- Introduction…………………………………………………………………………………………………….. 29
The need for Specialization……………………………………………………………………………………………………………………….. 30
The Source of the need for transportation / Trading…………………………………………………………………………………. 31
Brief presentation of the Parties involved in Trading………………………………………………………………………………… 31
The Traders or Merchants………………………………………………………………………………………………………………….. 31
The Sellers or Shippers……………………………………………………………………………………………………………………….. 31
The Buyers or Receivers……………………………………………………………………………………………………………………… 31
The Banks…………………………………………………………………………………………………………………………………………… 31
Brief presentation of the Documents involved in Trading…………………………………………………………………………. 32
The Sale Contract……………………………………………………………………………………………………………………………….. 32
The Letter of Credit…………………………………………………………………………………………………………………………….. 32
Terms related to Trading………………………………………………………………………………………………………………………….. 32
INCO TERMS……………………………………………………………………………………………………………………………………….. 32
Transporting the goods by sea………………………………………………………………………………………………………………….. 33
Parties directly involved in a Chartering Deal……………………………………………………………………………………… 33
The Ship Owners…………………………………………………………………………………………………………………………… 33
The Charterers……………………………………………………………………………………………………………………………… 34
The Operators………………………………………………………………………………………………………………………………. 35
Ship-Owners VS Charterers……………………………………………………………………………………………………………………….. 36
The Intermediates (or Intermediaries)………………………………………………………………………………………………………. 36
The Brokers………………………………………………………………………………………………………………………………………… 36
The (Port) Assistants…………………………………………………………………………………………………………………………………. 36
The Ship Agents………………………………………………………………………………………………………………………………….. 36
The Stevedores…………………………………………………………………………………………………………………………………… 36
The Tally – men…………………………………………………………………………………………………………………………………… 37
The Crane / Winch Operators…………………………………………………………………………………………………………….. 37
The Tools………………………………………………………………………………………………………………………………………………….. 37
The Ship……………………………………………………………………………………………………………………………………………… 38
The Cargo……………………………………………………………………………………………………………………………………………. 38
The Documents…………………………………………………………………………………………………………………………………………. 38
a. Documents indirectly related to Chartering……………………………………………………………………………. 38
The Sale Contract………………………………………………………………………………………………………………………….. 38
The Letter of Credit………………………………………………………………………………………………………………………. 38
b. Documents directly related to Chartering………………………………………………………………………………. 39
The Charter Party…………………………………………………………………………………………………………………………. 39
The Booking Note…………………………………………………………………………………………………………………………. 39
The Bill of Lading…………………………………………………………………………………………………………………………… 39
Insurance………………………………………………………………………………………………………………………………………………….. 40
Ship Insurance………………………………………………………………………………………………………………………… 40
Cargo Underwriters – Ship Underwriters…………………………………………………………………………………. 40
P&I Clubs (Protection & Indemnity)………………………………………………………………………………………… 40
Insurance Brokers…………………………………………………………………………………………………………………… 40
Third-Party Management…………………………………………………………………………………………………………………………. 41
Recapitulation…………………………………………………………………………………………………………………………………………… 42
Parties directly involved in a Charter Deal………………………………………………………………………………………….. 42
Introductory Definitions / Glossary…………………………………………………………………………………………………………… 43
- Ship Brokers…………………………………………………………………………………………………….. 45
The role of Shipbrokers in Chartering………………………………………………………………………………………………………… 45
Brokers Tasks……………………………………………………………………………………………………………………………………… 45
The Legal Position of Shipbrokers……………………………………………………………………………………………………………… 46
Specialization……………………………………………………………………………………………………………………………………………. 47
Commission………………………………………………………………………………………………………………………………………………. 48
In practice…………………………………………………………………………………………………………………………………………… 49
Commission and Charter Parties………………………………………………………………………………………………………………. 49
Definitions / Glossary………………………………………………………………………………………………………………………………… 49
- Ship’s Agent…………………………………………………………………………………………………….. 51
The legal position of Agents……………………………………………………………………………………………………………………… 53
The mission of the Agents…………………………………………………………………………………………………………………………. 54
Appointing the Agents………………………………………………………………………………………………………………………………. 55
Protecting Agents……………………………………………………………………………………………………………………………………… 55
Remuneration of the Agents…………………………………………………………………………………………………………………….. 55
Characteristic Disbursement Accounts Pro-forma includes:……………………………………………………………………… 56
Agents and Charter Parties……………………………………………………………………………………………………………………….. 56
Terms and Acronyms related to Agency……………………………………………………………………………………………………. 57
- Traders and the Contract of Sale of Goods…………………………………………………………………. 59
International Trade…………………………………………………………………………………………………………………………………… 59
Traders (definition)…………………………………………………………………………………………………………………………………… 60
Commodity Brokers………………………………………………………………………………………………………………………………….. 60
Contracts of Sale of Goods (definition)……………………………………………………………………………………………………… 60
Terms and conditions contained in the Sale Contract……………………………………………………………………………….. 61
Shipping terms……………………………………………………………………………………………………………………………………. 61
Rules related to the Sale Contract…………………………………………………………………………………………………………….. 62
Inco Terms………………………………………………………………………………………………………………………………………….. 62
GAFTA…………………………………………………………………………………………………………………………………………………. 64
The Documentary duties in Sale Contracts…………………………………………………………………………………………. 65
Sale Contracts and the Letters of Credit……………………………………………………………………………………………………. 65
Sale Contract and the Bills of Lading…………………………………………………………………………………………………………. 66
Sale Contract and the Charter Parties………………………………………………………………………………………………………. 66
Terms and acronyms related to Sale Contracts…………………………………………………………………………………………. 67
Example of C&F Sale Contract…………………………………………………………………………………………………………………… 67
Example of FOB Sale Contract…………………………………………………………………………………………………………………… 71
Risk Management in Trading……………………………………………………………………………………………………………………. 72
- Letter of Credit…………………………………………………………………………………………………. 75
The Letter of Credit as a security………………………………………………………………………………………………………………. 75
Types of “Letters Of Credit”………………………………………………………………………………………………………………………. 80
The Parties Involved in the Letter of Credit……………………………………………………………………………………………….. 80
The Chartering point of view…………………………………………………………………………………………………………………….. 80
Terms related to Letters of Credit……………………………………………………………………………………………………………… 81
Acronyms related to Letters of Credit……………………………………………………………………………………………………….. 82
Sample term used on a Sale Contract, related to the Letter of Credit……………………………………………………….. 83
Documents usually needed to allow payment of the Letter of Credit………………………………………………………… 83
How it works, in practice…………………………………………………………………………………………………………………………… 83
Sample Letter Of Credit…………………………………………………………………………………………………………………………….. 85
- the Cargo………………………………………………………………………………………………………… 87
Cargoes, from a chartering perspective……………………………………………………………………………………………………. 88
Sample of various cargo types……………………………………………………………………………………………………………. 89
Sample of Various Cargo Packaging. (Break Bulk Cargoes)………………………………………………………………….. 91
Indicative Stowage Factors for Grain Cargoes………………………………………………………………………………………….. 91
Classification of Dangerous Goods……………………………………………………………………………………………………………. 92
Acronyms related to Cargoes……………………………………………………………………………………………………………………. 92
- the Ship………………………………………………………………………………………………………….. 95
Ship’s Measurements……………………………………………………………………………………………………………………………….. 97
The Plimsoll Line……………………………………………………………………………………………………………………………………….. 98
Types of Merchant Ships (Freighters)……………………………………………………………………………………………………….. 99
Bulk-Carriers……………………………………………………………………………………………………………………………………….. 99
Tweendeckers / General Cargo / Multi-Purpose ships / Heavy Lifters………………………………………………… 99
Container Ships………………………………………………………………………………………………………………………………… 100
Ro – Ro ships (Roll on – Roll off)…………………………………………………………………………………………………………. 100
Tanker Ships……………………………………………………………………………………………………………………………………… 101
OBO (Ore-Bulk-Oil) – Combination Carriers………………………………………………………………………………………. 101
Coasters……………………………………………………………………………………………………………………………………………. 101
-Passenger Ships, Ro-Pax (Roll on off – Passengers), Cruise Ships…………………………………………………….. 101
Support Ships……………………………………………………………………………………………………………………………………. 101
Categorization of merchant Ships…………………………………………………………………………………………………………… 101
Terms related to Ships and their construction………………………………………………………………………………………… 104
Acronyms and Abbreviations related to Ships…………………………………………………………………………………………. 105
Prefixes…………………………………………………………………………………………………………………………………………………… 105
Prefixes used for the several types of Ships……………………………………………………………………………………… 105
- Insurance………………………………………………………………………………………………………. 107
Hull and Machinery………………………………………………………………………………………………………………………………… 107
Risks usually covered under an H&M………………………………………………………………………………………………………. 108
Additional Coverage:………………………………………………………………………………………………………………………… 108
Sets of Clauses under H&M…………………………………………………………………………………………………………………….. 108
Usual terms of H&M covers……………………………………………………………………………………………………………… 108
Duty of disclosure……………………………………………………………………………………………………………………….. 108
Alteration of the risk…………………………………………………………………………………………………………………… 109
Un-seaworthiness………………………………………………………………………………………………………………………. 109
Safety regulations, breach of safety regulations – warranties…………………………………………………….. 109
Intent………………………………………………………………………………………………………………………………………….. 110
Gross negligence………………………………………………………………………………………………………………………… 110
Classification by a class society…………………………………………………………………………………………………… 110
Change of Ownership, management etc…………………………………………………………………………………….. 111
Loss due to ordinary use…………………………………………………………………………………………………………….. 111
Inadequate maintenance……………………………………………………………………………………………………………. 111
Trading limits………………………………………………………………………………………………………………………………. 111
Identification………………………………………………………………………………………………………………………………. 111
The seven Doctrines of Insurance……………………………………………………………………………………………….. 112
The “Proximate Cause”………………………………………………………………………………………………………………. 112
What is loss of hire…………………………………………………………………………………………………………………………… 112
Cargo Insurance……………………………………………………………………………………………………………………………………… 113
Open Policy (OP) in International Trade………………………………………………………………………………………………….. 114
PERILS CLAUSE………………………………………………………………………………………………………………………………….. 114
AVERAGE CLAUSES……………………………………………………………………………………………………………………………. 114
Losses NOT covered by the “all risks” form:……………………………………………………………………………………… 115
War risk insurance………………………………………………………………………………………………………………………………….. 115
WAR RISKS………………………………………………………………………………………………………………………………………… 116
KIDNAP AND RANSOM……………………………………………………………………………………………………………………………. 116
Additional Insurance covers……………………………………………………………………………………………………………………. 119
Electronic equipment……………………………………………………………………………………………………………………….. 119
Delay Insurance………………………………………………………………………………………………………………………………… 119
Excess Letter of Indemnity……………………………………………………………………………………………………………….. 120
Loss of Hire Insurance………………………………………………………………………………………………………………………. 120
Trade Credit Insurance……………………………………………………………………………………………………………………… 120
Trade Disruption Insurance………………………………………………………………………………………………………………. 120
Failure to Honor Arbitration Award Insurance………………………………………………………………………………….. 120
Contract Termination Insurance……………………………………………………………………………………………………….. 120
Drug seizure……………………………………………………………………………………………………………………………………… 120
8b. Cyber Crime, What has been done so-far……………………………………………………………………. 123
Cyber Crime – Cyberworthiness……………………………………………………………………………………………………………….. 123
Saudi Aramco Case:…………………………………………………………………………………………………………………….. 124
Maersk Case:…………………………………………………………………………………………………………………………………….. 125
Clarkson Plc:……………………………………………………………………………………………………………………………….. 125
Facebook data leak:……………………………………………………………………………………………………………………. 125
Simple examples of Human Errors in shipping……………………………………………………………………………. 125
WHAT HAS BEEN DONE SO FAR……………………………………………………………………………………………………………… 127
2014…………………………………………………………………………………………………………………………………………………. 127
2015…………………………………………………………………………………………………………………………………………………. 127
2016…………………………………………………………………………………………………………………………………………………. 127
2017…………………………………………………………………………………………………………………………………………………. 128
2018…………………………………………………………………………………………………………………………………………………. 131
2018…………………………………………………………………………………………………………………………………………………. 133
- P&I Clubs………………………………………………………………………………………………………. 139
The Clubs………………………………………………………………………………………………………………………………………………… 139
The birth of the modern P&I Clubs………………………………………………………………………………………………………….. 140
The Pooling Agreement (Pool Clubs)……………………………………………………………………………………………………….. 141
The usual covers that P&I Clubs provide are:……………………………………………………………………………………. 142
Charterers’ / Traders’ and Shipbrokers’ Liability……………………………………………………………………………………… 142
Charterers’ and Traders’ risks may include:……………………………………………………………………………………… 142
Cargo………………………………………………………………………………………………………………………………………………… 143
Wreck removal…………………………………………………………………………………………………………………………………. 143
Loss of or Damage to the ship…………………………………………………………………………………………………………… 143
Pollution…………………………………………………………………………………………………………………………………………… 143
Traders……………………………………………………………………………………………………………………………………………… 143
Charterers’ Liability as Cargo Owner………………………………………………………………………………………………… 143
Charterers’ P&I War Risks…………………………………………………………………………………………………………………. 143
Additional cover……………………………………………………………………………………………………………………………….. 143
Charterers’ Liability to Hull……………………………………………………………………………………………………………….. 144
SHIPBROKERS’ Cover………………………………………………………………………………………………………………………… 144
Personal injury………………………………………………………………………………………………………………………………….. 144
Salvage & G.A……………………………………………………………………………………………………………………………………. 144
Stowaways……………………………………………………………………………………………………………………………………….. 145
- Classification……………………………………………………………………………………………… 147
Classification Societies……………………………………………………………………………………………………………………………. 147
History……………………………………………………………………………………………………………………………………………………. 148
Flags of convenience or open registries………………………………………………………………………………………………….. 149
IACS: PURPOSE AND OBJECTIVE OF MEMBERS……………………………………………………………………………………….. 151
Classification Societies members of IACS………………………………………………………………………………………………… 152
EQUIVALENT CLASSIFICATION SYMBOLS………………………………………………………………………………………….. 152
- Types of Charter…………………………………………………………………………………………. 155
The main types of Chartering Agreements……………………………………………………………………………………………… 156
- VOYAGE CHARTERS…………………………………………………………………………………………………………………………….. 157
The Characteristics of Voyage Charter, In Brief………………………………………………………………………………… 157
Description of the Agreement………………………………………………………………………………………………………….. 157
Cost Element…………………………………………………………………………………………………………………………………….. 158
Recapitulation of the Cost Element under Voyage Charter………………………………………………………… 159
The Time Element…………………………………………………………………………………………………………………………….. 159
Recapitulation of the Time Element under Voyage Charter……………………………………………………….. 159
The Risk Element………………………………………………………………………………………………………………………………. 160
Consecutive Voyages………………………………………………………………………………………………………………………………. 161
The Characteristics of Consecutive Voyages, In Brief……………………………………………………………………….. 161
Description of the Agreement………………………………………………………………………………………………………….. 161
Contract of Affreightment, (COA)…………………………………………………………………………………………………………… 162
The Characteristics of COA, in Brief………………………………………………………………………………………………….. 162
Description of the Agreement………………………………………………………………………………………………………….. 163
Part Cargoes or Way Cargoes & Parceling……………………………………………………………………………………………… 164
The Characteristics of Part Cargoes and Parceling, In Brief………………………………………………………………. 164
Description of the Agreement………………………………………………………………………………………………………….. 164
Glossary, Abbreviations and Acronyms…………………………………………………………………………………………………… 165
- TIME CHARTERS………………………………………………………………………………………………………………………………….. 166
Time Charter Period………………………………………………………………………………………………………………………………… 166
The Characteristics of Time Charter Period, In Brief…………………………………………………………………………. 166
Description of the Agreement………………………………………………………………………………………………………….. 166
Cost Element…………………………………………………………………………………………………………………………………….. 168
Time Element……………………………………………………………………………………………………………………………………. 169
Risk Element…………………………………………………………………………………………………………………………………….. 170
Payment of hire under Time Charters………………………………………………………………………………………………. 170
Advance hire………………………………………………………………………………………………………………………………. 170
Deductions from hire………………………………………………………………………………………………………………….. 170
Off-hire……………………………………………………………………………………………………………………………………….. 170
Ballast Bonus………………………………………………………………………………………………………………………………. 171
Paramount Clauses…………………………………………………………………………………………………………………….. 172
US Paramount Clause…………………………………………………………………………………………………………………. 172
Time Charter Trip……………………………………………………………………………………………………………………………………. 173
Description of the Agreement………………………………………………………………………………………………………….. 173
The Characteristics of Time Charter Trip, In Brief……………………………………………………………………………… 173
BAREBOAT CHARTER or DEMISE CHARTER……………………………………………………………………………………………… 174
OPTIONAL PARTS OF BARECON 2001…………………………………………………………………………………………. 175
Glossary and Abbreviations used in Time Charters…………………………………………………………………….. 176
Time Risk Element in different Types of Charter……………………………………………………………………………………… 177
- Maritime Markets……………………………………………………………………………………….. 179
Relations between the markets………………………………………………………………………………………………………………. 180
Supply and Demand……………………………………………………………………………………………………………………………….. 180
Liner / Tramp Markets……………………………………………………………………………………………………………………………. 182
Liner Market…………………………………………………………………………………………………………………………………………… 182
Tramps……………………………………………………………………………………………………………………………………………………. 184
The Tramp ships……………………………………………………………………………………………………………………………….. 184
The Tramp markets…………………………………………………………………………………………………………………………… 184
Liquid and Dry Markets…………………………………………………………………………………………………………………………… 185
Tankers’ Market……………………………………………………………………………………………………………………………….. 185
The Tanker ships…………………………………………………………………………………………………………………………. 185
The Tanker markets……………………………………………………………………………………………………………………. 185
Dry Cargo Markets……………………………………………………………………………………………………………………………. 186
The Dry Cargo Ship……………………………………………………………………………………………………………………… 186
The Dry Cargo Market………………………………………………………………………………………………………………… 186
Bulk Carriers’ Market………………………………………………………………………………………………………………………… 186
The Bulk-Carrier ship………………………………………………………………………………………………………………….. 186
The Bulk-Carrier market……………………………………………………………………………………………………………… 187
The Rare Commodities……………………………………………………………………………………………………………….. 187
Break Bulk or Tweendeckers’ Market……………………………………………………………………………………………….. 188
The Tweendecker ship………………………………………………………………………………………………………………… 188
The Tweendeckers’ market………………………………………………………………………………………………………… 188
Containers’ Markets…………………………………………………………………………………………………………………………. 189
The Container ships……………………………………………………………………………………………………………………. 189
The Containers’ market………………………………………………………………………………………………………………. 189
Ro/Ro (Roll on / Roll off)……………………………………………………………………………………………………………………. 190
The Ro/Ro ship……………………………………………………………………………………………………………………………. 191
The Ro/Ro market………………………………………………………………………………………………………………………. 191
Specialized markets………………………………………………………………………………………………………………………………… 192
Reefers……………………………………………………………………………………………………………………………………………… 192
The Reefer ships…………………………………………………………………………………………………………………………. 192
The Reefers’ market……………………………………………………………………………………………………………………. 193
Car Carriers………………………………………………………………………………………………………………………………………. 193
The Car Carrier ship……………………………………………………………………………………………………………………. 193
The Car Carriers’ Market…………………………………………………………………………………………………………….. 193
Live Stock Carriers’ Market……………………………………………………………………………………………………………….. 194
Coasters’ Market………………………………………………………………………………………………………………………………. 194
Feeders…………………………………………………………………………………………………………………………………………….. 195
Barges / Pontoons…………………………………………………………………………………………………………………………….. 195
Tugs………………………………………………………………………………………………………………………………………………….. 195
Heavy-lifts…………………………………………………………………………………………………………………………………………. 195
FLO / FLO ships…………………………………………………………………………………………………………………………………. 195
- Charter Parties & Bimco Documents………………………………………………………………….. 197
In brief……………………………………………………………………………………………………………………………………………………. 197
Charter-party forms……………………………………………………………………………………………………………………………….. 197
Charter-Party terms……………………………………………………………………………………………………………………………….. 198
Representations……………………………………………………………………………………………………………………. 198
Conditions…………………………………………………………………………………………………………………………….. 198
Warranties……………………………………………………………………………………………………………………………. 199
Innominate terms…………………………………………………………………………………………………………………. 199
Frustration of the Charter Party……………………………………………………………………………………………………………… 200
Charter Party and Bills of Lading…………………………………………………………………………………………………………….. 200
Charter Parties and the Chartering Procedures………………………………………………………………………………………. 201
Charter Party Elements…………………………………………………………………………………………………………………………… 202
Important Charter Party Clauses…………………………………………………………………………………………………………….. 202
Lay-Can (Lay-days – Cancelling date)………………………………………………………………………………………………… 202
Cancelling clauses…………………………………………………………………………………………………………………………….. 203
Cesser clause……………………………………………………………………………………………………………………………………. 204
Lien Clauses………………………………………………………………………………………………………………………………………. 205
General Average……………………………………………………………………………………………………………………………….. 206
Rule Paramount (Average)……………………………………………………………………………………………………………….. 207
Paramount clause (Hague-Visby Rules)…………………………………………………………………………………………….. 208
Law and Arbitration/Mediation clause……………………………………………………………………………………………… 209
New Jason Clause……………………………………………………………………………………………………………………………… 211
Both-to-Blame Collision Clause…………………………………………………………………………………………………………. 211
Strike or Lock-Out…………………………………………………………………………………………………………………………….. 212
War Risks………………………………………………………………………………………………………………………………………….. 213
Piracy………………………………………………………………………………………………………………………………………….. 214
Ice Clauses………………………………………………………………………………………………………………………………………… 215
13b. N.Y.P.E. 2015, Commentary………………………………………………………………………………… 217
13c. BARECON 2017, Commentary……………………………………………………………………………… 233
13d Bunker Terms 2018 by BIMCO, Commentary……………………………………………………………. 237
The purpose for the revised “Bunker Terms 2018”………………………………………………………………………………….. 237
Bunker Terms 2018, Standard Bunker Terms and Conditions Bimco 2018……………………………………………… 238
Clause 1 – Definitions………………………………………………………………………………………………………………………… 238
Clause 2 – Specifications/Grades/Quality…………………………………………………………………………………………. 238
Clause 3 – Quantities/Measurements………………………………………………………………………………………………. 238
Clause 4 – Sampling………………………………………………………………………………………………………………………….. 239
Clause 5 – Delivery……………………………………………………………………………………………………………………………. 239
Clause 6 – Documentation……………………………………………………………………………………………………………….. 239
Clause 7 – Price………………………………………………………………………………………………………………………………… 239
Clause 8 – Payment………………………………………………………………………………………………………………………….. 239
Clause 9 – Claims………………………………………………………………………………………………………………………………. 239
Clause 10 – Risk/Title………………………………………………………………………………………………………………………… 240
Clause 11 – Compliance with Laws and Regulations………………………………………………………………………….. 240
Clause 12 – Sanctions Compliance Clause………………………………………………………………………………………… 240
Clause 13 – Anti-Corruption Clause………………………………………………………………………………………………….. 241
Clause 14 – Indemnity………………………………………………………………………………………………………………………. 241
Clause 15 – Liability………………………………………………………………………………………………………………………….. 241
Clause 16 – Force Majeure……………………………………………………………………………………………………………….. 241
Clause 17 – Termination…………………………………………………………………………………………………………………… 242
Clause 18 – Pollution………………………………………………………………………………………………………………………… 242
Clause 19 – Drugs and Alcohol Policy……………………………………………………………………………………………….. 242
Clause 20 – Confidentiality……………………………………………………………………………………………………………….. 242
Clause 21 – Third Party Rights…………………………………………………………………………………………………………… 242
Clause 22 – Assignment……………………………………………………………………………………………………………………. 242
Clause 24 – Dispute Resolution Clause……………………………………………………………………………………………… 242
Clause 25 – Notices…………………………………………………………………………………………………………………………… 243
Clause 26 – Entire Agreement and Priority of Terms………………………………………………………………………… 243
Annex A (Election Sheet)…………………………………………………………………………………………………………………… 243
In Practice…………………………………………………………………………………………………………………………………………. 243
In Brief……………………………………………………………………………………………………………………………………………………. 245
Bills of Lading F
- Bills of Lading…………………………………………………………………………………………….. 245
orms………………………………………………………………………………………………………………………………. 248
Way Bill…………………………………………………………………………………………………………………………………………….. 249
Cargo Receipts………………………………………………………………………………………………………………………………….. 251
The Functions of the Bills of Lading…………………………………………………………………………………………………………. 251
The Commercial Significance of Bills of Lading……………………………………………………………………………………….. 252
The High Commercial Value of a B/L…………………………………………………………………………………………………. 254
Other Aspects of the Commercial Significance of B’s/L…………………………………………………………………….. 255
Clean Bills of Lading. (COB)…………………………………………………………………………………………………………………….. 255
Ad Valorem Bills……………………………………………………………………………………………………………………………………… 256
Significance of Date / Place…………………………………………………………………………………………………………………….. 256
Letters of Indemnity LOI………………………………………………………………………………………………………………………….. 257
Signing the Bills of Lading……………………………………………………………………………………………………………………….. 257
International Rules and usual Clauses of Bills of Lading………………………………………………………………………….. 259
Hague Rules & Hague Visby Rules…………………………………………………………………………………………………….. 259
General Paramount Clause……………………………………………………………………………………………………………….. 260
Hamburg Rules 1978………………………………………………………………………………………………………………………………. 261
Rotterdam Rules 2009……………………………………………………………………………………………………………………………. 261
Entry into force and ratifications………………………………………………………………………………………………………. 262
Bills of Lading in sets………………………………………………………………………………………………………………………………. 262
Bills of Lading and the Charter Party………………………………………………………………………………………………………. 263
Bills of Lading and the Letter of Credit……………………………………………………………………………………………………. 264
Bills of Lading & Chartering Procedures………………………………………………………………………………………………….. 264
Clauses usually contained in the “conditions of carriage” (NON-Liner)…………………………………………………… 265
Elements contained in Bills of Lading……………………………………………………………………………………………………… 265
Historical Facts……………………………………………………………………………………………………………………………………….. 266
ELECTRONIC BILLS OF LADING………………………………………………………………………………………………………………… 266
BIMCO Electronic Bills of Lading Clause……………………………………………………………………………………………. 269
Electronic Data Interchange and Bills of Lading………………………………………………………………………………… 270
Authenticity and signature:………………………………………………………………………………………………………… 270
Electronic Bills of Lading Systems……………………………………………………………………………………………………… 271
- “E-title”…………………………………………………………………………………………………………………………………………. 275
The today’s (Summer 2018) remarks by the industry……………………………………………………………………….. 276
- Dispute resolution: Litigation – Arbitration – Mediation…………………………………………….279 A. Litigation:…………………………………………………………………………………………………………………………………………279 B.Arbitration:………………………………………………………………………………………………………………………………………….279 C.Mediation:………………………………………………………………………………………………………………………………………….. 280
How Arbitration works……………………………………………………………………………………………………………………… 280
The Piraeus Association for Maritime Arbitration (“PAMA”)…………………………………………………………….. 282
Arbitration and Charter Parties-Bills of Lading (Arbitration clauses)…………………………………………………. 282
Arbitration Proceedings……………………………………………………………………………………………………………………. 284
Arbitration awards, enforcement……………………………………………………………………………………………………… 284
How Mediation works………………………………………………………………………………………………………………………. 285
A successful Mediation should:………………………………………………………………………………………………………… 286
“Executive Tribunal” (or “MINI-TRIAL”)…………………………………………………………………………………………….. 287
- Chartering Procedure……………………………………………………………………………………. 289
Parties involved in the chartering procedure…………………………………………………………………………………………… 290
- The Pre-Negotiation stages………………………………………………………………………………………………………… 290
Generic Information…………………………………………………………………………………………………………………………. 290
Indicators such as Baltic Dry Index (BDI)…………………………………………………………………………………………… 292
Specific Information…………………………………………………………………………………………………………………………. 293
Cargo Orders………………………………………………………………………………………………………………………………. 293
Position Lists……………………………………………………………………………………………………………………………….. 294
- The Negotiations’ Stage……………………………………………………………………………………………………………… 295
Firm Offers……………………………………………………………………………………………………………………………………….. 296
Elements Usually Contained in A Firm Offer……………………………………………………………………………….. 298
Counter offers………………………………………………………………………………………………………………………………….. 301
Subjects……………………………………………………………………………………………………………………………………………. 302
Commonly accepted Subjects:……………………………………………………………………………………………………. 302
… in brief ………………………………………………………………………………………………………………………………………….. 303
Recapitulation (Recap) of Main Terms………………………………………………………………………………………… 304
Details / Lifting of Subjects……………………………………………………………………………………………………………….. 304
Agreement on Details…………………………………………………………………………………………………………………. 304
Lifting of Subjects……………………………………………………………………………………………………………………….. 305
Recapitulation of fixture…………………………………………………………………………………………………………………… 305
- The period of follow-up. (Post-Fixture)………………………………………………………………………………………… 306
The procedures of chartering dry cargo ships – in brief…………………………………………………………………….. 306
Example of Recap of Fixture on a time charter agreement…………………………………………………………. 306
Flow of negotiations – the procedure (Chart)………………………………………………………………………………………….. 311
- Chartering of Tanker Ships……………………………………………………………………………… 313
The Ship………………………………………………………………………………………………………………………………………………….. 313
Vetting – Approvals by Major Oil Companies…………………………………………………………………………………………… 314
The meaning of “approvals” or “approved”……………………………………………………………………………………… 315
The decision……………………………………………………………………………………………………………………………….. 316
Types of Tanker Ships……………………………………………………………………………………………………………………………… 316
Tanker Ships according to size………………………………………………………………………………………………………………… 318
Offshore Vessels (Drilling/Supporting/Assisting)…………………………………………………………………………………….. 319
Accommodation Unit/Floatel……………………………………………………………………………………………………… 320
Anchorhandling Tug – AHT………………………………………………………………………………………………………….. 320
Crane and Construction Vessel/Unit…………………………………………………………………………………………… 320
Diving Support Vessel…………………………………………………………………………………………………………………. 320
Drilling Barge………………………………………………………………………………………………………………………………. 320
Drilling Rig…………………………………………………………………………………………………………………………………… 320
Drilling Tender……………………………………………………………………………………………………………………………. 320
Jack-up -……………………………………………………………………………………………………………………………………… 320
Offshore Service Vessels…………………………………………………………………………………………………………….. 320
Production Ship………………………………………………………………………………………………………………………….. 321
Production Unit………………………………………………………………………………………………………………………….. 321
Seismic ship………………………………………………………………………………………………………………………………… 321
Semi-submersible……………………………………………………………………………………………………………………….. 321
Stand-by Vessel…………………………………………………………………………………………………………………………… 321
Submersible………………………………………………………………………………………………………………………………… 321
Supply Ship…………………………………………………………………………………………………………………………………. 321
Tension Leg Platform………………………………………………………………………………………………………………….. 321
Pipelines…………………………………………………………………………………………………………………………………………… 321
Tank Cleaning…………………………………………………………………………………………………………………………………………. 323
The Cargo……………………………………………………………………………………………………………………………………………….. 323
Crude Oil:………………………………………………………………………………………………………………………………………….. 323
Fuel Oil:…………………………………………………………………………………………………………………………………………….. 323
Gas Oil / Diesel Oil:…………………………………………………………………………………………………………………………… 324
Gasoline……………………………………………………………………………………………………………………………………………. 324
Naphtha……………………………………………………………………………………………………………………………………………. 324
Liquid Petroleum Gas (LPG):……………………………………………………………………………………………………………… 324
Liquefied natural Gas (LNG):…………………………………………………………………………………………………………….. 324
Kerosene:…………………………………………………………………………………………………………………………………………. 324
Residues:………………………………………………………………………………………………………………………………………….. 324
Lubricants:………………………………………………………………………………………………………………………………………… 324
Bitumen:…………………………………………………………………………………………………………………………………………… 324
Chemicals…………………………………………………………………………………………………………………………………………. 325
Fresh Water / Wine / Olive Oil:…………………………………………………………………………………………………………. 325
The Tanker Market…………………………………………………………………………………………………………………………………. 325
Tanker Commentaries (Examples).…………………………………………………………………………………………………… 328
Dirty Tankers East of Suez Commentary…………………………………………………………………………………………………. 328
Dirty Tankers West of Suez Commentary………………………………………………………………………………………………… 329
Clean Tankers Commentary……………………………………………………………………………………………………………………. 329
Freight fixing system, “Worldscale………………………………………………………………………………………………………….. 330
Claims due to Hedging……………………………………………………………………………………………………………………… 332
The London Tanker Brokers’ Panel Ltd……………………………………………………………………………………………………. 333
AVERAGE FREIGHT RATE ASSESSMENTS – AFRA………………………………………………………………………………… 333
Clean Single Voyage Assessments…………………………………………………………………………………………………….. 334
AFRA…………………………………………………………………………………………………………………………………………………. 334
Example of Clean single voyage assessments…………………………………………………………………………………… 335
- Sale & Purchase Market………………………………………………………………………………… 337
In Brief……………………………………………………………………………………………………………………………………………………. 337
New Buildings…………………………………………………………………………………………………………………………………………. 338
Typical Process to order a newbuilding…………………………………………………………………………………………….. 338
Disputes……………………………………………………………………………………………………………………………………………. 340
Cancellation for Delay………………………………………………………………………………………………………………………. 340
Second Hand S&P Procedures…………………………………………………………………………………………………………………. 342
PRE- PURCHASE SURVEY REPORTS……………………………………………………………………………………………………. 345
MOA…………………………………………………………………………………………………………………………………………………. 346
Bill of Sale…………………………………………………………………………………………………………………………………………. 347
Exchange of Documents on Closing/Delivery……………………………………………………………………………………. 347
Documentation………………………………………………………………………………………………………………………………… 347
Disputes……………………………………………………………………………………………………………………………………………. 349
Ship Financing………………………………………………………………………………………………………………………………………… 351
EQUITY FINANCING…………………………………………………………………………………………………………………………… 351
LEASING……………………………………………………………………………………………………………………………………………. 351
SHIPPING FINANCE AND BIMCO……………………………………………………………………………………………………….. 352
- Voyage Estimation……………………………………………………………………………………….. 355
In Theory,……………………………………………………………………………………………………………………………………………….. 355
What is the voyage estimation?……………………………………………………………………………………………………….. 355
Who needs to estimate the freight?…………………………………………………………………………………………………. 356
Principles of freight Calculations………………………………………………………………………………………………………. 356
Factors to be considered………………………………………………………………………………………………………………….. 357
Factors related to the state of the market………………………………………………………………………………….. 357
Factors related to the ship………………………………………………………………………………………………………….. 358
Factors related to the specific employment……………………………………………………………………………….. 358
Factors related to the contracting parties…………………………………………………………………………………… 358
Legal and practical aspects concerning freight…………………………………………………………………………………. 359
When is the freight earned?……………………………………………………………………………………………………….. 359
When is the freight payable?……………………………………………………………………………………………………… 359
Charter Parties and Freight Payment………………………………………………………………………………………….. 360
Freight collection………………………………………………………………………………………………………………………… 360
Dead-freight……………………………………………………………………………………………………………………………….. 360
“Results” obtainable from a voyage calculation……………………………………………………………………………….. 361
Steaming time…………………………………………………………………………………………………………………………….. 361
Time at Ports…………………………………………………………………………………………………………………… 361
Total period needed to complete the employment………………………………………………………… 361
Quantity of cargo, that can be accommodated………………………………………………………………. 362
Gross / Net (freight) income…………………………………………………………………………………………… 362
Quantity of bunkers to be consumed … Expenses for Bunkers……………………………………….. 362
Total expenses………………………………………………………………………………………………………………… 363
Gross / Net profit / (loss)………………………………………………………………………………………………… 363
Indicators………………………………………………………………………………………………………………………………………….. 363
Useful Tips………………………………………………………………………………………………………………………………………… 364
Tools needed to perform Voyage Estimation……………………………………………………………………………………. 364
Calculations according to the proposed Type of Charter………………………………………………………………….. 365
Voyage Charter Calculations……………………………………………………………………………………………………….. 365
Consecutive Voyages and Contracts of Affreightment……………………………………………………………….. 366
Part Cargoes, or Way-Cargoes……………………………………………………………………………………………………. 366
Liner Calculations……………………………………………………………………………………………………………………….. 366
Reefer Calculations…………………………………………………………………………………………………………………….. 367
Time Charter Calculations…………………………………………………………………………………………………………… 367
Tanker Calculations………………………………………………………………………………………………………………………. 368
Tanker Voyage Estimation……………………………………………………………………………………………………………………… 368
Worldscale Rate………………………………………………………………………………………………………………………….. 368
Defining the costs of the carrier……………………………………………………………………………………………………………… 370
Fixed Costs………………………………………………………………………………………………………………………………….. 370
Voyage Charter…………………………………………………………………………………………………………………………… 371
Brief Layout of calculations…………………………………………………………………………………………………………………….. 375
QUICK VOYAGE ESTIMATION ON A SPOT VESSEL……………………………………………………………………………… 375
VOYAGE ESTIMATION TO DEFINE THE T/C EQUIVALENT…………………………………………………………………… 376
Voyage Estimation Example……………………………………………………………………………………………………………… 376
- Laytime Calculation……………………………………………………………………………………… 379
Introduction / Definitions……………………………………………………………………………………………………………………….. 379
Laytime definition…………………………………………………………………………………………………………………………………… 381
Laytime and Traders……………………………………………………………………………………………………………………………….. 381
Demurrage definition……………………………………………………………………………………………………………………………… 381
Dispatch definition. (Dispatch OR Despatch)…………………………………………………………………………………………… 381
Types of “Laytime” agreements………………………………………………………………………………………………………………. 382
A.Predefined Laytime. An agreed number of days or hours. (for example: 3 days loading/ 2 days discharging, or 5 total days for loading and discharging). The predefined time is usually expressed in days or hours……….. 382
B. Calculable Laytime. A fixed rate of loading or discharging (Xtons per day, therefore the number of days and/or hours and/or minutes of Laytime allowed for loading or discharging is the result of the division of the total tons loaded with the rate of loading or discharging)…………………………………………………………………………………………………………………. 382
C. Undefined Laytime. Occasionally, the Laytime allowed is less specific and expressed as “Customary Quick Dispatch” (CQD), or ‘’as Fast As she (the ship) Can receive (load) or deliver (discharge)’’ (FAC), or ‘’Custom Of the Port’’ (COP) or the combination FAC/COP. The term that is more often used nowadays is the CQD……………………………. 382
Documents needed for calculating the Laytime………………………………………………………………………………………. 382
Statement of Facts (SOF)………………………………………………………………………………………………………. 382
Notice of Readiness (NOR)……………………………………………………………………………………………………. 382
Charter Party (CP)…………………………………………………………………………………………………………………. 383
Calculating Laytime procedures, in brief…………………………………………………………………………………………………. 383
Calculating /Defining Laytime Allowed……………………………………………………………………………………………………. 383
A. Pre – defined Laytime calculations. By the term pre-defined Laytime we shall mean that the Laytime allowed either for loading or for discharging is agreed as a number of days or hours allowed for loading and/or discharging. As an example, the agreement might be the following:………………………………………………………………………………………………….. 383
B. Calculable Laytime. By the term Calculable Laytime we shall mean that the Laytime allowed, either for Loading or for Discharging, is agreed in a form of a rate of tons (or cubic meters) per day or a rate of tons per hold/hatch etc./per day. 384
Loading or Discharging Rate per day………………………………………………………………………………. 384
Loading or Discharging Rate per Hatch per Day……………………………………………………………… 384
Loading or Discharging Rate per Gang per Day……………………………………………………………….. 384
Loading or Discharging Rate per Hatch per Day basis Biggest Hold………………………………… 385
The Shipping Practice point of view……………………………………………………………………………………………. 385
Reversible Laytime Calculations……………………………………………………………………………………………………….. 385
Undefined (Indefinite) Laytime…………………………………………………………………………………………………………. 386
COP (Custom of the Port)……………………………………………………………………………………………………… 386
CQD (Customary Quick Dispatch)…………………………………………………………………………………………. 386
FAC (Fast As Can)………………………………………………………………………………………………………………….. 386
FACCOP………………………………………………………………………………………………………………………………… 386
Liner Terms…………………………………………………………………………………………………………………………………. 387
No Demurrage / No Dispatch……………………………………………………………………………………………………… 387
Assessing the commencement of Laytime………………………………………………………………………………………………. 387
“Arrived” Ship / the “Notice of Readiness” (NOR)…………………………………………………………………………….. 388
Port / Berth Charter Parties……………………………………………………………………………………………………………… 388
Notice Time………………………………………………………………………………………………………………………………………. 389
Inspections……………………………………………………………………………………………………………………………………………… 389
Time waiting for berth……………………………………………………………………………………………………………………… 390
Time Used Before Commencement of Laytime………………………………………………………………………………… 390
Turn Time…………………………………………………………………………………………………………………………………………. 390
Allowing eventual Laytime Interruptions………………………………………………………………………………………………… 391
Exceptions (in time counting)……………………………………………………………………………………………………………. 391
Charter Party Clauses Connected to time counting…………………………………………………………………………………. 392
General Strike clause…………………………………………………………………………………………………………….. 392
General Ice Clause………………………………………………………………………………………………………………… 392
War Risks Clause…………………………………………………………………………………………………………………… 392
Shifting Time…………………………………………………………………………………………………………………………. 392
Workable or Available Hatch………………………………………………………………………………………………… 392
Laytime calculations and Voyage Estimations………………………………………………………………………………………… 393
Calculating the Laytime………………………………………………………………………………………………………………………….. 393
Tools…………………………………………………………………………………………………………………………………………………. 393
- Statement of Facts (SOF)………………………………………………………………………………………………… 394
Recapitulation of steps needed in Calculating the Laytime…………………………………………………………………….. 395
Calculating the Demurrage / Dispatch……………………………………………………………………………………………………. 396
Demurrage……………………………………………………………………………………………………………………………………….. 396
Payment of demurrage………………………………………………………………………………………………………………. 396
Dispatch (or Despatch).…………………………………………………………………………………………………………………….. 397
Example of Lay-Time Calculation / Time Sheet……………………………………………………………………………………….. 397
- Strategies in Shipping……………………………………………………………………………………. 399
KNOWLEDGE OF THE MARKET……………………………………………………………………………………………………………….. 399
RISKS………………………………………………………………………………………………………………………………………………………. 400
The risk evaluation……………………………………………………………………………………………………………………………. 400
Time risk…………………………………………………………………………………………………………………………………………… 400
Risk related to the perils of the sea………………………………………………………………………………………………….. 400
Financial risk…………………………………………………………………………………………………………………………………….. 400
Risk assessment. Counter Party Risks……………………………………………………………………………………………….. 400
DECISION MAKING………………………………………………………………………………………………………………………………….. 401
Ship-management Strategies……………………………………………………………………………………………………………. 401
Ship purchasing Strategies……………………………………………………………………………………………………………….. 402
New buildings VS second hand ships………………………………………………………………………………………………… 402
Scrapping………………………………………………………………………………………………………………………………………….. 402
Lay-up………………………………………………………………………………………………………………………………………………. 403
SPREADING THE RISK AMONG DIFFERENT MARKETS……………………………………………………………………….. 403
CORPORATE CHARTERING MODELS / FLEETS OF SHIPS……………………………………………………………………. 403
HEDGING TOOLS…………………………………………………………………………………………………………………………………….. 404
Hedging and Indexes………………………………………………………………………………………………………………………… 404
Freight derivatives……………………………………………………………………………………………………………………………. 405
CONCLUSION………………………………………………………………………………………………………………………………………….. 407