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Dry Cargo Charterparties agreement - Time charters & voyage charters

Seller and buyers worldwide – whether they deal in grain, soybean, sugar, iron ore, coal, cement, steel coils, black oil, chemicals, and so many other dry and wet products, need staff that are well versed in ocean transport, ports, stevedoring, cargo insurance, and so much more. They also require traders – who are conversant in the commodity and global markets - and can enter into sale and purchase contracts under the best terms.

For example, International Materials, Inc. is a large trading company located in Boca Raton, Florida. They provide cement, slag, steel products, and many other bulk materials to companies located in the U.S.A. and all around the world. As an example, they may sell the cargo to one of their customers as follows: “About 35,000 metric tons clinker in bulk CIF Savannah”.

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In another instance The Aluminum Company of America (ALCOA) may have recently purchased 30,000 metric tons of bauxite from its supplier in Port Kamsar. The terms of sale are "FOB Port Kamsar." There is something common to both transactions. The seller or buyer must enter the shipping market and charter a vessel to carry the cargo to the destination. In the first case, International Materials, as the CIF seller, will typically charter the tonnage. In the second case, Alcoa, as FOB buyer, will typically charter the vessel.

In the examples above, the CIF seller and the FOB buyer will likely charter a vessel. The Contract between one party who has control of a ship and another party who wishes to make use of the ship is known as a Charterparty. While choosing a charter party, there are choices such as time charters and voyage charters.

Time Charters
: Under a time charter party, the time charterer typically hires a vessel's services for a specified period, for example, "about 90 days". Under the time charter concept, the time charterer pays to hire at a daily rate for the use of the vessel. Most ordinary delays to the vessel are for the time charterer's account.

The shipowner pays the operating costs of the vessel. It includes crew, maintenance and repairs, stores, hull and machinery, and P and I insurance, etc. The time charterer pays hire, directs the vessel's commercial operations, and pays all voyage expenses. These include bunkers, port charges, canal dues, and cargo handling expenses. There are numerous various forms, but to give a taste of dry cargo time charters, two types that are commonly used are: -
These two Charters differ substantially in their wording. Generally speaking, the NYPE terms are more advantageous to the Charterer, while BALTIME favors the Owner. Various clauses may be amended or added to for any one fixture. There are countless different c/p forms, several of which are particular to a certain Charterer or trade. On each occasion, the Master must carefully check the terms and conditions of the c/p in use such as:
  1. Description of the ship, including speed and consumption, and advise his commercial operator of any errors or inaccuracies. The Master is to conform as closely as possible to the charter party description, and must alert his commercial operator and management office if the vessel is unable to comply, giving reasons.

  2. Performance during the Charter must be monitored. The Master is to clarify the governing fair weather clause in the charter party. He is to ensure that any bad weather experienced correctly and accurately logged. Weather maps/reports are to be retained to settle disputes due to fair weather clause was exceeded.

  3. Similarly cargo performance, where appropriate, must also be monitored (e.g., in cases of self-discharge)

  4. There may be a deduction for fuel used in crew service. It is particularly so in NYPE and includes power consumed in galleys, air conditioning, etc. Usually, an allowance is agreed upon when making the Charter, but the Master may have to calculate and prove such a figure.

  5. When on time charter, bunkers (and water figures where required) at the start and end of a Charter must be taken and agreed with Charterers. These figures must agree with consumption figures during the Charter, as otherwise, there may be a claim against Owners. The Master must check for a provision of on-and off-hire surveyors' attendance.

  6. The Master must look to see what the Off-Hire conditions are. In some time charters, the vessel will go off-hire immediately; there is a break in service. In contrast, others may give the Owner a time allowance before off-hire commences (e.g., 3 hours of stoppage before vessel goes off-hire) or give the Owner a time allowance every 6 or 12 months maintenance purposed (e.g., 48 hours every 12 months).

  7. In the port there may be a proportional loss of hire if, for example, one or more hatches are not available to Charterers because of their state of cleanliness, crane breakdown, etc.

  8. The Master must ensure that any deviations from the direct course between ports are brought to the attention of his commercial operator so that he may take the matter up with Charterers directly.

Voyage Charters

Under the voyage charter party the voyage charterer typically contracts the vessel's services for one voyage, for example, "loading at Iskenderun, Turkey for discharge at Savannah". The vessel's Owner is paid freight to carry the cargo from one port to another. The Charter ends when the cargo is discharged. Under the voyage charter party, ordinary delays to the vessel during the sea passage are for the ship owner's account.

Other delays – many delays that can occur in port - are allocated by the Contract. Some delays may be for the Owner's account and others for the voyage charterer's account. To achieve this end, the voyage charterer, by paying freight, obtains not only the basic transportation service but also an agreed amount of laytime.

Laytime is the agreed time that the voyage charterer may keep the vessel at the loading and discharging place without having to pay an additional sum of money. If there are delays and the laytime is exceeded, an additional amount called "demurrage" is paid at the agreed per day demurrage rate. There is so much more to learn about charter parties and chartering. However, understanding ocean transport is an integral part of international trade. Sales contracts for commodities almost always have detailed language about the required transportation. The bottom line is that a seller or buyer who can obtain transportation services on better terms and conditions can sell or buy cargos more economically and outdo its competitors!

Voyage charters come in many forms, and are usually based on a particular trade. The Master must particularly look out for:
  1. Loading tonnage’s and any draft restrictions at load and discharge ports.
  2. The ship’s ability to load the required quantity.
  3. Safe access to the load and discharge ports and berths.
  4. Tendering N.O.R and notices required
  5. Laytime details and all terms and conditions contained in the c/p and additional clauses.
Under a voyage Charter, all of the Charterer's instructions will be received on board via the commercial operator. Any instructions not received through these channels must be reported to the operator immediately.

Some sample Voyage Charters can be found below: AmWelsh 93 , Gencon 94 , Graincon, etc.

Major commodity traders:
  1. Cargill is one of the largest privately held firms in the United State and is a producer and distributor of agricultural products such as grain, sugar, refined oil, cotton, etc.

  2. The Archer Daniels Midland Company (ADM) is an American global food and commodities trading company located in Chicago with offices throughout the U.S.A. and abroad.

  3. International Materials, Inc. (IMI) is a worldwide provider of cement, wallboard, natural gypsum, bauxite, iron ore and iron fines, clinker, coal, petcoke, slag, among other materials.

  4. Louis Dreyfus Company B.V. (LDC) is a global merchant firm that is involved in agriculture, food processing, international shipping, and finance. The company also owns and manages ocean vessels.

Some Reputed Commercial Vessel Operators:
  1. Liberty Maritime Corporation Liberty Maritime Corporation is a Long Island-based commercial shipping company that operates the U.S. flag and various foreign flag vessels. They service the U.S. Jones Act trade and carry many cargos on behalf of the U.S. military.

  2. The Foremost Group is a privately held family-run shipping company based in New York City and operates globally, chartering vessels to companies in the dry bulk shipping industry. Its fleet includes some of the world's largest bulk carriers.

  3. Navios Maritime Holdings, Inc. is a global seaborne shipping and logistics company focused on the transport and transshipment of dry bulk commodities including iron ore, coal, and grain. The company is based in Greece and has offices in New York.

  4. Clipper Group is a global company with an office in Houston. Clipper has taken delivery of more than 100 newly-built bulk carriers in the past decade. They mostly operate Handysize, Supramax, and Ultramax vessels.

  5. Oldendorff Carriers is a longstanding family-owned shipping company dating back generations with headquarters in Germany. It operates around 700 ships worldwide and also has offices in Connecticut. Oldendorff Carriers are one of the world's largest dry bulk shipping companies, shipping and transhipping over to 300 million tons of bulk cargo every year.

  6. Ultrabulk owns a massive fleet and is a Danish company with offices worldwide including Stamford, Connecticut. They offer services in five segments namely Parcel, MPP, Handysize, Supramax and Panamax segments.

  7. Genco Shipping and Trading is a publicly-traded company with offices in Manhattan, Singapore, and Denmark. They are a leading provider of international seaborne dry bulk transportation services of iron ore, coal, grain, steel products, etc.

Our additional pages contain somewhat larger lists of resources where you can find useful informations

  1. Tanker Time Charters

  2. Specific information such as, parties to the contract, where and when the vessel will be delivered, rates of hire, general permitted cargoes, general trading range etc. ....

  3. Documentation & notices

  4. When a vessel is on Time Charter, bunkers and the majority of port services and costs, etc., are to the account of Time Charterers. However, should Time Charterers default on the payment, then these charges may fall on Owners, and there will be a serious risk of the vessel being arrested for debts incurred by the Time Charterer.

  5. Function of bill of lading

  6. The Bill of Lading is one of the most important documents that the Master will sign and therefore strict controls on how it is issued are required. Although the B/L is usually drafted by the Shipper and presented to the Master for signature, it is an Owners document. One of its three functions is to act as a receipt for the cargo, so the Master must make sure that the quantity and description of the goods are accurate as he will be expected to deliver the same to the Receiver.

  7. Role of ship classification society

  8. Classification societies verify the structural strength and integrity of the ship’s hull and its fittings, as well as the reliability and function of the propulsion steering systems, power generation, other systems on the ship....

  9. Seaworthiness for cargo ship, international navigational condition & procedure for Insurance claim

  10. Insurance premiums amount to a very large proportion of the ship’s running costs. While the Owner insures his ship against certain risks and may present a claim which will recuperate at least part of his losses, the effect of submitting many claims will increase the insurance premiums for the next year. It is therefore in everyone's interest to ensure that risks are not taken, that the ship operates safely and that accidents and incidents are avoided....

  11. Masters obligation to follow charterers routeing advise - The Hill Harmony case

  12. The Hill Harmony case involved a vessel on time charter trading trans-Pacific. The Charterers had engaged a weather routing service, and the Master was advised to take the shortest northern great circle route; however, he deemed it safer to take a more southerly rhumb line route. The Charterers were eventually able to prove that the great circle route had been suitable for safe navigation and that the extra steaming time was for the Owners account....

  13. Ship agency services
    A ship’s agent works on the front lines and there might involve an unlimited number of issues in port. The agent must work towards solving these problems. An agent needs to learn a lot fast about ships and cargo.

  14. Role of a ship management company
    Ship management companies are located in the world's maritime centers. Many companies manage large fleets on behalf of numerous ship owners. Many of the larger management companies also own vessels. Essentially, the decision to outsource a ship management function is a financially driven one. In most cases, outsourcing of ship management services means that the shipowner can conduct business at a reduced cost, primarily due to reduced in-house staff and resources.

  15. Ship finance considerations
    Ship finance is somewhat different from other asset-based lendings such as real estate finance. After all, shipping business earnings can be quite volatile and, therefore, less predictable. Additionally, the collateralized asset (the ship) is extremely mobile. The traditional method for ship finance was private resources.

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DG cargo handling Procedures & Guidelines
Safety in engine room Standard procedures
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