Question

Q2. briefly explain the main elements of the following chartering contract

i. time chartering

ii. voyage chartering

B. tabulate the costs that are associated under the charter parties between the responsibilities of the ship owner and the charterer under (i) and (ii)

Answer 1

The charter party agreement establishes the type of charter that governs the type of operations to be carried out. Charter types are defined under three headings.

• Voyage Charter
• Time Charter
• Demise Charter

VOYAGE CHARTER

a) General : Under voyage charters, the charterer pays for the use of the ship’s cargo space for one, or sometimes more than one, voyage. In these cases the owner's earnings are usually based on the quantity of cargo loaded, or as a lump sum irrespective of the quantity of cargo loaded.

b) Charter Party Agreement:
i) The Operator must read and be thoroughly conversant with the charter party agreement or fixing telex and bring to the attention of the Manager any point requiring clarification.

ii) In circumstances where the client and/or broker does not forward the charter party, the Commercial Ship Operator shall request the necessary voyage information.

These files are to be uniquely identified and located in the post fixture department. These files must remain in the regional office until all outstanding items pertaining to the voyage have been closed, after which they are to be archived.

v) The charter party document is to be filed in the voyage file if made available.

vi) Where the charter information is in the form of an email, fax, telex or letter of abstract, this information is to be filed in the voyage file.

c) Instructions to Master :

i) The Operator must make the following details known to the Master by email or telex as soon as they are received after completion of charter party negotiations. In some cases this information will take the form of a recap and/or charterers voyage orders. In some cases the Operator will need to extract the relevant information from the charter party:

• Charterer
• Laydays
• Ports
• Tendering of Notices
• Cargo
• Load/Discharge Rates
• Agents
• Bunker Arrangements
• Any other information which could affect the prosecution of the voyage

ii) On receipt of the charter party the Operator shall check the advance detail against the charter party and take up any material differences with the client prior to sending a copy of the charter party to the Master.

iii) In the instances where the charter party is not made available then the Operator is to forward whatever relevant information is received from the clients/charterers. If the Master is advised of any requirements of the charter directly by the charterer or by their agent the Master is required to convey these requirements to the Operator.

The above is to be filed in the voyage file.

d) Communications with the Vessel :
The Operator shall be responsible for day-to-day communications with the Master on post fixture operation matters in compliance with the CITM, the charterer’s voyage orders and other relevant requirements. The specific means used and requirement for communication depend on the urgency of the situation.

e) Cargo
The Operator, by communicating with the Master, shall monitor that:

• The cargo spaces have been accepted by the shippers
• The correct amount of cargo agreed under the charter party has been loaded/discharged
• There are no discrepancies in the bill of lading or shore to ship weights
• There are no problems unresolved prior to departure of the ship

Any problems relating to commercial cargo matters shall be addressed by the Operator who shall communicate with the Master by telephone, e-mail or telex as appropriate, to assist him in resolving these matters. Where required, the technical manager is to be involved. Communications from the Master and Operator and other relevant parties shall be filed in the voyage file. The Operator may also engage the services of the PandI Club as necessary in compliance with the client's cover arrangements.

All other cargo related papers are also to be filed in the voyage file. The monitoring of type and stowage of cargo is the responsibility of the Master, however the Operator must be aware of how this relates to the operation of the vessel. The Operator must ensure that the vessel is complying with the charter party requirements in this respect.

f) Freight Collection :
The Operator, with the assistance of the Assistant, is responsible for ensuring that freight is invoiced and collected in the most efficient and accurate manner possible. The Manager is to be informed of any freight collection problems should they arise.

g) Claims and Expenses:
The Operator will be responsible for ensuring that all claims and expenses applicable under a voyage charter are compiled as accurately as possible and submitted to the charterers in the most efficient manner. This includes claims for demurrage/despatch, charterer's expenses, cargo heating, hold cleaning, shifting etc.

The Operator, with the assistance of the Commercial Assistant, will follow each claim closely until all outstandings have been recovered from the charterers. If deemed necessary the Operator should seek the services of the client's FD&D Club to assist with collecting outstandings. The Manager should be advised of any particular problems that are encountered in this area.

h) Agency:
The Operator, with the assistance of the Commercial Assistant, will be responsible for ensuring that agents are appointed for the ports that the vessel is to call to under the charterer’s voyage instructions. These will either be nominated by the charterer or selected by the Operator in order to provide best cost and service, based on the client's or V.Ships preferred agency lists and/or past experience. The Operator is responsible for ensuring that the agents perform their function in the most cost effective and efficient manner and should bring any under performance issues to the attention of the Manager, and if appropriate the clients and charterers.

The Operator must carefully check the agent's disbursement accounts when received, to ensure that voyage and running costs are properly allocated and all charterers expenses have been billed out as appropriate.


TIME CHARTER

a) General:
These types of charter differ from voyage charters in that the owner places the vessel, crew and equipment at the disposal of the charterer. The charterer then generally has full commercial control of the vessel, including arranging bunkers, handling operations, port charges and other matters that would normally handled by the owner under a voyage charter. Under a time charter the owner will receive hire based on the period of the charter or per dead-weight tonne per month.

b) Charter Party:
On receiving the recap or fixture note the Operator is responsible for ensuring that the Master is provided with all the necessary information in order to comply with the terms of the contract and to be able to work with the time charterers. In particular the Operator must carefully note the period of the charter, any cargo exclusions, trading limits, performance warranties and the hire rate and frequency of payment.

c) Hire:
The Operator is responsible for ensuring that hire is invoiced as per the terms of the charter party and that the same is collected without delay. Any problems with non-payment of hire must be notified to the Manager.

d) On/Off Hire Surveys :
The Operator must ensure that on-hire and off-hire surveys are arranged as required and that the client's interests in this regard are ensured. The Operator is to make best efforts to reduce the costs of these surveys by either sharing them with the charterer or by coinciding the on-hire survey with the previous charter off-hire survey.

e) Speed and Performance:
Speed and performance is an extremely important aspect of time charters and the Operator must ensure that the Master is fully aware of the provisions of the charter party warranties. Operator must ensure that adequate arrangements are in place to ensure that speed and performance are properly monitored and recorded in order to compile any claims against the charterer or to check and counter any claims that may be received from the charterer.

f) Charter Reconciliation:
With the assistance of the Assistants, the Operator must ensure that the time charter reconciliation is carried out as quickly and accurately as possible on the vessel being redelivered. This includes on/off hire survey fees, delivery and re-delivery bunkers, performance claims, owner's port expenses, off-hire claims and other such matters. The Operator should engage the services of the clients FD&D Club if necessary in order to assist in this if required.

g) Off-hire:
The Operator must liaise closely with the Master and the technical manager in order to ensure that down time for owner's requirements is kept to an absolute minimum. This will include liasing with regard to crew changes, maintenance, stores delivery and other such matters.

h) Claims
The Operator is responsible for both compiling and countering any claims that arise during the period of the time charter. The Manager must be consulted in the event of any disputes or difficult claims. The clients PandI and/or FD&D Club must be engaged to assist as required in such circumstances.


DEMISE CHARTER

Demise charter, or bareboat charter, occurs when an owner hires or leases the vessel to a charterer who then provides the crew, together with stores and bunkers as well as paying for all the operating costs. In such cases the vessel will then likely be sub-let by the bareboat charterer on time and/or voyage charters. The preceding sections of the procedure will then apply.

iii) A voyage file unique to that charter party for each ship shall be maintained by the Operator. Electronic voyage files are to be created and stored in the company’s messaging system.