship to a time charter
committing his ship to a time charter
and fix his ship instead for a voyage
and fix his ship instead for a voyage
charter on the spot market and
charter on the spot market and
when lucrative fixtures become
when lucrative fixtures become
available.
available.

The Charterers
The Charterers
>e*uirement
>e*uirement
The charterer is usually either a

The charterer is usually either a
speculator on the chartering market
speculator on the chartering market
who hopes to make a profit by a wise
who hopes to make a profit by a wise
strategy of chartering and sub-
strategy of chartering and sub-
chartering or is a trader who needs
chartering or is a trader who needs
transportation for his cargo.
transportation for his cargo.

The Charterers
The Charterers
>e*uirement
>e*uirement
?xample $f the charterer is a trader who

?xample $f the charterer is a trader who
wishes to sell goods on C$4 terms then ,if
wishes to sell goods on C$4 terms then ,if
he does not own a ship he will need to
he does not own a ship he will need to
charter one in order to satisfy his
charter one in order to satisfy his
obligation under the cargo sale contract to
obligation under the cargo sale contract to
transport the goods to the buyer<s chosen
transport the goods to the buyer<s chosen
port of delivery.
port of delivery.
@e may either decided to secure

@e may either decided to secure
transportation for a period i.e. time
transportation for a period i.e. time
charter! thereby knowing in advance what
charter! thereby knowing in advance what
the transportation cost element of his
the transportation cost element of his
cargo sale will be for that period when
cargo sale will be for that period when
negotiating the price of the goods or
negotiating the price of the goods or
alternatively ,he may speculate on the
alternatively ,he may speculate on the
market and secure transportation for a
market and secure transportation for a
particular cargo to a particular destination.
particular cargo to a particular destination.

The Charterers
The Charterers
>e*uirement
>e*uirement
@e will negotiating the sale of that

@e will negotiating the sale of that
cargo i.e. voyage charter!
cargo i.e. voyage charter!
2hether the charter is a time charter

2hether the charter is a time charter
or a voyage charter the charter will
or a voyage charter the charter will
be looking for terms which provide
be looking for terms which provide
him with the maximum flexibility to
him with the maximum flexibility to
control the employment of the ship
control the employment of the ship
since his transportation re'uirements
since his transportation re'uirements
may well change depending on the
may well change depending on the
re'uirements of the cargo sale
re'uirements of the cargo sale
contract.
contract.

Terms of the Charter
Conditions !/arranties and "n

nominate Terms
nominate Terms
2arranty is a term of less

2arranty is a term of less
importance ,the breach of which will
importance ,the breach of which will
normally allow the innocent party to
normally allow the innocent party to
claim damages but not to terminate
claim damages but not to terminate
the contract.
the contract.


nominate Terms
nominate Terms
Condition is a term of such

Condition is a term of such
importance that any breach of it will
importance that any breach of it will
entitle the innocent party to
entitle the innocent party to
terminate the contract forthwith.
terminate the contract forthwith.
)ample&
)ample&
.a1 A statement that the ship is fully

.a1 A statement that the ship is fully
classed
classed
.b1 The duty to proceed on a voyage

.b1 The duty to proceed on a voyage
without deviation.
without deviation.
.c 1 A statement that the vessel is

.c 1 A statement that the vessel is
epected ready to load by a certain
epected ready to load by a certain
date.
date.


nominate Terms
nominate Terms
Conditions&
Conditions&
)ample&
)ample&
.d1 A statement relating to the

.d1 A statement relating to the
shipAs flag in wartime.
shipAs flag in wartime.
.e1 A statement that no

.e1 A statement that no
dangerous on unlawful goods
dangerous on unlawful goods
will be shipped
will be shipped

Terms of Charter
Terms of Charter

nominate Terms
nominate Terms
"n nominate . or "ntermediate

"n nominate . or "ntermediate
terms1
terms1
"n general it appears that terms

"n general it appears that terms
relating to the vesselAs
relating to the vesselAs
description will be treated as
description will be treated as
intermediate terms in which case
intermediate terms in which case
the *uestion of whether or not
the *uestion of whether or not
the charter can be terminated
the charter can be terminated
will depend upon the
will depend upon the
seriousness of the effect of the
seriousness of the effect of the
breach.
breach.

Terms which are implied
by law
by law
?ven when the charter is silent on a

?ven when the charter is silent on a
particular issue ,the law may imply a term
particular issue ,the law may imply a term
if it is necessary to do so it give business
if it is necessary to do so it give business
efficacy to the contract.
efficacy to the contract.
The court will not be over ready to do so

The court will not be over ready to do so
and will certainly not do so merely to save
and will certainly not do so merely to save
one of the parties from a bad deal or to
one of the parties from a bad deal or to
make the contract fairer
make the contract fairer
,rima facie that which in any contract is

,rima facie that which in any contract is
left to be implied and need not be
left to be implied and need not be
expressed is something so obvious that it
expressed is something so obvious that it
goes without saying so that if while the
goes without saying so that if while the
parties were making their bargain ,an
parties were making their bargain ,an
officious bystander were to suggest some
officious bystander were to suggest some
express provision for it in their agreement.
express provision for it in their agreement.

by law
by law
?xamples
?xamples
*! That the ship is seaworthy

*! That the ship is seaworthy
-! That the owner will proceed with

-! That the owner will proceed with
the voyage with reasonable dispatch
the voyage with reasonable dispatch
.! That the charterer will not ship

.! That the charterer will not ship
dangerous cargo.
dangerous cargo.
/! That the port nominated by the

/! That the port nominated by the
charter will be safe for the vessel
charter will be safe for the vessel

Chartering Operations
8iner
8iner
Tramping
Tramping

$iner Operations
$iner Operations
8iner shipping is associated with fixed

8iner shipping is associated with fixed
sailing schedules of vessels, providing
sailing schedules of vessels, providing
predetermined sailing fre'uencies, range
predetermined sailing fre'uencies, range
of the sailing dates, fixed routes and range
of the sailing dates, fixed routes and range
of ports that are covered on the voyages.
of ports that are covered on the voyages.
The system comprises sharing of cargo

The system comprises sharing of cargo
capacities of member shipping lines on
capacities of member shipping lines on
agreed tariff rates to organise reliable and
agreed tariff rates to organise reliable and
regular sailing patterns.
regular sailing patterns.

Chartering )perations
Chartering )perations
$iner Operations $iner Operations
The ships operating on liner terms may be The ships operating on liner terms may be
general cargo ships carrying break bulk cargo, general cargo ships carrying break bulk cargo,
container vessels, 9o-9o vessels etc. 8iner container vessels, 9o-9o vessels etc. 8iner
vessels carry a mix of smaller parcels of different vessels carry a mix of smaller parcels of different
types of cargoes during the same voyage. types of cargoes during the same voyage.
2hen vessels are operated under liner terms the 2hen vessels are operated under liner terms the
applicable freight rates are normally those that applicable freight rates are normally those that
are negotiated and decided by the 8iner are negotiated and decided by the 8iner
Conferences. Conferences.
The conferences publish the schedule of freight The conferences publish the schedule of freight
rates and conditions for carriage. These freight rates and conditions for carriage. These freight
rates remain in force for long periods and have rates remain in force for long periods and have
provisions of adjustments e.g. surcharge for fuel provisions of adjustments e.g. surcharge for fuel
prices, undue delays in some ports etc. prices, undue delays in some ports etc.

8iner )perations
8iner )perations
(arketing;
(arketing;
$n context of shipping it refers to

$n context of shipping it refers to
marketing of the ship<s services space for
marketing of the ship<s services space for
cargo!. &ecuring cargo for ships involves
cargo!. &ecuring cargo for ships involves
continuous market survey, advertising
continuous market survey, advertising
ship<s voyage schedules and direct contact
ship<s voyage schedules and direct contact
with the clients.
with the clients.
&hipping company may have a marketing

&hipping company may have a marketing
department with professionals dedicated
department with professionals dedicated
to canvassing for cargo and related
to canvassing for cargo and related
documentation.
documentation.

)perations on Tramping Terms

)perations on Tramping Terms
0essels operating on tramping terms are

0essels operating on tramping terms are
mostly those carrying bulk cargoes which
mostly those carrying bulk cargoes which
may be dry bulk cargoes like ore, coal,
may be dry bulk cargoes like ore, coal,
grain etc. or li'uid bulk cargoes like crude
grain etc. or li'uid bulk cargoes like crude
oil, petroleum products, chemicals etc.
oil, petroleum products, chemicals etc.
Tramping terms normally mean carriage of

Tramping terms normally mean carriage of
one commodity of cargo involving one
one commodity of cargo involving one
shipper, one consignee and one bill of
shipper, one consignee and one bill of
lading. %lthough at times there may be
lading. %lthough at times there may be
more number of consignees and cargo
more number of consignees and cargo
parcels carried under different bills of
parcels carried under different bills of
lading.
lading.

)peration on Tramping Terms

)peration on Tramping Terms
The freight rate or hire rate of a

The freight rate or hire rate of a
vessel is agreed upon, between the
vessel is agreed upon, between the
ship owner or operating owner and
ship owner or operating owner and
the cargo owner or shipper.
the cargo owner or shipper.
5egotiations are made through
5egotiations are made through
intermediaries known as the owner<s
intermediaries known as the owner<s
brokers and charterers< agents who
brokers and charterers< agents who
match re'uirements of cargoes with
match re'uirements of cargoes with
the ships and vice a versa.
the ships and vice a versa.


Operations on Tramping Terms

They get paid for their services by way of

They get paid for their services by way of
brokerage and address commission
brokerage and address commission
respectively.
respectively.
The agreements for carriage of cargo

The agreements for carriage of cargo
between the owners and the charterers
between the owners and the charterers
are known as charter parties. There are
are known as charter parties. There are
different types of charter parties for
different types of charter parties for
different types of cargoes, geographical
different types of cargoes, geographical
locations, terms for carriage, handling of
locations, terms for carriage, handling of
cargoes etc.
cargoes etc.
The standard formats of charter parties

The standard formats of charter parties
facilitate faster agreements as most
facilitate faster agreements as most
terms and conditions are known to both
terms and conditions are known to both
the parties.
the parties.



There are different types of charter

There are different types of charter
parties for different types of cargoes,
parties for different types of cargoes,
geographical locations, terms for
geographical locations, terms for
carriage, handling of cargoes etc.
carriage, handling of cargoes etc.
The standard formats of charter

The standard formats of charter
parties facilitate faster agreements
parties facilitate faster agreements
as most terms and conditions are
as most terms and conditions are
known to both the parties.
known to both the parties.

Operations on Tramping Terms Operations on Tramping Terms
&tandard formats have been developed or &tandard formats have been developed or
approved by internationally reputed institutions approved by internationally reputed institutions
like 7altic and $nternational (aritime Council like 7altic and $nternational (aritime Council
7$(C)!; $nternational %ssociation of $ndependent 7$(C)!; $nternational %ssociation of $ndependent
Tanker )wners $5T?9T%5A)!; +eneral Council of Tanker )wners $5T?9T%5A)!; +eneral Council of
7ritish &hipping +C7&!; $nstitute of Chartered 7ritish &hipping +C7&!; $nstitute of Chartered
&hipbrokers; %ssociation of &hipbrokers and &hipbrokers; %ssociation of &hipbrokers and
%gents :&% etc. %gents :&% etc.
%mendments in a charter party is made as %mendments in a charter party is made as

necessary for a specific voyage by necessary for a specific voyage by
inclusions#replacements#removal of clauses on inclusions#replacements#removal of clauses on
the basis of agreements between the two parties the basis of agreements between the two parties
for for

Operations on Tramping
TermsF
TermsF
#oyage estimatingF #oyage estimatingF
#oyage estimating is an important function #oyage estimating is an important function

under chartering and operations. "t is a under chartering and operations. "t is a
process of estimating viability of a voyage. process of estimating viability of a voyage.
"t involves estimation of epected revenue "t involves estimation of epected revenue
and epenses that will have to be incurred and epenses that will have to be incurred
for making a prospective voyage and is an for making a prospective voyage and is an
essential eercise to find the best option essential eercise to find the best option
out of different alternatives that may be out of different alternatives that may be
available for a shipAs employment. available for a shipAs employment.
Offers for prospective employment are Offers for prospective employment are
compared on a common datum of earnings! compared on a common datum of earnings!
which may be either daily Bross Operating which may be either daily Bross Operating
Profit .BOP1 also called Bross Daily Surplus! Profit .BOP1 also called Bross Daily Surplus!
-ett Daily Surplus! the TC >ate or Daily -ett Daily Surplus! the TC >ate or Daily
Gield Gield

TermsF
TermsF
2hen whole ship is fixed on a voyage charter and 2hen whole ship is fixed on a voyage charter and
the freight rates are applied on the basis of per the freight rates are applied on the basis of per
tonne of cargo it becomes desirable to load tonne of cargo it becomes desirable to load
maximum amount of cargo. Then it becomes maximum amount of cargo. Then it becomes
necessary to calculate the maximum 'uantity of necessary to calculate the maximum 'uantity of
cargo that can be carried for the purpose of cargo that can be carried for the purpose of
voyage estimation. voyage estimation.
This calculation involves taking into consideration This calculation involves taking into consideration
the "2T, hold capacities, stowage factor, the "2T, hold capacities, stowage factor,
available depths of water in the loading and available depths of water in the loading and
discharging ports, geographical areas the ship is discharging ports, geographical areas the ship is
re'uired to trade, seasonal draught restrictions, re'uired to trade, seasonal draught restrictions,
variation of draught that may be encountered due variation of draught that may be encountered due
to the change in water density, 'uantity of fuel to the change in water density, 'uantity of fuel
and water needed for the voyage and ship<s and water needed for the voyage and ship<s
constants constants

TermsF
TermsF
.)n the expense side the costs and

.)n the expense side the costs and
time for cargo handling, costs for
time for cargo handling, costs for
river or canal transit as applicable,
river or canal transit as applicable,
cost of fuel, vessel<s standing
cost of fuel, vessel<s standing
charges etc. are calculated to assess
charges etc. are calculated to assess
the voyage viability.
the voyage viability.

TermsF
TermsF
Operating )penses
Operating )penses
>
>
The expenses involved in ship operations

The expenses involved in ship operations
are generally classified in two types. 4irst
are generally classified in two types. 4irst
are those that are incurred when the ship
are those that are incurred when the ship
actually makes a voyage, whether it is
actually makes a voyage, whether it is
loaded with cargo or is on ballast.
loaded with cargo or is on ballast.
The expenses are termed as direct

The expenses are termed as direct
operating expenses ")?!. The second
operating expenses ")?!. The second
types are those that need to be incurred
types are those that need to be incurred
irrespective of whether the vessel is
irrespective of whether the vessel is
sailing or not.
sailing or not.
These are indirect operating expenses

These are indirect operating expenses
$)?! also called standing charges or the
$)?! also called standing charges or the
running cost.
running cost.

TermsF
TermsF
5umber of estimations are made, with slightly 5umber of estimations are made, with slightly
varied freight rates e.g. in steps of *B cents per varied freight rates e.g. in steps of *B cents per
tonne within the expected range. tonne within the expected range.
This done for each of the prospective voyage to This done for each of the prospective voyage to
assess viability of voyages as well as to facilitate assess viability of voyages as well as to facilitate
negotiations. 4or the purpose of voyage negotiations. 4or the purpose of voyage
estimations standard forms are used by the estimations standard forms are used by the
estimators. estimators.
%part from providing a standard, the use of %part from providing a standard, the use of
forms provides and assurance to the estimator forms provides and assurance to the estimator
that no details are left out. The forms are also that no details are left out. The forms are also
helpful in assessing the actual value of the helpful in assessing the actual value of the
estimations after the voyage has been completed estimations after the voyage has been completed
as well as serve as a reference for future as well as serve as a reference for future
estimations estimations

TermsF
TermsF
Computer ,rogrammes>
Computer ,rogrammes>
Custom built computer software

Custom built computer software
programmes are now available for the
programmes are now available for the
purpose of voyage estimation. The
purpose of voyage estimation. The
computer database holds the ships<
computer database holds the ships<
particulars including fuel consumption at
particulars including fuel consumption at
different speeds that in the normal range
different speeds that in the normal range
of operations. 7ased on the essential
of operations. 7ased on the essential
parameters programmed into it, the
parameters programmed into it, the
system provides available deadweight
system provides available deadweight
capacity once information such as
capacity once information such as
draught; density of water and bunker
draught; density of water and bunker
remaining on board are entered while it
remaining on board are entered while it
picks up the constants form database and
picks up the constants form database and
provides for these in the calculations
provides for these in the calculations

TermsF
TermsF
Computer ,rogrammes> Computer ,rogrammes>
The programme provides shortest distances The programme provides shortest distances
between link ports like &ingapore, &ue;, ,anama between link ports like &ingapore, &ue;, ,anama
etc, re'uiring only additional distances to be etc, re'uiring only additional distances to be
entered in. The programme also calculates the entered in. The programme also calculates the
ship<s draughts applicable to the load line ;ones ship<s draughts applicable to the load line ;ones
deduced from the dates of the prospective deduced from the dates of the prospective
voyage. voyage.
$t is integrated with updated information on the $t is integrated with updated information on the
daily bunker prices at major bunker ports to daily bunker prices at major bunker ports to
provide suitable bunkering options on the ports provide suitable bunkering options on the ports
en-route. en-route.
$n case programmed for tankers it can provide $n case programmed for tankers it can provide
tank wise capacities taking into consideration the tank wise capacities taking into consideration the
volume variations due to temperatures as well as volume variations due to temperatures as well as
corrections for list and trim. corrections for list and trim.

TermsF
TermsF
Computer ,rograms
Computer ,rograms
The programme provides a number

The programme provides a number
of figures for TC rates based on small
of figures for TC rates based on small
step variations *B cents per tonne!
step variations *B cents per tonne!
of freight rates.
of freight rates.
H 8"'CO -)/S >)$)AS) 'O-DAG

H 8"'CO -)/S >)$)AS) 'O-DAG
2@T0 ED$G 2662I
2@T0 ED$G 2662I
8"'CO! the worldJs largest shipping

8"'CO! the worldJs largest shipping
organisation! has +ust added
organisation! has +ust added
-O>B>A"- J?@ to its innovative
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"nternet Document )diting
"nternet Document )diting
Application .idea1! officially launched
Application .idea1! officially launched
a year ago in 8ei+ing.
a year ago in 8ei+ing.
The number of companies using idea

The number of companies using idea
now eceeds 266 and includes not
now eceeds 266 and includes not
only ship,owners and shipbrokers!
only ship,owners and shipbrokers!
but also ship management
but also ship management
companies! port agents and law firms
companies! port agents and law firms

$n addition to numerous
$n addition to numerous
conventional voyage and time
conventional voyage and time
charter parties, idea offers electronic
charter parties, idea offers electronic
versions of ship and crew
versions of ship and crew
management agreements, towage
management agreements, towage
contracts, bills of lading and
contracts, bills of lading and
statements of fact.
statements of fact.

7$(C)Cs idea comes with free access

7$(C)Cs idea comes with free access
to a comprehensive library of popular
to a comprehensive library of popular
standard shipping forms, to which
standard shipping forms, to which
7$(C) will add new forms on a
7$(C) will add new forms on a
regular basis. %mong the documents
regular basis. %mong the documents
currently available on the system
currently available on the system
are>
are>

#arious 8"'CO Contracts&

#arious 8"'CO Contracts&
%(2?8&@ D.
%(2?8&@ D.
7%8T$(? *D.D
7%8T$(? *D.D
7%9?C)5 ED
7%9?C)5 ED
7$(C) &T%5"%9" 7:5A?9 C)5T9%CT

7$(C) &T%5"%9" 7:5A?9 C)5T9%CT
-BB*
-BB*
7)FT$(?
7)FT$(?
7,T$(? .
7,T$(? .
C)5+?57$88 *DD/
C)5+?57$88 *DD/

#arious 8"'CO Contracts

#arious 8"'CO Contracts
;
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C)58$5?7$88 -BBB
C)58$5?7$88 -BBB
C)58$5?7))A$5+ -BBB
C)58$5?7))A$5+ -BBB
C9?2(%5 %
C9?2(%5 %
C9?2(%5 7
C9?2(%5 7
4:?8C)5
4:?8C)5
+?5C)5 D/
+?5C)5 D/
+?5T$(?
+?5T$(?
@?%06C)5
@?%06C)5

#arious 8"'CO Contracts& #arious 8"'CO Contracts&
0GD>OC0A>T)> 0GD>OC0A>T)>
-O>B>A"- ?@ -O>B>A"- ?@
SA$);O>' ?= SA$);O>' ?=
SA$);O>' @9 SA$);O>' @9
S0"P'A- @? S0"P'A- @?
S$OT0">) S$OT0">)
Statement of ;acts .short form1 Statement of ;acts .short form1
SDPP$GT"') ?@ SDPP$GT"') ?@
SG-ACO')K 2666 SG-ACO')K 2666
TO/CO- TO/CO-
TO/0">) TO/0">)
#O$COA #O$COA
/O>$D;OOD @@. /O>$D;OOD @@.

'ore information about 8"'COJs

'ore information about 8"'COJs
idea can be obtained from
idea can be obtained from
8"'COJs web site
8"'COJs web site
at
at
www.bimco.dk4idea
www.bimco.dk4idea
.
.

>elationship between the
Charter party and 8ills of
$ading
$ading
$n the vast majority of cases a charterer is

$n the vast majority of cases a charterer is
either a trader who is selling or buying
either a trader who is selling or buying
goods or is someone acting for such a
goods or is someone acting for such a
party
party
vis--vis
vis--vis
the ship-owner and the
the ship-owner and the
main purpose of a chartered ship is to
main purpose of a chartered ship is to
carry goods to the satisfaction of a
carry goods to the satisfaction of a
contract for the $nternational sale of
contract for the $nternational sale of
goods.
goods.
The ability of the charterer to obtain a bill

The ability of the charterer to obtain a bill
of lading from the ship is a fundamental
of lading from the ship is a fundamental
re'uirement since without a bill of lading
re'uirement since without a bill of lading
,the trader will have great difficulty in
,the trader will have great difficulty in
selling the goods.
selling the goods.

$ading
$ading
"mportant points to remember

The seller often knows nothing of the

The seller often knows nothing of the
fundamental standing of the buyer and is
fundamental standing of the buyer and is
taking the risk in considering his good
taking the risk in considering his good
unless he can reasonably certain of being
unless he can reasonably certain of being
paid for them.
paid for them.
The obvious solution that of demanding

The obvious solution that of demanding
payment in advance is unlikely to appeal
payment in advance is unlikely to appeal
to the buyer ,who may have no reason to
to the buyer ,who may have no reason to
trust the seller to ship goods of the
trust the seller to ship goods of the
promised 'uantity and description
promised 'uantity and description
.
.

$ading
$ading

The buyer is not usually present or

The buyer is not usually present or
represented at the load port and is
represented at the load port and is
not therefore in a position to inspect
not therefore in a position to inspect
the goods.
the goods.
4urthermore even after the shipment

4urthermore even after the shipment
so long as the cargo remains at sea
so long as the cargo remains at sea
its 'uantity and condition cannot be
its 'uantity and condition cannot be
inspected by any further potential
inspected by any further potential
buyer.
buyer.

$ading
$ading

The cargo whilst at sea cannot

The cargo whilst at sea cannot
be physically transferred to a
be physically transferred to a
new buyer.
new buyer.
The only way in which the seller

The only way in which the seller
can effect a transfer of any part
can effect a transfer of any part
of such cargo is by transferring
of such cargo is by transferring
instead a document of title
instead a document of title
which is accepted as being the
which is accepted as being the
documentary e*uivalent of that
documentary e*uivalent of that
cargo.
cargo.

$ading
$ading
The 7ills of lading was invented to cure

The 7ills of lading was invented to cure
these difficulties and has the following
these difficulties and has the following
functions;
functions;
*! $t is a receipt given by the carrier for

*! $t is a receipt given by the carrier for
the goods which describes the apparent
the goods which describes the apparent
order and condition and 'uantity or weight
order and condition and 'uantity or weight
of the goods on shipment ;and
of the goods on shipment ;and
-! $t is a contract of carriage which sets

-! $t is a contract of carriage which sets
out the terms under which the goods are
out the terms under which the goods are
to be carried by the ship.
to be carried by the ship.
$t is a transferable document of title

$t is a transferable document of title
,possession of which proves entitlement to
,possession of which proves entitlement to
the goods.
the goods.

$ading
$ading
,ayment for the goods can therefore

,ayment for the goods can therefore
be made against the bill of lading
be made against the bill of lading
and bill can be negotiated provided
and bill can be negotiated provided
it has been made out to order! from
it has been made out to order! from
one holder to another ,thereby
one holder to another ,thereby
transferring from one holder to
transferring from one holder to
another the right to obtain delivery
another the right to obtain delivery
of the goods from the ship.
of the goods from the ship.

$ading
$ading
% sea waybill-otherwise known as a waybill

% sea waybill-otherwise known as a waybill
is also a receipt and a contract of carriage.
is also a receipt and a contract of carriage.
@owever it is not treated as a document

@owever it is not treated as a document
of title since unlike 7ill of 8ading it not
of title since unlike 7ill of 8ading it not
negotiable and remains at all times a
negotiable and remains at all times a
contract with the shipper.
contract with the shipper.
&ince the sea waybill is neither negotiable

&ince the sea waybill is neither negotiable
nor a document of title it is not well suited
nor a document of title it is not well suited
to transactions involving documentary
to transactions involving documentary
credits because banks tend to place great
credits because banks tend to place great
importance on security.
importance on security.

$ading
$ading
&ea waybill should therefore be used

&ea waybill should therefore be used
only when there is no intention of on-
only when there is no intention of on-
selling the goods during the course
selling the goods during the course
of the voyage.
of the voyage.
4or this reason they are used most

4or this reason they are used most
often in the container trade
often in the container trade

$ading
$ading
2hich is the governing contract of

carriage-The Charter ,arty or the 7ill
of 8adingG
of 8adingG
&ince the bill of lading is a receipt for

&ince the bill of lading is a receipt for
the shipment of goods ,it will come
the shipment of goods ,it will come
into operation once those goods
into operation once those goods
have been shipped.
have been shipped.
@owever if the vessel has been

@owever if the vessel has been
chartered it will probably come into
chartered it will probably come into
operation as a result of orders which
operation as a result of orders which
have already been given by the
have already been given by the
charterer under the charter party.
charterer under the charter party.

$ading
$ading
2hich is the governing contract of carriage-The 2hich is the governing contract of carriage-The
Charter ,arty or the 7ill of 8adingG Charter ,arty or the 7ill of 8adingG
@owever since the 7ill of 8ading is also a contract @owever since the 7ill of 8ading is also a contract
of carriage of goods a potential conflict arises of carriage of goods a potential conflict arises
between the two contracts. between the two contracts.
$t would be commercial nonsense for there to be $t would be commercial nonsense for there to be
two contracts between the same two parties for two contracts between the same two parties for
the carriage of the same goods on the same the carriage of the same goods on the same
voyage. voyage.
%ccordingly the law has adopted a common sense %ccordingly the law has adopted a common sense
approach and has held that when a bill of lading approach and has held that when a bill of lading
is held by a party who already has a charterparty is held by a party who already has a charterparty
contract with the person who is the carrier under contract with the person who is the carrier under
the bill of lading ,the bill is to be treated as a the bill of lading ,the bill is to be treated as a
receipt and a document of title-but not as a receipt and a document of title-but not as a
contract of carraige. contract of carraige.

$ading
$ading

of 8adingG
of 8adingG
@owever once that 7ill of 8ading is

@owever once that 7ill of 8ading is
endorsed to a party who is not a
endorsed to a party who is not a
party to the charter party then in his
party to the charter party then in his
hands ,the bill of lading operates not
hands ,the bill of lading operates not
only as a receipt and a document of
only as a receipt and a document of
title but also as a contract of carriage
title but also as a contract of carriage
between him and the carrier.
between him and the carrier.

$ading
$ading

carriage-The Charter ,arty or the 7ill of
8adingG
8adingG
This is explained by ?vans 8H in the case of

This is explained by ?vans 8H in the case of
$sland %rchon
$sland %rchon
8egal relations between shipowner and

8egal relations between shipowner and
charterer are governed by their contract
charterer are governed by their contract
contained in the charterparty.
contained in the charterparty.
2hen a bill of lading is issued or is

2hen a bill of lading is issued or is
transferred to the owner or person entitled
transferred to the owner or person entitled
to possession of the cargo who is not the
to possession of the cargo who is not the
charterer ,then it contains or evidences a
charterer ,then it contains or evidences a
separate contract between the shipowner
separate contract between the shipowner
and that other person.
and that other person.

$ading
$ading

8adingG
8adingG
?xample *
?xample *
% is a seller of goods on C$4 terms to 7

% is a seller of goods on C$4 terms to 7
.:nder that contract it is the duty of % to
.:nder that contract it is the duty of % to
arrange the transportation of the goods to
arrange the transportation of the goods to
7 and in order to perform his duties under
7 and in order to perform his duties under
the sale of contract.
the sale of contract.
% charters a ship from her owner C

% charters a ship from her owner C
)nce the cargo has been shipped a bill of

)nce the cargo has been shipped a bill of
lading is signed by the ship<s master on
lading is signed by the ship<s master on
behalf of his owner as carriers and
behalf of his owner as carriers and
released to % as shipper.
released to % as shipper.

$ading
$ading

8adingG
8adingG
?xample *
?xample *
2hilst the bill of lading is held by % it does

2hilst the bill of lading is held by % it does
not operate as a contract of carriage
not operate as a contract of carriage
between % and C since there is already a
between % and C since there is already a
Charterparty contract between those two
Charterparty contract between those two
parties.
parties.
2hen the bill of lading is endorsed by % to

2hen the bill of lading is endorsed by % to
7 pursuant to the contract of sale then ,in
7 pursuant to the contract of sale then ,in
the hands of 7 it operates as a contract of
the hands of 7 it operates as a contract of
carriage between 7 and C since there is no
carriage between 7 and C since there is no
charter party contract between 7 and C.
charter party contract between 7 and C.

$ading
$ading

8adingG
8adingG
?xample -
?xample -
% sells 7 on 4)7 terms .$n this case the

% sells 7 on 4)7 terms .$n this case the
duty to provide the transportation falls on
duty to provide the transportation falls on
7 and he charters the ship C .)nce the
7 and he charters the ship C .)nce the
cargo has been shipped the master
cargo has been shipped the master
releases the bill of lading to % as shipper.
releases the bill of lading to % as shipper.
2hilst the bill of lading is held by % it

2hilst the bill of lading is held by % it
operates as a contract of carriage between
operates as a contract of carriage between
% and C since there is no charter party
% and C since there is no charter party
contract between % and C.
contract between % and C.

$ading
$ading

8adingG
8adingG
?xample -
?xample -
)nce the bill of lading is endorsed by % to

)nce the bill of lading is endorsed by % to
7 the bill of lading will not operate as a
7 the bill of lading will not operate as a
contract of carriage between 7 and C since
contract of carriage between 7 and C since
there is already a charter party contract
there is already a charter party contract
between 7 and C.
between 7 and C.
)nce the bill is further endorsed by 7 to "

)nce the bill is further endorsed by 7 to "
it operates as a contract of carriage
it operates as a contract of carriage
between " and C since there is no charter
between " and C since there is no charter
party contract between " and C.
party contract between " and C.

$ading
$ading
Conflicting duties under the Charter

Party and the 8ill of $ading
)nce the cargo has been shipped under a

)nce the cargo has been shipped under a
Chartered vessel it is clear that the ship
Chartered vessel it is clear that the ship
owner can be a party to different
owner can be a party to different
contracts the charter party and the bill of
contracts the charter party and the bill of
lading! with two different contracting
lading! with two different contracting
parties the charterer under the charter
parties the charterer under the charter
party and the consignee under the bill of
party and the consignee under the bill of
lading!.
lading!.
Therefore unless the two contracts are on

Therefore unless the two contracts are on
back to back terms there is a potential for
back to back terms there is a potential for
confusion and conflict.
confusion and conflict.

$ading
$ading
Conflicting duties under the Charter Party Conflicting duties under the Charter Party
and the 8ill of $ading and the 8ill of $ading
?xample * ?xample *
?mployment orders given by the charterer under ?mployment orders given by the charterer under
the charter party may put the owner in breach of the charter party may put the owner in breach of
his obligations to the cargo owner under the bill his obligations to the cargo owner under the bill
of lading. of lading.
%n order given by a charterer to change the port %n order given by a charterer to change the port
of discharge from ,ort % to 7 after the 7ills of of discharge from ,ort % to 7 after the 7ills of
lading have been released for ,ort % would if the lading have been released for ,ort % would if the
shipowner complied with them make him guilty of shipowner complied with them make him guilty of
deviation under the bill of lading contract. deviation under the bill of lading contract.
This could seriously prejudice his ,I$ cover This could seriously prejudice his ,I$ cover
$nsurance! $nsurance!

$ading
$ading

)ample
)ample
The issue of a bill of lading may seriously

The issue of a bill of lading may seriously
diminish the effectiveness of rights which
diminish the effectiveness of rights which
the owner may have under the charter.
the owner may have under the charter.
4or example an owner has the right under

4or example an owner has the right under
Clause 1 of the 56,? form of charter to
Clause 1 of the 56,? form of charter to
withdraw the vessel from the charterer<s
withdraw the vessel from the charterer<s
employment if hire has not punctually
employment if hire has not punctually
been paid.
been paid.

$ading
$ading

)ample
)ample
@owever if a bill of lading has been issued

@owever if a bill of lading has been issued
in the meantime a withdrawal may be not
in the meantime a withdrawal may be not
much use to the ship owner since he
much use to the ship owner since he
completely separate obligations to the
completely separate obligations to the
cargo owner under the bills of lading will
cargo owner under the bills of lading will
continue
continue
These obligations include the duty to

These obligations include the duty to
proceed to and deliver the cargo at the
proceed to and deliver the cargo at the
port specified in the bill of lading even
port specified in the bill of lading even
though the bill of lading freight may
though the bill of lading freight may
already have been pre-paid to the
already have been pre-paid to the
charterer and even though no further hire
charterer and even though no further hire
will be payable under the time charter.
will be payable under the time charter.

$ading
$ading
Conflicting duties under the

Conflicting duties under the
Charter Party and the 8ill of
Charter Party and the 8ill of
$ading
$ading
?xample
?xample
$ndeed the owner may even have to

$ndeed the owner may even have to
pay out of his own pocket port
pay out of his own pocket port
expenses ,stevedoring charges and
expenses ,stevedoring charges and
other costs which should have been
other costs which should have been
for the time charterer<s account
for the time charterer<s account
under the time charter if the charter
under the time charter if the charter
had not been terminated by the
had not been terminated by the
withdrawal.
withdrawal.

Oil Tanker ;reights
Oil Tanker ;reights
A#)>AB) ;>)"B0T >AT) ASS)SS')-T A#)>AB) ;>)"B0T >AT) ASS)SS')-T

.A;>A1 .A;>A1
"ntroduction "ntroduction
%49% and its Terms of 9eference was

%49% and its Terms of 9eference was
originally laid down and sponsored by
originally laid down and sponsored by
&hell and subse'uently 7, for their
&hell and subse'uently 7, for their
internal use.
internal use.
$n *DE-, shell and 7, stopped sponsoring

$n *DE-, shell and 7, stopped sponsoring
it.
it.
$t is now compiled by the 8ondon Tanker

$t is now compiled by the 8ondon Tanker
7rokers ,anel and is based on information
7rokers ,anel and is based on information
relating to transport agreements supplied
relating to transport agreements supplied
by various oil companies and also from all
by various oil companies and also from all
known fixtures concluded on the open
known fixtures concluded on the open
market.
market.
$t is recogni;ed by tax authorities in many

$t is recogni;ed by tax authorities in many
countries for pricing of intra-company oil
countries for pricing of intra-company oil
movements.
movements.

Oil Tanker ;reights
Oil Tanker ;reights
A#)>AB) ;>)"B0T >AT) ASS)SS')-T A#)>AB) ;>)"B0T >AT) ASS)SS')-T

.A;>A1 .A;>A1
Principle
Principle
To establish an average transportation

To establish an average transportation
cost per ton in a given month for vessel in
cost per ton in a given month for vessel in
different si;e categories.
different si;e categories.
To represents the cost of all chartered

To represents the cost of all chartered
tonnage actually operating in the month
tonnage actually operating in the month
being assessed, irrespective of when the
being assessed, irrespective of when the
vessel was fixed.
vessel was fixed.
4ixtures concluded during the period of

4ixtures concluded during the period of
assessment will not affect the result unless
assessment will not affect the result unless
such vessel is actually performing a
such vessel is actually performing a
voyage during the assessment month.
voyage during the assessment month.

Oil Tanker ;reights
Oil Tanker ;reights
/ho uses A;>A and whyL

/ho uses A;>A and whyL
$t removes the variable factors in shipping

$t removes the variable factors in shipping
costs so that the rate paid by the affiliate
costs so that the rate paid by the affiliate
reflects the cost of chartered tonnage
reflects the cost of chartered tonnage
operating in the month being calculated.
operating in the month being calculated.
$t takes into account transport costs on a

$t takes into account transport costs on a
worldwide basis including spot market
worldwide basis including spot market
factor for that month.
factor for that month.
$t is also used for transactions between oil

$t is also used for transactions between oil
traders and also by government bodies
traders and also by government bodies

Oil Tanker ;reights
Oil Tanker ;reights
A;>A rate D/T categories

A;>A rate D/T categories
+eneral purpose 3 *J,1BB#-/,BBB

+eneral purpose 3 *J,1BB#-/,BBB
(edium range 3 -1,BBB#//,DDD

(edium range 3 -1,BBB#//,DDD
8arge range * 3 /1,BBB#KD,DDD

8arge range * 3 /1,BBB#KD,DDD
8arge range - 3 EB,BBB#*1D,DDD

8arge range - 3 EB,BBB#*1D,DDD
08CC 3 *JB,BBB#.*D,DDD
08CC 3 *JB,BBB#.*D,DDD
:8CC 3 .-B,BBB#1/D,DDD
:8CC 3 .-B,BBB#1/D,DDD

Oil Tanker ;reights
Oil Tanker ;reights
#essels not included in the assessment #essels not included in the assessment
+overnment-owned vessels except when on +overnment-owned vessels except when on

commercial charter commercial charter
0essels employed in speciali;ed trades such as 0essels employed in speciali;ed trades such as
the carriage of clean oils, petrochemicals, lube the carriage of clean oils, petrochemicals, lube
oils, bitumen, etc. oils, bitumen, etc.
0essels employed in protected trades such as the 0essels employed in protected trades such as the
:.&. Hones %ct trade. :.&. Hones %ct trade.
Components in each si;e category Components in each si;e category
Company vessels Company vessels
0essels on long term charter L*E months! 0essels on long term charter L*E months!
0essels on short term charter M*E months! 0essels on short term charter M*E months!
0essels on single voyage charter 0essels on single voyage charter

Oil Tanker ;reights
Oil Tanker ;reights
The mechanics of A;>A

The mechanics of A;>A
The calculations are made for the period

The calculations are made for the period
from the *Jth of a month to the *1th of
from the *Jth of a month to the *1th of
the next month, both dates inclusive. $t is
the next month, both dates inclusive. $t is
the weighted average of commercially
the weighted average of commercially
chartered tonnage as employed in the
chartered tonnage as employed in the
international transport of oil during the
international transport of oil during the
period considered.
period considered.
0essels fixtures for each of the above four

0essels fixtures for each of the above four
vessel categories are supplied by member
vessel categories are supplied by member
companies who use %49% and from report
companies who use %49% and from report
of fixtures concluded on the market for
of fixtures concluded on the market for
loading in the period under assessment.
loading in the period under assessment.

Oil Tanker ;reights
Oil Tanker ;reights
A;>A Assessment steps

The carrying capacity of each vessel

The carrying capacity of each vessel
operating during the assessment period is
operating during the assessment period is
calculated using a standard voyage.
calculated using a standard voyage.
The weighted average rate in :& dollars

The weighted average rate in :& dollars
per ton for carrying a ton of oil on that
per ton for carrying a ton of oil on that
standard voyage is estimated for each of
standard voyage is estimated for each of
the four vessel oil on that standard voyage
the four vessel oil on that standard voyage
is estimated for each of the four vessel
is estimated for each of the four vessel
types. 4or vessels that are on time charter,
types. 4or vessels that are on time charter,
the TC@#"2T #month is converted into
the TC@#"2T #month is converted into
cost per ton of cargo for the standard
cost per ton of cargo for the standard
voyage.
voyage.

Oil Tanker ;reights
Oil Tanker ;reights

%n overall weighted average is

%n overall weighted average is
calculated for each si;e group as
calculated for each si;e group as
follows>
follows>
Total carrying capacity of each si;e

Total carrying capacity of each si;e
category! x 2eighted average rate
category! x 2eighted average rate
for that si;e category!
for that si;e category!
The values arrived are in :& dollars

The values arrived are in :& dollars
per ton and are converted into 2&
per ton and are converted into 2&
index on the basis of the standard
index on the basis of the standard
voyage used and are published as a
voyage used and are published as a
2& $ndex 4igure for each si;e
2& $ndex 4igure for each si;e
category.
category.

Oil Tanker ;reights
Oil Tanker ;reights
2)98" &C%8?
2)98" &C%8?

The 2)98"&C%8? %ssociations of 8ondon

The 2)98"&C%8? %ssociations of 8ondon
and 5ew 6ork jointly publish a book, listed
and 5ew 6ork jointly publish a book, listed
over JB,BBB voyage rates and distances.
over JB,BBB voyage rates and distances.
The book is revised yearly to take account

The book is revised yearly to take account
of changes in bunker prices and port dues,
of changes in bunker prices and port dues,
amendments are also published from time
amendments are also published from time
to time throughout the year.
to time throughout the year.
These NbaseO rates are given in :&P per

These NbaseO rates are given in :&P per
tonne of cargo and take into account
tonne of cargo and take into account
bunker prices, canal transit times and port
bunker prices, canal transit times and port
charges.
charges.

Oil Tanker ;reights
Oil Tanker ;reights
/orld Scale /orld Scale
The rate is based on a standard vessel of K1,BBB The rate is based on a standard vessel of K1,BBB
tonnes cargo capacity costing P *-,BBB per day tonnes cargo capacity costing P *-,BBB per day
fixed hire and performing a round voyage fixed hire and performing a round voyage
load#discharge and back to load port at */.1 load#discharge and back to load port at */.1
knots on 11 tonnes of fuel oil per day. $t must be knots on 11 tonnes of fuel oil per day. $t must be
emphasi;ed that these rates are nominal rates, in emphasi;ed that these rates are nominal rates, in
practice the ship-owner and charter will negotiate practice the ship-owner and charter will negotiate
a rate for the particular voyage is 'uestion as a a rate for the particular voyage is 'uestion as a
percentage of the nominal rate. percentage of the nominal rate.
Thus if the voyage was fied at Thus if the voyage was fied at
/O>$DSCA$) %66 ./S %661 then the rate /O>$DSCA$) %66 ./S %661 then the rate
would be as published. "f the voyage was would be as published. "f the voyage was
fied at /S %=6 then it would be %=67 of fied at /S %=6 then it would be %=67 of
the published rate. the published rate.

Oil Tanker ;reights
Oil Tanker ;reights
/orld Scale
/orld Scale
This has proven to be a remarkably successful This has proven to be a remarkably successful
compromise between the charterer<s desire for compromise between the charterer<s desire for
flexible discharge options and the owners need flexible discharge options and the owners need
for a fair predictable income for his vessel, for a fair predictable income for his vessel,
however there are problems. 2)98"&C%8? is however there are problems. 2)98"&C%8? is
based upon an average vessel earning an based upon an average vessel earning an
average rate with average rate with average average rate with average rate with average
costs. costs.
The further your vessel is away from the The further your vessel is away from the
2)98"&C%8? average and the further away the 2)98"&C%8? average and the further away the
market is from 2& *BB then the greater the market is from 2& *BB then the greater the
potential for distortions. potential for distortions.

Oil Tanker ;reights
Oil Tanker ;reights
/orld Scale
/orld Scale
This is why when looking at fixture reports

This is why when looking at fixture reports
you may see a 08CC fixing at 2& JB whilst
you may see a 08CC fixing at 2& JB whilst
a product tanker is fixed at 2& -BB, the
a product tanker is fixed at 2& -BB, the
cost per tonne of cargo moved on a 08CC
cost per tonne of cargo moved on a 08CC
is much lower than the cost per tonne of
is much lower than the cost per tonne of
cargo moved on a product tanker,
cargo moved on a product tanker,
thus
thus
the product tanker will attract a
the product tanker will attract a
higher
higher
2)98"&C%8? percentage. ,rudent
2)98"&C%8? percentage. ,rudent
owners will be aware of any distortions
owners will be aware of any distortions
their particular vessel specifications and
their particular vessel specifications and
the state of the market may cause and will
the state of the market may cause and will
adjust their figures accordingly.
adjust their figures accordingly.

Oil Tanker ;reights
Oil Tanker ;reights
/orld Scale
/orld Scale
The new worldwide tanker nominal freight

The new worldwide tanker nominal freight
scale 2)98"&C%8?! is intended merely
scale 2)98"&C%8?! is intended merely
as a standard of reference to assist
as a standard of reference to assist
subscribers to conduct business.
subscribers to conduct business.
The responsibility of the associations is

The responsibility of the associations is
limited to providing subscribers with rates
limited to providing subscribers with rates
for voyages calculated in accordance with
for voyages calculated in accordance with
the basis of a calculation and to revising
the basis of a calculation and to revising
2)98"&C%8? from time to time.
2)98"&C%8? from time to time.
The nominal rate for a voyage does

The nominal rate for a voyage does
not in itself have any significance as
not in itself have any significance as
representing a fair or reasonable rate
representing a fair or reasonable rate
for the standard vessel or any other
for the standard vessel or any other
si5e and4or type of vessel at any
si5e and4or type of vessel at any
particular time.
particular time.

Oil Tanker ;reights
Oil Tanker ;reights
(arket levels of freight are to be expressed in (arket levels of freight are to be expressed in
terms of a percentage of the nominal freight rate. terms of a percentage of the nominal freight rate.
Thus 2)98"&C%8? *BB would mean the rate for Thus 2)98"&C%8? *BB would mean the rate for
the voyage in 'uestion as calculated and issued the voyage in 'uestion as calculated and issued
by the associations, while 2)98"&C%8? *K1 by the associations, while 2)98"&C%8? *K1
would mean *K1 per cent of that rate and would mean *K1 per cent of that rate and
2)98"&C%8? K1 would mean K1 per cent of that 2)98"&C%8? K1 would mean K1 per cent of that
rate. rate.
9ates are calculated and 'uoted only in :&" per 9ates are calculated and 'uoted only in :&" per
tonne. @owever, freight may of course by payable tonne. @owever, freight may of course by payable
in any currency and the contracting parties in any currency and the contracting parties
should specify clearly the currency of payment should specify clearly the currency of payment
and the method to be used to determine the rate and the method to be used to determine the rate
of exchange to apply if the currency of payment of exchange to apply if the currency of payment
is to be other than :&". is to be other than :&".

Oil Tanker ;reights
Oil Tanker ;reights
8asis of calculation 8asis of calculation
%ll rate calculations, which are made in :&", are %ll rate calculations, which are made in :&", are
per tonne for a full cargo for the standard vessel per tonne for a full cargo for the standard vessel
based upon a round voyage from loading port or based upon a round voyage from loading port or
ports to discharging port or ports and return to ports to discharging port or ports and return to
first loading port using the under-mentioned first loading port using the under-mentioned
factors. factors.
%ll of the factors shown are purely nominal and %ll of the factors shown are purely nominal and
for rate calculation purposes only. $n particular, for rate calculation purposes only. $n particular,
the fixed hire element of :&" *-,BBB per day is the fixed hire element of :&" *-,BBB per day is
not intended to represent an actual level of not intended to represent an actual level of
operating costs, nor to produce rates providing a operating costs, nor to produce rates providing a
certain level of income or margin of profit, either certain level of income or margin of profit, either
for the standard vessel or for any other vessel for the standard vessel or for any other vessel
under any flag. under any flag.

Oil Tanker ;reights
Oil Tanker ;reights
/orld Scale
/orld Scale
Standard vessel
Standard vessel
Total capacity
Total capacity
K1,BBB tonnes
K1,BBB tonnes
i.e. the vessel<s capacity for cargo plus

i.e. the vessel<s capacity for cargo plus
stores, water, and bunkers, both voyage
stores, water, and bunkers, both voyage
and reserve; also see section 1 -! of part
and reserve; also see section 1 -! of part
% of the preamble!.
% of the preamble!.
%verage service speed

%verage service speed
*/.1
*/.1
knots
knots
7unker consumption steaming

7unker consumption steaming
11
11
tonnes per day
tonnes per day
,urposes other than steaming

,urposes other than steaming
*BB tonnes per round voyage
*BB tonnes per round voyage

Oil Tanker ;reights
Oil Tanker ;reights
/orld Scale
/orld Scale
$n ,ort- 1 tonne for each port

$n ,ort- 1 tonne for each port
involved during the voyage.
involved during the voyage.
+rade of 4uel )il .EB C&T

+rade of 4uel )il .EB C&T
,ort Time / days for a voyage from

,ort Time / days for a voyage from
one loading port to one discharging
one loading port to one discharging
port.
port.
%dditional *- hours allowed for extra

%dditional *- hours allowed for extra
port involved on a voyage.
port involved on a voyage.

Oil Tanker ;reights
Oil Tanker ;reights
/orld Scale
/orld Scale

4ixed @ire ?lement :&" *-,BBB ,er

4ixed @ire ?lement :&" *-,BBB ,er
day
day
7unker price */D,K1 per tonne

7unker price */D,K1 per tonne
This price represents the average

This price represents the average
worldwide bunker price for fuel oil
worldwide bunker price for fuel oil
.EB cst! during the period *st
.EB cst! during the period *st
)ctober *DDD to .Bth &eptember
)ctober *DDD to .Bth &eptember
-BBB as assessed by Cockett marine
-BBB as assessed by Cockett marine
oil limited of 8ondon!
oil limited of 8ondon!

Oil Tanker ;reights
Oil Tanker ;reights
,ort costs ,ort costs
,ort costs used are those assessed by the ,ort costs used are those assessed by the
associations in the light of information available associations in the light of information available
to them up to the end of &eptember -BBB, the to them up to the end of &eptember -BBB, the
rate of exchange used for converting costs in a rate of exchange used for converting costs in a
local currency to :&" being the average local currency to :&" being the average
applicable during &eptember -BBB. applicable during &eptember -BBB.
Canal transit time Canal transit time
-/ hours is allowed for each transit of the -/ hours is allowed for each transit of the
,anama canal. ,anama canal.
.B hours is allowed for each transit of the &ue; .B hours is allowed for each transit of the &ue;
Canal. Canal.
(ileage is not taken into account in either case. (ileage is not taken into account in either case.

Oil Tanker ;reights
Oil Tanker ;reights
2orld &cale
2orld &cale
?xamples of 2et 4ixtures

?xamples of 2et 4ixtures
&ource 4air ,lay )ctober -BBE

&ource 4air ,lay )ctober -BBE

)amples of Time
)amples of Time
Charters
Charters

8altic Dry "nde&
8altic Dry "nde&
Source ;airplay October
Source ;airplay October
266?
266?

Thank 6ou I %ny

Thank 6ou I %ny
Questions
Questions

Charter Party

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Charter Party

The major operation under this function is

These operations are therefore primarily

These operations are concerned with

There are many mutually agreed

The terms and conditions for carriage

Charter party is a contract between

Three important elements are;

a! "escription of the ship

b! "escription of the trade

c ! "escription of time period

Description of the Ship

The type of ship to be hired#chartered very

$ts normal for owners to provide all the

%n example such as &hell time and $nter

Description of the Ship

(any Charterers re'uire the following

*! +eneral %rrangement ,lan ,including

-! "etailed Cargo manifold arrangement

.! ,umping %rrangement ,lan

/! ,lan of Cargo Tank 0entilating &ystem

1! (anufacturers Characteristics Curves

Description of the Ship

&peed and Consumption

Description of the Ship Description of the Ship

Description of the Ship Description of the Ship

5ame of the &hip 5ame of the &hip

6ear of 7uild 6ear of 7uild

5ame and location of )wners 5ame and location of )wners

Call 8etters Call 8etters

&ummer "eadweight &ummer "eadweight

4resh 2ater %llowance 4resh 2ater %llowance

4resh 2ater %llowance 4resh 2ater %llowance

Description of the Ship

&peed and Consumption

Description of the Trade

Owners will negotiate an entry

Description of the Trade

The Charter ,arty will guarantee that

The dangerous areas such as war

Description of the Trade

The Charter Party shall also

"n addition !a modern

Description of the Period

The period of charter commences

There are two types of charters, 5on-

This kind of charter ordinarily means that

9eason for "emise Charters 7are 7oat

"emise charters are created not so much

Thus a contract for the purchase of a ship

% variant of this would be for a financing

This would enable the bank to avoid not

"emise charters are also concluded

Charter parties other than "emise;

There are two types;

*! Time Charters i.e. contracts for the use

-! 0oyage Charter contracts for the use of

0oyage charter is an engagement of a

The ship owner provides for all the ship<s

To compensate for the delays that

$ist of Charterparty Clauses

There are two important of the

$ist of Charterparty Clauses

Place This can be important as