Module3 - Vessel and Voyage Operations Part 2

CERTIFICATE IN SHIP OPERATIONS
MODULE 3
Vessel and Voyage Operations II

Part 2: Commercial and Post-fixture Management
AUTHOR
Semiramis Koliou
Post Fixtures Analyst, Navig8 Europe Ltd.
Lloyd's and the Lloyd's crest are the registered trademarks of the society incorporated by the Lloyd's Act 1871 by the name of ‘Lloyd's’
CONTENTS
Page No.
LEARNING OUTCOMES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1. COMMERCIAL VOYAGE MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.1 Commercial Management and Ship Management . . . . . . . . . . . . . . . . . . . . . 5

1.1.1 Chartering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.1.2 Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.1.3 Post-fixture: Financial Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.2 Other Functions Performed in Shipping Companies . . . . . . . . . . . . . . . . . . . . 6
1.2.1 Crewing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.2.2 Supplies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.2.3 Legal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.2.4 Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.2.5 Finance and Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.2.6 Technical . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2. BUNKER MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1 Voyage Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

2.1.1 Bunkers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1.2 Bunkering: Receiving Bunkers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.2 Bunkers Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.2.1 Bunkers Quality and Prices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3. PROCUREMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.1 The Importance of Procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

3.2 The Procurement Process Simplified . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Certificate in Ship Operations 3-1

Contents Module 3
4. DISBURSEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.1 Items Included in Disbursements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

4.2 Checking Disbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5. FREIGHT/HIRE COLLECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.1 Freight Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

5.1.1 Hire: Definition and Examples. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.1.2 Freight: Definition and Examples . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.1.3 Terms Related to Freight. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6. MASTER’S GENERAL ACCOUNT (MGA) . . . . . . . . . . . . . . . . . . . . . . . . . 26
7. SUMMARY/CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SUGGESTIONS FOR RECOMMENDED READING

AND USEFUL WEBSITES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
AUTHOR BIOGRAPHY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
APPENDIX 1. DECIMAL PARTS OF THE DAY . . . . . . . . . . . . . . . . . . . . . . 32
APPENDIX 2. SAMPLE OF A STATEMENT OF

FACTS OF A TANKER VESSEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
APPENDIX 3. SAMPLE’S OF COMMONLY USED

TANKER CHARTER PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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3-2 Certificate in Ship Operations

LEARNING OUTCOMES
By the time this module is completed, students should be able to:
• Understand the essential commercial voyage management functions of ship

management companies.
• Evaluate the importance of bunker management and describe its complex

nature greatly affecting many aspects in shipping, the financial side being the
most important one.
• Comprehend what procurement is and how the procurement process is carried

out by ship management companies.
• Understand the significance of disbursements accounts and evaluate the need

for their timely settlement.
• Comprehend the need for post-fixture analysis and identify the duties involved
in it, while at the same time being introduced to the basic terms of freight, hire,
time charters and voyage charges, notice of readiness, statement of facts,
laytime, demurrage and dispatch.
• Understand freight/hire collection and its significant role for the survival and
prosperity of ship management companies.
• Understand what the Master’s General Account (MGA) is and why keeping full
and correct records of crew members is important for the orderly function of a
vessel.

INTRODUCTION
Vessel and voyage operations are the heart of all ship management companies in today’s
demanding environment. Understanding how these develop and unfold is essential for
anyone wanting to engage in the shipping industry, as they are often the driving force of
the shipping market. The basic knowledge of the principles of vessel and voyage operation
is an absolute necessity for all employees working in them.
These principles are general and apply to all companies dealing with ship management
and operation, as they deal with commercial voyage management, bunker management
procurement (or purchasing), handling disbursement accounts, post-fixture issues and
analysis including freight collection and checking Master’s General Accounts. As these
issues are encountered in all shipping companies with only a little variation being observed
to fulfil the individual requirements of different companies. A good understanding and
application of them will ensure that employees will be able to smoothly conduct their duties
in cooperation with each other, in order to achieve the common goals of the company.
Understanding what is involved in vessel and voyage operation is essential to employees

of any level and any department of a shipping company so that as information is distributed
and filtered through the company the individual knows what their role is in the process to
get the right work done.

1. COMMERCIAL VOYAGE MANAGEMENT
Commercial voyage management refers to ship management companies employing

vessels on behalf of the shipowners covering various elements. This may include a variety
of activities such as chartering, operations, technical management, crew management,
accounting and financial management, ship investment and other activities.
1.1 COMMERCIAL MANAGEMENT AND SHIP MANAGEMENT
Ship management, which is somewhat different from commercial management, refers to

professional independent organisations that for a negotiated fee and with no shareholding
ties with their clients, undertake responsibility for the management of vessels in which they
have no financial stake (Panayides, F., 2001).
This general ship management can be broken down into a variety of activities that are
separated from the commercial part and from the rest of functions performed by the
shipowning company.
Commercial voyage management most commonly refers to an individual ship management

company undertaking those activities which are concerned with the commercial aspects of
shipping: chartering, operations and financial/accounting control resulting from the overall
performance of a vessel.
1.1.1 Chartering
Chartering is a core activity of any shipping company and refers to seeking and negotiating
employment and concluding charter parties or other contracts relating to the employment
of the vessels. The basic aim is to secure the best employment available in order to
optimise earnings for a vessel and to ensure the best possible positioning of the vessel to
best take advantage of the constantly changing market conditions.
1.1.2 Operations
The operational aspect of commercial management is one of the most crucial parts of any
shipowning or ship management company. As already discussed in Module 1, this is the
department which deals with the daily functions of the vessels, covering a broad range of
activities and is the area where money can be saved or lost and a voyage can be made
more or less profitable, depending on how carefully it is planned and executed.
1.1.3 Post-fixture: Financial Analysis
This is the function which actually evaluates a prospective fixture – what is known as
voyage estimating – thereby providing the expected financial results of a fixture of a vessel.
This includes loading calculations, routes followed, calculating hire or freight, demurrages,
comparing estimated performance with the actual one, and analysing the overall
performance of a vessel.

Commercial Voyage Management Module 3
1.2 OTHER FUNCTIONS PERFORMED IN SHIPPING COMPANIES
Shipping companies are usually divided into various departments, grouping activities
performed by the employees into various specialised divisions. Most shipping companies
have departments such as operations, chartering, crewing, supplies, legal, administration,
finance, technical etc.
1.2.1 Crewing
Crew management covers a broad range of activities including the recruitment, selection,
placement, training and management of officers and ratings employed on the vessels of a
company. This also covers travel services and payroll management through the Master’s
General Account, which are an integral part of the crew management activity.
1.2.2 Supplies
The supplies (also known as procurement) department establishes the list of appropriate
vendors supplying suitable materials based on a number of parameters, such as quality,
compliance with international acceptable standards, price, availability and proximity to the
vessel’s port of call. This department also coordinates the shipment times and costs, taking
into consideration both local and international standards and regulations for delivery of
specific items that vessels may order. These materials range from ship’s spares, stores,
fresh provisions, chemicals, paints and others.
1.2.3 Legal
The legal department covers a large field of activities, varying from the handling of marine
claims and other insurance matters that may arise of a legal nature, to company law,
national/international taxes, sale and purchase of vessels etc.
1.2.4 Administration
The administration department is responsible for the main organisation of the personnel,
providing employment policies, training of employees, conducting internal controls to
ensure that the organisation works according to the policies laid down and within the
working instructions given.
1.2.5 Finance and Accounting
The finance and accounting departments usually cover budgets, accounting and finance
services and functions, providing regular reports for each operational department, each
ship and for the company as a whole.
The management needs to keep the accounting department up to date with operational
proceedings at all times, with changes and corrections when necessary.
Other equally important functions include arranging for financial sources when building
new vessels.

Module 3 Commercial Voyage Management
1.2.6 Technical
The technical department is responsible for the maintenance, repair and dockings of ships.
Other duties include the building of new ships, often organised in a new-building section.
Commercial voyage management companies are professionals; experts with the necessary
knowledge and experience and are the only ones who can effectively deal with a vigorous
competitive and dynamic external environment, where all companies constantly have to
adopt to new conditions in order to survive.
The good quality of commercial managers, their technical expertise and experience, the
extent of information technology they use, as well as the location of their office and their
ability to be flexible to accommodate their clients’ needs, coupled with the right prices for
their services are the criteria for a ship management company selection (Panayides, F.,
2001).
SELF-ASSESSMENT QUESTIONS
1. Discuss the basic functions of commercial voyage management

companies.
2. Provide examples of how shipping companies are usually divided.

2. BUNKER MANAGEMENT
Ships are a large and complex means of transport using the sea and they must be self-
sustaining in that environment for until they reach their next destination. The main engine
of the vessel is responsible for moving the ship around her various ports of call, therefore,
power generation and propulsion form an integral part of sea transport. Depending on the
size and type of the ship, the machinery parts and spaces vary, and so does the need for
bunkers (Taylor, D.A., 1990).
Therefore, preparing for the execution of a voyage also involves the right selection of
bunkers, i.e. the appropriate types of fuel the vessel will need to provide propulsion and
generate electrical power for all the systems on board the vessel.
2.1 VOYAGE PLANNING
When it comes to voyage charters, operators select the route the vessels under their
supervision should follow. This task is critical for many reasons, as the selected route has
a direct effect on the vessel’s anticipated profit; a slight change in the route can determine
whether a voyage will be more or less profitable – or even if there will be losses incurred.
Voyage planning refers to deciding the route that a vessel is going to follow to get from one
part of the world to another. This decision is made by the operators, who, in order to
effectively decide the best prospective route, must consider issues such as the distance to
be covered, the bunkers that will be needed for this purpose (called “bunkering”), as well
as other important factors, such as: the weather conditions that the vessel is likely to
encounter during her projected passage (known as routeing) the charterers’ needs in
terms of timely delivery of the cargo and the vessel’s needs for spares or stores.
Voyage planning may seem an easy task, but should not be viewed as such; the details to
be considered are numerous and the relative costs considerable.
2.1.1 Bunkers
The word “bunkers” is translated into fuel oil for a vessel; it’s one of those old expressions
that have remained unchanged, other examples including a vessel’s “sailing” from a port,
“steaming” to another port, etc. Bunkers were compartments where coal used to be
stowed.
Providing bunkers to a vessel is essential, as through the use of fuel oil (or Intermediate
Fuel Oil – IFO) and diesel oil (Marine Diesel Oil – MDO) the vessel is able to be in motion,
manoeuvre in and out of ports or confined waters, run her auxiliary engines to provide for
electricity during her stay at ports and use all equipment available on board, to load,
discharge, cool, heat etc.
A vessel’s bunkering operations are controlled under procedures incorporated in its Safety
Management System.

Module 3 Bunker Management
These procedures should ensure that any possible risks associated with the operation
have been assessed and that controls are in place to mitigate these risks. The procedures
should also address contingency arrangements in the event of a spill.
2.1.2 Bunkering: Receiving Bunkers
For a vessel to receive bunkers, careful and detailed calculations must be effected.
Bunkering can take up to several hours to be completed; the exact quantity of bunkers that
the vessel can receive must be vigilantly calculated so that the vessel can safely enter or
leave a port without facing any draught issues while entering a port, berthing and loading
(or discharging).
The vessel must have enough bunkers on board to safely reach her next destination, plus
a safety margin, in the event of any unforeseen circumstances.
The operator and the master with the assistance of the chief engineer should consider the
following items during the procedures:
• Determine that there is adequate space for the volume of bunkers to be

loaded.
• Establish the maximum loading volume for all tanks.
• Provide control for the setting of bunker system valves.
• Determine the loading rates for the start of loading, bulk loading and topping-
off.
• Take special precautions if bunkers are loaded into the double bottom tanks of
the vessel.
• Make arrangements for bunker tank ventilation and overflow.
• Verify that the gauging system of the vessel operates properly and accurately.
All this must be done concurrently with calculating how much cargo the vessel can lift, so
that her maximum earning capacity is reached; other issues such as shallow draughts or
tides along the vessel’s route must also be considered, to avoid damages to the hull of the
vessel or any sort of delays.
It used to be common practice that bunkering could take place concurrently with loading
or discharging operations, if that was allowed by the nature of the cargo and any safety
issues that could subsequently arise. However, nowadays bunkering during cargo
operations is not considered to be best practice as there may be conflicts of interest for the
personnel on watch. Spillages often occur when crew members are distracted by other
tasks such as the loading or discharging of cargoes.
Alternatively, vessels can receive bunkers at the anchorage area of a port or at various
bunkering stations around the world.

Bunker Management Module 3
The bunkering of vessels is strictly monitored both by port regulations and shipping
companies’ policies, as pollution incidents in the past have been the cause of time
consuming claims and costly fines.
Port regulations may vary, however, most developed ports have very stringent regulations
and bunkering operations are closely monitored by port authorities, making the employment
of oil spill prevention companies almost compulsory, in addition to vessels’ oil spill
prevention mechanisms.
These generally require that all personnel involved in the bunkering operation on board
should have no other tasks and should remain at their work stations during topping-off, i.e.
when the vessel’s tanks are about to be filled up to their maximum capacity.
Picture 1
Bunkering a Vessel by Barge
Source: http://www.marine-knowledge.com/general/vessel-bunkering.html
(accessed on 6 July 2011).

Source: http://cdn.marineinsight.com/wp-content/uploads/2010/10/bunkering.jpg
(accessed on 26 February 2012).
Picture 2
Bunkering of a Vessel by Pipelines
Source: http://www.marine-knowledge.com/general/vessel-bunkering.html
(accessed on 6 July 2011).

2.2 BUNKERS COSTS
Irrespective of where bunkering takes place, the costs associated with it are considerable.
Apart from the obvious cost of acquiring the bunkers when a vessel is under a voyage
charter, there are other expenses which ship managers have to bear. The main expenses
include barge costs, fuel consumption of the vessel while she is sailing to the bunkering
point, extra port dues if bunkering takes place while the vessel is at port or jetty costs, the
cost of delaying while the vessel is bunkered, and other subsequent costs.
After bunkering is completed, checks must be done to ensure that the quantity and quality
of the bunkers are as agreed. This is done by the so-called “sounding” of the tanks, which
involves measuring the quantity of the bunkers in the tanks of the vessel. A very common
practice is to check the quality of the bunkers provided, where samples of the fuels are
taken in the presence of the master or chief officer of the vessel; these are then forwarded
to independent laboratories throughout the world and assessed accordingly. One of the
best known is Lloyd’s Register’s Fuel Oil Bunker Analysis and Advisory Service (FOBAS),
who:
“provide ship operators and managers with independent verification of fuel

quality, as loaded, against international standards and environmental legislation,
helping them to assess and manage the risk from poor quality fuel and its
potentially damaging effect on machinery performance”
Lloyd’s Register, available from: http://www.lr.org/sectors/marine/Services/

Consultancy/FOBAS/FOBASM.aspx (accessed 3 July 2011).
2.2.1 Bunkers Quality and Prices
Providing the right type of bunkers is of utmost importance for a vessel’s orderly function,
as in the past there were cases where the provision of contaminated bunkers, or bunkers
of a lesser quality had caused costly damages to vessels and ship management
companies.
One can easily understand that a better quality of fuel will almost certainly have a higher
price, however bunker prices are not driven solely by the quality factor; scarcity of bunkers
in a port may drive their prices up, while plentiful availability can keep them softer. Events
such as damages to the delivery barges, or bad weather conditions causing congestion in
a port may also affect prices.
Other equally important elements that need to be closely monitored and weighed up
include the time that the vessel will have to wait to receive the bunkers, which not only
includes the bunkering time itself, but as just mentioned, possible congestion in the port or
bunkering point.
These details are provided to ship management companies by bunkering suppliers around
the world with what is known as a “bunkers report”; this provides information on the various
grades of bunkers that exist, their prices, availability at the various bunkering ports and
points around the world, waiting time and other useful information.

It is yet another duty of operators to carefully weigh up all the above and perform elaborate
calculations prior to any vessel’s bunkering in an effort to minimise possible expenses and,
thus, maximise the vessel’s income capacity.
To provide an example of the topics an operator must consider before making a decision to
bunker a vessel at a given port, the following needs to be calculated:
1. Regarding the vessel:
• vessel’s deadweight dwt;
• vessel’s fresh water production and consumption;
• the vessel’s daily bunker consumption, both in IFO and MDO;
• constant weights of the vessel.
2. The delivery point of the vessel (which may be a port or any other point agreed on
the charter party), the loading port(s) and discharging port(s) and the availability and
price of bunkers on those ports.
3. The prospect of bunkering the vessel in intermediary points, i.e. with a minor
deviation, if that is allowed by charterers, for bunkering purposes, also considering
the extra costs involved for doing so.
4. The bunkers that the vessel already has on board.
5. The vessel’s consumption at sea and at port.
6. The actual distance between ports and how many sailing days are needed.
In calculating these costs, operators often use specifically designed software, which
enables them to check all these parameters and somewhat facilitates decision making.
At this point, it is worth mentioning that a rather successful measure taken to reduce the
cost of bunkers is the simple, yet effective reduction of vessel’s speed. Slow steaming
achieves the reduction in vessel fuel consumption as speeds are reduced, which at the
same time reduces carbon and other emissions and thereby reduces the environmental
impact of ocean-going vessel operation. Slow steaming has already generated significant
environmental benefits.
Whether slow steaming ultimately results in cost savings for a ship management company
will depend on a number of factors, including bunker price levels, vessel load factors, and
vessel charter rates.
It is of vital importance that the ship operator constantly updates the technical department
of the company with details on the vessel’s agreements and requirements as per the
charter party, and also reminds the officers in the ship’s engine rooms to be equally quality
conscious because they are the ones on the spot where the supply is made.
This is particularly important when a ship is on a time charter as, under such a charter, the
supply of bunkers becomes the charterer’s responsibility and so the ship manager loses

direct control over quality. Charterers will always be anxious to keep costs to the minimum
and one has to face the fact that they are not directly concerned with the long-term
condition of the machinery.
1. Evaluate the importance of bunkering.
2. Explain how bunkers can play a crucial role in the financial outcome of a
voyage.

3. PROCUREMENT
As already discussed in Chapter 1 of this module, procurement refers to supplying a vessel

with all items necessary for her effective and efficient operation.
Having an efficient supply chain for routine maintenance spares and equipment is essential
to any commercial ship management company. This usually involves having a network of
suppliers worldwide and using their supply chain mechanisms, offering shipowners and
management companies a global delivery service for what seems to be an endless list of
items: ship spares, cabin stores, paints, marine parts, chemicals, the fresh provisions
consumed by the crew of the vessel, the bonded stores, maps for navigation, nautical
publications, mooring ropes, wires and cables, electrical supplies, and any other needs a
vessel may have.
These specialised supply chain management services integrate the network of suppliers’
global infrastructure and expertise in freight forwarding, warehousing, supply chain
management; coupled with services provided by ship agencies around the globe to serve
every ship’s needs in a timely and cost-effective way by choosing suitable transport modes
to match customers’ timing and cost concerns.
3.1 THE IMPORTANCE OF PROCUREMENT
The timely despatch of spares that a ship needs at various ports is crucial for the orderly
function of a vessel and when it comes to fresh provisions, the well-being of her crew.
Where these spares are despatched to, is up to the operator and the technical department
to decide, to avoid possible problems with customs, delays to the vessel and even their
quality, which varies from one port or country to another. Additionally, stores, lubricants and
provisions need to be arranged, in cooperation with the supply department of the company
and the agents, to ensure that no delays, shortages or problems of any kind will occur.
The purchasing department establishes a list of suppliers throughout the world. This does
not happen overnight: ships get supplies at various ports and this department is responsible
for keeping records of the various parameters of each procurement. These include quality,
compliance with international acceptable standards, price, availability, proximity to the
vessel’s port of call, good coordination of the shipment times and the costs involved, taking
into consideration both local and international standards and regulations for delivery of
specific items that a vessel may order.
They create their own catalogues for stores and provisions, machinery spare parts,
lubricants, paints and any other supplies, including bonded stores the ships get in all ports
of call for future use and reference. Bonded stores refer to specialty food, beverage, liquor
and tobacco products used aboard ships by the ship’s crew (given that the regulations of
the ship management company permit).
The purchasing personnel must also keep track of historic prices on items supplied and do
actual consumption analysis per vessel as well as compare it with previous consumption,

Procurement Module 3
and inform management of any increases on the daily running costs of the vessels. To do
that, they check the inventory of what the ship has on board, sometimes ordering in
advance certain items that will be needed by the vessel in the future; they also keep track
of how many items (for example, marine spares) are actually used on board the vessel and
compare them to their projected consumption/usage. By doing this they can record
damages encountered by the vessel, trace faulty materials supplied by a supplier (and thus
refrain from using this supplier in the future), and optimise supply quantities. This analysis
can also be used to evaluate costs for a certain period of time, or cost per machinery, cost
per vessel, compare sister vessels to each other and even create budgets for future
reference.
3.2 THE PROCUREMENT PROCESS SIMPLIFIED
The process of procurement can vary from company to company, however the basics are
normally as follows:
• The master sends the requisition list from the vessel, including all items the
vessel may require.
• The purchasing department receives the requisition and checks the inventory
of the vessel kept in the office (to check for discrepancies or unused items):
– Based on the variety of items requested (e.g. marine spare parts, fresh
provisions, paints, lubricants, chemicals, bonded stores etc.) and the
vessel’s expected itinerary (route to be followed) a requisition is sent to
suppliers.
– To ensure that the stores requested universally are the same and come
from reliable suppliers, certain catalogues are used, such as the IMPA and
ISSA catalogues.
– The IMPA catalogue is issued by the International Marine Purchasing

Association, which was formed in 1978 by a group of senior purchasing
executives who wanted “to create an industry ‘voice’ to represent the
interests of the purchasing profession within shipping and promote close
co-operation and understanding between buyer and supplier”.1 The
association’s mission is to promote and facilitate the cooperation and
provide the basis for a common understanding among the various
purchasers and suppliers of the global shipping industry.
– The ISSA is the International Ship Suppliers and Services Association,

which represents ship suppliers throughout the world, in an effort to ensure
that ship management companies get the best service possible, at the
finest quality and the fairest prices.2 To ensure this, the suppliers who are
members of the ISSA undergo various audits and checks before gaining
admittance.
1 IMPA, available from http://impa.net/about/ (accessed 25 March 2012).

2 ISSA, available from http://www.shipsupply.org/AboutUs.aspx (accessed 28 March 2012).

Module 3 Procurement
• When the vessel calls at a port where she has never been before, the
procurement team searches for suppliers/vendors using directories of suppliers
in this new port.
• The requisition of the vessel is then sent to the selected vendors, also
mentioning the time the vessel is expected to arrive at the port of call.
• Vendors reply, giving their quotation, listing the prices per item to be supplied.
• The purchasing department now has the sums requested from each supplier
(all of them for the same items) and therefore is able to compare the prices
given, the terms of payment, the availability of items quoted by each supplier
and perhaps the quality of some items, the order readiness of each supplier
etc.
• After comparing quotes a decision is made, an order given to a supplier (or to

different suppliers, if that is necessary) and the remaining terms of the deal are
arranged (mode and exact time of delivery to the vessel, coordination with
agents at ports for effective and efficient delivery etc.).
• When the order is executed and the items requested are delivered to the
vessel, it is the duty of the purchasing department to check for any discrepancies
in the final delivered items, as well as in their quality, based on reports from the
master/chief officer/chief engineer. These should be recorded for future
reference, as seen above.
• Upon the execution of the order, vendors also send their final invoices, which
are again checked against the original quotation by the supply department and
are further processed by the disbursements personnel (to be discussed in the
next chapter) and paid by the accounting/finance department.
1. Describe the procurement process.
2. Evaluate the importance of procurement in connection with the daily running

costs of the vessels.

4. DISBURSEMENTS
Disbursements refer to any vessel’s expenses incurred at a port of call. These expenses
can include anything from payment of agency fees for services provided at a port by the
agents, to port expenses, the cost of various inspections carried out at ports, surveys of all
sorts, costs for supplying any items the vessel needs (not the cost of the items themselves),
any crew medical costs, if necessary; in short, any expense that might arise on account of
the vessel.
These disbursements are usually initially checked/approved by the operator of the vessel,
who should know all the requirements of the vessel; however, the checking of every item
on the requisition of the vessel cannot be done by the operator, simply because there are
items such as spare parts, paints or fresh supplies which the operators don’t usually deal
with and therefore cannot know the cost of.
Checking all expenses incurred by a vessel at a port is, therefore, normally done by
disbursement analysts, or even specialised companies, who keep records of all such items
and port expenses, just like the procurement department does. The difference between the
two is that disbursements personnel deal with all other expenses of the vessels and not
just the requisition list for supplying the vessel with the items necessary.
4.1 ITEMS INCLUDED IN DISBURSEMENTS
Port expenses form the majority of the expenses of a vessel at a port. These differ from port
to port, from country to country and are usually based on the characteristics of the vessel
herself (e.g. her net registered tonnage, gross registered tonnage, length overall, draught)
which can determine where a vessel can berth. Different costs apply when a vessel berths
alongside a berth, or at a jetty, or when she is performing loading or discharging operations
via ship-to-ship transfer. These are made up by various dues, including (but not limited to)
flag dues, wharfage dues, expenses for shifting the vessel from the port anchorage to berth
or to various berths if requested, pilots’ costs, tugs used for berthing assistance, if
necessary, costs for mooring men, stevedores and many others, depending on the port, its
geographical position and the applicable regulations. These are usually calculated in the
initial port cost estimate quoted by the local port agents, who are familiar with such costs
and can provide accurate estimates of them.
Port regulations also affect the port disbursements, as it is mandatory in the majority of
ports for local authorities to board the vessel and perform various inspections to ensure
that a vessel complies with all applicable regulations. In cases where vessels do not
comply, fines are imposed, which are included in the supplementary disbursement
accounts (D/As).
Moreover, vessels carry out their regular inspections by the classification society and flag
of the vessel to renew the various certificates that have to be valid at all times. Any costs
for arranging those are also included in the port D/As.

Module 3 Disbursements
Temporary repair works and various system upgrades from technicians can also be done
at ports – at a cost – which is again included in the disbursement account. Disbursements
can also include the costs for transiting canals.
A vessel’s call can range from a very simple one and therefore rather straightforward,
limited to the basic port expenses, to the most complex one, involving authorities, surveys,
prolonged stays at port due to bad weather conditions, shifting costs and respective tugs
bookings and cancellations, searching teams for stowaways, naval escort and armed
guards to prevent piracy incidents – the list may be endless and depends on various
parameters.
4.2 CHECKING DISBURSEMENTS
One can easily understand that one of the duties of the D/A’s personnel is to check all
agency appointments. This starts from checking the proforma disbursement, i.e. the agents’
initial estimate for the port call before the vessel’s arrival, listing all anticipated expenses in
accordance with local customs, port regulations etc.
Once this is done, an advance payment is made to the agents. Usually a percentage of,
say, 85% of the estimated disbursement amount is remitted to the agents in advance. This
is the common market practice and the D/A’s personnel is responsible for the timely
remittance of funds to avoid any delays in the services provided to the vessel.
On completion of the vessel’s call, the agents submit their final disbursement accounts,
providing all relevant supporting vouchers (also including invoices collected from all the
suppliers of the vessel at the port). These are thoroughly checked and verified by the
disbursements department before they are made available to the operator of the vessel for
the final approval. Some may be allocated for payment by the charterers, depending on their
nature, for example any taxes on cargoes carried are usually paid by the charterers. Once
the disbursement account is approved by the operator, the disbursements personnel proceed
with the final payment, which is adjusted in accordance with the advance payment.
Therefore, D/As personnel perform a very important cost management procedure, which
should be as effective and efficient as possible for the benefit of the ship management
company. Moreover, they can perform frequent financial reports and reconcile accounts
with every supplier and/or agent, making significant savings through the selection of
appropriate agents, appointing them in a timely manner, carefully reviewing expenses and
finally, approving them. This greatly assists effective financial management and voyage
results.
1. Describe the various items that may be included in a disbursements

account.
2. Explain why checking disbursements is important for a ship management

company.

5. FREIGHT/HIRE COLLECTION
All vessels exist to serve the needs of an ever-increasing and demanding market for sea
transport. Raw materials and finished goods grow or are manufactured in different parts of
the world and need to be transported worldwide. Shipping transport is the most economic
means of transport, as it provides economies of scale through transporting large volumes
of cargoes (Stopford, M., 2009).
All ships are bought by their owners in the hope of a good return on investment. This is
achieved through an ongoing attempt to find the right and suitable charter for every vessel.
The voyage which will be estimated to yield the most income to the vessel will be preferred
over others yielding less income, or even generating losses.
The terms of each employment for a vessel are expressed in the charter parties, which are
documents widely accepted by the market for their use. Appendix 3 has samples of some
of the most commonly used tanker charter parties.
Furthermore, these charter parties can be amended, in other words altered, to suit the
particular needs of the main contracting parties: the ship owner/manager, the charterers
and the intermediate brokers assisting in “fixing” the vessel. This is done by the fixture
recapitulation, or recap, as it is commonly referred to, which reflects all changes that have
been made to the charter party agreed and further clarifies any other term which needs
special attention to serve the specific needs for the cargo transported, the ports visited and
all other terms agreed in this respect.
The calculation of the monies due to shipowners is made mostly by the commercial
management company to which the ship has been entrusted and is known as freight
collection.
5.1 FREIGHT COLLECTION
The correct calculation of all hire and freight invoices and ensuring their timely collection
in accordance with the terms and conditions of the charter parties agreed is essential for
every ship management company, as this forms the only means of its income and funding
of all activities.
Given the organisational structure of the ship management company these duties may be
undertaken by operators who know all terms agreed on a charter party, therefore its
financial aspects too. Alternatively – usually when a large number of ships is involved –
these can be carried out by revenue collection analysts, or specialised companies, who
deal exclusively with the calculation of hires and freights as well as performing laytime
calculations and demurrages.
5.1.1 Hire: Definition and Examples
Hire is the income of a ship that is produced from a time charter. It is most commonly a
sum agreed on the time charter party, payable in advance, on a per day basis, for every 15

Module 3 Freight/Hire Collection
days. In long-term charter parties, extending beyond a number of years, for example five
years, the term can be modified so that hire will be payable every 30 days in advance.
To provide an example of a hire calculation, say that if a ship is time-chartered for three
months for the amount of US$25,000 per day, and given that hire is payable every 15 days
in advance, the gross hire of the first 15 days should be calculated as follows:
15 days × US$25,000 per day = US$375,000.
From the gross hire some deductions are made, which are always specified in the charter
party. Such deductions usually include:
• The address commission which is a commission on gross freight payable by

the owner to the charterers.
• The brokerage commission which is commission on gross freight payable by

the owners to the chartering broker(s).
• Any sums advanced by the charterers to cover the owner’s expenses at the
vessel’s various ports of call.
On the other hand, there are also other items which need to be added to the first hire
payment, such as:
• The value of the bunkers remaining on board at the time of delivery of the
vessel to the charterers’ service. This is determined by the so-called “on hire
survey”, which is a very detailed survey taking place at the first loading port of
call of the vessel by an independent qualified surveyor, who calculates the
amount of bunkers available on board at the port. In case the delivery point was
not the port itself but another agreed point at sea, the surveyor further calculates
the quantity of bunkers the vessel has used to sail from her delivery point to the
port, to determine the exact amount of bunkers on delivery. The corresponding
quantity of bunkers on board at the time of redelivery of the vessel is calculated
at the last port of call of the vessel by an “off hire survey” and these are
deducted from the last hire payment.
• Any amounts agreed on account of victualling expenses that the vessel

undertakes.
• In the situation where a ballast bonus has been agreed in the charter party, this
is also included in the first hire statement and makes up a part of the gross
freight; in this case commissions will have to be calculated including the ballast
bonus amount.
• Any amounts on account of stevedore damages that occur at various ports.

These are the result of poor handling of loading or discharging equipment and
usually they are repaired before the vessel sails from the port. The cost of these
repairs under a time charter is for the charterers’ account.

Freight/Hire Collection Module 3
• When the vessel is a bulk carrier, usually an amount for the final cleaning of
holds, on a per hold basis, is agreed in the charter party and has to be paid by
the charterers.
After the vessel completes her voyage and is redelivered to the owners, a final hire
statement must be drawn up and settlement of any balances must be made. It is the
operators’ duty to make sure that any balance in owner’s favour is settled as soon as
possible.
5.1.2 Freight: Definition and Examples
Freight is the income of a ship resulting from a voyage charter, i.e. for the carriage of a
pre-specified quantity of cargo from a named port or ports to other ports, or from liner
operations. Freight rates are usually expressed in the following ways:
1. As an agreed amount of money (always expressed in US dollars) per metric tonne of

actual cargo carried.
E.g. A ship loads 37,532.26 mt of cargo and the agreed freight is US$15 per metric
tonne.
Freight will be calculated as follows:
37,532.26 mt × US$15/mt = US$562,983.90
2. As an agreed lump sum amount payment for the voyage.
E.g. US$540,000 for a cargo of minimum 40,000 mt.
Freight will be the lump sum amount agreed, i.e. US$540,000, irrespective of how
much more cargo the vessel will finally load.
The charter party agreed will have all the details specifying how freight will have to be
calculated and when it should be collected; the person calculating has to make sure
collection is done correctly and promptly.
Freight is payable in accordance with the various terms that may be agreed on in the
charter party, some of the most common ones being:
• Proportionally prepaid (i.e. a proportion of 90% or 95% of the freight) within a

specific number of days after signing the bills of lading (Bs/L). In this case, any
balance due to the owners is settled with the calculation of demurrage or
dispatch (for dry cargoes) and with demurrage calculation for the tanker market
(as in tankers there is no dispatch).
• Fully prepaid or within a specified number of days of signing Bs/L.
• Before breaking bulk – or as commonly abbreviated to “BBB” – which in practice

means that freight will be paid before the vessel commences discharging. In
this case it is of vital importance that freight is indeed paid BEFORE the ship
commences discharging, otherwise costly claims could arise.

• On “Right and true delivery” of the cargo, which means that freight will be paid
on completion of discharging.
The first two ways are more common in the dry market, whereas the third and fourth ways
are more extensively used in the tanker market. However, variations of all the above ways
of payment can be found in both markets.
It can easily be understood that as the amounts of money related to freight are considerable,
it is to the benefit of the ship management company to have them collected – by the careful
follow up of the operators – as soon as possible and thus take advantage of any interest
accrued in the bank.
5.1.3 Terms Related to Freight
For practical reasons, a very simplified list of terms relating to freight is hereby provided.
5.1.3.1 Laytime
Laytime is “the time available to a charterer for a voyage-chartered ship’s cargo operations”
(Packard, W., Laytime Calculating, Fairplay Publications Ltd., p. 7).
In other words, it is the pre-specified and agreed time given to charterers during which they
are responsible to effect all loading and discharging operations.
This time is negotiable and can be expressed as either of:
(a) a certain number of days – for example three days to load and discharge (in tanker
chartering this can also be expressed in hours, e.g. 84 hours);
(b) as loading/discharging operations to be effected at the rate of a given amount of tons

per day, for example – loading rate: 500 mt/hr; discharging rate: 350 mt/hr.
Assuming that the cargo to be loaded is, say, 50,000 mt of cargo, the time allowed will be
calculated as follows:
500 mt/hr × 24 hrs = 12,000 mt/day for loading.
Loading laytime allowed: 50,000/12,000 = 4.166 days
350 mt/hr × 24 hrs = 8,400 mt/day for discharging.
Discharging laytime allowed: 50,000/8,400 = 5.952 days
Total laytime allowed: 4.166 + 5.952 = 10.118 days
If a vessel, following the charterers’ instructions, completes all loading and discharging
operations using, say 11 days, then demurrage is due to the owners by the charterers.

Freight/Hire Collection Module 3
If a dry cargo vessel, following the charterers’ instructions, manages to complete all loading
and discharging operations in less than the agreed laytime period, then dispatch is
payable.
If the vessel is a tanker vessel, dispatch is not payable.
5.1.3.2 Demurrage
Demurrage refers to the liquidated damages that shipowners receive if the charterers
exceed the allowed laytime for loading and discharging purposes.
It is expressed as a negotiated sum per day, for example US$15,000/pro rata per day, i.e.
the day is broken into decimal parts as follows:
1 day is 24 hours, therefore = 1.0
23 hours is 0.95833 of a day (derived if you divide 23 hours/24 hours)
Likewise, 60 minutes is 0.04166 of a day (60 minutes = 1 hour/24 hours)
59 minutes is 0.040972 of a day (derived if you divide 59/60/24)
When fixing a vessel, the owners of a ship will try to have a daily rate of demurrage
somewhat greater than the daily running cost of the ship to make sure that at least these
expenses are covered and the vessel is not delayed at a port, without the owners’/
managers’ ability to control these delays. To use the first example used in laytime (above),
if laytime is agreed to be 10 days for loading and discharging but the vessel has used 13
days for these operations, the owners should receive demurrage to cover for the vessel’s
loss of three days waiting at ports to load and discharge the charterers’ cargo.
Therefore, demurrage would be calculated as follows:
3 days demurrage × US$15,000 = US$45,000 payable to the SHIPOWNER.
To attempt yet another explanation on demurrage, one should remember that under a time
charter a vessel is compensated for every day, hour and minute under which she offers her
service to the charterers, even if an unexpected delay occurs; the same principle should
also be applied when vessels are under voyage charters.
5.1.3.3 Dispatch
Dispatch applies to dry cargo charters only and is, in fact, the opposite of demurrage: when
charterers effect the cargo operations in a shorter time than that allowed for by the laytime,
then they receive a “reward”, called dispatch. Dispatch is again a sum agreed in the charter
party, usually half the demurrage rate for every day “saved” or pro rata, i.e. for the part of
the day “saved”.
To use the example given in demurrage, “half dispatch” for US$15,000/day would be
US$7,500/day.

Therefore, if the laytime agreed is 10 days for loading and discharging operations, and
charterers have managed to complete these operations in only eight days, then they
should be rewarded by dispatch.
Dispatch then would be calculated as follows:
2 days dispatch × US$7,500 – US$15,000 payable to the CHARTERER.
5.1.3.4 The Notice of Readiness (NOR)
The NOR is tendered by the master of a vessel and by tendering it the master declares to
all parties concerned –the port authorities, the agents, the shippers or the receivers of the
cargo and any other authorities or bodies that may be involved in the voyage – his vessel’s
readiness to commence cargo operations. When this notice must be tendered will have
been agreed in the charter party. The NOR is most commonly tendered after a ship has
been granted free pratique, i.e. entered at the custom house and had her holds/inspected
and passed.
The significance of the NOR tendering is that laytime begins to count depending on it and on
the terms that have been agreed on the charter party. For example, laytime could start
counting 6 hours after tendering a valid NOR, or at 0800 hrs on the next working day. Actually,
there is a great variety of terms that can be agreed in this respect and further examples would
only be confusing to the reader.
In cases where reasons beyond the ship’s control (such as port congestion) can stand in
the way of tendering notice of readiness, the master should tender it anyway, as it would
most usually be accepted.
If a NOR is not accepted for some reason (e.g. ship’s holds not being accepted), then the
master must re-tender it, until it is accepted.
Tendering the NOR is heavily dependent on the charter party agreed, as in some cases
(especially for dry cargoes) the notice can only be given during daylight or during office
hours, during port working days, etc. Therefore, it is of paramount importance that a master
does all in his power to complete all formalities as soon as possible and tender the NOR
as quickly as he can, so that laytime commences as soon after arrival as possible – and it
is the duty of any good operator to examine the charter party and alert the master to tender
the NOR as soon as possible.
1. Define the terms hire, freight, laytime and demurrage.
2. Explain why correctly calculating monies due is important for a ship

management company.

6. MASTER’S GENERAL ACCOUNT (MGA)
Ships, no matter how sophisticated and technologically advanced, always need people to
put them in motion. Therefore, both on-board personnel (i.e. crew members) and shore
personnel (i.e. employees in the ship management company dealing with the vessel’s
operation) are needed to ensure that whatever terms and conditions have been fixed by a
charter party are carried out as agreed.
Shore personnel are easy to deal with, as they are employed and managed from a central
office – the ship manager’s office. They have a – more or less – fixed work schedule and
normally stick to it, getting regular weekends and bank holidays off work. Usually these
employees receive their compensation at the end of each month or as may be agreed by
their terms of employment.
However, things on board a vessel may be quite different: there are no bank holidays or
weekends, and although there is now a strict regulatory framework for on-board crew
working hours, there still may be deviations from it for a number of reasons: urgent orders
to clean the vessel’s cargo carrying compartments, bad weather conditions or crossing of
notorious piracy threat areas which require all crew to be on the alert, safety drills on which
all crew must participate – the list may be endless.
With so many crew members of various ratings, signing in the vessel at different time
periods and with constant changes in their overtime hours, naturally there is the need for
a system which records all that consistently.
The Master’s General Account, or MGA as it is usually referred to, in simple terms is a list,
or an account, giving details about the following:
• The duration of the period the MGA covers.
• The ports at which the vessel has called, giving exact arrival and departure
times.
• The time consumed at each port of call.
• The time consumed at sea (calling from one port to another).
• A list including the names of all crew members employed on a ship and their
respective agreed wages. This is used to keep a record of all monies that crew
members are receiving as wages, bonuses or overtime and even make
deductions, if necessary.
• It also records other activities, such as cash provided to the master of the
vessel to cover any additional expenses that might be incurred and are not
already paid for by the ship management company. These expenses may
include a variety of any extra costs or expenses such as giving a bonus to the
vessel’s agents for extra services provided, etc.

Module 3 Master’s General Account (MGA)
The MGA is a “bookkeeping” system recording the above information, which is compulsory
to have on all merchant vessels and copies of which are kept by the ship management
company for cross-checking and verifying.
Through the MGA, the payroll of the ship’s personnel is calculated for the period each crew
member is signed on the vessel until they are signed off and any records of any balance
due to them is shown there.
Apart from recording the wages, a Master’s General Account registers all cash withdrawals
from it made on account of every seaman’s wage. Usually seamen have their wages
allotted to a bank account; however, they may need cash at certain ports of call, which they
get from the cash provided to the master. This cash is further deducted from their agreed
wages.
The MGA further calculates the working days of every seaman, their overtime, bonuses, if
any, due for effecting extra work such as cleaning tanks, or crossing war risk areas. It also
takes into consideration deductions made on account of taxes or any other expenses that
each seaman may incur. Some bonded stores are charged to seamen and these are also
calculated in the MGA.
As vessels have numerous crew members, which change every few months, it is very easy
to see that the MGA is an absolutely necessary tool for the master and the ship management
company itself to use in order to keep track of the related crew costs and calculate the
exact balance due to crew members.
This allows both the crew members, who are also called upon to agree and sign the MGA,
and the ship management company to get a clear picture of the crew financial position at
any given period.
The MGA is sent by the master to the ship management company on a monthly basis.
The use of sophisticated databases allows all involved to have a clear picture of the crew
financial position at any given time, based on the respective wage scale for each seaman,
reconciling accounts for every one of them, providing summary analysis for them, in any
given currency, therefore, allowing both sea and shore personnel to analyse monthly
allotments, cash advances etc. as they see fit.
One may wonder why keeping the record straight when it comes to crew members and
funds due to them should be such an elaborate process, however understanding that a
happy crew usually results in a well-run vessel and in the achievement of desired financial
results should be a good enough reason.
SELF-ASSESSMENT QUESTION
1. Explain the functions of a Master’s General Account.

7. SUMMARY/CONCLUSION
This module dealt with the issues of vessel and voyage operations relevant to the
commercial voyage management, which are the commercial aspects of chartering, vessels’
operation and post-fixtures and the various duties involved in them.
The crucial function of bunkering has also been discussed, describing its complicated
nature and complexity, which greatly affects many aspects in shipping, the financial side
being the most important one.
Procurement and its vital role was further discussed, giving an overview of how a
commercial vessel is supplied. The timely despatch of all items that a ship needs at various
ports is crucial for the orderly function of a vessel and the well-being of her crew.
Disbursement accounts, which are formed by the various expenses incurred by vessels at
their ports of call and how they affect a vessel’s finances were also examined, and the
subsequent checking process explained.
Post-fixture analysis was examined, including freight collection, discussing the fundamental
elements of hire, freight and terms related to freight collection, such as the notice of
readiness, the statement of facts, laytime, demurrage and dispatch.
Finally, the Master’s General Account was explained, as an essential tool to keep a record
of all crew members signing on a vessel and their respective wages. MGAs are needed to
provide guidance on the exact amounts due to every seaman, for their wages, overtime,
bonuses, also taking into consideration deductions from these wages, if any.

SUGGESTIONS FOR RECOMMENDED
READING AND USEFUL WEBSITES
Applied Weather Technology, Inc. (AWT): Available from: http://www.awtworldwide.com/

products/fuel-schedule-optimization.asp
The Baltic and International Maritime Council, 2011: Available from: https://www.bimco.org
Baltic and International Maritime Council – BIMCO, available from: https://www.bimco.org/

en/Chartering/Documents.aspx
Clarksons, Shipping Intelligence Network, 2011: Available from: http://www.clarksons.com/
Det Norske Veritas, available from: http://www.dnv.com/
http://www.he-alert.org/index.asp
International Marine Purchasing Association, available from: http://impa.net.
International Maritime Organization, available from: http://www.imo.org/About/Conventions/

ListOfConventions/, accessed on 9 July 2011.
ISSA, available from: http://www.shipsupply.org/AboutUs.aspx (accessed 28 March 2012);

http://www.marine-knowledge.com/general/vessel-bunkering.html (accessed 29 March 2012).
Lloyd’s Register, available from: http://www.lr.org

AUTHOR BIOGRAPHY
Semiramis L. Koliou BSc, MSc
Semiramis is currently a Revenue Collection Executive with Navig8 Europe Limited.
She was a lecturer of the Shipping, Transport and Logistics department at BCA College in
Athens (Greece), which collaborates with London Metropolitan University (UK). Her
teaching experience has been gained at BCA, where she was lecturing on a part-time
basis for many years on undergraduate and postgraduate shipping courses, while at the
same time working in the shipping industry.
She also has many years’ working experience in reputable shipping companies in Greece,
working in various departments, such as accounting, operations, crewing, chartering,
freight collection, claims and insurance. Throughout her career in shipping she has given
on-the-job guidance and preparation for trainees, providing them with the realism and
practicality sought to complete tasks in shipping.
Semiramis holds a degree in International Shipping from the University of Plymouth (UK).
Her undergraduate studies include Economics as a major field of concentration and
Shipping Management and Operation as a minor field of concentration at The College of
Southeastern Europe (Greece).

REFERENCES
Packard, W. (1999) Laytime Calculating, Fairplay Publications Ltd.
Panayides, F. (2001) Professional Ship Management: Marketing and Strategy, Plymouth

Studies in Contemporary Shipping and Logistics, Ashgate Publishing Ltd., p. 6.
Stopford, M. (2009) Maritime Economics, Routledge, Part 1.
Taylor, D.A. (1990) Introduction to Marine Engineering, Revised 2nd Edition 1990, Elsevier
Ltd, Oxford.
http://www.marine-knowledge.com/general/vessel-bunkering.html
http://www.lr.org/sectors/marine/Services/Consultancy/FOBAS/FOBASM.aspx
http://impa.net
http://www.shipsupply.org
https://www.bimco.org/en/Chartering/Documents.aspx

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CERTIFICATE IN SHIP OPERATIONS

Vessel and Voyage Operations II

1. COMMERCIAL VOYAGE MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

1.1 Commercial Management and Ship Management . . . . . . . . . . . . . . . . . . . . . 5

2.1 Voyage Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

3.1 The Importance of Procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Certificate in Ship Operations 3-1

4.1 Items Included in Disbursements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

5.1 Freight Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

6. MASTER’S GENERAL ACCOUNT (MGA) . . . . . . . . . . . . . . . . . . . . . . . . . 26

SUGGESTIONS FOR RECOMMENDED READING

APPENDIX 1. DECIMAL PARTS OF THE DAY . . . . . . . . . . . . . . . . . . . . . . 32

APPENDIX 2. SAMPLE OF A STATEMENT OF

APPENDIX 3. SAMPLE’S OF COMMONLY USED

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3-2 Certificate in Ship Operations

By the time this module is completed, students should be able to:

• Understand the essential commercial voyage management functions of ship

• Evaluate the importance of bunker management and describe its complex

• Comprehend what procurement is and how the procurement process is carried

• Understand the significance of disbursements accounts and evaluate the need

Certificate in Ship Operations 3-3

Understanding what is involved in vessel and voyage operation is essential to employees

3-4 Certificate in Ship Operations

Commercial voyage management refers to ship management companies employing

1.1 COMMERCIAL MANAGEMENT AND SHIP MANAGEMENT

Ship management, which is somewhat different from commercial management, refers to

Commercial voyage management most commonly refers to an individual ship management

1.1.3 Post-fixture: Financial Analysis

Certificate in Ship Operations 3-5

1.2 OTHER FUNCTIONS PERFORMED IN SHIPPING COMPANIES

1.2.5 Finance and Accounting

3-6 Certificate in Ship Operations

1. Discuss the basic functions of commercial voyage management

2. Provide examples of how shipping companies are usually divided.

Certificate in Ship Operations 3-7

2.1 VOYAGE PLANNING

3-8 Certificate in Ship Operations

2.1.2 Bunkering: Receiving Bunkers

• Determine that there is adequate space for the volume of bunkers to be

• Establish the maximum loading volume for all tanks.

• Provide control for the setting of bunker system valves.

• Make arrangements for bunker tank ventilation and overflow.

Certificate in Ship Operations 3-9

3-10 Certificate in Ship Operations

Certificate in Ship Operations 3-11

2.2 BUNKERS COSTS

“provide ship operators and managers with independent verification of fuel

Lloyd’s Register, available from: http://www.lr.org/sectors/marine/Services/

2.2.1 Bunkers Quality and Prices

3-12 Certificate in Ship Operations

1. Regarding the vessel:

• vessel’s deadweight dwt;

• vessel’s fresh water production and consumption;

• the vessel’s daily bunker consumption, both in IFO and MDO;

• constant weights of the vessel.

4. The bunkers that the vessel already has on board.

5. The vessel’s consumption at sea and at port.

Certificate in Ship Operations 3-13

1. Evaluate the importance of bunkering.

3-14 Certificate in Ship Operations

As already discussed in Chapter 1 of this module, procurement refers to supplying a vessel

3.1 THE IMPORTANCE OF PROCUREMENT