Chartering Lec1

Chartering Management
By
Dr. Breksal El-Miligy
Introduction
A charter party is a contract by
which a shipowner agrees to lease,
and the charterer agrees to hire, a
vessel or all the cargo space, or a
part of it, on terms and conditions
mentioned in the charter party.
Introduction
The main types of charter parties
are:
Bareboat Charter Party
(sometimes called a Demise
Charter).
Time Charter Party and
Voyage Charter Party.
Introduction
If your vessel is chartered it is of
the utmost importance that you
read the charter party carefully,
especially the added clauses, until it
is thoroughly understood.
Introduction
It is advisable to have the officers
read it as a matter of information
and instruction and it will do no
harm to discuss it with them,
especially with the chief officer.
Introduction
The important clauses should be
check-marked for quick reference.
If any refer to dates of the
notification of ETA to consignee or
charterer's agent, make a note of
the day the message is to be sent
and be sure to send it.
Chapter 1
Demand and Supply

of Maritime
Transport
Chartering Management By Dr. Berksal ElMiligy
Introduction
Maritime transport like any
industry has a demand and supply
sides
Remember:
Demand means cargo
Supply means vessel
Major factors affecting the

demand of maritime
transport
Factors affecting the Demand

1.
2.
3.
4.
Economic factors
Political events and development
Natural factors
Technical reasons
10
1. Economic Factors
1. Developments in the world
economy and trade have a direct
effect on the maritime demand.
As the world economy fluctuating,
trade and maritime transport
demand fluctuates as well.
WHY?
11
1. Economic Factors
2. The change of economic policy,
from dirty heavy cargo to clean
light cargofrom volume to value,
has its effect on the maritime
demand.
12
1. Economic Factors
2. Both Export and import countries
are encouraging the processing of
raw materials to take place in the
countries of resource.
WHY?
13
1. Economic Factors
Reducing costs
Protecting the environment from
pollution.
Job opportunities.
14
1. Economic Factors
2. After that the maritime
transport demand has become
higher in value and lower in
volume. (New trend of trade).
15
2. Political Events and

Development
1. Wars have a big influence on
maritime transport demand.
Q. Is it a negative or positive
influence?
16
2. Political Events and

Development
2. Political alliances have a
significant impacts as they
restrict trade among members.
Q. How to overcome this problem?
17
3. Natural Factors
1. Weather condition (ex., affect
the demand of grain because of
the changes in the harvest).
2. Climate changes.
3. Changes in natural conditions.
18
4. Technical Reasons
1. Maritime transport can create
new demand for trade, which
resulting in:
i.
ii.
Reducing transport cost.

Developing transport technology.
But, technical development sometimes

affects the maritime demand negatively
as introducing other modes of
transport.
19
4. Technical Reasons
When a shipper is to choose a mode
of transport, he must examine:
a) Availability
b) Speed
c) Cost
20
Major factors affecting the

size of maritime transport
supply
21
Basic Features of maritime

transport Supply
Basic features of maritime

transport supply:
1. Shipping has those typical

characteristics of transport
industry. (Capital Intensive)
2. Maritime transport has its particular
commercial features that differs
from other modes of
transportwhich are?
22
Factors affecting the size of

maritime transport supply
Five factors are the major
elements that determine the size
of maritime transport supply:
1.
2.
3.
4.
5.
Size of the ship

Sailing speed
Time in port
Operation/maintenance ratio
Space utilization factor (Loading factor)
23

1. Size of the ship:
The number of ships needed for
carrying maritime trade measured in
ton-mile depends on the average size of
ship.
24

Why is there a limit to
ships size?
OR
What are the factors that

prevent ships from
becoming bigger?
25

From the shipowners point of
view:
1. Technical reasons:
a) Dynamics: Rough sea
Length of wave
Stress on hull
b) Statics: Loading and/or
discharging
26

From the shipowners point of
view:
2. Port facilities: handling equipment big

size ship will stick to some port and not all
ports.
3. Navigation routs itself.
27

From the cargo owners point of
view:
Big ships became slower, which will

reduce demand specially if the cargo is
sensitive to time.
28

2. Sailing speed
The ships carrying capacity (more trips)
will increase when the ship sails faster.
The faster the ship, the more revenue will
be, but the fuel consumption will increase.
And!
29

3. Time in port
The less time ships spend in port, the

more cargo they can carry over a fixed
period of time.
To increase ships turn-round time, and
reduce wasted time, cargo handling
efficiency in port is the most important
factor.
What are the impacts on maritime
transport supply?
30

4. Operation/maintenance ratio
Old ship carry less cargo during a
certain period of time because it needs
more time for repair and maintenance,
which increase the direct cost and
reduce carrying capacity.
31

5. Space utilization factor (Loading
factor)
When the ship is full loaded, it carries
more cargo.
It is the percentage of cargo or
passengers carried e.g. 4000 tons
carried on a vessel of 10000 capacity
has a load factor of 40%
32
Shipping Intermediates
33
Why maritime demand and

supply do not meet directly?
OR
Why shipping intermediaries
are needed?
34
Shipping intermediaries role

1. Market knowledge and contacts.
2. Technical know-how and
professionalism
3. Logistics services.
35

1. Market knowledge and contacts:
Each market has its own features,
particularities, and geographical
location.
Knowledge on the local market is
essential for any success and contacts
in the shipping market is also
important.
36

Intermediaries is necessary to
enlarge the market coverage and to
make the contacts between the
shipowner and the cargo owner within
such large open market.
37

2. Technical know-how and
professionalism:
Intermediaries have not only
commercial knowledge, but also
technical and managerial knowledge in
ship sale/purchase activities.
38

3. Logistics services:
Intermediaries are providing a great
logistics services, documents in ports
and all procedures to the transport
activities, as well as advising their
clients when needed.
39

However, shipping intermediaries have
three main roles:
1. Informative: Supply information.
2. Intermediary: Make contact
between the parties for a contract.
3. Supportive: Provisions and
logistics services.
40
Shipping Brokers
41
Ship Brokers
Who acts between two parties for a
definitive task.
Communicate or make contacts between
shipowner and cargo owner against a
commission.
42
Ship Brokers
There are two types of brokers:
1.Sale/Purchase brokers
2.Chartering brokers
43
Ship Brokers
1. Sale/Purchase brokers
Provide information at three main levels
a) Financial level
b) Technical level (Specifications)
c) Commercial level (Market trend)
44
Ship Brokers
However, the sale/purchase broker
should offer lots of services such as:
1. Provide information on reported
ships sales at the recent past; name
of the ship, seller, buyer, costs,
instalment or payment methods.
45
Ship Brokers
2. Provide information on the relevant
vessels on the market for sale.
(information like the ones mentioned
in the previous point, the place of
ship) and if there any other
suppliers.
46
Ship Brokers
3. Provide information and analysis on
the situation of the market and the
trend of the trade.
4. Provide information on second hand
and scrap markets as well as the
economic life of the vessel.
47
Ship Brokers
5. Assist and provide more information
to be able to negotiate the
conditions of sale/purchase
contract.
48
Ship Brokers
2. Chartering brokers:
They are for the tramp shipping only,
and are divided into:
1. Owners brokers
2. Charters brokers
49
Ship Brokers
They have similar activities, except
that they are appointed by opposite
parties.
Each of them should provide his
principal by information and give
advices on ships open and cargo
offering.
50
Ship Brokers
A chartering broker can or
cannot act as an owners
broker?!
51
Shipping Agents
52
Shipping Agents
Brokers work terminates with the
conclusion
OR
When he carries out or fulfil a specific
task against a commission.
53
Shipping Agents
While, the agents work lasts for a
longer period of time because he has
many activities and larger scope of
services.
These activities are differ according to
the type of the shipping agent.
54
Shipping Agents
However, there are two types of
shipping agents:
1. Port agent
2. Liner agent
55
Shipping Agents
1. Port agent
Appointment by the shipowner to
represent him at the port of call.
Needed more in tramp shipping
because liner has a fixed route and a
fixed schedule.
He should assist the master and the
crew at the port if required.
56
Shipping Agents
In voyage chartering, if the charterer
insists to appoint the agent by
himself, still the owner may wish to
appoint another agent to look after
his benefits, he will work, in this case,
as a protecting agent.
57
Shipping Agents
The port authority only deals with the
port agent, the protecting agent will
works as an observer.
58
Shipping Agents
2. Liner agents:
He is working as a general agent,
normally for a long period of time and
several shipping line within specific
geographical area
59
Shipping Agents
His activities and services include:
Transport connections
Container equipment control and
maintenance.
Freight collection.
Transport documents processing
60
Shipping Agents
Signing the bill of lading on the
shipowners behalf.
Space booking.
Special marketing and sales activities.
61
Shipping Agents
Freight forwarders:
While, shipping agents represent
shipowners, freight forwarders
represent cargo owner (shipper).
He may act on behalf of his principal or
for his own account.
62
Shipping Agents
a) When acting as an agent:
When he acts as an agent, or when he
signs any document, one of the
following terms should be written prior
his name:
On behalf of
In the name of
For the account of
As agent only
63
Shipping Agents
b) When acting as a principal:
When he acts as a principal, he is an
independent contractor who takes
responsibilities under his own name.
He issues his own document of
transport (B/L) to provide the services
required from his client.
64
Shipping Agents
Impacts of shipping brokers, agents,
and forwarders:
The impact on two levels:
1. Transport quality
2. Transport costs.
65
Shipping Agents
1. Transport quality
Shipping intermediaries play an
important role in transport reliability
and achievement.
A good broker is referred to as a first
class broker; does the job required
right the first time which saves money
and time.
66
Shipping Agents
2. Transport costs:
Using a good broker, agent, or freight
forwarder results in:
a) Reduction of the unexpected costs.
b) Cost control can be improved.
67
Shipping Agents
2. Transport costs:
Using a good broker, agent, or freight
forwarder results in:
a) Reduction of the unexpected costs.
b) Cost control can be improved.
68
69
Thank You
70

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Chartering Management

Demand and Supply

Chartering Management By Dr. Berksal ElMiligy

Major factors affecting the

Chartering Management By Dr. Berksal ElMiligy

Factors affecting the Demand

Chartering Management By Dr. Berksal ElMiligy

Chartering Management By Dr. Berksal ElMiligy

Chartering Management By Dr. Berksal ElMiligy

Chartering Management By Dr. Berksal ElMiligy

2. Political Events and

Chartering Management By Dr. Berksal ElMiligy

2. Political Events and

Chartering Management By Dr. Berksal ElMiligy

Chartering Management By Dr. Berksal ElMiligy

Reducing transport cost.

But, technical development sometimes

Chartering Management By Dr. Berksal ElMiligy

Major factors affecting the

Chartering Management By Dr. Berksal ElMiligy

Basic Features of maritime

Basic features of maritime

1. Shipping has those typical

Factors affecting the size of

Size of the ship

Factors affecting the size of

Chartering Management By Dr. Berksal ElMiligy

Factors affecting the size of

What are the factors that

Factors affecting the size of

From the shipowners point of

Factors affecting the size of

2. Port facilities: handling equipment big

Chartering Management By Dr. Berksal ElMiligy

Factors affecting the size of

Big ships became slower, which will

Chartering Management By Dr. Berksal ElMiligy

Factors affecting the size of

Factors affecting the size of

The less time ships spend in port, the

Factors affecting the size of

Chartering Management By Dr. Berksal ElMiligy

Factors affecting the size of

Chartering Management By Dr. Berksal ElMiligy

Why maritime demand and

Shipping intermediaries role

Chartering Management By Dr. Berksal ElMiligy

Shipping intermediaries role

Shipping intermediaries role

Chartering Management By Dr. Berksal ElMiligy

Shipping intermediaries role

Chartering Management By Dr. Berksal ElMiligy

Shipping intermediaries role

Chartering Management By Dr. Berksal ElMiligy

Shipping intermediaries role

Chartering Management By Dr. Berksal ElMiligy

Chartering Management By Dr. Berksal ElMiligy

Chartering Management By Dr. Berksal ElMiligy

Chartering Management By Dr. Berksal ElMiligy