Shipping
• Agenda
– Part 1. Introduction, Nomenclature, Major
shipping companies
– Part 2. Charter - Voyage, time and
others
– Part 3. Deck maintenance
– Part 4. Engine room and maintenance
– Part 5. Communication system and others
Chartering
• Chartering is an activity by which, a
charterer (who will normally be the owner
of the cargo) will get into an agreement
with shipowner or shipbroker for
transporting the cargo at certain price
known as Freight rate.
Chartering
• A charterer may also be a party without a
cargo who takes a vessel on charter for a
specified period from the owner and then
trades the ship to carry cargoes at a profit
above the hire rate, or even makes a profit
by re-letting the ship out to other
charterers.
Chartering
• Freight rates are prices at which cargo is moved
from one point to other.
• Freight rates may be on
- Per-ton basis over a certain route
or
- Per-day basis for the duration of charter.
- Nature of Cargo being shipped (Value of
goods, Perishable etc.,)
Chartering
• Freight rates for Bulk Carriers and Tankers
would be on tonnage basis.
• Freight rates for Containers would be on
volume basis.
• Both Tonnage and Volume data would be
used to arrive at Freight rates.
Chartering
• Depending on the type of ship and the
type of charter, normally a standard
contract form called a charter party is used
to record the exact rate, duration and
terms agreed between the shipowner and
the charterer.
Types of Charters
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Voyage Charter
Time Charter
Bareboat Charter
Demise Charter
Charter Party Members
• Charterers
Vs
• Ship Owner / Ship Operator / Ship
Management Company / Ship Brokers
(Shipbrokers are specialist intermediaries
between shipowners and the charterers.)
Voyage Charter
• Voyage Charter – Charterer pays per ton basis.
• Vessel costs like fuel costs, navigation costs,
salary of crew will be paid by Owner
• Vessels can ply between two ports or can touch
many ports.
• Initial Start Port and Final Destination Port will
form end points for Voyage Charter.
• A Voyage Charter may contain sub-voyage
charters.
Voyage Charter - Contd
• The entire ship is chartered for the
transport of a full cargo, and this can be
detailed out as:
- for a well determined voyage
- for a voyage to go and return
- for a series of specific voyages
- for a round trip with different harbours
and the right for the charterer to load and
discharge
Time Charter
• Charterer pays for fixed time period.
• Vessel owner will take care of Fuel costs,
Navigations costs, salary of crew.
• Cargo Management Company would
decide upon ports, routes etc.,
Time Charter - Contd
• Period time charter - the charterer can make as many
trips during that period with the ship as he possibly can.
• Trip time charter - only a single trip can be made just as
under a voyage charter but at time charter conditions.
• Under a time charter the ship owner is only responsible
for the nautical and technical operation of the ship
whereas the charterer is responsible for the commercial
operation of the ship.
• It follows that under a time charter, the fixed costs of the
ship are for the account of the owner and the variable
costs are for the account of the time charterer.
BareBoat Charter
• Charterer hires vessel for entire period.
• Charterer pays for all expenses.
• It is indirect way of acquiring vessel at the
end of charter period
Demise Charter
• Charterer takes full control of Financial
and Legal responsibility
Latest Trends in Charter
• Cross Charter – Ship owners can also be
part of charterer for part of the ship.
• Storage Chartering – Ships are chartered
for Storage of goods.
Charterparty
• The agreement between Shipowner and
Charterer is normally termed as Charter
party where all clauses would be detailed
out.
Costs in Shipping Operations
• Running Costs
• Variable Costs
Running Costs
• Running costs investment
Capital
Interests
Depreciations
• Running Costs - Operating costs
Manning Costs
Stores Costs
Repairs and Maintenance Costs
Insurance
Administration costs
Variable Costs
• Vessel's voyage costs – Fuel
• Port voyage costs
Ports and Light dues
Tugs and Pilotage Costs
Canal dues (Suez, Panama etc.,)
Agency fees
Costs linked to the arrival and sailing of the ship.
• Cargo handling costs
Cost for Stowing of Cargo
Claims
Cost Comparison
Expenses Heading
Voyage Charter
Time Charter
BareBoat Charter
Depreciation interest on
Capital finance
charges
Owner
Owner
Owner
Insurance on
Hull/Machinery
Owner
Owner
Owner or Charterer
Survey Classification
Owner
Owner
Owner or Charterer
Maintenance and Repair
Owner
Owner
Charterer
General Costs
Owner
Owner
Charterer
Stock, Supply Crew
Owner
Owner
Charterer
Crew Wages
Owner
Owner
Charterer
Lub.Oil
Owner
Owner
Charterer
Fresh Water
Owner
Owner or Charterer
Charterer
Fuel Oil
Owner
Charterer
Charterer
Harbor dues
Owner
Charterer
Charterer
Loading charges
Owner or Charterer
Charterer
Charterer
Discharging charges
Owner or Charterer
Charterer
Charterer
Stowage Charges
Owner or Charterer
Charterer
Charterer
Cleaning of Holds
Owner or Charterer
Charterer
Charterer
Damage to Cargo
Owner or Charterer
Owner or Charterer
Charterer
Bill of Lading
• Charterer takes full control of Financial and Legal
responsibility
• A bill of lading (referred to as a BOL,or B/L) is a
document issued by a “carrier” to the “consignee”.
• Bill of Lading is a document which acknowledges that
specified goods or cargo have been received on board.
• Bill of Lading will also specify Port of Destination.
• Carrier is normally a ship's master or a company's
shipping department.
• Consignee is the party to which the cargo has been
scheduled to be despatched.
Bill of Lading
• It is a receipt signed by the carrier confirming whether
goods matching the contract description have been
received in good condition (a bill will be described as
clean if the goods have been received on board in
apparent good condition and stowed ready for transport)
• It is also a document of transfer, being freely transferable
but not a negotiable instrument in the legal sense.
• Like a cheque, it may be endorsed affecting ownership
of the goods actually being carried.
• It is separate from any contract for the sale of the goods
to be carried, however it binds the carrier to its terms,
irrespectively of who the actual holder of the B/L, and
owner of the goods, may be at a specific moment.
Types of Bill of Lading
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Straight Bill of Lading
Order Bill of Lading
Bearer Bill of Lading
Surrender Bill of Lading
Straight Bill of Lading
• It is a Non-Negotiable Bill of Lading
• It states that the goods are consigned to a
specified person and it is not negotiable free
from existing equities, i.e. any endorsee
acquires no better rights than those held by the
endorsor.
• If the carrier holds a security interest over the
goods for unpaid debts, the endorsee is bound
for the same. Although, if the endorsor
wrongfully failed to disclose, the endorsee will
have a right to claim damages for failing to
transfer an unencumbered title.
Order Bill of Lading
• It is a negotiable bill of lading.
• This bill uses express words to make the bill
negotiable, e.g. it states that delivery is to be
made to the further order of the consignee
using words such as "delivery to A Ltd. or to
order or assigns".
• Consequently, it can be endorsed by A Ltd. or
the right to take delivery can be transferred by
physical delivery of the bill accompanied by
adequate evidence of A Ltd.'s intention to
transfer.
Bearer Bill of Lading
• This bill states that delivery shall be made
to whosoever holds the bill.
• Such bill may be created explicitly or it is
an order bill that fails to nominate the
consignee whether in its original form or
through an endorsement in blank.
• A bearer bill can be negotiated by physical
delivery.
Surrender Bill of Lading
• Under import documentary credit the bank
releases the documents on receipt from the
negotiating bank but the importer does not pay
the bank until the maturity of the draft under the
relative credit.
• This direct liability is called Surrender Bill of
Lading (SBL), i.e. when we hand over the bill of
lading we surrender title to the goods and our
power of sale over the goods.
Issues on Bill of Lading
• In most cases, bill of lading is not a document of
title, and it simply identifies that a particular
individual has a right to possession at the time
when delivery is to be made.
• Problems arise when goods are found to have
been lost or damaged in transit, or delivery is
delayed or refused.
• Mostly, Consignees would not form part of
Contract of Carriage (Charter party)
• Above can be avoided using ‘Subrogation’ – to
give the consignee the same rights of action
held by the consignor.
Indian Shipping Companies
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Shipping Corporation of India
Barber Shipping
Great Eastern Shipping
Essar Shipping
Sanmar Shipping
Varun Shipping