Key Definitions and Overviews Flashcards
What are the main differences between a voyage charter, time charter, and contract of affreightment (COA)?
- Voyage Charter: Single voyage, freight paid per ton or WS rate, owner bears most costs (bunkers, port dues).
- Time Charter: Charterer hires the vessel for a period, pays hire daily, and pays for bunkers and port costs.
- COA: Agreement to carry a set quantity of cargo over time, using named/unnamed vessels, often multiple shipments under a single contract.
- Each shipment under COA usually governed by a standard voyage charterparty (e.g., Asbatankvoy).
What clauses are commonly unique to a Contract of Affreightment (COA)?
Typical COA clauses include:
- Nomination clause: Schedule of lifting windows and nomination procedures
- Substitution clause: Allows substitution of tonnage if owner’s vessels unavailable
- Bunker escalation clause: Adjusts freight in response to bunker cost fluctuations
What details must be included in a firm offer for a tanker fixture?
A firm offer should include:
- Charterer/Owner names
- Vessel name and details (from Q88)
- Cargo description and quantity
- Laycan (laydays/cancelling)
- Load/discharge ports
- Freight terms (WS or $/ton)
- Demurrage rate
- Commission split
- Governing law and arbitration venue
- Offer valid until: date/time/place
What is a fixture recap and how does it differ from a firm offer?
A recap is the confirmation of all agreed terms after negotiations. It lists full fixture details, often referencing the standard C/P (e.g. Asbatankvoy), and includes clauses, laytime, demurrage, commissions, law, and arbitration. A firm offer is an initial, binding proposal that expires if not accepted.
How is the WS100 rate calculated under Worldscale?
WS100 is calculated based on a notional 75,000 DWT standard vessel:
- Round voyage (load-discharge-load)
- Average port charges and bunker prices
- Daily hire of $16,000/day
- Speed of 12.5 knots
- Fuel consumption: 30 MT/day at sea (VLSFO), 5 MT/day in port (MGO)
- Total voyage cost divided by cargo quantity = WS100 rate
What are the advantages of using Worldscale for tanker freight?
- Simplifies freight negotiations with standardised rates
- Automatically includes multi-port/load/discharge costs
- Provides a transparent market benchmark
- Allows quick adjustment to actual market via WS points (e.g. WS130)
- Avoids constant re-negotiation of lump sum freight
What does WS130 mean in a tanker charter?
It means the agreed freight is 130% of the WS100 rate for the relevant voyage, calculated based on the most recent Worldscale flat rates and conditions.
What is WSHTC and how does it affect laytime?
- WSHTC: Worldscale Hours Terms and Conditions
- It provides standardised laytime terms, typically 72 hours SHINC for loading/discharging unless otherwise agreed. It’s designed to be used with WS-based fixtures.
What should a cleaning clause include in a tanker charter?
- Vessel to present tanks, pipelines, and pumps clean to charterer’s inspector satisfaction
- Re-inspection allowed if first fails
- Time/costs for failed inspection on owner’s account
- Right of termination after repeated failure
- Clause may address previous cargo residues and cross-contamination risks
What are the three main sources of income under an Asbatankvoy charter party?
1) Freight: payment for cargo carried
2) Demurrage: compensation for delays beyond laytime
3) Deadfreight: compensation for short shipment if the charterer fails to provide minimum agreed cargo quantity
When is deadfreight payable under a voyage charter?
Deadfreight is payable when the charterer fails to supply the full quantity of cargo stated in the charter party, and the ship is otherwise ready to load it.
What clause in Asbatankvoy deals with demurrage?
Clause 8 - Demurrage is payable if laytime is exceeded at the agreed daily rate. No despatch is allowed.
What are common payment terms for freight in Asbatankvoy?
Freight is usually payable on shipment, either:
- Upon completion of loading
- On bill of lading date
- Or against freight invoice supported by B/L copies
The exact payment timing is agreed in the recap.
What are the main terms of a Ship-to-Ship (STS) laytime clause?
- Operations must comply with OCIMF STS guidelines.
- Charterers to provide fenders, hoses, and other equipment at their time and expense.
- Charterers to arrange all necessary permits and approvals.
- Laytime starts: 6 hours after NOR is tendered or when the first lighter is alongside - whichever is earlier.
- Laytime ends: when the last line is cast off and the vessel has sailed (not hose disconnection).
What is reversible laytime and what are its benefits?
Reversible laytime allows time saved at one port (e.g. loading) to be used at another (e.g. discharging). Benefits:
* Charterers can manage port delays flexibly
* Owners may offer improved freight terms since risk of demurrage is lower
* Increases efficiency of port operations and improves scheduling
Name ten periods commonly excluded from laytime in voyage charters.
1) Time prior to laydays
2) NOR notice period (usually 6 hours)
3) Time lost due to vessel’s fault
4) Weekends and holidays (if SHEX)
5) Heavy weather (if WWD)
6) Ballasting/deballasting
7) Slops discharge
8) Port congestion delays outside charterers control
9) Crew or owner’s strikes
10) Quarantine delays
What laytime periods are typically counted at half rate?
1) Idle time between berths (if within port limits)
2) Weather delays where port terms apply partial time
3) Pumping operations below minimum pressure (e.g. 100 psi)
Note: Must be agreed in the C/P, often found in Asbatankvoy rider clauses.
What are the conditions for a vessel to be considered ‘an arrived ship’?
- Port charter: vessel must reach the usual waiting place within port limits and be ready in all respects.
- Berth charter: vessel must be securely moored at the berth and ready in all respects.
In both cases, NOR must be tendered to start laytime unless otherwise agreed.
Where can NOR be tendered under a port vs berth charter?
- Port Charter: at arrival at the customary waiting place inside port limits.
- Berth Charter: only once vessel is all fast at the berth.
Customary exceptions apply for NAABSA, WIFPON, or where otherwise contractually agreed.
What are the key requirements of a nomination clause in a COA?
- Owner to nominate performing vessel for each lifting.
- Charterer must accept nominated vessel and confirm loadport.
- Shipper must have export clearance and cargo available within laydays.
- Receiver must accept tonnage at agreed discharge port.
- Even distribution of cargo over period is often required.
Why is a nomination clause important in a COA?
It ensures smooth scheduling of liftings, guarantees cargo readiness, clarifies operational responsibilities, and supports performance planning.
What is a firm offer and what are ethical responsibilities during its use?
A firm offer is a binding proposal valid for a limited time, stating clear terms. Ethics:
* Owners: offer one ship per cargo only
* Charterers: consider only one firm offer per cargo at a time
* Brokers: act only within authority of principal, maintain confidentiality and transparency, follow Baltic Code of Ethics.
What terms must be included in a properly structured firm offer?
- Vessel details and Q88
- Cargo description and quantity
- Laycan
- Load/discharge ports
- Freight terms (WS/lump sum)
- Demurrage rate
- Charter party form (e.g. Shellvoy 6)
- Expiry of offer (date/time)
- Subjects (if any)
- Law and arbitration venue
What is a break-even rate and how is it calculated for a voyage estimate?
The break-even rate is the daily income needed to cover voyage and fixed costs. It is calculated as:
* Total voyage cost (bunkers, port dues, canal tolls, etc.)
* Divided by total voyage duration (in days)
* Compare result with daily earnings to assess profit/loss.
