18/09/2023

INTERNATIONAL TRANSPORT
AND INSURANCE

PHAN VŨ NGỌC LAN – MDE

International Business
Administration Department
lanpvn@huflit.edu.vn

CHAPTER 5

TRAMP CHARTERING

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In this chapter
 Voyage chartering
 Time chartering

1. Voyage chartering
 Definition/concept
 Features
 Pros and cons
 Voyage chartering process
 Basic terms and conditions in Charter Party
 Relation between Charter Party and Charter
Party B/L

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2. Time Charter
 Definition/concept
 Pros and cons
 Forms
 Basic terms and conditions in Time Charter
Party

1.1. Definition / Concept

 Voyage chartering takes place when a
charterer reserves a whole/part of a ship
for transporting his cargoes from port(s) of
loading to port(s) of discharge for a single or
some voyages.
 Tramp: ship without predetermined voyage
and not up to a specified route.

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1.1. Definition / Concept

Forms:
 Single voyage

 Round voyage

 Consecutive voyage

 Lumpsum

1.2. Features
 High carriage volume
 Charter Party B/L is as valid as a receipt
and an additional legal document to
Charter Party.
 The role of Charter Broker.

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1.3. Pros and Cons

Pros (Advantages)
 High flexibility

 Lower price than Liner chartering.

 Freedom to negotiate the terms in CP.

 High travel speed

Cons (Disadvantages)
 Complicated chartering process and CP
negotiating.
 Fluctuating freight.

1.4. Voyage chartering process

Contract Negotiation
Broker
Result Result Shipowner /
Charterer
Charter party signing Carrier

Charter party execution

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1.5. Basic terms and

conditions in CP
 A voyage charter party (VCP): a document
regulating the relationship between the carrier and
the charterer according to which the carrier
commits to use whole or part of a ship for
transporting cargo from (a) port(s) of loading to (a)
port(s) of discharge, and the charterer commits to
pay monetary reward, called freight.
 VCP’s content should be compatible with content of
International sale contract
 VCP is standardized into sample.
 Common sample: GENCON (composed by BIMCO -
Baltic & International Maritime Conference and British
Chamber of shipping in1922, revised in 1976, 1994)
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VCP sample
General cargo carriage:
 GENCON

 NUVOY

 SCANCON

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VCP samples
Specialized goods carriage:
 NORGRAIN 89.

 SOVCOAL (Soviet Union - 1962), POLCOAL (Poland -

1971), AMWELSH (1993).
 SOVORECON (Soviet Union -1950).

 CEMENCO (USA - 1922).

 CUBASUGAR (Cuba).

 EXONVOY, MOBILVOY 96, SHELLVOY (USA).

 RUSSWOOD (Soviet Union -1933).

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1.5. Basic terms and

conditions in CP
1. Contracting parties
2. Ship’s clause
3. Laydays clause
4. Cargo clause
5. Loading / Discharging Port Clause
6. Loading / Discharging Charges Clause
7. Freight Clause
8. Laytime and Despatch / Demurrage

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1.5. Basic terms and

conditions in CP
9. Liability and Immunity Clause
10. Arbitration clause

11. Lien on Cargo Clause

12. Strikes, War clause

13. General Average and New Jason

clause
14. Both to Blame Collision Clause

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1. Contracting parties
 Shipowner / Carrier vs Charterer
(Importer / Exporter).
 Agreed via agents: Stipulating agent’s
name, shipowner and charter; noting “as
agent only” at the end of CP.

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2. Ship’s clause
 Including name, carrying capacity, gross tonnage,
position of the ship at the time of contracting, size
of ships (length, beam), draught, call sign, IMO
(International maritime organization) number,
year of building, port of registration, classification,
number and size of cargo holds, ...
 The contracting parties can also agree about a
right of the shipowner to substitute a sister ship
with the same specifications
-> “Ship named and/or Substitute Sister Ship” next
to the ship’s name.

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3. Laydays / Laycan Clause

 Laydays refer to the time when a ship must
present itself to the charterer, i.e. the time when
the ship remains at the loading port for shipment.
 How to stipulate: specific time / period of time

 If the ship is near the loading port, parties can

agree on:
+ Prompt: the ship shall arrive 1-3 days after
contract signing.
+ Promtisimo: the ship shall arrive in the day of
contract signing.
+ Spot prompt: the ship shall arrive several hours
after contract signing.
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3. Laydays / Laycan Clause

 Shipowner / Carrier has to inform the charterer of
ETA (Estimated Time of Arrival).
 When is the ship considered to arrive at the port?

- It arrives at the commercial area of the port where

ships wait for the loading (Port Charter)
- It arrives at a specific dock / berth (Dock / Berth
Charter)
 NOR (Notice of Readiness) is tendered (i.e. handled)
after :
+ Free Pratique is done.
+ Other technical conditions are ready for loading:
clean holds, sufficient number of cranes.
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4. Cargo clause
 Stipulate clearly the commodity name,
packaging, specification. “and/or” is used for
more than 2 types.
 Stipulate quantity with tolerance and
tolerance option. E.g. “10,000 MT more or
less 5% at the Master’s option”.
 The charterer shall be responsible for Full
and Complete Cargo.

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5. Loading / Discharging Port

Clause
 Specifying one or many ports
 2 ways:

- General stipulation: one safe berth, Haiphong

port
- Specific stipulation: which berth, area?
 Safe berth (in terms of maritime and politics)

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Western Europe port

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6. Loading / Discharging Charges Clause

 The charges bearer can be negotiable.
 Free In (FI): Shipowner is free from loading on board at
the port of departure but has to bear discharging cost at the
port of discharge.
 Free Out (FO): Shipowner is free from discharging charges
but has to bear loading costs.
 Free In and Out (FIO): Shipowner is free from both loading
and discharging costs at the ports.
 FIOST: Shipowner is free from loading, discharging,
stowage and trimming
 Liner Terms/Gross Terms/Berth Terms: shipowner has
to bear all loading, discharging, arranging, stowage,
trimming ...of cargo in the vessel hold.
--> In combination with Incoterms
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7. Freight Clause
 Rate:
- For heavy cargo: based on MT / LT / ST
- For bulky cargo: based on m3
- For different kinds of cargo: standard (wood), gallon
(oil), bushels (wheat)…
 The party to bear cost: e.g. 20 USD/MT F.O.S

 Amount of goods for freight calculation:

- Intake Quantity / B/L quantity

- Delivery Quantity
 Payment term: Payment in advance / deferred
payment / combined term.
E.g. 40% shall be paid several days after B/L signature,
40% after the ship arrives at port of discharge, 20%
after discharging is finished.
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8. Laytime and Despatch / Demurrage

 Laytime / Allowed time: the time when the vessel
stays at the port for loading and discharging.
 If the charterer finishes the loading / discharge earlier
than allowed time in the contract, he/she will be granted
an amount of money (Despatch Money). Otherwise, if
the charterer cannot finish the loading / discharge duely
/ promptly, he/she will be fined for such delay
(Demurrage Money).

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8. Laytime and Despatch / Demurrage

Day?
 Days

 Running / Consecutive Days

 Working Days

 Working Days of 24 hours

 Weather Working Day (WWD) -> Popular in

international maritime
 Sundays

 Holidays

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Laytime stipulation
 S.H.INC. (Sundays and Holidays Included).
 S.H.EX. (Sundays and Holidays Excepted).
 S.H.EX.E.I.U. (Sundays and Holidays Excepted Even If
Used).
 S.H.EX.U.U. (Sundays and Holidays Excepted Unless Used).
 W.W.D.S.H.EX.E.I.U. (Weather Working Day, Sundays and
Holidays Excepted Even If Used).
 W.W.D.S.H.EX.U.U. (Weather Working Day, Sundays and
Holidays Excepted Unless Used).

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Example
28/8: Monday
NOR to be released at
29/8: Tuesday 3pm 30/8
30/8: Wednesday • 4 WWD SHInC ?
31/8: Thursday • 4 WWD SHEX ?
• 4 WWD SHEXEIU ?
1/9: Friday • 4 WWD SHEXUU ?
2/9: Saturday (Holiday)
3/9: Sunday
4/9: Monday
5/9: Tuesday

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Laytime stipulation

 Cargo to be loaded in 7 WWD, S.H.EX

 Cargo to be discharged in 7 WWD, S.H.EX.E.I.U
 Cargo to be loaded and discharged in 15 WWD, S.H.Inc
 Cargo to be Loaded and Discharged at the Rate of 1500
MT per WWD, S.H.EX.E.I.U

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Commencement of laytime
(loading and discharging)
 Laytime for loading and discharging shall
commence at 13.00 hours, if notice of
readiness (NOR) is given up to and including
12.00 hours, and at 06.00 hours next working
day if notice given during office hours after
12.00 hours.

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Time lost in waiting for berth

“W, W, W, W”.
 WIPON (whether in port or not)

 WIBON (whether in berth or not)

 WIFPON (whether in free pratique or not)

 WICCON (Whether in customs cleared or not)

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Time for Despatch / Demurrage

 For all time saved (i.e. including Sundays and
Holidays).
 For all working time saved (i.e. excluding
Sundays and Holidays).
- Despatch = ½ Demurrage.

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9. Liability and Immunity Clause

The carrier shall be responsible for the damage and loss of
cargo due to:
 Due Deligence in supplying a seaworthy vessel.

 Bad stowage or improper storage...

The carrier shall be free from liability (Exemptions from

Liability) for damage and loss of cargo due to:
 Natural disasters, unexpected accidents at sea, pirates.

 Inherent defects of ships and machinery.

 The nature of the goods.

 Fire, but not the fault of the sailor on board.

 War and captive and confiscatory activities of government ...

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10. Arbitration
 Institutional arbitration: stipulating name, address,
rules of arbitration.
 Ad – hoc arbitration: stipulating how to choose
arbitrators, board of arbitrators, applicable law, ....
 3 suggestions from GENCON

+ UK law + London Maritime Arbitration Rules.

+ US Law and New York Arbitration Rules.
+ Law and Rules negotiated by both parties.

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11. Lien on Cargo Clause

 A lien clause gives the shipowner the right to exercise the lien
over the goods when the charterer breaches his/her
commitment to pay freight, demurrage or other expenses as
agreed.
Article 41. Maritime claim leading to maritime lien (Art. 41 VN
Maritime Law 2015) – Maritime claims on...
1. salary, repatriation cost, social insurance contribution
cost and other monetary amount paid to the master, officer
and other seafarers that belong to crew members aboard a ship.
2. compensation for life, disability or other injury to human
health in association with operations of a ship.
3. Arbitration charges, deadweight tonnage charge, marine
safety charge and other seaport fees
4. ship rescue remuneration.
5. non-contractual property loss and damage directly relating
to operations of a ship.
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12. Strikes, War clause

 "War Risks" shall include any war (whether actual or
threatened), act of war, civil war, hostilities, revolution,
rebellion, civil commotion, warlike operations, the laying
of mines (whether actual or reported), acts of piracy, acts
of terrorists, acts of hostility or malicious damage,
blockades (whether imposed against all Vessels or
imposed selectively against Vessels of certain flags or
ownership, or against certain cargoes or crews or
otherwise howsoever), by any person, body, terrorist or
political group, or the Government of any state
whatsoever, which, in the reasonable judgement of the
Master and/or the Owners, may be dangerous or are
likely to be or to become dangerous to the Vessel, her
cargo, crew or other persons on board the Vessel. (Art.
17 CP)
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13. General Average and New

Jason clause
 General average: the special costs and sacrifices carried
out intentionally and appropriately to save the ship, cargo
and freight from an accident towards them in the voyage.
 In the event of an accident, danger, damage or disaster
before or after the commencement of the voyage,
resulting from any cause whatsoever, whether due to
negligence or not, for which, or for the consequence of
which, the Carrier is not responsible, by statute, contract
or otherwise, the goods, Shippers, Consignees or owners
of the goods shall contribute with the Carrier in general
average to the payment of any sacrifices, losses or
expenses of a general average nature that may be made
or incurred and shall pay salvage and special charges
incurred in respect of the goods. (Art. 12, VCP)
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Features of General Average

 General average (GA) refers to intentional and
voluntary actions of the shipmaster and crew
aboard.
 GA act should be appropriate, bringing the least
damage and help to prevent bigger loss in the
voyage.
 The damage should be special, (i.e. not happen in
normal condition).
 GA act must take place in the ocean.
 The risk towards the voyage must be serious and
actual.
 The damage must be for common safety.
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2 factors of General Average

 G/A Sacrifice: sacrifying this asset for saving the
others.
 G/A Expenditure: costs relating to act and
consequences of GA, including:
+ Cost of entry and exit of port of distress
+ Cost of warehousing and storage at the port of
distress;
+ Cost for loading and unloading goods at the port
of distress;
+ Increased costs in fuel and crew;
+ Expenses for temporary repair of damaged ships.

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14. Both-to-Blame Collision

Clause
2 parties should specify:
 Applicable cases

 Who would pay the relating costs

 Place, time and currency of payment

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Sample Fixture Note

FIXTURE NOTE
It is mutually agreed between:
(Insert Shipowner’s information)
Herein after called the Shipowners.
and
(Insert Lessee’s information)
herein after called the Charterers.
For the carriage of cargo under following terms and conditions
1. Cargo: 17.000 MT Salt in bulk
2. Performing vessel: MV “Diamond Star” Vietnam FLG,
1990 built in Japan, P& I club w.o.f class vires VR903268,
IMO no. 9008677. Registered: Hai Phong
 Dwt/Grt/Nrt: 27000/17130/9499

 L/B/T: 164.000/27.500/6407.0

 2H/2H.
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Sample Fixture Note

3. Laycan: 16th – 18th November, 2019.
4. Loading Port: 1 safe berth, 1 safe port of NhaTrang-
Vietnam
5. Discharging Port: 1 safe berth, 1 safe port of Kobe-
Japan
6. Freight rate: USD 18.00/ MT – FOS on basis 1/1.
7. Freight payment: full ocean freight less commission to
be paid to Owners’ nominated bank & account by T/T within
03 banking days after completed of loading and
signing/releasing B(s)/L marked “Freight-prepaid” and
“clean on board” but always before breaking bulk. Full
freight to be earned, discountless, non-returnable whether
vessel and/ or cargo lost or not lost.

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Sample Fixture Note

8. Loading: Cargo to be loaded / stowed at Shippers’ /
Charterers’ risk / expenses at the average rate of 1000 MT
on basis of 2 hatches/ 2 holds / 2 workable gangs or pro
rata per weather working day of 24 consecutive hours,
Sundays and Holiday include.
Charterers are responsible to arrange holds survey at their
expenses before loading cargo and supply the Shipowners
a survey report.
If the vessel fails to pass survey then time lost after the
discovery thereof until the vessel is again ready to load
shall not count as laytime. The charges of the second
survey to be borne by Owners with debit note from
Surveyors. Should the vessel still fail holds surveys for the
third time then it is Charterers’ option to reject the vessel at
Owners’ time/ costs/ risks.

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Sample Fixture Note

9. Discharging: Cargo to be discharged at
Receivers’/Charterers’ risk / expenses at the average rate of
1500 MT on basis of 2 hatches/ 2 holds / 2 workable gangs or
pro rata per weather working day of 24 consecutive hours,
Sundays and Holiday include.
All opening and closing hatches should be done by vessel’s
crew and at Owners’ risks and expenses at both ends.

10. Lighterage/lightening if required due to vessel’s draft at

both ends to be arranged by Charterers or
Shippers/Consignees at their risk/time and expenses.

11. Owners and/or Master to give 7/5/3/2/1 day notice of

expected time of vessel’s arrival at loading & discharging port.

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Sample Fixture Note

12. Taxes, dues. levies on vessels to be at Owners’
account at both ends.
13. Taxes, dues. levies on cargo to be at Charterers’
account at both ends
14. Dunnages / Bamboo mats/ seperations if required to be
for Charters account and arrangement to Surveyors
satisfaction but Owners to contribute USD 7,500 in
lumpsum which to be deductible from ocean freight.
15. Owners’ B(s)/ L form to be applied and Charter party
B(s)/ L acceptable.
16. Should the vessel(s) be detained by Authorrities at
loading/ discharging port, the direct actual expenses
incurred on vessel(s) to be for Owners’ account if the arrest
causes by Owners and /or their employees. The same to be
for Charterers/ Consignees and/or their employees.
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Sample Fixture Note

17. Demurage/ Despatch:
a) Rate of demurrage/despatch at load port and discharging
port:
– Demurrage: USD 2,000 per day or pro rata for all time lost.
– Despatch: USD 1,000 per day or pro rata for working time
saved.
18. Owners/ Master to give the performing vsl holds shall be
dry and swept clean prior to vsl’s arrival at load port and in
case vsl’s holds condition fail the inspection of independent
surveyor, time lost until pass next inspection and expenses
incurred for re-cleaning vsl’s holds tbf owrs’ acct.
19. New Jackson clause, the paramount clause the chamber
of shipping war risk clause 1 and 2, both-to-blame collision
clause, pollution clause and P&I club bunker deviation clause,
Himalayas clause seem tb incorporated in this charter party.

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Sample Fixture Note

20. Arbitration in Philipins in England law.

21. General average, if any to be settle accord to York-

Antwerp Rules 1974.

22. Other terms and condition not mentions here as per

Gencon c/p 94.

23. Total Commission 3.75 % incl add comm.

The fixture note come into efficient upon duly

signed/stamped by OWRS/CHRS.

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1.6. Relations between VCP and

VCP’s B/L
 CP: charterer  carrier
 B/L: carrier  consignee

-> Charterer  Consignee?

-> Subject to Incoterms
1. Charterer = Consignee  CP

2. Charterer ≠ Consignee  B/L

3. B/L negotiated to others  B/L

4. B/L refering to CP  CP

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2. Time Charter
 Definition / Concept
 Pros and Cons
 Forms
 Basic terms and conditions in Time Charter
Party

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2.1. Definition / Concept

 In a time charter the charterer charters the
ship for a particular voyage or for a set period
of time. The charterer can direct where the
ship will go, but the owner of the ship retains
possession of the ship through its employment
of the master and crew.
 The relation between the Charterer and
Shipowner is governed by Time Charter Party
 Feature: a method of asset leasing.

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2.2. Pros and Cons

Pros:
For the Charterer (Carrier) :
 Flexibility in cargo transport.

 Low cost -> High effectiveness.

For shipowner:
 Receiving a fixed income during chartering time.

For shipper:
 High carriage demand in a long time, not dependence
on chartering and freight increase.
 Reduction in transport cost.

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2.2. Pros and Cons

Cons:
For charterer:
 Difficulty in ship management,
inexperience in operation and high
responsibility for shipped cargo.
 Costs for fuel, water, loading and
discharge, ...
For shipowner:
 Low chartering price

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2.2. Pros and Cons

When to use?
Shipowner:
 Difficulty in looking for cargo to be shipped.

 Main business is chartering.

 The freight has a tendency to reduce for a long

time.
Carrier (Charterer):
 Ability to handle business in transporting.

 Ability for marketing, looking for demand from

import-export enterprise.
 Inability in buying the ship (financially).

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2.3. Forms of Time chartering

 Normal time charter
 Bare boat charter

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2.4. Content of Time Charter

party
 Time Charter 1902-TIMON
 Uniform Time Charter-BALTIME 1909,
1939, 2001.

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2.4. Content of Time Charter

party
1. Parties information: name and address of the
Charterer and Shipowner.
2. Ship clause: more detailed than those stipulated in
Sample contract / Vessel charter party.
3. Time and port of ship handling
4. Chartering time
5. Cargo allowed for carriage
6. Operation scale
7. Freight clause
8. Freight payment clause
9. Time and port of ship returning after chartering

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2.4. Content of Time Charter

party
10. Cost allocation in ship exploitation: most
important.
- Shipowner to bear fixed costs

- Charterer to bear variable costs

11. Other clauses

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THANK YOU FOR LISTENING

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