18/09/2023

INTERNATIONAL TRANSPORT
AND INSURANCE

PHAN VŨ NGỌC LAN – MDE

International Business
Administration Department
lanpvn@huflit.edu.vn

CHAPTER 4

LINER CHARTERING

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In this chapter
1. Definition
2. Features
3. Pros and cons
4. Process of liner chartering
5. Liner chartering for shipment in containers
6. Freight in liner chartering
7. Incoterms rules for ocean shipment
8. Bill of lading (B/L)

1. Definition
 Liners: ships trading between fixed and
predetermined number of ports regardless
whether they are full or empty.
 Booking Shipping Space: the activity in which
the shipper, on his own or through a broker,
requests the shipowner / carrier to offer him a
space on the ship for carrying his cargo from one
port to another.

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1. Definition
 Shipper sends out booking note to the
shipping line or its agent.
 The shipping line confirm such action via the
booking confirmation/booking
acknowledge

2. Features
 Liners’ cargoes are made up of a large number of
different consignments from a number of different
shippers.  Not high quantity. Usually: dry cargo with
packaging.
 Plying among fixed ports and following published
schedules and routes.
 Liner freight includes loading, stowage/trimming and
discharge expenses. Liner freight is calculated according
to liner tariff valid for a certain period of time.
 The transport document is bill of lading that regulates
the relationship of the carriers and cargo owners (i.e.
shipper or consignee). There is only the signature of the
shipmaster on B/L or his representative, not the
shipper’s or consignee’s.

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2. Features
 Multilateral relation: a shipowner /
carrier  many shippers.
 No regulations on Laytime and
Despatch / Demurrage as loading and
unloading are the shipowner/carrier’s
responsibility.

3. Pros and Cons

Pros (Advantages):
 Unlimited quantity of cargo.

 Loading and unloading are handled by the

shipowner / carrier.
 Simple procedures in booking. Convenience
in choosing commercial terms (e.g.
Incoterms).
 Convenience for shipper in calculating
business effectiveness and booking.

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3. Pros and Cons

Cons (Disadvantages)
 High freight rates.

 Shipper in weak legal status / position.

 Inflexibility in carriage operation.

4. Liner booking procedure

B/L

Booking note

Shipper Broker Shipowner

/
Booking confirmation
Carrier
Goods

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5. Liner chartering for

Container shipment
 FCL/FCL
 LCL/LCL
 LCL/FCL
 FCL/LCL

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Container Freight Station (CFS)

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A. Full Container Load – FCL/FCL

Booking
Empty Container Release Order

Consignor / Mate receipt  B/L

Carrier
Shipper
Full container

Full container
Empty container

B/L
Docs
Consignee

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A. Full Container Load – FCL/FCL

Shipper’s responsibilities
 Preparing the goods for transportation, (packing,
marking, dunnage or customs clearance if needed)
 Rendering booking confirmation to get Empty
container release Order.
 Picking up empty containers from ICD, CY as
stipulated in the container release note.
 Conducting the counting, stuffing into container and
banding of goods after customs clearance.
 Closing the doors with a seal to make sure that
the container is intact during the route of the ship
from port of loading to port of discharge;

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A. Full Container Load – FCL/FCL

Shipper’s responsibilities (cont.)
 Taking full containers to CY/ ICD and handing
over to the carrier in accordance with carrier’s
instructions stipulated on booking confirmation;
 Receiving EIR (Equipment Interchange Receipt).;

 Receiving shipped B/L from the carrier after the

containers are loaded on board of the ship;
 Paying related charges & fees (terminal handling
charge (THC) at port of loading, B/L fees, freight (if
any));
 Sending necessary documents (B/L and other
cargo documents) to the Consignee.

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A. Full Container Load – FCL/FCL

Carrier’s responsibilities
 Receiving Booking note from the Merchant;

 Confirming available space by Booking confirmation and

container release note;
 Releasing empty containers;

 Taking over full containers from the shipper at CY or

ICD;
 Loading cargoes onto ship;

 Collecting charges, fees, freight (if any) and issuing B/L;

 Transporting containers to destination port;

 Discharging containers to CY or ICD;

 Sending the consignee the Notice of Arrival;

 Releasing containers in exchange of B/L.

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A. Full Container Load – FCL/FCL

Consignee’s responsibilities
 Receiving B/L and cargo documents from the
Shipper and the arrival notice from carrier;
 Surrendering B/L to the carrier or his agent to
receive D/O (Delivery Order);
 Picking up full containers at the arrival terminal;

 Taking containers to his firm for unstuffing goods;

 Cutting seal and opening the doors, withdrawing

goods out of the containers;
 Returning empty containers back to the carrier’s
premise and paying related charges and fees;

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B. Less than Container Load - LCL/LCL

Forwarder / Forwarder /
Consolidator Consolidator
House B/L + Master B/L

House B/L + Master B/L

Delivery + Docs

Notice of Arrival

Goods
Carrier

Docs
Consignor Consignee

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B. Less than Container Load - LCL/LCL

Shipper’s responsibilities
 Booking a space of the ship or a container with a
consolidator/freight forwarder (if applicable) or
receiving a booking confirmation from the importer;
 Doing customs clearance for the goods (if
required);
 Arranging and pay for the goods to be sent to the
inland clearance depot (ICD) or container freight
station (CFS); and
 Getting B/L from the carrier and send it to the
consignee.

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B. Less than Container Load - LCL/LCL

Carrier/consolidator's responsibilities
 Receiving and confirming booking from the merchant by
a booking acknowledgement;
 Receiving and grouping goods with other small
consignments for the same destination and packing all into
one container;
 Sealing containers and loading onto board of the ship;

 Issuing B/L;

 Unloading containers at the destination port and moving

them into CFS;
 Unstuffing goods out of container and delivering to each
consignee; and
 Bearing all costs and fees relating to cleaning container
after devanning goods.
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B. Less than Container Load - LCL/LCL

Consignee’s responsibilities
 Receiving B/L from the shipper and the arrival
notice from the carrier;
 Surrendering B/L at the office of the carrier or his
agent to get D/O;
 Getting their goods at CFS by showing D/O;

 Paying related costs and fees such as: LCL fee,

D/O fee, THC, container clearance fee...

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C. FCL/LCL or LCL/FCL
 The duties of each party are similar to the
above-mentioned but with appropriate
flexibility.

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6. Freight in Liner chartering

Basic Freight Rates: calculated based on
carriage tonnage, product size and value,
including:
 Minima Freight Rates

 Parcel Freight Rates

 Open Rates

 Special Freight Rates

 Dangerous Cargo Freight Rates

 ...

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6. Freight in Liner chartering

Additional Fees
 Applicable when the cargo is too heavy and/or long (> 2T,
>12m).
 Congestion surcharge.

 Bunker Adjustment Factor - BAF.

 Currency Adjustment Factor - CAF

 Winter surcharge

 Others (e.g. war surcharge)

Rebates / Discounts:
 Immediate Rebate.

 Deferred Rebate.

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6. Freight in Liner chartering

Freight payment:
 Freight Prepaid or Freight to Collect subject
to Incoterms.
Other fees:
 Storage fees.

 CFS fees.

 THC-Terminal Handling Charge.

 Cleaning fees,...

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7. Incoterms rules for ocean

shipment

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EXW
DDP FCA

1. Point of risk
DPU transfer? FAS
2. Point of cost
transfer?
DAP 3. Seller’s & buyer’s FOB
obgliations?
4. Transportation
method?
CIF CPT

CFR CIP

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8. Ocean Bill of Lading

 Definition
 Functions
 Classification
 Content

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A. Definition / Concept of B/L

 Ocean Bill of lading (B/L) is a kind of sea
cargo transportation document issued by the
carrier or its agent to the shipper after the
goods have been on board or are ready to be
loaded on board.
 Govern the relation between shipper and
carrier.
 Commonly available with: 3 originals (and
some copies).

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A. Definition / Concept of B/L

 Issuer:
- Carrier / shipowner
- Shipmaster
- Agent for carrier

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A. Definition / Concept of B/L

 Time of B/L issuance: after the goods have
been shipped on board or received for
shipment.
 Issued party: Shipper: Exporter / Exporter’s
representatives.

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B. Functions of B/L
 Proof of Carriage Contract
 Receipt of Cargo
 Property's Ownership / Document of Title

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B1/ Proof of Carriage Contract

 In liner chartering: no carriage contract, but
Booking note.
 B/L is the ONLY PROOF acknowledging
carriage contract signing.
 In tramp / voyage chartering: Charter Party +
B/L
 B/L is a PROOF acknowledging carriage
contract signing
 Legal framework for arising disputes?

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B2/ Receipt of Cargo

 B/L evidences that the carrier has received and/or
loaded the goods on board, together with quantity
and quality stipulated on the B/L surface.
 The carrier shall:

- Has the responsibility with the cargo throughout

the shipment.
- Deliver the goods to the first presenter of issued
B/L at the port of destination.
When will the carrier fulflied his responsibilities?
 delivered the shipment at the port of destination and
collect the original B/L.

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B3/ Property's Ownership /

Document of Title
 Legal B/L holder?
 The party whose name is stipulated on the B/L.

 The party who is entrusted with cargo receipt.

 Right of cargo owner on B/L:

- Request the carrier to deliver when presenting the

B/L.
- Determine the ownership of B/L.

 B/L ownership can be transferred / traded.

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B/L’s role in International trade

 For exporter (Shipper):
- Basis for Customs declaration and Insurance contract
negotiation.
- After delivery, B/L + other docs = docs for payment
(under the terms and conditions of sale contract / L/C).
- Document confirming cargo value for indemnification
in case of damage.
 For carrier: Fulfiling his duty with the charterer
when: making delivery to the consignee and collect
the issued original B/L. Content of B/L is the legal
foundation for dispute settlement.
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B/L’s role in International trade

 For the Importer (Consignee): Original B/L
is a receipt of cargo, confirming quantity and
quality / condition. B/L can be traded or
transferred.
 For other fields: B/L is an important
document in the Claim Docs (esp. with
Insurer)
 B/L is commonly used in international
maritime and trade.

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C. Classification of B/L
Based on travel itinerary:
 Direct B/L

 Through B/L

 Local B/L: issued by the 2nd, 3rd carrier, being

valid only as receipt of cargo and
accompanying the 1st B/L (issued by 1st
carrier)
 Combined transport B/L: used when the
shipment is carried by at least 2 modes of
transport.

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Europe-> South West America?

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C. Classification of B/L
Based on goods condition / Shipmaster’s
remarks
 Clean B/L

 Unclean B/L

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Unclean B/L
 Containing adverse remarks / notations by
the carrier about the goods received for
shipping or their packaging condition.
 Examples:
• Cargo looks wet
• Damaged / Improper packaging
• Item no... missing
 Payment against unclean B/L is usually
rejected.

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Clean B/L
 B/L free from any adverse remarks / notations made
by the shipping company about the condition and
packaging of the goods shipped.
 Wordings on Clean B/L:
 “Description of goods” or “Particulars furnished by
shipper” column is sealed with “CLEAN” .
 No remarks/ notations
 Remarks / notations that do not make a B/L unclean:
- Second hand cases
- Repaired and renailed cases
- said to weight…
- weight, measurement, quality of the goods is unknown
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C. Classification of B/L
Based on the status of shipment / loading
 Shipped on board B/L

 Received for shipment B/L

??? Why does the Bank usually reject

payment against documents containing
“Received for shipment” B/L (especially the
delivery is under FOB, CIF or CFR terms)?

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C. Classification of B/L
Based on Negotiability
 Straight B/L

 To bear B/L

 Order B/L

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Straight B/L
 A bill with name and address of consignee.
 The shipping company only delivers the
goods to named consignee upon
presentation of identification.
 Not popular due to its inability to be
transferred / negotiable by common
endorsement.

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Straight B/L

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To bearer B/L
 B/L with the “consignee” box blank.
 “To order of…<blank>” / “To … <blank>”
 Tranfered by handling.

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To Bearer B/L?

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Order B/L
 A B/L where the wording “to order” or “to
order of” is added before any consignee
names, if any. E.g. To order of Shipper /
Consignee / Bank/…
 Common in international trade and maritime
as it can be negotiated via endorsement.

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Order B/L

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Endorsement
 Endorsement is the process of transfering cargo
ownership from this beneficiary to the others.
 The endorsing party has to sign and seal on the
back page, then handle the B/L to the transferred /
beneficiary.
 Meaning:
- Assumption of transfering ownership to the other
party.
- Being abstract and unconditional.
- Confirming responsibility of endorsing party
towards delivering the goods to the beneficiary.

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Endorsement
Classification:
 Nominated endorsement: “To…<named
person>” / “Delivery to …<named person>”
 “To order” endorsement: “To order of
…<named person>”
 Without recourse endorsement: “To order of
…without recourse”
 Blank endorsement: “To order of…<blank>” /
“To … <blank>”

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Endorsement

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Endorsement

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C. Classification of B/L
Based on Chartering method:
 Liner B/L

 Charter Party B/L

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C. Classification of B/L
Based on legal validity and circulation:
 Original B/L

 Copy B/L/Non-Negotiable B/L

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C. Classification of B/L
Based on B/L issuer:
 House B/L

 Master B/L - MB/L or Ocean B/L - OB/L

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C. Classification of B/L
 Surrendered B/L,
 Customs B/L,
 Collective/Joint B/L,
 On deck B/L,
 Short B/L,
 Container B/L,
 Switch B/L,
 Stale B/L,
 BOLERO B/L (Bill Of Lading Electronic Registry
Organization) …

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Seaway Bill
 More and more commonly used.
 Content: Front side: same as B/L, back side:
blank or short wordings.
 Sent with the ship or via the Internet.
 Does not include “Document of Title” function
 non-negotiable: the goods can only be
delivered to the nominated party on
Seawaybill

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D. B/L’s content
Front page
1. B/L No.
2. Shipper
3. Consignee
4. Notify party
5. Name of ship/vessel/Ocean vessel, Voyage No.
6. Place of delivery
7. Place of receipt
8. Port of Loading
9. Port of Discharge
10. Container No.; Seal No. of container

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D. B/L’s content
11. No. of original B/L
12. Description of Goods & Packages: No. of
containers, No. of Packages
13. Gross weight
14. Measurement
15. Freight & Charges: Freight prepaid/Freight
Collect/Freight payable at destination
16. Exchange Rate
17. Place and Date of issue
18. For the Master/For the Carrier/As Agent Only

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D. B/L’s content
Back page:
 Stipulating international maritime law and
regulations, loading and delivery terms,
freight and surcharges ....
 Stipulating the right and responsibility of the
carrier, shipper, in which the most important
are terms of liability, liability exemption,
limitation of liability of the carrier.

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THANK YOU FOR LISTENING

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