Commercial Operations

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Fleet Management Training Institute Date : 01-Nov-2022

Course Handout Prep by: Course Incharge
Approved by : Principal
Commercial Operations
COURSE HANDOUT FOR COMMERCIAL OPERATIONS

Duration of course – 8 hours
Table of contents :
1. Shipping process and Commercial Operations
2. Types of Charter Party, Commercial terms & clause
3. Company procedure for Ship Business
4. Ship Owner’s risk exposure
5. Items covered under P&I
6. Letter of Indemnity (LOI)
7. Cargo documents & Record keeping
8. Claims on different types of ships
Course Framework :
Scope
The course is designed to enhance the knowledge of Chief Officers and prepare
them to understand the demands of commercial operations.
Develop an in-depth understanding of operations, and processes and how they
align with the company's/ Owner’s business strategy.
To better understand Charter Parties and Contracts of Affreightment and the
shipowner's interest/liabilities with respect to the same.
The maritime regulatory framework related to operations, ship and cargo
types, classification, insurance, key roles and relationships and the principles of
chartering.
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TIME TABLE
Sr.no. Session Subject Duration Time
1 Shipping process and Commercial Operations 0900 - 0945

1A 45 Mins
2 Types of Charter Party, Commercial terms & clauses 0945 - 1030

1B 45 Mins
3 Company procedure for Ship Business

1C 30 Mins 1030 - 1100
4 Shipping process from logistics point of view (Video)

1D 10 Mins 1100 - 1110
5 Life of a ship broker (Video)

1E 5 Mins 1110 - 1115
Tea Break
15 Mins 1115 - 1130
2A Ship Owner’s risk exposure 20 Mins
6 1130 - 1150
7 2B Items covered under P&I 20 Mins 1150 - 1210

8 2C Letter of Indemnity (LOI) 30 Mins 1210 - 1240
2D
9 Cargo documents & Record keeping 1240 - 1300
20 Mins
Lunch Break
1300 - 1400
60 Mins
3A
10 Claims on different types of ships 120 Mins 1400 - 1600
Tea Break
15 Mins 1600 - 1615
11 4 Case Studies 75 Mins 1615 - 1730
Assessment and Feedback 30 Mins

12 1730 - 1800
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1. SHIPPING PROCESS AND COMMERCIAL OPERATIONS

Step #1: Importer requests quotes and orders goods
• consignee orders goods from a supplier (also called consignor).
• A common way to pay the supplier is to obtain a letter of credit.
Many buyers use this because it’s one of the most secure payment methods in international
shipping.
• Agreeing on shipping incoterms
Incoterms are essentially the terms that allocate the costs and the risks between the buyer
and seller when shipping.
Step #2: Freight forwarder arranges export
• Freight forwarder, will then contact their overseas partner to arrange the collection of the
goods.
• This will involve the preparation of several key documents used in the international shipping
process which are required for customs purposes.
Step #3: Booking of freight
• Once the required documentation is in order, the supplier must make a booking for the
export shipment.
Step #4: Goods to travel to international depot/port
• Depending on the shipping incoterms, this will either be arranged by the supplier or by the
consignee through their freight forwarder. Export clearance can then commence.
Step #5: Goods processed through export customs clearance and placed in transit
• Prior to departure, the goods will be processed through export customs clearance.
• This is where all documentation is reviewed and checked by government agencies.
Step #6: Goods arrive in buyer’s country for import clearance
• Once a buyer’s goods arrive in the country of destination, the goods undergo an
• import clearance.
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• Several regulations to be followed depending on the goods imported, including may be subject to
certain taxes, tariffs and/or charges.
Step #7: Goods are transported from the port to the buyer’s doorstep
• Mode of final delivery can be pre agreed.
• DURING ALL THESE STEPS, COMMERCIAL OPERATIONS DEPARTMENT HAS TO BE
ALWAYS IN PICTURE TO MAKE THE THINGS HAPPEN AND WILL PLAY THE VITAL
ROLE
DUTIES OF THE OPERATIONS DEPARTMENT

DUTIES : 1 ) MAXIMIZING REVENUE
❑ Optimize vessels cargo intake and advise Chartering if the loadable quantities can be
increased – Maximize Freight
❑ Optimize bunkers stems and uplift for the voyage in discussion with Chartering and
the Master
❑ Work closely with Master and Manager to economize on Fuel consumption e.g. Sea
Steaming, In-Port, Heating etc.
❑ Work closely on rebilling and collection of Post Fixture revenue (Freight, Demurrage,
Deviation & Rebill claims)
DUTIES : 2) MINIMIZE EXPENDITURE

❑ Ensure bunkers are purchased at competitive rates (Forward Fixed Pricing, Hedging
etc.)
❑ Monitor performance warranties to ensure, no over or under-performance (Speed &
Consumption, Pumping etc.)
❑ Keep a close check on the vessels port turn around time and minimize planned
downtown / period out of service
❑ Negotiate Port Expenses
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DUTIES : 3) RISK MANAGEMENT

❑ Evaluates if any operation exposes the Owners to any claims and or damages (Tank
cleaning with cargo on board)
❑ Reviews tank cleaning plans in conjunction with the Master to ensure cargo tanks
presented load ready
❑ Letters of Indemnity
DUTIES : 4) ADMINISTRATIVE
❑ Sending the voyage fixture note to the ship and maintains a close liaison with the
Charterer and or Brokers.
❑ Appointment of Agents, Arranging Bunker on-hire/off-hire surveys, Prevent sub-
optimization of vessel’s tradability
❑ Ensuring vessel is bunkered for the intended voyage (Safe reserves met)
DUTIES OF A TYPICAL OPERATION’S SUPERINTENDENT – 1

• Direct responsibility, for assigned vessels, for the implementation of the
Company’s Safety Management System with respect to Safety of
Navigation, Cargo, Ballast and Mooring and other marine operations.
• Attending vessels worldwide to supervise operations and monitor vessel
condition and ships staff compliance with management policies,
international, state and local regulations.
• Responding to operations related correspondence from vessels and
others and necessary follow-up.
• Reviewing and responding to vessel discharge and loading plans and
general supervision of cargo operations, including review of voyage
orders when necessary.
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DUTIES OF A TYPICAL OPERATION’S SUPERINTENDENT - 2

• Responding to charterers on operational questions and liaising with
Principals regarding same. Reviewing cargo letters of indemnity and
advising Masters when required by Principals.
• Where required appoints Owner’s Protective Agent for vessel port
calls.
• Monitors on-board navigational practices and provides guidance on
navigational issues when appropriate.
• Daily monitoring of vessels’ movements.
DUTIES OF A TYPICAL OPERATION’S SUPERINTENDENT – 3

• Liaison with Fleet Personnel Department on matters related to
appointment of deck officers to managed vessels. In consultation with
Fleet Manager and Superintendent Engineer as necessary.
• Reviews deck personnel appraisals.
• Interview candidates for senior positions, or promotion to senior
positions in the deck department.
• Briefing/de-briefing and appraise Masters
DUTIES OF A TYPICAL OPERATION’S SUPERINTENDENT - 4

• Liaising with P & I Clubs (i.e. USA voyage returns, CLC renewals, non-
crew personnel, ice warranty and war risk breaches etc.).
• Work closely with the Tech. Superintendents and provide operational
advice to the Technical Group / Team.
• Arrange oil major/CDI inspections in consultation with Principals,
Master and Fleet Team.
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• Respond to oil major/CDI inspections in consultation with Master and

Fleet Team
WHAT CAN GO WRONG; OPERATIONALLY ?

• Presenting the ship at load port with cargo tanks in contradiction with
Charterers Orders.
• Not tendering a valid NOR (location or tendering NOR only once for Two
ports
• Failure to follow Charters reporting requirements or Voyage
Instructions (ETA’s etc.
• Failure to issue Protests (e.g. Free Pratique, When in doubt, Issue a
Protest
• Failure to check and sign paperwork or signing without checking for
accuracy (Bill of Lading)
• Failure to obtain signature from Terminal / Charterers representatives
(NOR, Pumping logs etc.)
• Early Disconnection of hoses - prior to ROB survey
• Short loading / dead-freight claim (Ship Stop or Shore Stop?)
• Overloading (Ship Stop or Shore Stop?)
• Cargo contamination (Protecting Vessel & Owner, Samples)
• Failure to notify ship’s operator
• Signing blank forms and or receipts (When in doubt, stop & query ship’s
operator)
• Performance of Main Engine (Is vessel performing as per C/P warranties
or as expected?)
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• Weather routing & Safe Passage Planning (UKC, Utmost dispatch and
always WSNP)
• Navigation in Heavy Weather (Heavy Wx precautions taken? Again
WSNP applies?)
• Failure to document facts & advising Owners/Manager (Oil sheen in
port?)
• Relying on verbal instructions issued by third parties (Transcribe verbal
dialogue, request instructions be sent in writing)
2. Definition of Charter Party :

Charter party is a, contract by which the owner of a ship lets it to
others for use in transporting a cargo. The shipowner continues to
control the navigation and management of the vessel, but its carrying
capacity is engaged by the charterer.
Types of Charter Party :

A. Demise or Bareboat Charters
B. Non-demise Charters (Voyage and Time Charters).
Demise of Bareboat Charter :

1. In the Demise or Bareboat Charter the shipowner puts at the disposal of
the charterer merely the ship (hence it is called the bareboat charter) for
a specified period of time, in some cases running into several years.
2. The charterer takes over full control of the vessel as if he were the
owner (disponent owner).
3. The actual registered ownership still remains with the original owner.
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4. Bareboat chartering is not technically a contract for the carriage of

goods by sea. It is a "lease" of the ship, with an option to sell it to the
charterer at an agreed residual value after a period of time.
5. Any damage to (or claims on the) cargo is to be made good solely by the
charterer.
6. The owner of the vessel receives a relatively modest hire payment
commensurate with his reduced responsibilities and risks
7. Financiers wishing to invest in ships but having no expertise to operate
them find this method suitable.
NON DEMISE CHARTER (VOYAGE OR TIME)

➢ A non-demise charter arises when the shipowner provides the ship and
the crew with of course, the master and the officers, whilst charterer
provides the cargo.
➢ A voyage charter and time charter, which fall in this category, are further
elaborated hereunder.
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TIME CHARTER
WHO BEARS WHAT EXPENSES ?
Shipowner's Account Charterer's Account
Depreciation Hire money
Insurance of vessel (H&M) Bunkers
Interest on capital Port charges
Survey costs (if required) Canal dues
Overheads Load/disch expenses
Running costs Fresh water for boiler
Crew wages Some cargo claims
Water for domestic use Insurance of cargo and bunkers
Brokerage
Some cargo claims
Repairs and maintenance
VOYAGE CHARTER
WHO BEARS WHAT EXPENSES ?
Shipowner's Account Charterer's Account
All above costs + load/disch costs Freight & Demurrage
Port charges and canal dues Some cargo claims
Despatch if applicable
Water for all purposes
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INCOTERMS
➢ ICC’s Incoterms rules are the world’s essential terms of trade for the sale
of goods.
➢ The Incoterms rules provide specific guidance to individuals participating
in the import and export of global trade on a daily basis.
➢ Incoterms is an acronym standing for international commercial terms.
Incoterms is a trademark of International Chamber of Commerce,
registered in several countries.
➢ The Incoterms rules feature abbreviations for terms, like FOB (“Free on
Board”), DAP (“Delivered at Place”) which all have very precise
meanings for the sale of goods around the world.
➢ The use of Incoterms eliminates inconsistencies in language by giving all
parties the same definition of specific terms within a trade agreement.
➢ As a result, the risk of problems during shipment is reduced since all
parties clearly understand their responsibilities in performing trade
under the given contract.
COMMERCIAL ABBREVIATIONS
It will be helpful to know some common terms
• B/L - (Bs/L) Bill of lading (bills of lading)
• AFSPS - Arrival First Sea Pilot Station
• COGSA- Carriage of Goods by Sea Act
• CIF & E Cost, insurance, freight and exchange
• COB - Cargo on board; close of business (chart.)
• CHOPT - Charterer’s option
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• C/P -Charterparty; custom of the port

• C/N -Credit note
• DOP- Dropping outward pilot
• D.O. Delivery order
• f.i.o.s. (FIOS) Free in and out and stowed
• Fifo First in first out
• FIOT (fiot) Free in and out and trimmed
• FHEX- Friday and holidays excepted
• FHINC -Fridays & Holidays included
• FIOSpT -Free in and out and spout trimmed
• FWAD Fresh water arrival draft
• FLASH Feeder lighter aboard ship
• FIOST Free in and out, stowed and trimmed
• WL Institute Warranty Limits
• Lay/can Laydays commencing/laydays cancelling
• L/C Letter of credit; laydays commencing/laydays cancelling
• MOLCO More or less charterer’s option
• MTO Multimodal Transport Operator
• NAABSA Not always afloat but safety aground
• OSP One safe port
• OO Owner’s option
• Subs Subjects (fixed on)
• TARV Trans Atlantic Round Voyage
• TPRV Trans Pacific Round Voyage
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• MOLOO More or less owner’s option

• Wob Washed overboard
• X Shex, Sunday & Holidays excluded.
• DBE Despatch payable both ends
SOME COMMON CLAUSES
New Jason Clause

➢ The purpose of this clause is to highlight the fact that no matter what,
the general average would apply to the contract of carriage.
BOTH TO BLAME COLLISION CLAUSE

➢ A both-to-blame collision clause is an insurance policy clause that says
both vessel owners must share in the responsibility of a collision
between ships if the crash was due to negligence.
WAR RISK CLAUSE FOR TIME CHARTERS

➢ an exclusionary clause eliminating coverage for losses arising out of war
or warlike actions
BIMCO ice clause for Time Charter Parties
➢ The Vessel shall not be obliged to force ice but, subject to the Owners’
prior approval having due regard to its size, construction and class, may
follow ice-breakers
ISPS/MTSA CLAUSE FOR TIME C/P
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➢ Clause provides that the cost of security guards is to be for the

charterers' account, “unless such costs or expenses result solely from
the negligence of the Owners, the previous trading of the Vessel, the or
the identity of the Owners' managers.
➢ Off-hire Clause
Should the vessel be off-hire for more than 25 consecutive days the
Charterers have the option of cancelling this charter party provided no
cargo on board
BIMCO Piracy clause for Time Charter Parties

➢ The Vessel, unless the written consent of the Owners, shall not be
ordered to , any port, place, area or zone (whether of land or sea},where
it appears that the Vessel, her cargo, crew exposed to any actual,
threatened or reported acts of piracy.
➢ Should the Vessel be within any such place as aforesaid, which only
becomes dangerous, after her entry into it, she shall be at liberty to
leave it.
Salient features of C/P

These needs to be carefully checked in C/P document:
➢ Description of Vessel
➢ Duration
➢ Delivery
➢ Dangerous Cargo/Cargo Exclusions
➢ Trading limits
➢ Bunkers
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➢ Rate of Hire/Redelivery Areas and Notices

➢ Items which Owners will provide
➢ Items which Charterers will provide
➢ Berths
➢ Delivery/Cancelling
➢ Drydocking
➢ Salvage
➢ Stowaways
➢ Liberties
➢ Liens
➢ Bills of Lading
➢ General Average
➢ Navigation
➢ Cargo Gear and Lights
➢ Crew Overtime
➢ Ice
➢ Stevedore Damage
DEMURRAGE
➢ If the Charterers do not load the cargo in the agreed charter‐party lay
time, the Owners are entitled a payment for the delay to the ship.
➢ The payment is called demurrage.
➢ There is some important aspect of demurrage which every Master
should be aware of.
➢ If the ship goes on demurrage, then any exceptions to lay time like
Sundays, holidays etc., do not stop the demurrage accumulating.
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➢ "Once on demurrage, always on demurrage"
DESPATCH
➢ If a charter completes cargo operations before the allocated time as per
charter party, he is entitled to a payment by the Owners. This payment is
called "Despatch".
Weather working Days

➢ Weather working days" means days on which cargo operations are not
interrupted by weather.
➢ Weather stoppages stop the Lay time clock.
Voyage Instructions
➢ When the ship is fixed for the voyage charter, master will receive
“Voyage instructions” from the charterer through the ship owner’s
commercial team.
➢ The voyage instructions contains the information from the charter party
agreement that requires master’s attention and subsequent actions.
➢ Master must not miss the points in the voyage orders that requires his
actions.
➢ One of the way to do it is to highlight the text of the voyage instructions
that require his attention for easy follow up.
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Typical points in the voyage instructions :

• Name of the vessel
• Loading Port
• Discharge Port
• Laycan
• Cargo detail:
• Cargo Breakdown
• Loadport ETA notice
• NOR instructions
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• While on passage to discharge port- Speed instructions etc
3. Company procedures for Ship business

Certificates, Surveys and Inspections(QHSE Section 2.7)
➢ Master must ensure that all statutory, class and Trading certificates are
original and kept valid at all times.
➢ Upon receipt of a new certificate, Master should verify the accuracy of
its content, prior filing in ships certificate file. Any discrepancy observed
should be immediately notified to vessel’s superintendent.
Seaworthiness (QHSE Section 2.5)

➢ The seaworthiness of a ship is, understandably, the most important
characteristic and the consequences of becoming unseaworthy are
serious.
➢ If, during the course of a voyage, the ship sustains any damage which
might affect the validity of any of her safety certificates, then this must
be reported immediately to the Office for making necessary
arrangements to have the ship inspected and take necessary remedial
action to restore her seaworthiness and validity of the certificate.
Notice of readiness (QHSE Section 2.8)
➢ Upon arrival at the port, the ‘Notice of Readiness’ (NOR) is issued to
receive immediate attention. The Notice Of Readiness (NOR) is always to
be tendered in accordance with the terms of the Governing Charter
Party.
➢ ‘Notice of Readiness’ must be tendered on arrival, at Pilot Station, at the
port where cargo is to be worked
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When to tender NOR

➢ she has reached/arrived a position within the port where waiting ships
usually lie.(e.g. Pilot onboard, anchored, arrived port limit)
➢ She is ready in all respect to load/discharge cargo.
➢ Master has to tender 2nd NOR at times to protect ship owners interest
without prejudice to the original NOR
NOR has to be tendered on following occasions but not limited to
➢ Arrival pilot station
➢ Anchoring at Customary anchorage
➢ Vessel all fast
➢ On clearance received from authorities
➢ Shifting to different berth
➢ Everyday at certain time if vessel not berthed
Early departure procedure(EDP) (QHSE Section 2.7.2)

➢ The Master will authorize the Agent to sign doc on his behalf From (S ‐
2.9 F) but only after the Master has been consulted and reviewed B/L
figures and noted by protest any difference between ship and shore
(B/L) figures.
➢ The Master retains the right to and should protest, even by email for the
ship/shore differences, if found upon vessel’s departure.
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➢ Before the ship is released to sail, a comparison will be made by the

Shippers of the ship /shore figures and if within acceptable limits, the
ship will be permitted to sail.
Cargo claims (QHSE Section 2.18)

➢ Heavy Weather: Whenever heavy weather is encountered and there is a
possibility of cargo damage resulting either from the ingress of water or
the shifting of cargo, the Master should notify the Company and the P &
I Club's local representative so that a Club Surveyor can attend to
conduct a survey as soon as the vessel berths.
➢ Ventilation: Certain cargoes require controlled ventilation operating
continuously. If continuous controlled ventilation becomes impossible
because of mechanical breakdown or weather conditions, damage to the
cargo may result from the condensation, overheating or other factors.
The P & I Club Surveyor should always be called in if ventilation damage
is suspected or confirmed.
➢ Improper Stowage: Whenever cargo damage occurs as a result of the
collapse of section of cargo, the P & I Club Surveyor should be called in.
The damage may be caused by the use of under‐strength packing
materials or by improper stowage methods on board.
4. Shipowner’s Risk Exposure

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➢ During the entire shipping process, there are numerous legal liabilities
that shipowners are exposed to during the operation of their ships.
➢ Examples include cargo damage, collision and jetty damage, crew injury
and oil pollution.
➢ This list of exposures is growing rapidly as the IMO continues to create
further regulations
➢ Therefore, being responsible Maritime professionals, it is important for
us to understand these.
Defence and Legal Costs

➢ Legal liabilities which may arise in contract, in tort (negligence) or as a
breach of maritime or other law. A pro-active liability defence cover
inclusive of survey, claims adjustment, legal advice and ultimate
settlement on best terms will be necessary.
➢ Ship Collisions
Repair damage to ‘own ship’ plus the liability for the damage and
consequential losses to the other vessel can get complicated.
➢ Contact with Fixed and Floating Objects (FFO)
FFO damage caused by contacts with jetties and fendering, shore cranes,
navigational buoys and other 3rd Party property. Claims can arise for
consequential economic losses due to jetty damage closure and repair
downtime. Assistance will be needed for attendance by specialist civil
engineers to assess both the underlying cause and reasonable cost of repairs.
➢ Cargo Damage and Loss

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Damage and loss to cargo are normally covered by the shipper’s or consignee’s
cargo insurance policy. In turn, the cargo insurer will then bring a subrogated
and often aggressive recovery claim against the shipowner. Regardless of
whether the claim is brought by cargo insurers or directly by cargo interests,
Shipowners P&I will require to step in immediately to survey, defend against
cargo insurers or other interests and, if necessary, negotiate settlement on
best terms.
➢ Injury or Death of Crew, Passengers, Stevedores, Pilots, etc.

Ships can be hazardous places, especially while working cargo. Claims for injury
or accidental death to crew, passengers and other persons who come on board
comprise one of the largest elements of P&I liability exposure. Cover for all of
these risks, whether they arise under crew employment contracts or from
alleged shipboard negligence.
➢ Shipowners liability for wreck removal

is now decreed by the IMO’s Nairobi Convention. It entitles a formal port
authority order against owners if a wreck poses a navigational or
environmental hazard. The resultant legal exposure is one of strict liability and
limitation of liability is not generally entitled. Once H&M underwriters agree to
an ‘in principle’ payment of a Constructive Total Loss (CTL), then P&I will then
engage to cover wreck removal expenses.
Speed and performance warranty

➢ Most standard Charter Parties impose warranty for speed and
performance and owner has the duty to maintain the ship throughout
the charter period and the Master has a duty to prosecute his voyages
with utmost dispatch.
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➢ These clauses imply that the ship has to maintain her warranted
performance, during good weather periods, throughout the charter
period.
➢ Generally, a ship’s performance is warranted as a capability of a certain
speed, using a certain fuel consumption, in good weather only.
Speed and performance disputes

❖ Speed and performance disputes commonly arise between owners and
charterers under time charters.
❖ These disputes normally take the form of deductions from hire which
have either already been made by the charterer or are to be made in the
near future.
❖ Charterers deduct from hire (by way of set off) any extra time and
bunkers spent performing a voyage.
Adjusted for about

About factor is generally accepted and widely used as an allowance of 0.5
knots on speed and 5% on fuel consumption. Although this "rule" seems to be
applied invariably in London arbitrations, it is not actually the Law. Unless it is
expressly stated in the charter party, 5% allowance on fuel consumption only
be considered while calculating whether there is overconsumption or not. In
other words, 5% allowance on fuel is not to be used in bunker savings unless
otherwise stated in the charter party.
❖ It is common ground that the vessel's speed and consumption

performance is to be measured against both Beaufort force 4 and
Douglas sea-state 3.
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Average speed
Where the charter warranty provides for an average speed, the average is
usually defined over a prescribed period.
Good weather definition

- Which days to be taken as good weather days
- Average speed and consumption on good weather days
- Time of C.O.S.P and E.O.S.P
- Any instruction from charterers for slow speed
Speed and performance claims assessment
Speed and performance warranty are often assessed by charterers against

❑ Log books
Historically, the master’s evidence has been preferred by mariners and owners
when it comes to determining the ship’s performance in good weather.
❑ Routing company data
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By comparison, many charterers engage weather routing companies to

calculate a ship’s performance.
❑ Other sources
Information from independent weather bureaus, or local weather stations,
may also be applied.
Consideration for owners in defending performance claims

❑ Bad fuel supplied by Charterers.
❑ Bad weather during the voyage.
❑ Allowance should be made for the word "about" both in respect of
speed and in respect of fuel consumption.
❑ Savings in fuel may reduce the damages.
❑ The master made a sensible navigation decision to avoid bad weather or
to deviate to save life or property.
What is EEXI? (ENTRY IN FORCE 01 Jan 2023)

❖ The EEXI measures CO2 emissions purely considering the ship’s design
parameters.
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❖ EEXI does not require any measurement or reporting of true CO2

emissions while the ship is in operation.
❖ EEXI is the sister to EEDI, Energy Efficiency Design Index, which has been
in force since 2013.
❖ EEDI is applied to new ships while EEXI applies to existing vessels.
❖ EEXI regulation is one of the most significant measures by the IMO to
promote more environmentally friendly technologies and reduce the
shipping industry’s carbon footprint.
Some of ports in Europe, Asia, Canada etc. apply green discounts and rebates
that range from 0.5% to 20% of the port fees for complying with EEXI
requirements
What is C.I.I. ?
❖ To achieve a reduction in carbon intensity in the year 2030 by 40%
compared to year 2008.
❖ CII will help in achieving IMO goal of reducing GHG emissions by
improving vessel’s energy efficiency.
❖ From 2023, the CII requirements will take effect for all cargo, RoPax and
cruise vessels above 5,000 GT and trading internationally.
❖ The CII measures how efficiently a ship transports goods or passengers
and is given in grams of CO2 emitted per cargo-carrying capacity and
nautical mile.
What can Owners / Operators do to improve EEXI & CII?

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❖ Consider modifications such as engine power limitations

❖ Changing to more efficient fuel methods
❖ Hull form improvements
❖ Upgrading to more efficient propellers.
❖ Focus on increasing operational efficiency by planning routes to optimize
environmental conditions.
❖ Reduce or increase speed to reach the vessel’s most efficient operating speed.
5. PROTECTION & INDEMNITY CLUBS &

RISKS INSURED UNDER P & I COVER
Protection and Indemnity or P&I club is a non-governmental,

non-profitable mutual or cooperative association of marine
insurance providers to its members which consists of ship
owners, operators, charterers and seafarers under the
member companies
SCOPE FOR P & I CLUB COVER
➢ It is sometimes said that the Club covers risks which
cannot be placed elsewhere or that it covers everything
that is not covered by some other policy of marine
insurance.
➢ A more accurate description would be that a P & I Club
covers its members against their liabilities to third
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parties except for crew claims which are in fact

contractual liability.
➢ What P&I insurance covers?
• Personal injury, Illness and death claims from the crew, passenger, etc.
• Stowaways and its repatriation arrangement.
• Cargo claims for damage or loss of the same.
• Unrecoverable GA contributions.
• Liability due to a collision.
• Damage to fixed and floating objects ( Jetty, Pier, marine animals, Rig, Fishery Facility, etc.)
• Liability under approved towage contracts
• Removal of wreck
Some of the major P&I clubs :
➢ American Steamship Owners Mutual Protection and Indemnity Association, Inc
➢ The Britannia Steam Ship Insurance Association Limited
➢ Gard P&I (Bermuda) Ltd.
➢ The Japan Ship Owners' Mutual Protection & Indemnity Association
➢ The Steamship Mutual Underwriting Association (Bermuda) Limited
➢ Sveriges Ångfartygs Assurans Förening / The Swedish Club
➢ United Kingdom Mutual Steam Ship Assurance Association Ltd
➢ The West of England Ship Owners Mutual Insurance Association (Luxembourg)
P&I Claims:
➢ The P & I Club must be informed immediately when an incident occurs which could lead to a
claim. This is to be done both through the Head Office and the local representative.
➢ A list of the P & I local correspondents is published regularly and must be carried on board.
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➢ It is essential that the P & I Club is informed as soon as possible.
➢ Some claims will be rejected if the Club is not informed at the time of the incident.
➢ Any delay in reporting may make it very difficult to resolve a dispute at a later date
➢ Any time a third party calls for a survey of cargo, of the ship or anything connected with the
ship which could lead to a claim, the P & I Club local correspondents must be informed in
time to allow them to Surveyor Appoint A to represent the ship Owner's interests
WHEN TO CALL P& I CLUB

• Whenever cargo Receivers state they intend to carry out a cargo survey, the P & I Club
should be asked to send a Surveyor to represent the ship Owner's interests.
• The P & I Club Surveyor's experience of surveying many cargoes of different types enables
him to recognize whether or not the Receiver's claims are justified.
• Whenever the Master considers that the cargo he is loading or about to load is not as
described because of condition, moisture content or packaging, he should call the Office or
Owners and make the proper contact to arrange for the P & I Club to survey the complete
cargo before it is loaded.
• The Surveyor will advise the Master how to clause the Bill of Lading, if this is necessary, with
the most appropriate wording describing the defect.
• Whenever the Master considers it necessary to note protest on arrival in port, the P& I Club
should be informed of the "Note of Protest
6. Letter of Indemnity
❖ LOIs are an essential document to help world trade run smoothly.
❖ A letter of indemnity is generally used when the carrier is requested to step out of its
standard contractual obligations, at the request of the cargo owner (also the
signatory of the LOI)
❖ A Letter of Indemnity is offered by the shipper, promising to indemnify the carrier
against any loss or liability as a consequence of stepping out of its standard
contractual obligations.
❖ LOIs are generally requested by ship owners to Indemnify the shipowner, their
servants and agents and hold all of them harmless in respect of any liability, loss,
damage or expense of whatsoever nature which they may sustain by reason of
delivering the cargo in accordance with the request to do so.
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❖ It shall be borne in the mind that the Master does not have the authority to accept
‘Letter of Indemnity’ and same must be brought to the Owner’s attention. Master
needs to act as per owner’s instructions.
❖ The issuance of the letter of Indemnity allows the shipper to take immediate delivery
of the goods, thus saving himself time, additional demurrage, insurance costs.
Below are the most common scenarios in which an LOI is used

Cargo Release without Bill of Lading
Cargo Delivery to a Port Not Stated in the Bill of Lading
Changes/ misdescribing voyage terms
Change of Shipper
misdescribing or concealing the condition of the goods
misdescribing the quantity of the goods
misdescribing the voyage
misdescribing the date of shipment
misdescribing the date of issue of the bill of lading
Mixing dry cargoes
co-mingling, blending or adding dye to liquid cargoes
carriers are requested to handle special types of equipment
7. CARGO DOCUMENTS AND RECORD KEEPING :

❑ Notice of Readiness
❑ Notice of Readiness re-tendered
❑ Request for free pratique
❑ LOP for free pratique not granted
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❑ Mates’s receipt
❑ Bills of Lading
❑ Authorization to sign Bills of Lading
❑ Statement of Facts
❑ Letter of Protests
❑ Dead freight statement
❑ Loading / Discharging log
❑ Certificate of Origin
❑ Cargo Manifest
Additionally , on oil/ chem tankers

❑ Tank inspection certificate (Prior loading)
❑ OBQ report (Prior loading)
❑ Ullage report (After loading)
❑ Certificate of Quality
❑ Certificate of Quantity
❑ LOP (Free water, discrepancy in ship-shore figures, slow loading, delays during
berthing, delays during cargo operations, short loading)
❑ Slop tank report
❑ Samples receipt
❑ Pre transfer meeting document
❑ Vessel experience factor
❑ Pumping log
❑ Empty tank report
❑ Cargo receipt
❑ MSDS
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For bulk carriers :

❑ Hold inspection certificate
❑ Phytosanitary certificate
❑ Certificate of compliance with exemptions to trade sanctions
❑ UN approval certificate
❑ Declaration by shipper
❑ Certificate of transportable moisture limits
❑ Certificate of moisture content
❑ Masters response sheet
❑ Certificate of lashing
❑ Certificate of fitness to proceed to sea
❑ Certificate of weight and quantity
❑ Hatch sealing certificate
❑ Trimming certificate
❑ Stevedores time sheet
❑ Clean ballast discharge permit
❑ Paint compliance certificate
❑ Stevedores damage form
❑ No damage certificate
For Container ships :

❑ Commercial invoice
❑ Import/export customs declaration
❑ Air or railway bill
❑ Import licence
❑ Letter of credit
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❑ Importer security filing

❑ Packing list
❑ Dangerous goods declaration
❑ Container stowage plan
8. Cargo Claims- Tanker vessels

• Claims for shortage generally arise due to:
• Bill of Lading / shore figure high
• Ship or shore tank calibration error
• Incorrect density, temperature, ullage
• Evaporation / settling out of water
• Mistakes made in calculations
• Leakage of cargo
• Cargo not fully discharged (ROB)
To avoid Claims for shortage:
• Master should not sign the Bill of Lading and should suspend the Agent’s authority to
sign.
• Regular checks of cargo tank ullages, temperatures and pressures at loading, during
voyages and while discharging. Keep good records.
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• Cargo calculations to be double check by other officer and compare with cargo
surveyor.
• Lop for settling of water to be issued at load port.
• All tanks to be stripped empty and gauged jointly with cargo surveyor and dry tank
certificate signed by surveyor.
Precautions to be taken to avoid any claims
Load Port
• Samples has to be collected at manifold at the commencement of loading and 1st

foot in tank. Cargo must be stopped immediately upon any
discrepancy/discolouration in samples. Charterers/company/P&I need to be
informed immediately.
• Cargo temperature needs to be maintained as specified in CP. Temperature should
not exceed as specified in CP which might change the properties of the cargo.
• Ullage of non-nominated tanks should be monitored. Precautions should be taken to
avoid migration of cargo in other tanks.
Discharge port
• Cargo quantity before discharging has to be within limit as per CP. Voyage loss
should not be more than as mentioned in CP. Carry out Re ullaging and inform
charterers/owners if voyage loss is exceeding as per CP.
• Discharge rate or manifold pressure requirements of port should be always complied
with.
• Dry tank must be obtained and signed by cargo surveyor/loading master upon
completion of loading.
• Do not sign any document/protest for any out turn.
CARGO CLAIMS ON BULK CARRIERS :
SWEDISH CLUB SAYS: Cargo claims are the most common and costly category of
P&I claims. Analysis of the statistics over the past years (2016-2020) shows that
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• 20% of all insured bulk and general cargo vessels suffer a cargo claim a year.
• Most common type of claim:
Shortage (41%)
Physical damage (20%)
Wet damage (19%)
Contamination (7%)
Spontaneous heating (2%)
• Most common type of cargo involved:
Grains, dry bulk (25%)
Steel products, breakbulk (20%)
Rice, bagged (11%)
Other agricultural products, dry bulk (6%)
Soya beans, dry bulk (6%)
How to avoid wet damage on bulk carriers
• Before leaving port, the crew should inspect the hatch covers to ensure they are in a
weathertight condition. There should be no cargo in the drain channels, each hatch
cover should be secured properly, paint should be intact and the gaskets and
coamings should be in good condition.
• Carry out a weathertightness test at least annually and always after repairing or
replacing components in the cargo hatch system. When carrying water-sensitive
cargo such as grain, soybeans,paper, etc. it is recommended that weathertightness is
tested before each loaded voyage. Ultrasonic methods are suggested.
• Cargo hatch covers must be inspected and tested at regular intervals in accordance
with vessel-specific procedures e.g. opening, cleaning before closing, closing,
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cleating etc. These records should be kept in the Planned Maintenance System
(PMS).If complicated repairs are required, professional specialists should be
employed.
Reasons for Cargo Claims on Reefer Containers
• Reefer container temperature significantly different from the carriage set-point
temperature
• Incorrect set-point temperature
• Refrigerated container malfunction
• Refrigerated container failure.
• Lack of electrical power, either post stuffing and prior to loading
• Refrigerated container not being plugged in upon receipt on board
• Excessive voyage length, due to port congestion, deviation due to Covid restrictions
or other reasons, or vessel breakdown
Reasons for Cargo Claims on DG Containers
• Incorrect cargo declaration (due to fraud or miscommunication).

• Non-declaration of dangerous cargo by shippers.
• Poor quality and selection of packaging or improper container packing.
• Provision and accuracy of documentation and labelling.
• Professionalism of the container packing process.
• Human factors – regional, cultural & company attitudes to good practice and
compliance.
• Unchecked irregularities in the product production process.
• Mis-handling or dropping containers.
STEVEDORE DAMAGES :
Stevedore damages classed as :
➢ Damage to ship
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➢ Damage to cargo
➢ Personal injury
➢ Charterers responsibility as per CP clauses
➢ Stevedore damage clause to be followed by the Master
➢ Master to notify Charterers / Agents about damage as soon as practically reasonable
➢ Damage affecting seaworthiness must be repaired prior departure port
ACTIONS BY MASTER TO AVOID CLAIMS FROM STEVEDORE DAMAGE

o Inform stevedores before hand to ensure smooth operation
o Supervise the stevedores during the cargo operation
o Accurately noting damages and notifying charterers
o If in doubt, contact local P&I club for assistance
o Must comply with time limits for notification
o Issue protest for poor stevedoring performance
o Photographic evidence to be collected
o Accurate log book entries to be made
o Instruct duty officers to be more vigilant
o Photographic evidence must have a time stamp preferably
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STEVEDORE DAMAGE REPORT FORM

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STEVEDORE ADVANCE LETTER

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Commercial Operations

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Fleet Management Training Institute Date : 01-Nov-2022

COURSE HANDOUT FOR COMMERCIAL OPERATIONS

1 Shipping process and Commercial Operations 0900 - 0945

2 Types of Charter Party, Commercial terms & clauses 0945 - 1030

3 Company procedure for Ship Business

4 Shipping process from logistics point of view (Video)

5 Life of a ship broker (Video)

7 2B Items covered under P&I 20 Mins 1150 - 1210

Assessment and Feedback 30 Mins

1. SHIPPING PROCESS AND COMMERCIAL OPERATIONS

DUTIES OF THE OPERATIONS DEPARTMENT

DUTIES : 2) MINIMIZE EXPENDITURE

DUTIES : 3) RISK MANAGEMENT

DUTIES OF A TYPICAL OPERATION’S SUPERINTENDENT – 1

DUTIES OF A TYPICAL OPERATION’S SUPERINTENDENT - 2

DUTIES OF A TYPICAL OPERATION’S SUPERINTENDENT – 3

DUTIES OF A TYPICAL OPERATION’S SUPERINTENDENT - 4

• Respond to oil major/CDI inspections in consultation with Master and

WHAT CAN GO WRONG; OPERATIONALLY ?

2. Definition of Charter Party :

Types of Charter Party :

Demise of Bareboat Charter :

4. Bareboat chartering is not technically a contract for the carriage of

NON DEMISE CHARTER (VOYAGE OR TIME)

• C/P -Charterparty; custom of the port

• MOLOO More or less owner’s option

SOME COMMON CLAUSES

New Jason Clause

BOTH TO BLAME COLLISION CLAUSE

WAR RISK CLAUSE FOR TIME CHARTERS

➢ Clause provides that the cost of security guards is to be for the

BIMCO Piracy clause for Time Charter Parties

Salient features of C/P

➢ Rate of Hire/Redelivery Areas and Notices

➢ "Once on demurrage, always on demurrage"

Weather working Days

Typical points in the voyage instructions :

• While on passage to discharge port- Speed instructions etc

3. Company procedures for Ship business

Seaworthiness (QHSE Section 2.5)

When to tender NOR

Early departure procedure(EDP) (QHSE Section 2.7.2)

➢ Before the ship is released to sail, a comparison will be made by the

Cargo claims (QHSE Section 2.18)

4. Shipowner’s Risk Exposure

Defence and Legal Costs

➢ Cargo Damage and Loss

➢ Injury or Death of Crew, Passengers, Stevedores, Pilots, etc.

➢ Shipowners liability for wreck removal

Speed and performance warranty

Speed and performance disputes

Adjusted for about

❖ It is common ground that the vessel's speed and consumption

Good weather definition

Speed and performance claims assessment

Speed and performance warranty are often assessed by charterers against

By comparison, many charterers engage weather routing companies to

Consideration for owners in defending performance claims

What is EEXI? (ENTRY IN FORCE 01 Jan 2023)

❖ EEXI does not require any measurement or reporting of true CO2

What can Owners / Operators do to improve EEXI & CII?

❖ Consider modifications such as engine power limitations