By Kevin Joseph
MBA (Energy Trading)
A person or company involved in wholesale
trade ,especially one dealing with foreign
countries or supplying goods to a particular
An individual whose occupation is to buy
items at wholesale price and sell them at
The practitioners should be aware that the
demand for shipping is a derived demand.
Shipping is a derived demand, which means
that shipping as an industry depending on
people who are willing to trade by sea using
Eg.demand for grain trade increases, so
demand for shipping grows with it.
The Dry Cargo Market
Dry bulk trades comprise iron ore, coal, grain,
timber, steel and other similar cargoes which are
shipped in bulk.
Dry Cargo market relies on a range of vessels and
covers all the world’s major trade routes.
A chartering contract is the example of a transaction
entirely governed by market forces.
The relative bargaining strength of the two parties
depend on the current state of the market.
Dry Cargo Charter Parties
Two most commonly used charter parties used for dry cargo are
the Baltime and the New York Produce Exchange (NYPE)
The Baltime is often considered to favour shipowners while the
NYPE is considered more advantageous for charterers.
Many of the standard forms are imposed on the markets by the
To fit into the their contacts of sale of the commodity itself.
The charterer is most of the time in a stronger position as
far as terms and conditions are concerned as they are static
and is easy for them to band together with the competitors.
Single Voyage Charter:
Ship agrees to go to load a cargo of an agreed
quantity of a commodity and carry it to ‘B’ for which
the consideration will be rate of freight (calculated
on per tonne basis)
When there are more than one cargo to move and
in a consequence , it is convenient to fix the cost i.e
to contract with the owner.
The shipment is responsible for providing a seaworthy ship
with valid classification and a master and a crew, so that the
ship can be sailed to its final destination.
The charterer is responsible for loading, stowing and
discharging cargo safely.
The charterer is responsible for giving the master the
effective orders and instructions with regard to when and
where the cargo should be shipped.
The charterer is responsible for providing fuel for the
Contract of Affreightment
Binding agreement which sets forth the obligations
and rights of the owner of a vessel and a merchant.
The vessel owner undertakes to provide cargo space
(at a specified time and at a specified freight)to the
merchant who is liable for payment whether or not
the cargo is ready for shipment
The contract addresses issues associated specifically
with the vessel, its crew and the routes on which it
will be piled
Bare Boat Charter
The owner gives possession of the ship to the charterer and
the charterer hires its own master and crew.
The giving up of possession of the ship by the owner is the
defining characteristic of a bare-boat charter.
The bare-boat charterer is sometimes called a "disponent
The chartered takes over the vessel for a stated period of
time with a minimum of restrictions for a stipulated sum.
Terminologies used in voyage
Applies to bulk cargoes such as coal, where the surface of the
loaded cargo needs to be leveled out to make best use of the space
available and to minimize the danger of the cargo shifting in the
hold during the voyage.
Is the timber used to prevent metal to metal contact between
cargo and the ships to hold or between ship plates. And to stop
loose items from moving around in the hold during the voyage.
Is the name given to the procedure of checking the no of
packages, as they are loaded or discharges.
One who is employed in the loading or unloading of ships.
The primary role of a
stevedore is the loading
and unloading of freight on
an off ships while they are
includes 1-mooring and unmooring
2- cleaning and preparing
3-stacking and securing
associated with the
transfer of cargo
as a dock worker, docker
or dock laborer, wharfie)
is usually the entry point
for individuals seeking a
carrier on the docks or
Stevedores can than
progress to became a
foreperson or container
Skeleton of voyage charter :
Names of parties
Name of the ship with some
Cargo nature and quantity
Lay days and cancelling dates
Rate of freight and manner of
Speed of loading and
Time charters :
The shipment is
responsible for providing a
seaworthy ship with valid
classification and a master
and a crew, so that the ship
can be sailed to its final
Is to transfer the
commercial direction of
the ship to the charter
while leaving technical
controls with its owners.
Refer document - NYPE 93
Skeleton of time charters
Names of parties
Name of the ship with some
Speed and fuel consumption
Places of delivery and re
Trading area or limitations
Rate of hire
Lay days and cancelling dates
International chartering market
Dry cargo chartering takes place
all over the world
Geological location of a shipping
market is very crucial to hold a
Eg : London market
With the advent of new
communications between the
traders, the seller and the buyer
has improved significantly. It is
real time and can be part of the
market from any part of the
world at any time of the day.
Optical cables (trans atlantic
The practitioners in the
shipping communities :
Charters and their
Owners and their brokers
( here brokers can have
The broker can be a
member of the charter’s
(or owner’s own staff)
Exclusive brokers :
These can be shipbrokers that
negotiate charters only for one
shipowner or one charterer.
It can also mean shipbrokers
that specialise in a restricted
category of vessel, such as oil
tankers; or in a restricted
category of shipbroking , such as
sale and purchase of passenger
The broker can also work
exclusively with regard to the
place in which he offers his
broking services, such as a
broker offering services
exclusive to Hong Kong
Competitive brokers :
Here the principal places his
business on the market through
several brokers who are in
competition with each other to
bring suitable business to the
There is also extensive used of
intermediate broker . These
broker must walk a very narrow
path because he or she does not
represent either of the parties
and so must take care to be
The tanker market
This market is separate form the dry
cargo markets but tanker chartering
itself subdivides into separate
Crude oil market is the important
Any any political unrest in the
middle east directly effect the crude
It is also prone to be in headlines
due to the catastrophic pollution
problem during spills.
The depth of the water is important
to accommodate the draft of the
giant crude oil carriers.
This is the trade that
hits the news whenever
there is political unrest
in the Midddle East.
problem takes place
whenever there is oil
The things which conspired to stop
the continuing upward trend in
tanker sizes are Draft question
Economy of the ships-the sheer
size of ships were lacking
designers' into areas of pure
Recession caused by the oil
producing countries which
imposed massive price increase
and thus created a slump in the
demand for oil .and thus the
price of he ‘dead-weight tonne’
has to be increased
These are those which are extracted from
the crude oil which are to be burnt in that
Ranging from highly volatile to viscous .
There is a term as clean and dirty oil
Clean oil require particularly clean vessel,
handling that carry them .
The fuel can be naptha , kerosene , etc
Dirty oil covers fuel oil, diesel and heavy
gas oil as well as crude .Many heavy oil
require heating before they can be pumped
with the help of the heating coil.
The second tanker
market is that for refined
The oil consuming world
quickly found that the
most economical system
was to site refineries near
the end users.
Chemicals and other products
These are the by
products of the oil
refining . e,g
Some are volatile and
some are toxic that can
Ships in such trades have to be equipped
with showers at intervals along the deck
so that any splashes may be washed at
One thing these cargos have in common
is the need of the cleanliness of the ship’s
One source of impurity could simply be
the surface of the tanks themselves and
chemical carriers normally have metals
of the tanks coated with a plastic film.
Some are soluble and some are not.
Parcel tankers are used to carry many
different consignments in different tanks
H2so4, vegetable oil,wine LNG are easily
transported in this .
Tanker charter parties
Tanker market has its single voyage and consecutive voyage charters and a
contracts of affreightment.
The basic construction of the tanker charter is the same as for the dry cargo
and in some respects the clauses are simpler for the wet cargo as oil
installations are almost variably set well apart from port complexes.
the operation is simpler in case of the oil transport.
One major difference between voyage charters for dry cargo and those for
tankers is in the way the rate of freight is expressed.
It is usually expressed in terms of the unit of currencies per tonne of cargo
A system was evolved after world war 2 to have an agreed schedule of
nominal rates covering every combination of loading and discharging ports
for crude oil.
This enabled a charter to fix a ship naming in an area. fix prices for an area.