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Freight rates for Containers would be on volume basis. ... Harbor dues. Charterer. Charterer. Owner. Fuel Oil. Charterer. Owner or Charterer. Owner ... – PowerPoint PPT presentation

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Title: 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 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.

  • 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.

  • 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
  • - Nature of Cargo being shipped (Value of
    goods, Perishable etc.,)

  • Freight rates for Bulk Carriers and Tankers would
    be on tonnage basis.
  • Freight rates for Containers would be on volume
  • Both Tonnage and Volume data would be used to
    arrive at Freight rates.

  • 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
  • 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

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
  • 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.

  • 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
  • Cargo handling costs
  • Cost for Stowing of Cargo
  • Claims

Cost Comparison
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
  • 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
  • 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
  • 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
  • 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
  • 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

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

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
  • 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
  • Shipping Corporation of India
  • Barber Shipping
  • Great Eastern Shipping
  • Essar Shipping
  • Sanmar Shipping
  • Varun Shipping