STUDENT NAME: SALAH UDDIN MAHMOOD

ID: 23114007
COURSE ID: MTL-3501
FINAL TERM
Ans to Q1(a)
Ship owner is legal entity officially registered as the owner of the ship in a ship registry. Cargo
owner is the owner of the cargo that is required to be shipped.
Chartering is an agreement in which a ship owner agrees to rent out a ship to a cargo owner to
move the cargo from Point A to Point B.
Charter party is the agreement between the ship owner and the cargo owner/3 rd party where
the ship owner allows the cargo owner the use and/or management of the vessel in exchange
for “freight”.
Charterer is someone who has signed a charter party with the ship owner for the hire of the
required ship or a part of the capacity thereof A charterer may be the actual owner of the
cargo, a cargo trading company, someone acting on behalf of the actual cargo owner of
someone in the business of hiring ships for trading in cargoes.
While a ship broker brings the ship owners and charterers together and facilitates the charter.
Once an agreement is reached between the parties as per the charter party, it is called a
fixture. The ship broker(s) involved in the fixture receives a commission on the gross freight or
hire earned by the shipowner.

Ans to Q1(b)
PREFIXING ACTIVITIES WHILE CHARTERING A VESSEL
An agreement known as a charter party, is made between the parties involved in ship
chartering, namely the charterer and the shipowner.
During the ship chartering process, there is often a middleman, known as the broker. They are
generally engaged by those looking to charter a ship and will assist with finding the correct
vessel to meet the charterer’s requirements. However, they can also work with ship owners,
finding suitable charterers for their vessels.
So, there are usually three parties involved in the vessel chartering process: the charterer, ship
owner and ship broker.
Primary job of a ship broker is to collect following information from the charterer before placing into the
market:
  Charterer’s and shipper’s background – whether their financial transaction with other
shipowner in previous occasion was deliberate and regular, company reputation in the market,
record of no fraudulence, last few shipment of charterer, actual business address existence etc.
 Type of cargo, quantity, stowage factor – very important aspect to find right ship of same
carrying capacity, readiness of cargo in the warehouse or open yard, shipment delay if any,
stowage factor is very important to know to calculate ship’s crane and grab capacity, as well as
cargo space availability and load density of cargo hold.
 Loading and discharging ports – utmost important to know loading and discharging port for
searching ship owner’s vessel of same region and calculate laycan time, lay time, sea passage,
bunker consumption etc. to reach load/discharge port.
 Loading and discharging rates according to charterer’s contract – this information required to
find the right size of vessel (handimax/panama/cape size), gearless or with gear, shore crane or
mechanical loader/shooter, any port requirement of per hour loading/discharging rate etc.
 Commission details – all ship broker working on the basis of commission either from charterer
or owner which will influence freight rate also.
 Laycan (shipment date)

After gathering with all adequate information broker will launch in the market and search to contact
with shipowner and starting the process of negotiation. Ship broker should aware of current freight
market and it will take few days to attend numerous and hactic phone calls, attend email
correspondences to find a suitable ship which meets charterer’s terms and conditions.

If the ship broker gets the right ship he will enter the second phase of negotiation to formulate and fix
the deeds between charterer and ship owner. On the second stage the following activities will be seen:

 Broker send the initial hire rate to the charterer

 Charterer will offer his rate of hire to shipowner through broker, there will be some negotiation
for finalizing the rate. If broker is from owner side he will try to confess charterer with all his
market data and analysis, try to elaborate ship owner’s position in global market and shipping
strength in terms of number of fleets and age.
 If charterer finally agree with hire rate the ship broker then gets complete terms and conditions
from owner and send to charterer for his review.
 Charterer may agree to the terms set by owner or he may wish to make some changes focusing
basically on freight payment terms and conditions, demurrage/dispatch, lay day/lay time
calculation etc.
 Then broker will communicate with ship owner for confirmation after few changes offered by
charterer.
 Once both party agreed with terms and condition the broker will dispatch ship’s details to
charterer along with all statutory certificates.
 Final fixture recap is prepared, signed and confirmed by both parties
Ans to Q.2(a)

In time charter format the ship owner is responsible for vessel’s running expenses, i.e. manning,
repairs and maintenance, stores, master’s and crew’s salary, hull and machinery insurance etc.
Owner operates vessel technically, the commercial obligation will be on charterer’s shoulder.
While the charterers are responsible for the commercial employment of the vessel, bunker fuel
purchase and insurance, port and canal dues (including pilotage, towage, linesmen etc.), and all
loading/towing/discharging/stevedoring/trimming arrangements and costs. They direct the
ship’s commercial operations, but not her daily running and maintenance costs. Normally
load/discharge port agents are appointed by charterer. Ship owner may have protecting agent
too. In some cases there may be an agreement between the parties for an additional incentives
(perhaps several hundred US$) to be paid by charterers each time ship’s crew sweep and/or,
wash down the cargo holds of a dry cargo ship.

Ans to Q.2(b)

The ship broker is a non-contracting party to the contract (charter parties, contracts of
affreightments, fixture notes etc.) but is somehow involved to act for a contracting party called
principal i.e. the ship broker is acting as an agent and he derives his instructions (express or
implied) to act from the principal. He acts for the ship owners or the charterers (or a
buyer/seller of a ship, as the case may be).

Role of a Ship broker

The owner employs him to find a cargo or he may be employed by a charterer to secure a
vessel to carry his goods. On the other hand the sale and purchase broker acts on behalf of his
principals to buy or sell a vessel.
Yet another role of shipbroking lies in the New building field. By that we mean a broker who
acts for his principal in making contact and contracts with shipyards worldwide for the
construction of new buildings: bulk carriers, containerships, tankers or special purpose-build.
Most of the large ship brokers maintain a computer database giving the current position and
status of all ships in which they specialize. The charterers are therefore able to check on the
tonnage that is available before they enter the market.
It is the job of the ship owner’s shipbroker to ensure that all charterers who may have a cargo
from an area where his ship could load know the position and the details of his ship.
There is a world-wide network of shipbrokers involved in chartering ships.

Ans to Q.2(c)
The following types of voyage charter party implies in chartering a ship:
 Full liner terms (FLT)
 Liner terms
 Voyage charter party (VCP)
 Gencon Charter party
 Bareboat charter
Ans to Q.5
TABLE OF LAY TIME CALCULATION

Date Day Time Used Total Time Time Remarks

counted lost/Saved
D M H D M H D M H
22 Nov Thu 14:00 NOR tendered
16:00 Commenced loading
22 Nov Thu 0 08 00 0 08 00 - - - Time used before lay time
commences
23 Nov Fri 1 00 00 1 08 00 - - - 08:00 L/T commences
24 Nov Sat 0 21 30 2 05 30 - - - 08:00 – 10:30 Rain
25 Nov Sun 0 00 00 2 05 30 - - - SHEX: No work (excluded
from lay time)
26 Nov Mon 0 00 00 2 05 30 - - - Public holiday: No cargo
work
27 Nov Tue 1 00 00 3 05 30 - - - Normal working day
28 Nov Wed 0 17 15 3 10 30 0 12 15 L/T allowed 3 d 10 h 30m
16:30 – 23:15 Rain (6h
45m), L/T expires 05:00
29 Nov Thu 0 10 30 - - - 0 10 30 10:30 Completed loading
Totals: 4 09 15 3 10 30 0 22 45 Time lost
Demurrage: 0d 22h 45m and prorata = US$ 1706.25
Ans to Q.6

Voyage time Calculation Days Cost

Outward in ballast 865 nm at 14 kn 865 14.0 2.574
Loading time 3.12
Discharging time 4.95
Laden distance 7307 nm at 13.5 kn 7307 13.5 22.552
Repositioning leg 583 nm @ 13.5 kn 583 13.5 1.799
Extra sailing time for bad weather 1
Suez canal transit 1
Total voyage time: 36.995
Bunkers
HVF: 24.351 at 25 mt/day 24.351 25 608.775 tonnes
MDO: 28.925 at 1.0 mt/day 28.925 1.0 28.925 tonnes
8.07 at 1.5 mt/day 8.07 1.5 12.105 tonnes
A)Port disbursement
Kohsichang port charge 10000
Genoa port charge 55000
Suez canal dues 203000
Miscellaneous expenses 5000
B)Other disbursement
HVF at 423 usd/tonne: 608.775 x 423 257511.825
MDO: at 572 usd/tonne: 41.03 x 572 23469.16
Total disbursement (A + B) 553980.985
Daily hire of the ship: 10000 usd/day 369950
Total hire money to pay to owner:
36.995 x 10000
Total expense of the voyage: 923930.985
Freight to be calculated: Total 18.665
expense/cargo carried
2.5% adcom + 1.25% brokerage 0.6999
Final freight to be fixed to make 19.365
break even for the charterer/cargo
owner