CASA 3 New Lectures - Conven & Bulk Cargo Operations (PDF)

Professional Certificate Course conducted by CASA Handling of Break Bulk/Conventional Cargo Operations Delivered by Vasantha Dias – Secretary General / FTZMA ,Visiting Lecturer of CINEC Metro Campus & Shippers’ Academy Handling of Break Bulk/Conventional Cargo Operations Chart...

Professional Certificate Course conducted by CASA Handling of Break Bulk/Conventional Cargo Operations Delivered by Vasantha Dias – Secretary General / FTZMA ,Visiting Lecturer of CINEC Metro Campus & Shippers’ Academy Handling of Break Bulk/Conventional Cargo Operations Charter parties, rights, responsibilities and liabilities of owners & chatterers Notice of Readiness Arrived ship/Statement of facts, time sheets  Vessels’ Types Seaborne transport vehicles are ships Therefore, to understand seaborne transport system, we as candidates must be familiarized with various type of ships being used for sea transportation TYPE OF SHIPS IN INTERNATIONAL TRADE General Cargo Vessel Container Cargo Vessel Bulk Cargo Vessel Multi purpose vessel (MPV) RO/ RO Vessel RO/RO – LO/LO Crude Oil Tanker Product Oil Tanker Liquefied Petroleum Gas carrier (LPG Tanker) Liquefied Natural Gas Carrier (LNG Tanker) What is a general cargo ship? Generally it is a ship designed to carry dry cargo They have their own loading and discharging gear General cargo consist of Bags, packages, pellets and cargo units Common feature of every general cargo ship is it consist of derricks or cranes Container ships under 2,000 TEU are generally called feeders. (No hard and fast rule for the size) Feeders are small ships that typically operate between smaller container ports. Some feeders collect their cargo from small ports, drop it off at large ports for transshipment on larger ships, and distribute containers from the large port to smaller regional ports. Generally they have cargo gears Dry Bulk term has been used to distinguish from liquid bulk cargo carriers like tankers They carry solid dry cargo in unpacked form Example: Iron ore, Coal, Grain, Cement, Wheat Etc A multi-purpose vessel (MPV) is a ship that is built for the carriage of a wide range of cargoes. Examples of these cargoes are: timber, logs steel, building materials, rolls of paper and bulk cargo, containers and heavy lift units. These vessels consist of cargo gear like cranes or derrick Ro-Ro ships can come in several types such as ferries, cruise ferries, barges, and of course, cargo ships. Some Ro-Ro ships are used exclusively for the transportation of cars and trucks across the oceans. Specially designed with a ramp door to drive in and drive out vehicles. RORO VESSEL IN PORT WITH RAMP DOOR OPENED RO-RO stand for Roll on and Roll off LO-LO stand for load on and load off This vessel has a ramp door for drive in and drive out from the vessel and to the vessel This vessel also has cargo gear (Specially cranes) for load on and load off like a general cargo vessel It is a specially designed and built vessel to carry large amount of unrefined oil known as crude oil It carries crude oil from the point of extraction to refineries in large quantities. Inside the vessel tanks and pipe lines are built for this purpose Vessel does not have any cargo gear other than the boom to lift cargo manifold pipe LIQUID PRODUCT CARRIER LIQUID PRODUCT CARRIER This is a tanker specially designed to carry one or more type of refined oil Therefore, vessel can carry two or three types of refined oil at the same time Example; vessel can carry Petrol, Diesel and Kerosene at the same time Different sets of tanks are provided with many loading and discharging manifolds LIQUID PETROLIUM GAS CARRIER(LPG) LIQUID PETROLEUM GAS CARRIER (LPG) This is a specially designed vessel to carry liquid petroleum gas under high pressure Liquid Petroleum Gas consist of a mixture of Butane and Propane gas Tiny quantities of other gases also present LPG is normally odorless Therefor small amount of pungent gas known as ethyl mercaptan is added to identify in case of gas leak from any container  This is a special design vessel to carry Natural Gas in liquid form Special feature is no cargo gears Special pipe lines are available for loading and discharging Designed to carry gas under the temperature of -162c Maritime trade? Maritime trade is the lifeblood of the global economy, representing the backbone of international commerce by sea. It encompasses the movement of goods and commodities across oceans, connecting distant nations, fostering economic growth, and supporting countless industries worldwide. Charter Parties What is a Charter Party? A charter party is a document of contract by which a ship-owner 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 forth in the charter party. If permitted to do so by the terms of charter party, the charterer may enter into subcontracts with other shippers.  Who is charterer? The charterer’s job is to find a vessel for the cargoes they have from different shippers and maximizing the space on ship they plan to hire. What includes in a charter party ( C/P)? i) It is a document defining who as “Owners” and “Charterers”. ii) Defines the obligations, rights and liabilities of the ship-owner and charterer. iii) It is usually drawn up by the broker representing the charterers following negotiation and agreement of terms between both parties. iv) It is usually based on a particular edition of a recognized standard form (e.g. GENCON, BALTIME, NYPE) v) It is sometimes based on a specified charter party already performed by another vessel at an earlier date, in order to save effort and time in negotiating many of the terms. vi) It usually comprises a set of standard clauses on a printed form. vii) It may have many amendments to the standard clauses, as agreed by the parties viii) It should be signed by a broker representing each party to the contract, unless their principals sign instead. ix) should ideally be balanced so that it does not favour one party to the disadvantage of the other. Difference between B/L and Charter Party Differences Between a Charter Party Bill of Lading and Marine Bill of Lading:- Charter Party Clause: Charter party bill of lading contains a clause stating that it is subject to a charter party. Marine bill of lading does not contain such a clause or similar wording. Difference between C/P and B/L Points of Distinction Bill Of Lading Charter Party When used Some space is hired on a ship to carry a small The full ship is hired to carry a big consignment consignment Negotiability Transferable by an endorsement and delivery. Not transferable & negotiable at all Semi negotiable Types a) Clean B/L b) Foul B/Lading a) Time Charter b) Voyage Charter Receipt of goods and document of title Receipt of goods and document of title to the Neither a receipt nor a document of title. It is an goods agreement only Clauses & Warrantees Does not mention loading & un-loading days or States days allow for loading & un-loading + T/C + lay days Lay days Collateral Security It can be used as a collateral Security to borrow It cannot be used as a collateral security money Agreement Not an agreement for live of ship Agreement for living the full ship or subnational part Descriptions of Goods Gives details of goods to be shipped Does not contain details of Goods Types of Charter Parties There are three main types of charter parties:- 1. Bareboat( Demise) - The charterer takes responsibility for the crewing and maintenance of the ship during the time of the charter. He assumes the legal responsibilities of the owner, and is known as a despondent owner. 2. Time Charter - The vessel is hired for a specific amount of time. The ship-owner manages the vessel but the charterer gives orders for the employment of the vessel, and may sub- charter the vessel on a time charter or voyage charter basis. 3. Voyage charter - The charterer hires the vessel for a single voyage, but the ship-owner provides the master, crew, bunkering and supplies Rights, responsibilities and liabilities of owners & chatterers What are the responsibilities of charter parties? The ship-owner provides the vessel and crew, while the charterer pays a hiring rate for the duration of the charter. The charterer is responsible for covering various operational costs, such as fuel, port expenses, and maintenance. What are the responsibilities of a voyage charterer? A voyage charter is agreed between a ship-owner (who provides the vessel) and a charterer (who pays to transport goods). The charterer pays either a lump-sum or quantity-based freight rate to transport the cargo for the specific voyage, as well as the cost of loading and unloading the goods. Rights, responsibilities and liabilities of owners & chatterers What are the responsibilities of a time charter? In time charters, the charterer takes on full responsibility for vessel operation, cargo selection, and choosing routes. Cost Structure: Voyage charters involve a fixed freight rate (lump sum or per ton). Time charters involve a fixed daily or monthly "hire rate" paid by the charterer regardless of usage. What are the responsibilities of a demise charter? In a demise (or bareboat) charter, the charterer takes responsibility for the crewing and maintenance of the ship during the time of the charter. S/he assumes the legal responsibilities of the owner, and is known as a deponent owner. In a time charter, the vessel is hired for a specific amount of time. Bareboat/Demise Charter Basics Once the Charterer takes position of the vessel, the Charterer becomes entirely responsible for the vessel. This means the Charterer is accountable for the vessel's crew, fuel, insurance, and any maintenance and repairs the vessel needs. What are the characteristics of a demise charter? A demise charter, or bareboat charter, is an arrangement for the hiring of a vessel for which no administration or technical maintenance is included as part of the agreement. The charterer obtains possession and full control of the vessel, along with the legal and financial responsibilities for it. In other words, this is an arrangement for the chartering or hiring of a ship or boat for which no crew or provisions are included as part of the agreement. Instead, the people who rent the vessel from the owner are responsible for taking care of such things. What are the advantages of bareboat charter? A bareboat charter gives sailors a much greater degree of freedom than holidaying on a skippered yacht. You'll take the helm and go where you please, at your own pace. What are the duties and responsibilities of seafarers during onboard? The primary duty of a seafarer is to contribute to the safe and efficient operation of a ship. This encompasses a wide range of responsibilities, from navigation, maintenance, and cargo handling to safety procedures and emergency response. What are the responsibilities of a ship-owner? The charterer is responsible for arranging cargoes and voyages during the charter and also for paying all voyage expenses including fuel, port and canal dues, cargo handling charges. The ship-owner provides the ship and crew and is responsible for the capital charges and daily running costs. Liabilities What is the liability of charterer? Liability to cargo – as a Charterer you may be liable for loss of and/or damage to cargo resulting from bad stowage or mishandling, shortages as a result of theft or mismanagement, or non-delivery (through for example loss, arrival at the wrong port). A demise charter operates as a long lease of the vessel, with the charterer completely in charge. In time and voyage charters, the ship-owner still runs the ship, but when in port the charterer becomes responsible for loading and unloading the ship within the agreed period of laytime. If the charterer exceeds the allowed laytime, demurrage becomes payable.  The Importance of Charter Parties in International Trade Charter parties play a vital role in facilitating global trade, ensuring the efficient transportation of goods by sea. These agreements establish clear responsibilities and liabilities for both ship-owners and charterers, promoting smooth operations and minimizing disputes. Let’s explore why charter parties are crucial in international trade. Facilitate global trade by providing vessel availability. Charter parties enable ship-owners to make their vessels available for hire, allowing them to meet the demand for transporting goods across borders. This availability ensures that businesses can access reliable shipping services to move their products worldwide. Ensure efficient transportation of goods by sea: By defining the terms and conditions of carriage, charter parties help streamline the logistics process for ship owners. They specify loading and unloading procedures, delivery timelines, and any additional requirements for cargo handling. This clarity promotes efficiency and helps avoid delays or misunderstandings during transit, benefiting both ship-owners and the overall shipping industry. Establish clear responsibilities and liabilities. Charter parties outline the obligations of both ship- owners and charterers, ensuring accountability throughout the voyage. They determine who is responsible for vessel maintenance, crew expenses, insurance coverage, and compliance with maritime regulations. Clearly defined responsibilities minimize uncertainties and protect all parties involved. Safe Port Requirements in Voyage and Time Charters Here are some key points regarding safe port requirements for ships in both voyage and time charters. Voyage Charters Charterers must carefully evaluate the safety aspects of each port before initiating cargo operations on their ship. When entering a voyage charter party, it is essential to consider navigational hazards such as shallow waters, narrow channels, or unpredictable weather conditions that may be encountered during the ship’s journey. Security measures at ports are crucial in safeguarding cargo, whether on a ship or on land, from theft or any other criminal activities. Time Charters The responsibility to nominate safe ship ports lies with the charterer throughout the duration of the contract. It is essential for charterers to stay updated on any changes in safety conditions at nominated ports to ensure their ships’ safety. Regular communication between all parties involved in the ship ensures that any safety concerns related to the ship are promptly addressed. Comparison between Charter parties Comparison between Charter parties continued Notice of Readiness (NOR) The Notice of Readiness (NOR) is the document used by the captain of the ship, in the event of voyage chartering, to notify that his ship is ready, in every respect, to load and/or unload the goods. The Notice Of Readiness (NOR) is always to be tendered in accordance with the terms of the Governing Charter Party. Unless otherwise advised. The notice of readiness is the notice to the charterer, shipper, receiver or another person as may be required under the charter-party that:- 1 The vessel has arrived at the specified destination 2.The vessel is ready to load or discharge the cargo Notice of Readiness (NOR) continued... Requirements for a valid notice of readiness to be served:- The vessel is an arrived vessel. The vessel is ready and in a fit condition to receive or discharge the cargo. The notice of readiness is tendered to and received by the proper person according to the charter-party – Master of the vessel is the ideal party. The Notice Of Readiness (NOR) is always to be tendered in accordance with the terms of the Governing Charter Party. Unless otherwise advised, the NOR should be tendered to all parties as per voyage orders, stating that vessel is in all respects ready to load or discharge her cargo. If the vessel becomes not ready, then NOR will be tendered when the vessel has corrected whatever was the cause of her not being ready to present NOR. Images of the NOR What do you mean by “ Arrived Ship”? A ship is said to be an arrived ship when the ship has arrived within the fiscal and geographical limits of the port. Captain (master) of the ship is entitled to tender a Notice of Readiness (NOR) before the lay time starts to run against the charterers. Arrived Ship – In relation to Charter Parties Port Charter Party - It is not necessary for the vessel to be on her loading berth to be an “arrived ship” under a port charter party. All delays in berthing will be for the charterer’s account, and this is the more favourable charter party for owners. Berth Charter Party - The ship will only become an arrived ship once she has reached the particular berth that is expressly named in the charter party. Where the waiting area of a port is outside its legal, administrative, and fiscal limits, a ship within this area does not become an arrived ship.” Dock Charter Party- In a dock charter party the agreed destination is a dock and the vessel is an 'arrived ship' when she passes the dock gates. This type of charter party is very rare.  Understanding Lay time and Total Lay time Lay time, a crucial aspect of charter parties for ship owners, refers to the time allowed for loading/unloading cargo. It determines the financial implications for both ship owners and other parties involved. Exceeding the lay time incurs demurrage charges, resulting in additional costs for ship owners. Key points to understand about lay time and total lay time: Lay time: Lay time is the agreed-upon period during which the charterer has the right to load or unload cargo. It is typically expressed in days, hours, or even minutes. The clock starts ticking once the vessel arrives at the designated port or berth. Demurrage: When lay time is exceeded due to delays caused by either party, demurrage charges come into play. Demurrage refers to the money the charterer paid to compensate for the extra time taken beyond the agreed-upon lay time. This ensures that ship-owners are compensated for any lost time and potential revenue. Financial Implications: Understanding lay time is essential because it directly impacts both parties’ financial interests. For ship-owners, shorter lay times result in quicker turnaround times and increased efficiency. On the other hand, charterers aim to maximize their use of lay time while avoiding demurrage costs. What is Lay time? In commercial shipping, lay time is the amount of time allowed in a voyage charter for the loading and unloading of cargo. Under a voyage charter or time charter, the ship-owner is responsible for operating the vessel, and the master and crew are the employees of the ship-owner, not the charterer How is the lay time calculated? If the number of running hours or days spent loading or discharging the cargo, after the Notice of Readiness is properly given, varies from the contractually agreed amount of time, then the lay time is paid by the charterer as demurrage or the ship owner as dispatch, at the hourly or daily rate specified in the voyage Demurrage - charterer pays ship-owner Dispatch - Ship-owner pays charterer  When the lay time starts? 1. Vessel has become an “ arrived ship” within the T/C of C/P 2. The vessel is in respects ready to load & Discharge cargo 3. NOR has been served on the charterers or their agent as per C/P Does lay time run continuously? – No, It depend on charter party re Running Days/Working Days/Weather permit/working days Does demurrage run continuously in charter party? - Yes, demurrage is less likely to be interrupted. If an extra time required to complete the cargo operations constitutes time on demurrage, and the charterer is liable to the ship-owner for payment of demurrage. There are seven stages in a lay time calculation: 1. Read relevant clauses in the charter party. 2. Obtain Statement of Facts from agent. 3. Determine duration of lay time allowed. 4. Establish time of commencement of lay time. 5. Allow for interruptions to lay time as per the charter party. 6. Establish time of expiry of lay time. 7. Calculate dispatch or demurrage payable. The Statement of Facts ( SOF) is an extract from the port operations log kept by the charterer’s agent. Which is also an essential document in ship chartering, maritime logistics and shipping. It details all the critical elements and activities that take place while the vessel is at port. Date & Time of arrival of ship Tendering of Notice of Readiness ( NOR ) Time waiting for berth The time ship berthed/shifted to another berth commencement of lay time commencement of cargo operations; periods of suspension of lay time due to disruptions of cargo operation, with reasons in each case ( Weather condition and how it affected cargo operation) Completion of cargo operations & Departure Termination of lay time. Any other information pertaining to or influencing lay time calculation What is Lay Day? A term of a maritime law contract: days stipulated for the loading or unloading of cargo from a ship. Lay Days are defined according to these three types”- a) Running Days -Includes consecutive days including weekends and holidays b) Working Days - Includes consecutive days excluding weekends and holidays c) Weather permit/working days - Includes days on which the weather permits to continuous work of cargo loading and unloading Lay time calculation – An Example A ship is loading grain. It was agreed that cargo work would take 27 hours but it has taken 36 hours. More time is spent loading than expected. Demurrage is payable on the difference in time according to the agreed rate (e.g. $2 000 per hour) : 36 hours – 27 hours = 9 hours more (i.e. demurrage is payable) 9 hours x $2 000 = $18 000 (charterer pays ship-owner) If the same ship managed to load the grain cargo in 22 hours, less time is spent loading than expected. Dispatch is payable on the difference in time according to the agreed rate (e.g. $2 000 per hour). 27 hours – 22 hours = 5 hours less (i.e. dispatch is payable.) 5 hours x $2 000 = $10 000 (owner pays charterer) Lay time calculation continues.... Some delays to loading or discharging cargo are not subject to demurrage. These include : Rain during cargo operations when weather-sensitive cargo is involved (e.g. bagged cement; rolls of newsprint; grain; some minerals; bulk fruit, and others); Very strong wind can sometimes disrupt cargo operations Circumstances beyond the control of the charterer such as a shore side strike, civil unrest. Ship’s machinery malfunctioning (e.g. crane breaking down,; ship having a power blackout; hatch cover jammed; etc.) In such a case, the charterer will place the ship off hire until normal loading car resume Demurrage & Dispatch – Time which does not count lay time An interruption to lay time covers a period when time does not count because it is outside the definition of lay time as expressed in the lay time clause. A common example is “Weather Working Day” (WWD) lay time period. An exception to lay time, refers to a period that is within the definition of lay time, but is excluded by an exceptions’ clause. An example to show the time which does not count in calculating the Lay time For example: Ship A has a port charter with an interruption to lay time expressed in “Weather Working Days”. Ship B has a similar charter but with lay time expressed in working days and additional clause excluding time lost due to adverse weather. If both are waiting at anchorage for a berth, for ship A, rainy periods on working days will be excluded from lay time, but not in the case of ship B. This is because the rain did not delay the cargo operations An Image of a SOF Statement of facts, time sheets – Lay time calculation Below stages are required in a lay-time calculation: 1. Understanding of relevant clauses in the charter party. 2. Obtain SOF from vessel’s agent. 3. Determine the duration of laytime allowed. 4. Ascertain time of commencement of laytime. 5. Allow for interruptions to lay time as per the charter party. 6. Ascertain time of expiry of lay time. 7. Calculate dispatch or demurrage payable. Below is the simplified version of the lay time summary calculated at the end of the voyage. A Group Assignment Charles has chartered a vessel to David for a voyage or ocean trip under the conditions of charter party contracts. And under this contract the ship owner has the control over vessel and it is his duty to make sure the ship is seaworthiness and can complete the journey efficiently. In this assignment we will analyze the rights and liabilities of ship owner and charter party and this will cover various issues relating to loading, unloading, lay time, demurrage and deviation. In initial stage I will discuss terms of charter party and various problems that have aroused from the contract between Charles and David such as when no birth is available who is responsible for this and why only 500 tons were loaded despite the fact the vessel had the capacity of 1000 tons. Who is responsible for the delay during voyage due to various reasons and at last the discharge of vessel took eight days and during unloading it was found the reeds were rotted who is accountable for this and some reeds dropped on dock and damaged by sea who will be responsible for this negligence and who will claim damage from whom.