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Chartering Introduction

The document provides an introduction to chartering in shipping, covering demand and supply, cost elements, market participants, and different chartering methods. It details voyage, time, and bareboat charters, along with the responsibilities of owners and charterers. Additionally, it discusses risk management strategies and freight derivatives in the shipping industry.

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Karl-Heinz Dreier
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13 views25 pages

Chartering Introduction

The document provides an introduction to chartering in shipping, covering demand and supply, cost elements, market participants, and different chartering methods. It details voyage, time, and bareboat charters, along with the responsibilities of owners and charterers. Additionally, it discusses risk management strategies and freight derivatives in the shipping industry.

Uploaded by

Karl-Heinz Dreier
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Introduction to Chartering

Dec 2009
Agenda
• Demand and Supply

• Cost Elements in Shipping

• The market Participants


p

• Different ways of Chartering

• Concluding a Fixture

• Risk Management / Freight Derivatives


Demand and Supply
Costs Elements in Shipping

• Voyage Costs

• Operating and Daily Running Costs

• Capital Costs
Voyage Costs

• Bunkers
(Contracts/hedging/speed/fluctuations)
• Port
(Wharfage/Linesmen/Harbour dues/Light dues/Towage/Pilot)
• Canal
(
(Suez/Panama/Kiel....)
/ / l )
• Other Voyage Costs
(Cleaning/Taxes/War Insurance/Surveyors)
• Commission
((Broker commission/Address commission))
Operating/Daily Running Costs
• Crew
(All direct and indirect charges)
• Stores and Miscellaneous
(Spare parts/Lubricants/Water/General Stores)
• Insurance
(H&M and P&I...)
• Repair and Maintenance
(Spares/Surveys/Dry Dock...)
• Administration Costs
(Chartering/Operation/Technical/Crewing/ Finance and
Accouning –all shore based)
C i l Costs
Capital C

• Size of Loan
• Repayment Period
• Interest Rate
Th Market
The M k t Participants
P ti i t

• Owners
• Charterers
• Brokers

Charterparty Owner
Charterer

Charterer’s Owner s
Owner’s
broker broker
Owners

The Owner is the vessel controller:

• Head Owner
• Disponent Owner/Operator
• Commercial Manager
• (Cargo Owners)
Types of Vessels
Categorized by size

– ULCC > 315,000 MT


– VLCC 275,000 MT
– Suezmax 130,000-160,000 MT
– Af
Aframax/LR/Capesize
/LR/C i 90 000 120 000 MT
90,000-120,000
– Panamax 50.000-84,000 MT
– MR /Handy Size 30 000 40 000 MT
30,000-40,000
– GP/SR/Small Handy Size 20,000-30,000 MT
– Coaster 10 000 MT
10,000
– Barge 1,000 – 3,000 MT
Charterers

The Charterer is the cargo controller:

• Producer/Receiver
– Selling CIF
– Buying FOB
• Traders
• (Shipowners)
Different Ways of Chartering

• Voyage Charter

• Time Charter

• Bareboat Charter
Voyage Charter

• Transport cargo from A to B


• Charterer pays freight
• Owners pays all voyage related costs

– Single Voyage (all space/part space)


– Consecutive Voyages
– Contract of Affreightments (CoA)
Time Charter

• Hire a vessel
• Agreed period
• Description of ship
• Cargo and trading exclusions
• Hire p
per day/month
y/ or p
per dwt in Usd
(paid in advance)
• Chartererer p
pays
y all voyage
y g related costs
Bareboat Charter

• Hire an ”empty” vessel


• Long period
(Purchase option)
• Description of ship
• Cargo and trading exclusions
• Hire per day or per dwt in Usd
(paid in advance)
• Chartererer has commercial and technical
responsibility
ibilit and
d pays allll daily
d il running
i costs
t
as well as all voyage related costs
Tanker Chartering
g
• Single voyage (spot) charters
• Voyage Charter • Consecutive voyages
• Voyage Charter
– Low risk • COA (Contract of
– Low risk
Affreightment)
• Time Charter
– Medium risk • Charterer hires vessel for an
• Time Charter agreed period and pays for
– Medium risk variable costs including
• Demise or Bare Boat bunkers, port costs, canal tolls
Charter
• Charterer hires ‘empty’ vessel
• –Bare
HighBoat
risk Charter
for a (long) period. Has to
– High
Hi h risk
i k provide
id andd pay for
f allll costs
t
including crew, insurance,
drydocking and maintenance
plus variable costs
Cost Distribution

Employment Type

Costs Bare Boat Time Charter Voyage Charter


Capital Costs Owner Owner Owner

Daily Running Costs Charterer Owner Owner

Voyage Costs Charterer Charterer Owner


Ch t
Charterparty
t FForms
Voyage Charter
• Dry (Amwelsh, Gencon,Polcoalvoy, Baltimore Berth
Grain,, Welcon))
• Tanker (Asbatankvoy, Exxonvoy,BP Voy, Shellvoy,...)

Time Charter
(NYPE 93, Shelltime,BP Time,..)

Bareboat Charter
(B
(Barecon,..)
)

Always with reference to a dated charterparty


C
Concluding
l di a Fixture
Fi t

• Voyage Calculation

• Negotiations
– Indication
– Firm offer
Indication

We are pleased to indicate as follows:

• Vessel: Bow Sky/oos


• Laycan: Nov 10-20
• Cargo: 10,000
10 000 mts biodiesel from Houston to Rotterdam
• Freight: Usd 45,50 pmt
• D
Demurrage: U
Usd
d 35,000
35 000 pdpr
d
• Laytime: 350/350 mtph l/d shinc rev
Firm Offer
1. Reply time
2. Subjects
3. Name of Charterer/Owner
4 Vessel name
4. name, short description
5. Laycan (laydays/cancelling)
6. The cargo
g – full description
p
7. Load port(s) berth(s)
8. Discharge port(s) berth(s)
9. Freight
10. Payment of freight
11 Demurrage/Despatch
11.
12. Laytime
13. Commission
14. Charterparty Form/Terms
Risk Management / Freight Derivatives
• Risk Managment in Shipping
• Worldscale
• Freight Market Volatility
• FFAs
• Options
Risk Management
g in Shipping
pp g

• Risk in Shipping
• Operational Risk (Freight, Revenue, Cost and Expenses)
• Ownership Risk (Price Fluctuations
Fluctuations, Accidents and Losses)

• Traditional Hedging
• Time Charter, Bareboat Charter, CoA

• Introduction of Freight
g Derivatives
• BIFFEX
• FFAs
• Options
Worldscale (WS)
( )

• New Worldwide Tanker Nominal


Freight Scale (Worldscale) = annual
publication listing $/MT for voyage
between 2 ports.

• WS rate - % applied to flat rate to


calculate the $/MT rate for specific
voyage between 2 ports
ports.

Flatt R
Fl Rate
t x WS R
Rate
t = $/t
$/tonne rate
t
eg 5.40 x W150/100 = $8.10/MT
Worldscale Components:
• Standard Vessel
• Average service speed
• Bunker consumption
p
• Port time
• Fixed Hire Element
• Port costs - In USD converted from local currency rates
• Canal Transit Time – Panama and Suez
• Bunker Price

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