PNTC COLLEGES

Zone III, Lt. Cantimbuhan St. Poblacion, Dasmariñas City

COLLEGE OF MARITIME EDUCATION

ONLINE DISTANCE LEARNING MODULE

COURSE CODE SHP 304 PRE-REQUISITE NONE

COURSE TITLE Ship Superintendency and Chartering Practice SEMESTER 2nd
UNITS 3 YEAR LEVEL 3rd
COURSE DESCRIPTION
CREATED BY Capt. Edgardo B. Tabunan - Faculty, MT, College of Maritime Education

MODULE 10 (WEEK 10)

Ship Superintendency
SHIP OPERATIONS & MANAGEMENT
Chartering Practice
Voyage Charter vs Time Charter
TOPIC LEARNING OUTCOMES

The students shall be able to:

1. Explain The Ship Manager

2. Explain The management agreement
3. Explain Structure of Shipowning & Management Organizations
4. Explain The structure of ship management
5. Explain The technical departments
6. Explain Storing
7. Explain Insurance
8. Explain Operations
9. Explain Voyage Charter vs Time Charter
10. Explain What is a Charter
11. Explain Terms and Features of a Voyage Charter
12. Explain Terms and Features of a Time Charter
13. Explain How to Choose a Charter Type

ENGAGE

There are many different activities involved in managing and operating ships and the first decision that a shipowner
has to make is who to use for this work.
The first thought would be to hire the necessary personnel and create all the requisite departments in one’s own
company. Who do you think is the right person the shipowner would hire?

EXPLORE

• Ship Superintendency:
• Ship Manager
Taking charge of the day-to-day operations of ships can be a daunting
task. The ship manager, the person tasked with that great challenge, must
monitor and manage ships in a cost-effective manner, making sure that
the ships under his or her control are ready for employment, whenever
and wherever it is found. In your opinion, is a skilled manager quite rightly
command high salaries?

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• Chartering Practice

• Voyage Charter vs Time Charter

Ships, boats and other recreational vessels are owned by a large number
of individuals who often purchase them as assets. They do not use these
vessels for shipping goods or for ferrying passengers. What do the
shipowners prepare as an alternative to have an income?

EXPLAIN AND ELABORATE

• Ship Superintendency

SHIP OPERATIONS & MANAGEMENT

LESSON ONE

SHIP OWNERS, OPERATORS AND MANAGERS

1. THE SHIP MANAGER

There is much more to ship owning than simply buying a ship, finding the right cargoes and carrying them. In this
course it will be seen how many different activities are involved in managing and operating ships and that the tasks
require distinctly separate areas of skills; so separate that several experienced individuals have to be involved. The
first decision that a shipowner has to make, therefore, is who to use for this work.

The first thought would be to hire the necessary personnel and create all the requisite departments in one’s own
company. This ‘in-house’ approach has much to commend it. The obvious one is close control by the owner of all
aspects of the management activity. The amount of money tied up in the owning of a ship makes the idea of having
day-to-day contact with all those involved in its care such an advantage that the decision seems obvious.

Obvious that is until the question of cost is considered. Skilled managers quite rightly command high salaries and wish
to be employed in positions which are sufficiently challenging to be satisfying. If, therefore, the owner has very few
ships, the costs to be allocated against each ship to cover the management function becomes uneconomical.
Furthermore, with only a few ships to manage, the senior personnel will not have enough work to fill a satisfying day
so they will become bored and seek more challenging employment elsewhere.

This is not a problem for the owners of large fleets. The management costs are spread over more units and thus will
be at an acceptable level. Moreover, the higher income will permit the engagement of top-class staff with adequate
support staff, all of whom will have plenty of work to fill their days.

What, then, is the solution for the owner with a small fleet apart from the obvious one of buying more ships? The
answer lies in the employment of the services of an independent ship management company. There are now many
such companies based in different parts of the world. These companies contain all the different departments needed
to provide an efficient service for which they charge a fee.

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Because of their size they are able to attract top-class executives and the large numbers of ships under their
management enable them to enjoy economies of scale. This is another way of saying that their fees charged to each
individual ship is reduced in proportion to the number of ships they serve.

There is, of course a dilemma for the medium sized shipowner who will have to consider the benefits of using his own
staff over which he has direct control and balance this against the economies in using a third party to manage his
ships. Sometimes that problem is solved by sub-contracting only a part of the management function which is possible
in view of the clear demarcation between the different activities in ship management. A particular aspect of this partial
sub-contracting will be covered later.

Another device that has successfully overcome the lack of economies of scale for the medium sized shipowner has
been contracting to manage other owners’ ships by the same personnel as are employed in caring for the owner’s
own vessels.

2. The management agreement

In view of the large amounts of money and capital assets involved, a very clear written agreement is essential if
disputes and misunderstandings are to be avoided. Each management agreement is probably unique but the Baltic &
International Maritime Council (BIMCO) has compiled a printed Standard Ship Management Agreement known as
‘SHIPMAN 98’ which, even if it is not used in its entirety, provides a first class check-list of all the matters that should
be considered in making such a contract. (See Appendix 1).

Boxes 5 to 14 of Part I of this agreement identify all the different duties that may be sub-contracted by the ship owner
to a ship manager and these headings are a useful index to the duties that must be carried out if the management is
handled in-house. The clauses in Section 3 of Part II of the agreement expand on the duties to be carried out under
each heading and between them offer a reasonably comprehensive guide to these functions. Students should
familiarize themselves with these. Each actual management agreement will be individual because the ship owner may
choose to handle some of the activities itself or use a different manager for example to handle crewing (3.1).

The other clauses in the agreement relate to the way in which the management contract itself will be carried out. For
example, Clause 6.3 is most important as it provides that all insurance policies will be in the names of both owners
and managers, this means that both parties have the benefit of the protection, in the Lesson on insurance it will
become clear how important this is.

Clause 7 provides for the separation of the ship owners money from that of the Manager.

The manager is paid for its services by way of a Management Fee (Clause 8.)

Clause 9 describes how the management of the vessels shall be budgeted and how the Manager will report to the
owner on financial performance.

Clause 11 contains some very important responsibility clauses. These should be studied but in brief, they provide that
the managers are not liable for any loss etc. unless they were negligent, that the owners will indemnify them against
such losses. The ‘Himalaya’ clause (11.4) provides that the manager is acting as the agent of the shipowner and has
the same protection as the owner in respect of any applicable avoidance or limitation of liability.

The remaining clauses relate to administration, termination, law and jurisdiction and are self-explanatory. There is
provision for a series of Appendices A to D which are not reproduced but which provide space for recording the
vessels’ details, crew details, budget information etc.

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3. STRUCTURE OF SHIPOWNING & MANAGEMENT ORGANISATIONS

A number of the issues dealt with in this introductory lesson will be dealt with later in the course in much greater
depth. The purpose at this stage is to give a general overview of all those matters that fall within the overall
responsibility of the ship manager.

At the top of any ship owning or operating corporate structure will be a Board of Directors headed by a Chairman or
President and a Managing Director. It is their task to determine the overall policy of the business and future direction
that the company will take.

Policy areas which will be decided the by top management might include:
• The philosophy of the company's strategy. • The type and size of vessels used.
• Fleet replacement policy (owning and chartering options).
• Flag policy
• The trades or routes that the company will serve.
• In-house ship management or contracted out.
• Financial performance. Having established the policy, the board will delegate the management of these functions
to various in-house departments or contract them out as appropriate

4. The structure of ship management

The way in which these practical services are dealt with and especially how the various functions are grouped together
will differ, however all these different activities will need to be provided either from within the company or by
contracting out to independent ship management or crewing companies.

Acquisition of vessels

Before the company can operate it must have some vessels under its control.

1. Outright purchase The traditional way of procuring ships is to buy them outright. The company will either use its
own cash resources to buy the vessel or more likely obtain a loan or mortgage secured on the vessel.

The very largest companies may employ their own naval architects and design staff to create the type and size of new
buildings they want for the future or this function may be delegated to independent naval architects. More commonly
companies may buy vessels built to a pre-existing shipyard design that will be ‘tailored’ to its needs.

Other companies may concentrate on building up their fleet by buying second hand tonnage and for this purpose will
use the services of a Sale and Purchase Broker.

2. “Finance based” long term chartered Increasingly shipowning companies are using more ‘innovative’ ways to
procure new ships through intermediaries. This is because either the company does not have sufficient borrowing
capability for all the ships it wants to operate, or an intermediary is in a better position to obtain tax benefits from
purchasing ships than the operating company. In concept, the approach can be seen as analogous to leasing rather
than owning a car.

The ship owner may still be heavily involved in the design of the ship and may indeed have the ‘lifetime’ use of the
vessel sometimes with an option to purchase after (say) 25 years for a nominal sum.

A typical ‘tax driven’ approach is the German “KG” scheme where German individuals or companies who own vessels
can secure favorable tax treatment, part of the benefit of which they can pass on through competitive charter rates
to the liner company.
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Ships under these arrangements can be bareboat chartered (where the charterer is responsible for crewing,
maintenance, etc.) or time chartered where the actual owner performs these functions.

3. Time charters
Other companies will time charter suitable tonnage from other shipowning companies. Time charters are also used
to acquire tonnage to meet short term commitments or fluctuations in the fleet, perhaps to replace tonnage during
a dry dock programme or to meet a seasonal high level of demand.

5. The technical departments

Ships require constant supervision of their structure and their machinery, much of which need a regular programme
of maintenance. A merchant ship which is not kept in a seaworthy condition will be unemployable.

Seaworthiness does not just mean that there is no danger of the ship sinking although that is a vital element, the term
can also be considered as also meaning cargo-worthiness. No matter how sound the hull of the ship is against
springing a leak, and how good the engine is to propel the ship to her destination, if the hatches let water into the
holds, or the ventilation is inadequate so that cargo becomes damaged, then a merchant ship is considered
unseaworthy.

Looking after the physical structure of the ship falls neatly into two distinct sections which are usually referred to as
deck and engine-room. The term engine-room is easily understood as there is no difficulty in visualizing the
compartment of the ship which contains the main engine plus auxiliary machinery such as electricity generators,
pumps etc. It does, of course, extend a little further than the actual engine room as the term naturally includes the
propeller shaft and the propeller at the end of it.

It is perhaps better to think in terms of ‘deck’ as meaning all the rest of the ship which is not covered by the expression
‘engine-room’ because that is the responsibility of the deck department.

The engine-room department will usually employ shore-based marine engineers customarily referred to as
engineering superintendents. They have to oversee the routine operation of the ships’ main and auxiliary machinery,
keeping a close watch on routine servicing, maintenance and replacement of those parts which wear out and need
regular renewal. A small but vital element of their job is to ensure that the correct grade and quality of bunker fuels
and lubricants are supplied to the ships.

Superintendents have to be ready to react without delay with advice or physical presence in the event of a breakdown
and to oversee major repairs, inspections and overhauls.

The deck department is also often staffed by ship’s officers who have decided to work ashore and they have the title
of marine superintendents. Their duties, like their engineering colleagues, are concerned with maintaining the
structure of the ship from overseeing major surveys and repairs to ensuring the paintwork is kept in good condition.

Failure to ensure efficiency in the technical departments will quickly run the ships into trouble which can vary from
classification being temporarily withdrawn pending seaworthiness being restored to the extreme of a major
catastrophe with human lives as well as goods being placed at risk. As a result of international conventions initiated
by the International Maritime Organization (IMO), which is a division of the United Nations, most of the world’s
maritime nations have enacted laws which permit Port State Control, a device which enables a ship to be detained
until sub-standard items are put right. Such detention is one of the risks an owner runs if his technical departments
are inadequate.

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The International Ship Management Code of Practice (ISM code) is another international convention established by
the IMO which sets out the minimum levels of training, administration and management of ships and which has been
adopted by the majority of the maritime nations of the world.

6. Storing

In addition to the purchasing needs of the technical departments there are other requirements for equipment,
maintenance materials and spares. The officers and crew have to be housed and fed and world-wide purchasing
requires specialist skills especially in order to achieve maximum economy without skimping. Food can be a particular
problem because different nationalities have different eating habits, some of which have to be strictly adhered to.
Stores department personnel have to be aware of this and to be sure that adequate supplies of special foods are
bought particularly if the ship is trading to an area where such items are unobtainable.

7. Insurance

Perhaps surprisingly, insurance is a shipowner’s second biggest item of cost so that efficient administration of this
activity is very important.

Insurance for ships falls into two distinct categories and the most obvious is the insurance against loss or damage to
the ship itself; this is referred to as hull and machinery insurance. The most famous provider of this type of insurance
is Lloyds of London which is an organization which started in the City of London as long ago as the year 1687. Insurance
with Lloyds is provided by individuals known as underwriters who get their name from the way each person accepted
a part of the risk by writing his name, one under the other. This system of personal risk exists to this day but the
individuals tend to join together into syndicates. Access to the underwriters is only possible through a Lloyds broker
who acts on behalf of the shipowner in seeking the best cover possible at the lowest premium which is the money
paid by the shipowner to secure the insurance cover. When the broker has obtained sufficient cover it is possible for
the contract to be drawn up which is referred to as the insurance policy. The insurance broker’s income is a small
percentage of this premium the rest is shared among the underwriters in proportion to the amount of the risk each
one has accepted.

Marine insurance is by no means the monopoly of Lloyds, many of the bigger insurance companies include this type
of cover among their activities. Such companies may cover the entire risk although it is by no means unusual for
marine insurance brokers to arrange a policy which is partly covered by Lloyd’s Underwriters and partly by
company(ies).

Should there be a casualty, which could range from a small scrape against a rock to total loss of the ship, a claim will
be made against the underwriters who, once again, have to be approached via the insurance broker through whom
the cover was arranged.

The other sort of insurance can best be summed up under the heading of third party insurance. This includes such
things as claims against the ship by a port authority for damage done by the ship hitting the jetty; claims by crew
members for personal injury when negligence is alleged against the shipowner; claims by cargo owners when their
cargo is not delivered in the same "apparent good order and condition" as it was when it was loaded. In other words,
any claim made against the ship by another person or company.

For reasons which go right back into history, the underwriters were reluctant to offer this sort of cover and so the
shipowners joined together into groups and formed associations which to this day are still referred to as ‘P & I Clubs’;
their more formal title is Protection and Indemnity Associations. ‘Protection’ involves the legal help that the clubs
give to fight against unfair claims whilst ‘indemnity’ covers the repayment to the owners for any third party claims
that have been legitimately made and settled.

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Both these types of insurance need constant attention, most shipowners inevitably have several third-party claims
outstanding or ‘in the pipeline’ so that there is always work for the ship manager’s Insurance department to do.

8. Operations

Having covered the essential tasks of maintaining the ship in a seaworthy and commercially sound condition, the ship
managers have to have a department which can provide the organization to ensure the ship carries out the tasks to
which it has been committed by the commercial people who have arranged employment through the chartering
brokers

The operations department will know from the technical departments that the ship is ready to carry out revenue-
earning work and the commercial people will have explained what the commitment is. It is then up to the operations
staff to carry out all the many tasks needed to fulfil this commitment. For example, an essential job is to ensure that
the ship is sent to the right place at the right time and then told where to go next. Decisions have to be made as to
how much bunker fuel will be the ideal quantity and where this should be taken on board. Ensuring that the agents
at all ports of call are advised and their responses acted upon. Crew changes have to be organized at the appropriate
intervals and dry-docking is another major activity which has to be harmonized with commercial commitments. Whilst
many specialist tasks can be passed to the appropriate departments, the operations staff have to co-ordinate it all.

=========================
• Chartering Practice

9. Voyage Charter vs Time Charter

Ships, boats and other recreational vessels are owned by a large number of individuals who often purchase them as
assets. They do not use these vessels for shipping goods or for ferrying passengers.

Instead, they often lend them out to third party organizations who use them for a variety of purposes. In maritime
legal terms, this lending process is known as chartering. Chartering is an important concept of the global maritime
trade sector, and is of different types.

This article will delve into the differences between two specific categories of charters – the voyage charter and the
time charter.

10. What is a Charter?

A charter is an agreement between two or more groups known as charter parties, regarding the leasing of a vessel for
a fixed set of conditions. The terms and conditions stipulated in the charter are binding on all the parties in the
agreement and covers a wide variety of clauses and possible scenarios that may arise. It is considered to be an official
document in legal aspects and is required by Admiralty Law to be drawn up in case of any form of vessel hiring or
leasing.

A shipowner is the first party in the charter agreement who owns the vessel under consideration. The charterer is an
individual or organization who is in need of a ship.
The charterer may have cargo that he wishes to transport, or may further lease out the vessel to third parties.

The shipbroker is a link between ship owners and charterers, and aids in finalizing the terms of the agreement. The
terms of the agreement include the duration of leasing, fees, payment instalments, regulations on usage, and detailed
surveyor reports on the condition of the ship.

Payment is termed as a freight rate and is remitted to the shipowner at fixed intervals decided in the agreement.

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Surveyor reports are important in chartering, as they ensure that the vessel is seaworthy prior to being chartered.
Similarly, on completion of a charter agreement, and before final payment formalities, another survey report is
conducted to ensure that the vessel has sustained no damage during the lease period.

The charter agreement lays down the responsibilities of each group and stipulates the condition in which the vessel
is to be maintained.

There are three main types of charters – voyage charter, time charter, and demise charter.

The demise charter is often known as a bareboat charter, and grants ownership or possession of the vessel to the
charterer subject to certain time-bound conditions.

11. Terms and Features of a Voyage Charter

A voyage charter is a type of charter in which a vessel is leased out for a particular voyage. The charter agreement
lists the ports of call, destination, and restrictions on cargo, if any.
Most voyage charters are undertaken by charterers who have cargo that needs to be shipped. For this, they contact
ship owners through brokers and arrange a ship for a particular voyage.

Payment of voyage charters can be done in two methods – on a per-ton basis, or on a lump-sum basis.

The per-ton basis involves paying the owner for every ton of cargo or freight transported on the vessel. This is
preferred when the cargo tonnage is considerably lower than the gross maximum cargo tonnage of the vessel.
On the other hand, when a higher weight of the cargo is carried, it is advisable to pay on a lump-sum basis. The
shipowner must ensure that the tonnage carried on board the vessel is within the acceptable limits of the ship. This
includes checking the tonnage of on-deck cargo, and the various load lines of the vessel.

There are some important terms used in a contract agreement, that lays out the time-based rules to be followed for
the duration of the contract.

Laytime refers to the time that a charterer is allowed to complete the loading and unloading process at a port of call.
Since the owner pays duties and berthing charges at the port, they expect the charterer to hasten the process.

In case the charterer exceeds the laytime laid out in the contract, he is obliged to pay a penalty known as demurrage.
This covers the extra costs incurred by the shipowner owing to the delay by the charterer.
On the other hand, if the ship is able to complete the loading and unloading operations before the stipulated time,
the charterer can claim payment of a despatch from the owner. This is often seen as an incentive for charterers to
complete the port operations as soon as possible.
In voyage chartering, the shipowner undertakes payment of fuel, operation, and employment-related costs. It is their
responsibility to hire the officers and other crew members for the voyage either from a pool of individuals working
for them, or using brokers as middlemen to source mariners and seafarers.

In addition, the owner must also pay costs such as berthing and loading operations. Any equipment used must also
be paid for by the owners.

To recoup these costs, the owners charge a higher rate from the charterer. In general, charterers transporting a one-
off consignment prefer voyage charters despite the high cost. This is because they are not tied down to the contract
for a long period of time.

Simply put, a voyage charter involves a charterer hiring a vessel for the purpose of a single voyage, in which the route
and ports have been pre-determined. The responsibility of duty and other payments along with recruitment is handled
completely by the shipowner, while the cargo is the sole responsibility of the charterer.
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12. Terms and Features of a Time Charter

A time charter is a time-bound agreement, as opposed to a voyage charter. The shipowner leases a vessel to a
charterer for a fixed period of time, and they are free to sail to any port and transport any cargo, subject to legal
regulations.

Although the charterer controls the ship, the maintenance of the vessel still falls under the purview of the owner.
They are responsible for ensuring that the vessel meets internationally accepted maritime standards, throughout the
course of the agreement. They regularly employ marine surveyors to prepare reports on the seaworthiness of the
vessel and make repairs as and when required. The owner will face legal action in case the vessel is found to have
some major problem.

The time charter agreement can span anywhere from a few days to a few years. This is a long-term agreement that
works on a single rate of payment known as the freight rate.

Payment is to be remitted every quarter and does not fluctuate under ordinary circumstances.

In time chartering, the charterer is responsible for selecting a crew, paying charges that arise during the voyages, and
arranging for provisions to ensure smooth operations at every port of call. They must intimate the planned route to
the owners in advance. The payment is calculated on a per-day basis, with penalties added at a later time. The cost of
fuel, provisions etc. are to be covered by the charterer, while the owner will handle all maintenance-related costs.
The charterer often does not sail on the vessel and provide instructions to the master of the vessel in their stead. This
includes permissible cargo, route and ports, required charter speed etc.

Unlike voyage charters that use a rigid payment calculation, there are several provisions for unforeseen delays in time
charters.

Since payment is on a daily basis, the charterer may be delayed for a certain reason, and these are covered in the
agreement.

Time not included in the final payment is known as off-hire hours. For instance, if a vessel is slowed down because of
poor weather that could not have been predicted, the extra time spent is not included in the final time count.

Similarly, if some form of damage occurs and repairs need to be carried out, the duration is considered to be off-hire.
Certain clauses can be inserted in the agreement, that allows for a fixed number of off-hire hours. Beyond this, the
charterer is charged for delays.
Briefly put, a time charter involves leasing a vessel for a fixed period, on a per-day rate, where the charterer is free to
use the vessel. The owner only looks after maintenance-related cost.

Clauses are inserted to protect the charterer from having to pay for hours that were spent due to events that could
not have been foreseen.

13. How to Choose a Charter Type

Voyage and time charters are very different, in their intended use and service conditions. Knowing when to choose
each type of charter can go a long way in meeting expectations of the charterer and shipowner.
A voyage charter is preferred in cases where the charterer only needs the vessel for specific voyages that may arise
for different reasons. This could be the case when there is an occasional cargo to transfer.

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An occasional cargo commonly springs up during sudden surges in demand, when the supply services are down. Thus,
companies that may deal in other commodities may enter the cargo industry for that period of time, in order to make
a profit.

This can also happen when the charterer has already pressed into service their own fleet of vessels, which forces them
to hire a ship from a third party so that they may undertake a single voyage.

Voyage chartering can be tricky for inexperienced charterers, since the matter of the crew and equipment must be
handled correctly.

Most owners make arrangements to look after these requirements, but it is mostly based on goodwill. Having a
shipbroker negotiate the terms can be very helpful in ensuring that the occasional charterer is not inconvenienced by
having a ship without a crew to man it.

A time charter is more commonly used by more experienced chartering firms when there is a long-term requirement
for a vessel. Instead of having to specify the ports and routes undertaken by the vessel in the charter agreement, the
charterer simply hires the boat for a fixed period of time and takes complete control over the vessel in all but name.

As they are free to sail to any destination with any group of crew and officers, it is beneficial to companies that already
deal in shipping. For instance, if a ship is decommissioned or is sent in for repairs, the company needs to be able to
procure a vessel for the duration of that period.

Instead of having to book a ship every time they wish to undertake a voyage, they use time charters. Thus, for the
duration of the agreement, they will have possession of the vessel and are free to use it, within the purview of the
law. This is especially useful since such a charterer will often already have a crew ready to take over the hired vessel.
Another major factor that sways the decision to pick either a voyage or time charter is the finances of the shipping
industry. Voyage chartering is considered to be a volatile market since there is no assurance of leasing a boat on
completion of an existing contract. Since it is only applicable for a single voyage, the overall volatility of the voyage
charter is high.

However, charterers prefer voyage charters for the reason that they can always get a more competent rate from other
ship owners. In other words, the owners are at the mercy of the chartering sector.

So, most ship owners prefer time charters, as it guarantees financial returns for a fixed period of time, at a fixed rate.
This offers some protection against rapid fluctuation of the chartering rates. However, charterers do not prefer this
contract, as it ties them down at a single rate for an extended period.

A one-off charterer always goes for a voyage charter, while a regular charterer prefers time charters. Shipowners are
often directly approached by charterers, instead of having marine brokers. Thus, one must have an overall look at
various factors influencing the shipping sector, prior to choosing between a voyage and time charter.

EVALUATE

1. There are now many such companies based in different parts of the world. These companies contain all the
different departments needed to provide an efficient service for which they charge a fee. What do these
companies so called?
2. This agreement identify all the different duties that may be sub-contracted by the ship owner to a ship
manager and these headings are a useful index to the duties that must be carried out if the management is
handled in-house. What agreement is this?
3. At the top of any ship owning or operating corporate structure will be a Board of Directors. It is their task to
determine the overall policy of the business and future direction that the company will take. Who are they?

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4. If the company does not have sufficient borrowing capability for all the ships it wants to operate, what
innovative ways other shipowing companies do to procure new ships?
5. International Maritime Organization (IMO), which is a division of the United Nations, most of the world’s
maritime nations have enacted laws which enables a ship to be detained until sub-standard items are put
right. Such detention is one of the risks an owner runs if his technical departments are inadequate. Who had
been given a permit to do detention?
6. Claims against the ship by a port authority for damage done by the ship hitting the jetty; claims by crew
members for personal injury when negligence is alleged against the shipowner; claims by cargo owners when
their cargo is not delivered in the same "apparent good order and condition" as it was when it was loaded. In
other words, any claim made against the ship by another person or company. What do you call this other sort
of insurance?
7. Decisions have to be made as to how much bunker fuel will be the ideal quantity and where this should be
taken on board. Ensuring that the agents at all ports of call are advised and their responses acted upon. What
department is responsible with these matters?
8. Other shipowners do not use their vessels for shipping goods or for ferrying passengers. Instead, they often
lend them out to third party organizations who use them for a variety of purposes. In maritime legal terms,
what do you call this lending process?
9. He/she is a link between ship owners and charterers, and aids in finalizing the terms of the agreement. Who
are they?
10. Payment of voyage charters can be done in two methods – on a per-ton basis, or on a lump-sum basis.
1. When a higher weight of the cargo is carried, what method it is advisable to use?
11. The time charter agreement can span anywhere from a few days to a few years. This is a long-term agreement
that works on a single rate of payment. What do you call this payment?
12. A voyage charter is preferred in cases where the charterer only needs the vessel for specific voyages that may
arise for different reasons. When does this occasion happens?

Note: Quiz will be uploaded in Edmodo

EXTEND

A one-off charterer always goes for a voyage charter, while a regular charterer prefers time charters. Shipowners are
often directly approached by charterers, instead of having marine brokers. Which is more profitable? Explain.

References:

Ship Superintendency:
http://docshare02.docshare.tips
Chartering Practice:
Marine Insight - By Ajay Menon | In: Maritime Law | Last Updated on February 9, 2021

Revision Status:

MOD SHP 304(10)

Rev.: 00
Issue Date:
March 5, 2021

Form No. BPM2-CME 20 F-009 SHP 304(Module 10)

Rev.02 Page 11 of 11