Shipping Markets &

Ship Operations
Case Studies in Ship Operating

Understanding beyond written words

CK Sharma
29th November 2012
Mumbai
 Force Majeure at BIK – 1998 (page I)
 NGC hired an Ethylene vessel on Voyage Charter
(ASBATANKVOY C/P) to load Ethylene from BIK to Far
East.
 One day after tendering NOR at loadport, there was an
explosion in the pipeline from Plant to the Port.
Shippers/Charterers declared Force Majeure.
 Chartering Manager in Owners office kept the vessel
waiting at BIK & took 2 actions:
1. Asked the Charterers when the repairs are likely to be
completed & whether they would accept cancellation of CP.
2. Asked the P&I Club to give further advice in the matter.
 The MD for Asia in Ship Owning Co. ordered the vessel
to be fixed elsewhere immediately but the Chartering
Mgr protested & asked Club’s intervention to give advice
before fixing vsl elsewhere.
 Force Majeure at BIK – 1998 (page II)
 The MD frowned, threatened to take action against the
Chartering Mgr as a very good alternate business was
lost.
 The Club strictly advised the Owners not to fix the
vessel elsewhere until the CP with Iranians was formally
cancelled.
 As the luck would have it, the Pipeline was repaired in 3
days and Charterers insisted the vessel to be placed for
loading immediately as the Petrochemical plant had no
space left in tanks to store Ethylene & the Plant would
shut down in absence of the vessel.
 Had the Owners employed the vessel elsewhere without
cancelling the previous CP due to Force Majeure being
declared, they would have faced a huge claim.
 MD thanked the Chartering Mgr for his insistence.
 Suitability of the vessel at the Ports –
The case of mt CV Raman at Vizag
 In 1981/82 SCI had purchased a new vessel mt CV
Raman (MR-I) being operated by a new Asstt. Mgr
Operations.
 This vessel was doing regular voyages from Mumbai to
Cochin with Crude Oil.
 Suddenly, the Ministry (OCC) ordered SCI to send this
vessel to Vizag with full load of Crude which was
desperately needed by HPC Refinery.
 The action was taken very promptly and vessel was sent
at full speed.
 On arrival the Harbour Master refused to berth her as it
was discovered that her beam was 10 inches more than
max allowed at Vizag………….!!!!!!!!!!
 Bunkers as per C/P
 Chartering Managers often do not give much importance
to Bunker Clause in C/Ps. In hands of a cunning Owner it
can be a deadly weapon.
 In a coastal voyage from ECI to WCI a Clause was
agreed mainly as under:
 Charterers to redeliver the vessel with same quantity bunkers as
on delivery. Bunkers to be supplied from an a reputed Supplier
such as Chevron/Texaco/Shell etc.
 Vessel loaded at Vizag where the only supplier of
bunkers is IOC. Owner refused to take bunkers.
 Upon completion discharge at an anchorage point in
WCI, where bunker supply is not possible, the Owner
invoked the bunker clause and refused to accept
redelivery of the vessel till bunkers were supplied OR
Charterers to pay full ballast cost up to Fujairah.
 Bunkers as per C/P
 Charterers advisor saved the situation by
issuing message with following points:
 The C/P provided for a reputed supplier like
Chevron/Texaco/Shell, etc
 Indian Oil is covered under ETC.
 Indian Oil is a fortune 500 company and has supplied
bunkers to millions of vessel calls in Indian Coast.
Therefore, IOC is equivalent to Chevron/Texaco/BP,
etc for the bunker to be supplied.
 Chevron/Texaco/Shell have never supplied bunkers at
Indian Coast nor are likely to supply in foreseeable
future. This makes the contract condition impossible
to perform, thereby VOID as per English Law.
 Owners withdrew the case and settled amicably.
 Cargo discharge at wrong disport - 1
 Owner protecting unscrupulous Operator:
 A Dubai Operator Hired a vessel from a reputed
Owner & loaded Containers from Bombay for Umm
Quasar from 5 shippers for carrying project cargoes.
He got extra set of OBLs prepared at loadport
showing Dubai as disport. Agent was unaware of the
purpose & was conned.
 Cargo was discharged in Bandar Abbas & vessel
returned to Head Owners showing the fake
documents to Owners.
 Then the Operator asked the Shippers to pay freight
again for reaching the cargo to Umm Quasar.
 Some of the Shippers paid the freight again but one
of them went tough.
 Cargo discharge at wrong disport - 2
 This Shipper went to Bandar Abbas and hired a vessel
to ship the cargo himself to Umm Quasar. Then filed a
case against the Head Owner for all costs.
 Head Owners fearing difficulty, changed the name of the
vessel and stopped her trading in India.
 Shipper got the vessel arrested at Singapore Anchorage
during her bunkering & obtained P&I Club’s Guarantee.
 Head Owner contested the case on the strength of
documents given by the Operator.
 The Operator closed his shop in Sharjah and
disappeared.
 Head Owner lost the case & had to pay up full costs
including legal costs to the Shipper.
 Declaring Option before time
 A VLCC was Chartered by Oil Industry to transport
Crude from PG to WCI with Charterer’s option to
discharge at Mumbai Lighterage point or at Vadinar
declarable latest passing Quoin Island after loading.
 The concerned company officer declared the disport as
Vadinar when loading had just commenced based on old
information.
 But later there was a need to send the vessel to Mumbai.
The Charterers advised the Owner before reaching
Quoin Island that the vessel is required at Mumbai.
 Owner refused saying that there no provision for
multiple declaration of disport option. Charterers had no
choice but to pay USD 50,000 demanded by Owners to
bring the vessel to Mumbai.
 The case of 6 hrs after “NOR”
 The Buyers in Mumbai were importing Chemicals from well known
Japanese Traders. The receivers always had an agreed Laycan for
discharging. The governing C/P was ASBATANKVOY which
provides for 6 hours free time before laytime starts counting.
 Very often the vessels were arriving before commencement of
laycan and would tender NOR on arrival.
 The Traders would start counting laytime from 00:01 hrs on the date
of commencement of laycan & Receivers were happily paying
Demurrage based on same for years.
 New Chartering Manager insisted that the NOR can validly be
tendered at Mumbai only on commencement of laycan and Buyers
had right to have 6 hours “Free Time” before the laytime starts
counting.
 Traders protested saying that they have been getting this for last
many years but ultimately agreed to giving 6 hours free time.
 Buyers gained a lot of permanent savings on Demurrage incidence.
 Reducing Demurrage Incidence
 About 300,000 mts of Ethylene was being imported on C&F basis by
a Company via Hazira in 1991.
 The sources of loading were Venezuela, Med, PG.
 It was impossible to control arrival date of ships as the time taken on
long voyages was variable.
 The discharge was by ship to ship transfer at Hazira where only
about 2,000 tons could be unloaded in a day due to the tidal
conditions in the port.
 There was often a bunching of vessels at Hazira which resulted in
huge demurrages.
 The New Chartering Manager changed the situation by altering
buying pattern to FOB basis for cargoes ex PG. This resulted in
taking control of the Shipping part for short voyages (4 days) and
vessels were loaded keeping in mind the open Lighterage windows
at Hazira.
 The demurrage incidence was reduced to USD 0.5 Million as against
USD 4.0 million.
 Golden Kiku
 A case of Part II of Gencon C/P:
 The vessel was fixed to load Iron Ore from ECI to China
under Gencon 94 C/P.
 At Chinese Discharge Port, pilot Anchored at a safe place
during river transit for 8 hours due to fog.
 Charterers raised Despatch claim of USD 3000/- deducting
Shifting time from Anchorage to Berth.
 On deep scrutiny of Line 115 of Part II of Gencon CP it was
revealed that the wording is “MOVING TIME” from
anchorage to berth will not count as used laytime.
Therefore, 8 hours of time lost “waiting” at a place en-
route from Anchorage to berth was used laytime.
 Owners denied Charterers claim and counter claimed USD
15,000 Demurrage invoking line 115 of the Gencon Part II.
This was paid by Charterers without protest.