8/27/2022

Trường Đại học Tôn Đức Thắng

Khoa: Quản Trị Kinh Doanh
Bộ Môn: QTKD QT

Môn: International Cargo Transportation and Insurance

Mã môn học: 706022
Giảng viên: Hà Ngọc Minh

706022-Chapter 2-Chartering operation

CHAPTER 2
CHARTERING OPERATION

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Learning Objectives

LO1: Types of shipping service

LO2: Voyage charter and standard charter party forms
LO3: Gencon 1994

706022-Chapter 2-Chartering operation

LO1
Types of shipping service

1. Liner service shipping

2. Tramp service shipping

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Liner service: definition

 The service involves a regularly scheduled

shipping service, often calling several ports along
an inter-range route according to time-tables and
prices advertised well in advance (tariff)
 The service is, in principle, open to all shippers
and in this sense it resembles a public
transportation service  common carrier
 The operation of “conferences”/ strategic
alliances
 Likely: bus service
706022-Chapter 2-Chartering operation

Liner service: characteristics

1. Regular sailing on predetermined routes 

Repetition of voyages & advertising for the
same sailing schedule based on the carrier
2. Cargo usually is varied  small/general cargo 
Either containerized or Non-containerized 
partly hire
3. Freight rates are stabilized by setting identical
charges for all shippers of the same item aboard
a certain ship
4. A liner-service company issues a standard (or
uniform) contract of carriage or bill of lading

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Carrier Shipping agent Shipper

Shipping agent Freight

Forwarder

FREIGHT MARKET IN
 Boking Note
LINER SHIPPING
 Bill of Lading

706022-Chapter 2-Chartering operation

Tramp (charter) service: definition

 Vessels which operate on the Tramp market – commonly

called trampers – do not operate on a regular route or
schedule and are made available for clients who will
charter – or part-charter (with other clients) – the vessel
for a specific journey or a specific duration
 Types of chartering:
 Voyage chartering
 Time chartering
 Bareboat chartering
 Contract of affreightment (COA)
 Likely: taxi operation
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Tramp service: characteristics

1. Tramp ships do not have fixed schedules  Sailing

based on cargo available  No expected repetition.
2. Homogeneous cargo in huge quantity bulk cargo
(iron ore, coal, grain, oil…) and oversized goods
3. Freight rates vary according to the demand & supply
 loading/unloading excluded
4. Normally a standard contract form called a charter
party (C/P) is used to record the exact rate, duration
and terms agreed between the shipowner and the
charterer
706022-Chapter 2-Chartering operation

THE CHARTERING MARKET

 Shipowner
Ship Broker Charterers
 Charter

 Charter Party
 Bill of Lading

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LO2
Voyage charter and C/P

• The voyage chartering means that the shipowner

promises to carry on board a specific ship a particular
cargo for a single voyage from one or more loading
ports to one or more discharging ports.
• The payment is called freight Loading and
discharging costs are divided between the shipowner
and the charterer in accordance with the agreement
from case to case
• The contract is called a voyage charter party (C/P)
706022-Chapter 2-Chartering operation

Voyage charter and C/P

Voyage charter-party refers to a contract for carriage of

goods by sea concluded to include terms and conditions
whereby the carrier is bound to provide the whole or a
specified part of a ship for the shipper with the purpose
to carry goods on a voyage.
(Art 146. VN Maritime Code 2015)

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Types of Voyage charter

• Single Voyage Chartering

• Return Voyage Chartering
• Consecutive Single Voyage Chartering
• Consecutive Return Voyage Chartering

706022-Chapter 2-Chartering operation

Standard Charter Party Forms

Standard forms contract forms designed and

published by international bodies containing specific
clauses for a given trade
Advantages:
• To standardize clauses.
• To simplify the negotiation.
• To reach international uniformity.
• To reduce the risk of misunderstanding and disputes
arising in respect of the matters covered by the contract.

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Standard Charter Party Forms

Name Date Code name Publisher

Uniform General 1922,1976,1994 GENCON BIMCO
North American 1973(amended NORGRAIN 89 ASBA
Grain 1989)
Uniform Time 1939(amended BALTIME BIMCO
Charter 1974)
New York 1993 NYPE 93 ASBA
Produce
Exchange T/C
Standard 2001 BARECON BIMCO
Bareboat

706022-Chapter 2-Chartering operation

LO3
Gencon 1994-background

Uniform General Charter, or “GENCON” most

commonly used worldwide
Publisher: BIMCO  1922, 197, 1994
GENCON 1994 consists of two parts
Part I is the “box form”  freely negotiable
Part II contains all the standard terms and conditions 
usually non-negotiable  attaching a negotiated fixture
note (if amend)

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Gencon 1994-Part I-26 boxes

1. Shipbroker 2. Place and Date

3. Owners/Place of business (Cl. 1) 4. Charterers/Place of business (Cl. 1)

5. Vessel’s name (Cl. 1) 6. GT/NT (Cl. 1)

/
7. DWT all told on summer load line in 8. Present position (Cl. 1)
metric tons (abt.) (Cl. 1)
9. Expected ready to load (abt.) (Cl. 1)
10. Loading port or place (Cl. 1) 11. Discharging port or place (Cl. 1)
12. Cargo (also state quantity and margin in Owners’ option, if agreed; if full and
complete cargo not agreed state “part cargo”) (Cl. 1)
13. Freight rate (also state whether 14. Freight payment (state currency and
freight prepaid or payable on delivery) method of payment; also beneficiary and
(Cl. 4) bank account) (Cl. 4)
706022-Chapter 2-Chartering operation

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15. State if vessel’s cargo handling gear 16. Laytime (if separate laytime for load. and
shall not be used (Cl. 5) disch. is agreed, fill in a) and b). If total
17. Shippers/Place of business (Cl. 6) laytime for load. and disch., fill in c) only)
(CI. 6)
18. Agents (loading) (Cl. 6) (a) Laytime for loading

19. Agents (discharging) (Cl. 6)

(a) Laytime for discharging

Total laytime for loading and

(a)

discharging
20. Demurrage rate and manner payable 21. Cancelling date (Cl. 9)
(loading and discharging) (Cl. 7)
22. General Average to be adjusted at (Cl.
12)
23. Freight Tax (state if for the Owners’ 24. Brokerage commission and to whom
account (Cl. 13 (c)) payable (Cl. 15)
25. Law and Arbitration (state 19 (a), 19 26. Additional clauses covering special
(b) or 19 (c) of Cl. 19; if 19 (c) agreed provisions, if agreed
also state Place of Arbitration) (if not
filled in 19 (a) shall apply) (Cl.706022-Chapter
19) 2-Chartering operation

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The important clauses - highlighted

Introduction to Participators:
• shipowner/disponent owner
• chartering broker Place of business
• charterer
Note:
Shipowner # disponent owner  owner
Owner  not responsible for loss/damage/delay
arising from the neglect/default of the Master/crews

706022-Chapter 2-Chartering operation

The important clauses - highlighted

Cargo clauses:
• Description of goods
• Packing: bulk or break bulk
• Cargo option: coal and/ or cement, Cement and/or
any lawful merchandises
• Quantity/ Weight/ Measurement/SF
• More or Less (±): MOLOO , MOLCO, Deadfreight

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The important clauses - highlighted

Vessel clauses:
• Vessel’s name / Substitute or Sister ship
• Nationality/ Flag
• Building year/ place
• DWT- deadweight tonnage
• GRT- gross register tonnage
• NRT- net register tonnage
• Draft/ Length/ Beam
• Present position
• Hatches, equipment for cargo handling…

706022-Chapter 2-Chartering operation

The important clauses - highlighted

Laycan clauses: (Laytime + Cancelling)

• When the vessel should be ready to load at the first
port or delivered to the charterer

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The important clauses - highlighted

Arrived ship:
The ship must be within the geographical and legal
area of the port
• Berth charter  ex: one safe berth X port
• Port charter  ex: the said vessel shall proceed to X town
The ship must be ready and in a fit condition to
receive or discharge her cargo
Where required, notice of readiness (NOR) must have
been given to the charterer.

706022-Chapter 2-Chartering operation

The important clauses - highlighted

Loading/discharging port or place:
The place for loading or discharging can be agreed in
several ways,
A fixed berth, e.g., "berth 2 at Lagos".
A fixed port, e.g., "1 safe port Sydney".
A fixed area, e.g., "1 safe port/l safe berth Japan".
A port or an area for order, e.g., "US Gulf for order".
Several ports, e.g., "berth 2 at Lagos and 1 safe berth
Casablanca“
If a port is to be nominated later  state the latest
time
Ex: Loading ports to be nominated by Charterers latest
when the vessel is706022-Chapter
passing 2-Chartering
Gibraltar",
operation 13
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The important clauses - highlighted

Safe port, safe berth, always afloat, etc:
SBP or "REACHABLE ON HER ARRIVAL" or
"ALWAYS ACCESSIBLE“ ship shall always lie
afloat
"safe" not only to factors such as high winds,
heavy swell, insufficient or bad construction of quays,
dolphins, etc.  but also to other factors such as
warlike operations and political disturbances
The near clause  "The said vessel shall proceed to
the loading port ... or so near thereto as she may safely
get and lie always afloat ..."
706022-Chapter 2-Chartering operation

The important clauses - highlighted

Safe port, safe berth, always afloat, etc:
"SAFE PORT"'-means a port which, during the relevant period
of time, the ship can reach, enter, remain at and depart from
without, in the absence of some abnormal occurrence, being
exposed to danger which cannot be avoided by good navigation
and seamanship
"SAFE BERTH"-means a berth which, during the relevant
period of time, the ship can reach, remain at and depart from
without, in the absence of some abnormal occurrence, being
exposed to danger which cannot be avoided by good navigation
and seamanship

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The important clauses - highlighted

Laytime
the period of time agreed between the parties during which the
owner will make and keep the vessel available for loading or
discharging without payment additional to the freight.

706022-Chapter 2-Chartering operation

The important clauses - highlighted

Laytime
6c) Commencement of laytime (loading and discharging)
“Laytime for loading and discharging shall commence at
1300 hours, if notice of readiness is given up to and
including 1200 hours, and at 0600 next working day if
notice is given during office hour after 1200 hours”
Note:
Whether in port or not- WIPON
Whether in berth or not- WIBON
Whether in free pratique or not- WIFON
Whether in customs clearance or not- WICON
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The important clauses - highlighted

Demurrage
an agreed amount payable to the owner in respect of delay to
the vessel beyond the laytime, for which the owner is not
responsible.
Rules:
Once on demurrage, always on demurrage  not be subject
to laytime exceptions.
2 dispatch money
Despatch
an agreed amount payable by the owner if the vessel completes
loading or discharging before the laytime has expired
ON (ALL) WORKING TIME SAVED" (WTS) or "ON (ALL)
LAYTIME SAVED“
ALL TIME SAVED (ATS)
706022-Chapter 2-Chartering operation

The important clauses - highlighted

Time allowed
Fixed time:
Five running days allowed for loading
Loading at a rate of 500 metric tons per day
Loading at a rate of 125 metric tons per day and
hatch
 Time not fixed
Liner terms with customary quick dispatch (CQD)
As fast as the vessel can receive /deliver

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The important clauses - highlighted

Time allowed
"PER HATCH PER DAY" shall mean that the
laytime is to be calculated by dividing (A), the
quantity of cargo, by (B), the result of multiplying the
agreed daily rate per hatch by the number of the
vessel's hatches.

Voylayrules 1993
706022-Chapter 2-Chartering operation

The important clauses - highlighted

Time allowed
"PER WORKING HATCH PER DAY" (WHD) or "PER
WORKABLE HATCH PER DAY" (WHD) shall mean that the
laytime is to be calculated by dividing (A), the quantity of
cargo in the hold with the largest quantity, by (B), the result of
multiplying the agreed daily rate per working or workable
hatch by the number of hatches serving that hold.

Voylayrules 1993
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The important clauses - highlighted

Time allowed
"DAY" shall mean a period of twenty-four consecutive hours
running from 0000 hours to 2400 hours. Any part of a day shall
be counted pro rata
"HOLIDAY" shall mean a day other than the normal weekly
day(s) of rest, or part thereof, when by local law or practice the
relevant work during what would otherwise be ordinary
working hours is not normally carried out
"WORKING DAYS" (WD) shall mean days not expressly
excluded from laytime
"RUNNING DAYS" or "CONSECUTIVE DAYS" shall mean
days which follow one immediately after the other
706022-Chapter 2-Chartering operation

The important clauses - highlighted

Time allowed
"WEATHER WORKING DAY" (WWD) or "WEATHER
WORKING DAY OF 24HOURS" or "WEATHER WORKING
DAY OF 24 CONSECUTIVE HOURS" shall mean a working
day of 24 consecutive hours except for any time when weather
prevents the loading or discharging of the vessel or would have
prevented it, had work been in progress.
"EXCEPTED" or "EXCLUDED" shall mean that the days
specified do not count as laytime even if loading or discharging
is carried out on them.
"UNLESS USED" (UU) shall mean that if laytime has
commenced but loading or discharging is carried out during
periods excepted from it, such time shall count.
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The important clauses - highlighted

Time allowed
WWD, SHInc  weather working days of 24
consecutive hours, Sundays, holidays included
WWD, SHEx  working days of 24 consecutive
hours, Sundays, holidays excepted
WWD, SHEX UU  unless used
WWD, SHEX EIU  even if used
 Statement of facts
 Time sheet

706022-Chapter 2-Chartering operation

Example 1-WWD calculation

Laytime: 03 WWD
The ordinary hours of the port: 07 00–19 00
Laytime commenced: 16 00 on 1 June
There were two interruptions—one due to weather between 10
00–12 00 on 2 June and one due to a winch failure between 08
00–10 00 on 3 June.

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Example 2- Statement of facts

• Vessel arrived: 0900, Monday 9 September

• Notice of Readiness tendered: 0930, 10 September
• Notice of Readiness accepted: 0930, 10 November
• Vessel berthed: 0930, 11 September
• Cargo weight/quantity: 5,000 MTs
• Loading commenced: 1500, 11 September
• Loading completed: 0930, 19 September
• Laytime allowed for loading: 5 WWDSHEXUU

706022-Chapter 2-Chartering operation

The important clauses - highlighted

Freight clause
"the reward payable to the carrier for the carriage and
arrival of the goods in a merchantable condition, ready
to be delivered to the merchant“
Fixing of the freight
 Rate of freight, the unit of measurement of cargo: x Usd/MT
or x Usd/CBM
 Lump sum for the voyage
Payment of freight
Freight payable at port of loading: on signing B/L
Freight paid at port of destination:
Freight payable before breaking bulk
Freight payable after completion of discharge
20
Freight payable concurrent with discharge
706022-Chapter 2-Chartering operation
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The important clauses - highlighted

Freight clause/ Notes:
Clause 4: “pre-paid” or “paid on delivery”  advance
freight intake quantity  irrecoverable by the
charterers, even if the cargo is lost in transit
Freight payable at destination  delivered quantity 
payable upon delivery

706022-Chương 2- Nghiệp vụ thuê tàu

The important clauses - highlighted

Loading and discharging cost
Allocation of costs
Owner’s account: Gross terms/ Liner terms
Charterer’s account: Free of any (I/O/S/T)
EX: FREIGHT RATE: USD 30/MT LINER TERMS
 FI
 FO
 FIO
 FIOS
 FIOST
 FILO
 LIFO

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Loading/Discharging

Loading - In Discharging-
Out
Stowage- S
Trimming-T
(LSD-
lashing/security/
dunnage) Chương 2 43

The important clauses - highlighted

Lien clause
Owner shall have a lien on the cargo and on all sub-
freights payable in respect of the cargo, for freight, dead
freight, demurrage, claim for damage and for all amounts
due under the Charter Party including the costs of
recovering the same. (Art. 8/ Gencon 1994)

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The important clauses - highlighted

Owners’ responsibility clause (Art.2/Gencon 1994)
Responsible for loss of or damage to the goods, for
delay in delivery of the goods, only if:
Due diligence  make the vessel in all respects seaworthy,
properly manned, equipped and supplied
Bad stowage
See: Art. 3.1 (Hague 1924), Art.150 (VN Maritime code 2015)
Not responsible:
The neglect or default of the Master or crew or some other
person
Deck cargo

706022-Chapter 2-Chartering operation

The important clauses - highlighted

Arbitration clause
The parties may opt for
(1) English law and London arbitration;
(2) US law and New York arbitration; or
(3) any other governing law and place of arbitration the
parties wish to choose

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Annex : ship’s particular

• International Convention on Tonnage Measurement

of Ships, 1969
• Vietnam Maritime Code 2015

706022-Chapter 1-Carriage of Goods by Sea

Displacement

The weight of a vessel and

her contents,

or

the weight of the displaced

watermass.

D(LT)=M (cu.ft)/ 35
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Gross tonnage (GT) or Gross

registered tonnage (GRT)

706022-Chapter 1-Carriage of Goods by Sea

Net tonnage (NT) or Net registered

tonnage (NRT)

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Deadweight (DWT)

 Ship can safely carry

 DWC / DWCC

706022-Chapter 1-Carriage of Goods by Sea

Cargo carrying capacity

By bale space is meant

the volume of the cargo
holds that can be used
for general cargo.

By grain space is meant

the volume of the cargo
holds that can be used for
bulk cargo.

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CWL

The Construction Waterline (CWL) or Summer

Loadline is the line to which the ship may be
loaded in summer.

706022-Chapter 1-Carriage of Goods by Sea

“Length over all” (L.O.A.) is the total length of the

vessel.

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Beam

By beam is meant the

extreme breadth of the
vessel (A-B).
A B

706022-Chapter 1-Carriage of Goods by Sea

Draft / Air draft

Distance from the bottom
of the keel to the surface
WL of the water (WL - K).
A B
K

Distance from the

waterline
to the highest point of
the vessel (WL - H).

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Notes

Cargo Space-CS:
• Bale space capacity (cu. Ft)
• Grain space capacity (cu. Ft)
Coefficient of loading= CS/ DWCC
Stowage Factor- SF
• SF ≤ 40 cu ft/t (1.2 m3/mt) : deadweight cargo
• SF > 40 cu ft/t: measurement cargo

706022-Chapter 1-Carriage of Goods by Sea

1m3=35.3 cu ft
Stowage factor
Type of cargo
(cu ft/t) (m3/t)
Iron ore 14 0.40
Grain (heavy) 45 1.30
Coal 48 1.40
Woodchips 90 2.50
Containers (Teus) 56–105 1.6–3.0
Cars 150 4.2
Light crude oil 37.6 1.07
Heavy crude oil 33.7 0.95
Water 35.3 1
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Stowage factor

• SF = 2,240 x V/M (M: Long ton)

• SF = 1,000 x V/M (M: Metric ton)
Stowage factor: the space occupied by one metric ton of that
cargo. For example, the S.F of clinker is 1.5 − this means that 1
tonne of clinker will occupy 1.5 cubic metres. It is also
expressed in cubic feet per tonne.
Broken stowage: the space that is lost in a ship by cargo of
irregular shape or because of the hold being irregular. It includes
the space lost between cargo packages. It is expressed as a
percentage. If a cargo has a B.S of 5% this means that an
additional 5% of the cargo volume must be allowed for when
allocating space for that particular cargo.
706022-Chapter 1-Carriage of Goods by Sea

Exe.1

A cargo hold has a grain capacity of 3,200 CBM. and

bale capacity of 3,100 CBM. Find the quantity of each
of the following commodities which can be loaded in
the compartment:
1. Cotton bales ? Broken Stowage 10%.
2. Iron ore ?

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Exe.2
(a) A cargo hold having bale capacity of 3550 m³ and load density 5t/m² is to be filled
so as to maximize the freight. The cargo available is Cotton bales (SF 2.8m3 / T),
Freight: $50/T. How much of each cargo will you load and what is the freight earned?
(b) A cargo hold has measures 20m × 18 m × 10m. How many tons of cotton having
S.F. 2.60 m³/T and broken stowage 8% would fit in it?
(c) Length of hold = 17 m, Breadth of hold = 10m, height of hold = 9m. General
cargo of stowage factor 2.7 m³/t is to be loaded. Find the weight of cargo that can be
loaded in the hold if the expected broken stowage is 11%
(d) The dimensions of a tween deck are 20m × 15m × 3m. (i) Find the maximum
weight of general cargo that can be loaded in the compartment if stowage factor is
2.0 m³/t and broken stowage is 10%. (ii) Will the quantity of cargo be different if load
density of the deck is 1.25 t/ m²?
(e) The dimensions of a tween deck are 13m × 10m × 6m. 220t of cotton bales (SF
2.35 m³/t and BS = 7%) are to be loaded. Calculate the height of empty space left in
the tween deck
706022-Chapter 1-Carriage of Goods by Sea

Exe.3: WWDSHEX UU
• A GENCON charter party, with modifications and rider clauses, provides
for:
• Cargo: minimum 5000 metric tons (mt) up to full load capacity of the vessel
at charterers’ option.
• Laytime for loading: 1600 mt per WWD SHEX UU
• Laytime for discharging: 1200 mt per WWD SHEX UU.
• Laytime clause: “Laytime for loading and discharging shall commence at 1
p.m. if Notice of Readiness is given before noon and at 8 a.m. next working
day if notice given during office hours after noon. Notice at loading port to
be given to the shippers named in Box 17. Time actually used before
commencement of laytime shall count. Time lost in waiting for berth to
count as loading or discharging time as the case may be.”
• Demurrage and despatch clause: “Demurrage to be paid at the rate of USD
1,800 per day/pro rata for all working time lost, if any, to be settled directly
between Owners and Charterers.”
• Working hours /meal hours of the port: Midnight. to midnight each day
except on Sundays (0800-1200), and holidays unless required 31
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Statement of facts

• Vessel arrived: 14.00, Thursday 22 November

• Vessel berthed: 15.30, 22 November
• Notice of Readiness tendered: 14.00, 22 November
• Notice of Readiness accepted: 14.00, 22 November
• Cargo weight/quantity: 5,500 mt
• Loading commenced: 1600, 22 November
• Loading completed: 1030, 29 November
• Laytime allowed for loading: 3d. l0h. 30m. (5500/1600)
• Time to count from: 0800, 23 November
• Exceptions to laytime (and reasons): 24 November, 08.00 to
10.30-rain 26 November-Public holiday; no work

EXE.4: WWDSHEX EIU

• Same as Example 3 with changes to clauses as

follows:
• Laytime for loading: 1600 mt per WWD SHEX
EIU.

32
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Further reading-Chapter 2

1. Lars Gorton, Shipbroking and Chartering practice, 4th edition,

Lloyd’s of London Press Ltd
2. John F Wilson, Carriage of goods by sea, 6th edition, Pearson
3. Gencon 1994, Bimco
4. Voyage charter party laytime interpretation rules 1993
5. 100 Câu hỏi về Hợp đồng vận chuyển hàng hóa bằng đường
biển, NXB Lao Động, 2010

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