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CHARTERINGDinesh N. Kutty
Post fixtureoperations
Financial settlement
CHARTERING
Fixture Negotiation & Finalization
C/P Negotiation & Finalization
Abbreviations
Chartering Abbreviations• APS
• SHINC & SHEX
• DLOSP
• ETA, ETC & ETD
• SWAD & FWAD
Chartering Abbreviations• APS - ARRIVAL PILOT STATION.
• SHINC & SHEX - SUNDAYS AND HOLIDAYS INCLUDED.SUNDAYS AND HOLIDAYS EXCLUDED.
• DLOSP- DROPPING LAST OUTWARD SEA PILOT
• ETA, ETC & ETD- EXPECTED TIME OF ARRIVALEXPECTED TIME OF COMPLETIONEXPECTED TIME OF DEPARTURE
• SWAD & FWAD- SALT WATER ARRIVAL DRAFTFRESH WATER ARRICAL DRAFT
Chartering Abbreviations• ILOW
• BIMCO & IMB
• MOLOO & MOLCO
• OBQ
• ROB
Chartering Abbreviations• ILOW- IN LIEU OF WEIGHT
• BIMCO & IMB- BALTIC & INTERNATIONAL MARITIME COUNCILINTERNATIONAL MARITIME BUREAU
• MOLOO- MORE OR LESS IN OWNERS OPTION
• OBQ- ON-BOARD QUANTITY
• ROB- REMAINING ON BOARD
FIXTURE NEGOTIATION
OFFERENQUIRY COUNTERFIXTURE
CONCLUSION
VOYAGE
CARGO
PARCEL SIZE
LOADPORT
DISPORT
LAYDAYS
LAYCAN
TIME CHARTERING
TYPE OF SHIP
DURATION
TRADING AREA
CARGO
SPL.REQUIREMENTS
VOYAGE
DESCRIPTION-SHIP
PARCEL SIZE
FREIGHT
DEMURRAGE
C / PARTY.
TIME CHARTER
DESCRIPTION
T/C PARTICULARSSPEED
BUNKER CONSUMP.
PERIOD – RATE
EXCEPTIONS -CP
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CHARTERING NEGOTIATIONS- IMPORTANT ASPECTS
1. FIRM OFFER
2. COUNTER (there could be one/two or several counters exchanged)
3. RECAP OF TERMS (FIXED ON SUBJECTS)
4. CLEAN RECAP (FINAL FIXTURE RECAP)
5. EXECUTION OF CHARTER-PARTY.
TWO GOLDEN RULESFOR CHARTERING PRACTITIONERS
• ALWAYS ACT WITHIN YOUR AUTHORITY(working within one’s warranty of authority)
• NEVER TO OFFER SAME SHIP TO MORE THAN ONE CHARTERER AT A GIVEN POINT OF TIME.
SUBJECTS1. SUBJECT STEM.
2. SUBJECT SUPPLIERS.
3. SUBJECT RECEIVERS.
4. SUBJECT CHARTERERS MANAGEMENT APPROVAL.
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FIRM OFFER –VOYAGE CHARTER- A CASE STUDY
(sent 27 August 2009/ 1700 IST)1. VALID : 27 AUGUST 2009 / 1800 HRS IST
2. FOR ACCCOUNT OF: GLENCORE, SINGAPORE
3. NAME OF SHIP: M.V. JAL DHOOT (OWNERS: PANUNION SHIPPING)BUILT: 1997, IMO NO: 83211224CLASS: ABS, DWT: 47352.5LOA: 189 M, BEAM: 30.4 MHOLDS /HATCHES : 5 NOSCRANES: 5 CRANESCRANE SWL : 25 TONNES
4. CARGO DESCRIPTION: COKING COAL IN BULK MIN 45,000 MT MAX. 47,000 MTIN OWNERS OPTION
5. LOAD PORT(S) / BERTH(S): 1 SB/ 1 SP NEW CASTLE, AUSTRALIA (AA)
6. DISPORT(S)/BERTH(S): 1 SB/ 1 SP KAWASAKI OR CHIBA IN CHOPTION
7. LAYDAYS/CANCELLING: 15 SEPT (0001 HRS) – 25 SEPT (2359 HRS)
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FIRM OFFER –VOYAGE CHARTER (Contd…)
8. LOAD RATE: 15000 MT PD WWD SHINC
9. DISCHARGING RATE: 10000 MT PD WWD SHINC
10. FREIGHT: USD. 25 PER MT, FIOST BASIS 1/1
11. DEMURRAGE RATE: USD. 18000 PDPR ( 50 % Despatch)
12. LOAD / DISCH COSTS: FIOST (CHARTERERS ACCOUNT)
13. ADDRESS COMMISSION: 1.25% ADDRESS COMMISSION
14. BROKERAGE: TOTAL 2.5% ( 1.25% per broker)
15. CHARTERPARTY FORM: LATEST GENCON
16. SUBJECTS: ALL SUBJECTS 2 DAYS AFTER FIXING MAIN TERMS.
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COUNTER –VOYAGE CHARTER(sent 27 August 2009/ 1745 IST)
-counter from charterer to owner
COUNTER BASIS ACCEPT / EXCEPT
1. REPLY BY : WITHIN 15 MINUTES
2. NAME OF SHIP: M.V. JAL DHOOT (Does the vessel have AHL?)
3. LAYDAYS/CANCELLING: 15 SEPT (0001 HRS) – 20 SEPT (2359 HRS)
4. DISCHARGING RATE: 15000 MT PD WWD SHINC
6. FREIGHT: USD.20 PER MT, FIOST BASIS 1/1
7. DEMURRAGE RATE: USD. 12000 PDPR ( 50 % despatch)
8. ADDRESS COMMISSION: 2.5 % ON FREIGHT & DEMURRAGE
9. ALL C/P TERMS GENCON 1993 SUB-REVIEW
10. ALL SUBJECTS 3 WORKING DAYS (2 DAYS FOR MAIN TERMS AND 1 DAY FORC/P TERMS)
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COUNTER –VOYAGE CHARTER(sent 27 August 2009/ 1755 IST)
-counter from owner to charterer
COUNTER BASIS ACCEPT / EXCEPT
1. REPLY BY : WITHIN 15 MINUTES
2. M.V. JAL DHOOT HAS AHL. INSPECTED BY AMSA IN MAY 2009
3. FREIGHT: USD.22 PER MT, FIOST BASIS 1/1
4. DEMURRAGE RATE: USD. 15000 PDPR ( 50 % Despatch)
5. SUBJECTS: REPEAT LAST
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CASE STUDY (Contd….)1. CHARTERERS AGREED TO OWNERS LAST COUNTER AND
VESSEL WAS PUT ON SUBJECTS ON MAIN TERMS (SOCHARTERERS SUBS VALID TILL 29 AUGUST 2009 1800 HRSIST).
2. BROKERS PREPARE AND SUBMIT SUBJECTS RECAP.
3. CHARTERERS AND OWNERS EXCHANGE COUNTERS ON C/PTERMS.
4. THE SUBJECTS ARE LIFTED BY CHARTERERS BEFORE EXPIRYOF TIME AND VESSEL IS CLEAN FIXED.
5. BROKERS PREPARE AND SUBMIT CLEAN RECAP.
6. CHARTER-PARTY IS EXECUTED.
DRY CARGO CHARTERING
“TIME CHARTER PARTY”
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MAJOR CLAUSES IN TIME CHARTER-PARTY
“NYPE” POPULAR TIME CHARTER-PARTY FOR DRY CARGO CHARTERING.(Evolved 1913, amended 1921,1931, 1946, 1981 & 1993) – Recommended byBIMCO & FONASBA.
MAJOR CLAUSES
1. PREAMBLE
2. DESCRIPTION OF VESSEL
3. DURATION
4. DELIVERY & RE-DELIVERY
5. ON-HIRE & OFF-HIRE SURVEY
6. DANGEROUS CARGO / CARGO EXCLUSIONS
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MAJOR CLAUSES IN TIME CHARTER-PARTY
7. TRADING LIMITS
8. OWNERS TO PROVIDE
9. CHARTERERS TO PROVIDE
10. CHARTER-HIRE
11. BUNKERS
12. SUPERCARGO
13. WAR RISK CLAUSE & ICE CLAUSE
14. COMMISSIONS
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HOW HIRE IS CALCULATED?
• TIME CHARTER IS GENERALLY CALCULATED AND DESCRIBED INDRY-CARGO CHARTER-PARTIES AS A DAILY RATE FOR EXAMPLE:US$ 8,000 PDPR
- PDPR MEANS “PER DAY PRO-RATA I.E. PRO-RATA ADJUSTMENT TOBE APPLIED FOR PART OF A DAY”
FOR EXAMPLE: IF A VESSEL IS ON HIRE FOR 10 DAYS 12 HOURS ATCHARTER-HIRE RATE OF USD. 8000 PDPR. THE TOTAL CHARTER-HIREWILL BE : 10.5 DAYS X 8000 = USD. 84,000.
• ALTERNATIVE METHOD IS PMT RATE CALCULATED ON THE BASIS OFVESSELS TOTAL DEADWEIGHT TONNAGE PER CALENDER MONTH.
FOR EXAMPLE:- US$ 5.00 PDWT PM OF A VESSEL DWT 30,000 TONSWILL WORK OUT AS:-US$ 5.00 X 30,000 = US$. 150,000 PER MONTH
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EXAMPLES OF T/C CALCULATIONS
ILLUSTRATION # ATIME CHARTER RATE IN A T/C FIXTURE CAN BE DESCRIBED AS –
USD……….PDPR IOT (VIZ.US$12000/- PDPR IOT).WORK OUT CHARTERHIRE FOR A PERIOD COMMENCING 10.00 HOURS 3RD JAN, ENDING 20.00HRS., 31ST JAN.
(EXAM PAPER YEAR 2000)
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EXAMPLES OF T/C CALCULATIONSSOLUTION TO ILLUSTRATION # A
CHARTER HIRE : US$ 12,000/- PDPRCHARTER PERIOD COMMENCES : 3 JAN 1000 HRSCHARTER PERIOD ENDS : 31 JAN 2000 HRS
PARTICULARS DD:HH:MM
3 JAN (1000 HRS TO 2400 HRS) 00:14:004 JAN TO 30 JAN 27:00:0031 JAN (0001 HRS TO 2000 HRS) 00:20:00TOTAL CHARTER PERIOD 27:34:00
THEREFORE, TOTAL CHARTER PERIOD 27 DAYS 34 HRSVIZ. 28 DAYS 10 HRSVIZ. 28.417 DAYS
TOTAL CHARTER-HIRE US$ 341004-00(28.417 DAYS X US$ 12000)
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EXAMPLES OF T/C CALCULATIONS
ILLUSTRATION # B
US$ 9.00 PDWT PM (30 CALENDAR DAYS) OF A VESSEL DWT 29,000 TONS.WORK OUT CHARTER HIRE FOR THE MONTH OF FEB. OF 29 DAYS
(EXAM PAPER YEAR 2000)
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EXAMPLES OF T/C CALCULATIONSSOLUTION TO ILLUSTRATION # B
DWT OF THE VESSEL: 29,000 TONS
CHARTER-HIRE RATE: US$ 9.00 PDWT PM
CHARTER-HIRE FOR A MONTH: US$ 261,000/-(29,000 T X US$ 9.00)
CHARTER-HIRE FOR A MONTHOF 30 DAYS : US$ 261,000/-
CHARTER-HIRE FOR A MONTHOF FEB.OF 29 DAYS : US$ 261,000/30DAYS X 29DAYS
I.E. US$ 252,300/-
VOYAGE ESTIMATION
“VOYAGE ESTIMATION”
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IMPORTANT ASPECTS OF VOYAGE ESTIMATING
1.VOYAGE DAYS STEAMING TIME, PORT STAY, IDLE TIME( IF ANY) XXX
2.DIRECT OPERATING EXPENSESPORT DISBURSEMENTS XXXBUNKER COSTS (TO DETERMINE BUNKER CONSUMPTIONS) XXXCANAL DUES, ETC. XXX XXX
3. VOYAGE REVENUEGROSS FREIGHT ( TO DETERMINE CARGO QUANTITY LOADED) XXXESTIMATED DEMURRAGE (FOR POST FIXTURE VOYAGE ESTIMATE) XXX XXX
4.FINAL CALCULATIONS
A) NET FREIGHT EARNINGSGROSS FREIGHT XXX LESS: ADDRESS COMMISSION XXXLESS: BROKERAGE XXX XXX
B) GROSS OPERATING PROFIT (G.O.P)NET FREIGHT EARNINGS XXX LESS: DIRECT OPERATING EXPENSES XXX XXX
C) TIME CHARTER YIELD (T.C.Y)GROSS OPERATING PROFIT ‘DIVIDED BY’ VOYAGE DAYS XXX
D) OPERATING PROFIT /LOSS PER DAYTIME CHARTER YIELD XXX LESS: STANDING CHARGES PER DAY XXX XXX
Important formulasa) gross operating profit (g.o.p)
net freight earnings ‘minus’ direct operating expenses.
b) time charter yield (t.c.y)
gross operating profit ‘divided by’ voyage days.
c) operating profit /loss per day
time charter yield ‘minus’ standing charges per day
d) break‐even freight rate
total operating expenses / total cargo
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ILLUSTRATION # C
WITH THE FOLLOWING INFORMATION PREPARE A VOYAGE ESTIMATE AND CALCULATETC YIELD; NOP PER DAY AND THE BREAK EVEN FREIGHT RATE?
MV PANAMAX, 73,000 DWT ; PRESENTLY AT CAPETOWN; SPEED 14 K AT 33 T/DBALLAST AND 35T/D LADEN; DO 2 T/D; BUNKER PRICE 80 $/T AND DO 150 $/T; STANDINGCHARGES 10,500 $/DAY.
CARGO COAL 65,200 TONS; RICHARDS BAY/ROTTERDAM; 14$/T; 2.5% COMMISSION :15,000 T/D SHINC BOTH ENDS.
AFTER DISCHARGE THE VESSEL IS TO PROCEED TO US GULF AND THE ESTIMATESHOULD INCLUDE THIS INFORMATION.DISTANCES: CAPE TOWN / RICHARDS BAY - 920
RICHARDS BAY/ROTTERDAM - 7120 (VIA CAPE)ROTTERDAM / US GULF - 4880
PORT CHARGES: RICHARDS BAY – $15,000 AND ROTTERDAM - $60,000
(NMIS STUDY MATERIAL)
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SOLUTION TO ILLUSTRATION # C
A) VOYAGE DETAILS
VESSEL : MV PANAMAXSPEED HO/DAY DO/DAY
BALLAST 14 K 33T 2.0 TLADEN 14 K 35T 2.0 T
BUNKER PRICESHO: $ 80 PER TON, DO: $150 PER TON
PORT COSTSRICHARDS BAY (LOADPORT) : $ 15,000, ROTTERDAM (DISPORT): $60,000
STANDING COSTS : $10,500/-
B) CARGO QUANTITY LOADED 65,200 MT
C)VOYAGE DAYS & BUNKER CONSUMPTIONS
DAYS HO DO
CAPETOWN TO RICHARDSBAY 3.0 99 6.00RICHARDS BAY (LOADPORT) 4.0 - 8.00RICHARDS BAY TO ROTTERDAM 21.0 735 42.00ROTTERDAM (DISCHARGE PORT) 4.0 - 8.00ROTTERDAM TO US GULF 15.0 495 30.00
---------------------------------------------TOTAL 47.0 1329 94.00
(NOTE: DAYS ARE ROUNDED TO WHOLE NUMBER)
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SOLUTION TO ILLUSTRATION # C (CONTD…)
D) DIRECT OPERATING COSTS
BUNKER COSTS : HO: 1329 MT X $ 80 = $ 106,320/-DO: 94MT X $ 150 = $ 14,100/- $120,420/-
PORT COSTS: RICHARDS BAY : $ 15,000/-ROTTERDAM : $ 60,000/- $ 75, 000/-
TOTAL $195,420/-
E) FINAL CALCULATIONS
NET FREIGHT EANINGS
GROSS FREIGHT 65200 MT X $14 = $912,800/-LESS: COMMISSION 2.5% = $ 22,820/-
$889,980/-
GROSS OPERATING PROFIT (NET FREIGHT – DOE) = $694,560/-
TIME CHARTER YIELD (GOP / VOYAGE DAYS) = $ 14,778/- per day
NET OPERATING PROFIT (TCY - STANDING CHARGES) = $ 4,278/- per day
BREAK EVEN FREIGHT RATE (TOT. OPERATING EXPS / TOT. CARGO) = $ 2.997 PMT