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Chapter 2: Shipping

Outline
I. Introduction to shipping
1. Introduction
2. Infrastructures
II. Methods of vessel charter
1. Liner charter
2. Voyage charter

I. Introduction to shipping
1. Introduction
Advantages:
Large quantities of freight can be safely stored and
move in one go
Shipping is a viable and cost- effective way for
moving a large amount of goods over long distances
(cheap freight)
Shipping is an important factor within the international
transport chain

Disadvantages
Slow speed
Probability of risk occurring

2. Infrastructure
2.1. Merchant vessels
2.1.1. Definition
A merchant vessel is a ship that transports
cargo and passengers for profitable
purpose.
(The Logistics and maritime economics
Institute)

II. Infrastructure
2.1. Merchant vessels
2.1.2. Specifications
Ships name
Port of Registry: A vessels home port, port of registry, or hailing
port, is its port of origin as shown on its registration documents and
lettered on the stern of the ship's hull
Flag:
Conventional flag
Flag of convenience

Ship owner
Dimensions:
Length over all (LOA): the greatest length of the ship, from fore to aft.
Beam: the greatest breadth of the ship, from port to starboard

2.1.2. Specifications
Classification
Draught/Draft: the distance from the bottom of the keel to
the waterline
Light Draught
Loaded Draught

Displacement: the weight of the ship and all that it


contains- cargo, fuel, water, stores, crew and effects.:
Light displacement (LD): the minimum weight of the ship,
includes weight of body of the ship, machines or equipments,
boiler, water in the boiler, crews and their effects
Heavy displacement (HD): includes LD, weight of cargo and
weight of stores that use for itinerary

Draft

Load lines

2.1.2. Specifications
Deadweight Tons (DWT) - The difference between
heavy displacement and light displacement- A measure
of the ship's total carrying capacity.
Cargo Deadweight Tons - The weight remaining after
deducting fuel, water, stores, dunnage and such other
items necessary for use on a voyage from the
deadweight of the vessel.
The gross register tonne (GRT)- The total cubic
measurements of the ship (including engine room,
bunker tanks for fuel and water, seamens
accommodation)
The net register tonne (NRT): is the available cubic
capacity for cargo

2.1.2. Specifications
Cargo space
Grain space: is the space which the ship has
available for cargo in bulk
Bale space: is the cubic contents of the ship
that is available for the transport of goods
packed in bales, boxes, crates,

2. Infrastructure
2.2. Sea Ports
2.2.1. Definition
A port is a facility for
receiving ships and/or
transferring seamen or
cargo. It is usually found
at the edge of an ocean.
2.2.2. Roles
-To serve ships
-To serve cargo

2.2. Sea Ports


2.2.3. Requirements for
an efficient port:
- Well- equipped with the
most modern handling
facilities;
- A well- organized
container yard, for both
storage and handling of
containers;

2.2. Sea Ports


2.2.3. Requirements for an efficient port:
Immediate availability of fresh water and bunker supplies for vessels
alongside (at berth);
A high-end computerized system to control the smooth delivery of
cargo to and from the port, to avoid any congestion and delays;
A good, highly trained and qualified workforce working 24/7
A good rail/road/barge network to facilitate delivery;
An efficient Customs clearance system;
Foresight and forward planning to ensure that there are always
enough berths available, to handle larger and faster container ships;
A computer system that allows the automation of routine operations
in the ports, that can be handle by remote control device; and
Making the port as customer- oriented as possible, and having a
user- friendly tariff system.

VI. Methods of vessel charter


Liner charter
Voyage charter

A. Liner Charter
1. Definition of Liner/ Liner shipping
company
- A liner service is defined as one that
operates to a regular sailing schedule,
transporting goods along a definite route,
to fixed ports of call
- A liner is a vessel that is engaged in this
kind of transportation

A. Liner Charter
2. Liner characteristics
Vessels operate among ports to a regular
sailing schedules
All relationships are regulated by bill of lading
All terms and conditions of carrier must be
accepted by cargo owner, without negotiation
Liner freight is fixed and be informed in liner
bound freight tariff

A. Liner Charter
3. How a liner service is run?
Liner Planning Division: planning of new trade routes and
fleet expansion
Ship Management Division: overall running of vessels
Liner Division: planning and logistics responsibilities for
services, vessel schedules, container equipment planning,
overseas offices and agencies, documentation and data
communications, and handling of claims and insurance
Finance Division: companys financial results, auditing and
performing treasury functions
IT/EDI Division: computer systems and data interchange
with suppliers and contractors
Human resource Division: manpower planning, staff
benefits, and all industrial relations

A. Liner Charter
4. What is a liner agent?
A person or company that acts on the shipping
lines behalf and carries out their business while
the vessel remains in the agents jurisdiction

Basic organization structure for a liner


agent
Senior Management

Marketing/sales

Documentation

Operations

Finance/
Administration

Information
Technology

A. Liner Charter
5. The order of liner charter
Step 1: Shipper let a customs broker or forwarder find a
suitable ship
Step 2: The customs broker or forwarder chooses a carrier
Step 3: The customs broker or forwarder and the carrier
negotiate some main terms and conditions: cargo name,
quantity of goods, ports of loading, ports of discharge,
issuing documents.
Step 4: The customs broker or forwarder inform to cargo
owner of the negotiated results
Step 5: Cargo is transported to the loading port by the
shipper
Step 6: After receiving goods, the carrier responsible for
issuing bill of lading to the shipper.

6. Ocean Bills of Lading


6.1. Definition and functions
The B/L is the main document used in international maritime
transport. It is issued by a carrier or representative of the
carrier, after cargo is shipped on board or received for
shipment.
Notes:
Issuer: give signature, full name, legal position

Signed by Mr as the carrier


Signed by Mr as the Master
Signed by Vietfract as agent for the carrier
Signed by Mr on behalf of Mr as the Master

Issuing time:
Shipped on Board
Received for shipment

Receiver: shipper (exporter or representative)

Functions
Evidence of the contract of affreightment
Confirmation of shipment
Document of title (title of ownership)

6. Ocean Bills of Lading


6.2. Main types of B/L
6.2.1. Base on the negotiable ability of B/L
Straight B/L: B/L that clearly states name and

address of the consignee


States that the goods are consigned to a specified person
Is non- negotiable document
Is used where the goods have been paid for or do not
require payment (donation or gifts)
The shipping company will deliver the shipment to its
consignee on presentation of an identification.

6. Ocean Bills of Lading


Order B/L: bill of lading that made out to the
order of a person (shipper, consignee or bank)
for delivery of the goods and that can be
transferred by endorsement to third parties.
+) to order of shipper
+) to order of consignee
+) to order of bank
The order B/L can be negotiated by endorsement
procedure.

6. Ocean Bills of Lading

Endorsement is a procedure of transferring of cargo ownership from


original cargo owner to another beneficiary.
On the reverse side of B/L, endorser has to give his signature,
stamp and hand it to endorsee, which is the next beneficiary of the
shipment.
In terms of legal side, endorsement is an action to confirm that the
cargo owner has given up the proprietorship of the shipments that
specified in the B/L to another beneficiary.
The endorser has to:
Make an endorsement by his language to assure that he has definitely
agreed to transfer the shipment to another person.
Make an endorsement in original B/L

Different types of endorsement:


Straight
To order
Blank

6. Ocean Bills of Lading


To Bearer B/L: This bill states that
delivery shall be made to whosoever holds
the bill. Such bill may be created explicitly
or it is an order bill that fails to nominate
the consignee whether in its original form
or through an endorsement in blank.
This B/L can be simply transferred by
handing the document.

6. Ocean Bills of Lading


6.2.2. Base on the issuing time
Shipped on board B/L: B/L that is released after cargo is pass
vessels rail. This document is an important evidence for completing
delivery liability of the sellers.
Note: FOB, CIF, CFR

Received for shipment B/L: is B/L that is issued after the carrier
receive the shipment, pledge to ship on board, and transport the
shipment by the named vessel.
+) the goods arrive at the port of departure before the vessel
+)the goods arrive at the loading port when the vessel has not
completed all the necessary conditions to berth the port (pratique,
customs).
+) Deliver the goods through a middle man: a forwarder, a
multimodal transport operator, or a consolidator.

2. Ocean Bills of Lading


6.2.3. Base on comments/ remarks B/L
Clean/ Perfect B/L: B/L issued by a carrier declaring
that the goods have been received in an appropriate
condition, without the presence of defects, normally
about the appearance and the quantity of goods.
Unclean/ Claused B/L: A bill of lading that shows a
shortfall or damage in the delivered goods.
Most banks refuse to accept any unclean B/L
Repairing ways to have clean B/L:
Replace or complement some missing or damaged goods
Repair damaged goods if it is possible
Form a letter of indemnity in order to be paid perfect goods part.

6. Ocean Bills of Lading


6.2.4. Other types
Surrender B/L
Seaway Bill
SWBs are non- negotiable, they cannot be issued to
order or to order of
The shippers signature is required on the SWB for
endorsement of the transport agreement, so that he
can not later refute the document
The lawful consignee has to be clearly identified, so
that the carrier knows when a consignee become a
lawful owner of the goods

6. Ocean Bills of Lading


6.3. Content of B/L
6.3.1. First side of B/L
Shipper
Consignee
Notify party
Vessel
Place of receipt
Place of delivery
Port of Loading
Port of Discharge
Goods
Freight and Charges
Number of original
Place of issue
Date of issue
Signature

6. Ocean Bills of Lading


6.3. Content of B/L
6.3.1. Reverse side of B/L
Definitions: carrier, shipper, consignee
The extent of carriers responsibility
Excepted Perils
Regulations on loading, discharging, preserving goods
Regulations on Freight and Charges
War, Strike, riots, civil, commodition clauses
Late delivery clauses
General average clause
Both to blame collision clause
Supreme Clause

7.Legal Systems in shipping


7.1 International Conventions
International Convention for the unification of certain
rules relating to Bills of lading/ Brussels Convention
1924/ Hague Rules
Protocol to amend International Convention for the
unification of certain rules relating to Bills of lading/ Visby
Protocol 1968/ Hague- Visby Rules
SDR Protocol 1979
United Nation Convention on the carriage of goods by
sea/ Hamburg Convention 1978/ Hamburg Rules
7.2.National law
Vietnam Maritime Code, 2005

8. Extend of carriers liability to the


goods- International legal systems
8.1. Period of liability: is a period in which the carrier is
liable for loss resulting from loss of or damage to the
goods.
- Hague and Hague Visby Rules: Carriage of goods
covers the period from the time when the goods are
loaded on to the time when they are discharged from
the ship
From tackle to tackle
- Hamburg Rules: The responsibility of the carrier for
the goods under this Convention covers the period
during which the carrier is in charge of the goods at
the port of loading, during the carriage and at the port
of discharge
=> From Port to Port

8. Extend of carriers liability to the


goods- International legal systems
The carrier is deemed to be in charge of the goods:
A) from the time he has taken the goods from:
i) the shipper, or a person acting on his behalf; or
ii) an authority or other third party to whom, pursuant to law or
regulations applicable at the port of loading, the goods must be
handed over for shipment;
B) until the time he has delivered the goods:
i) by handing over the goods to consignee; or
ii) in cases where the consignee does not receive the goods from
the carrier, by placing them at the disposal of the consignee in
accordance with the contract or with the law or with usage of the
particular trade, applicable at the port of discharge, or
iii) by handing over the goods to an authority or other third party to
whom, pursuant to law or regulations applicable at the port of
discharge, the goods must be handed over.

8. Extend of carriers liability to the


goods- International legal systems
8.2. Basis of liability: carriers liability on loss resulting from loss
of or damage to the goods
8.2.1. Extend of liability
Hague and Hague Visby Rules: loss and damage of goods
Hamburg Rules: loss, damage of goods and delay in delivery
- Delay in delivery occurs when the goods have not been delivered
at the port of discharge provided for in the contract of carriage by
sea within the time expressly agreed upon or, in the absence of
such agreement, within the time which it would be reasonable to
require of a diligent carrier, having regard to the circumstances of
the case
- The goods are considered loss if they have not been delivered
within 60 consecutive days following the expiry of the time for
delivery, and without waiting for consecutive evidence for the loss.

8. Extend of carriers liability to the


goods- International legal systems
8.2. Basis of liability
8.2.2. Main liabilities
Hague and Hague Visby Rules
Provide a seaworthy ship: the carrier is expected to
exercise due diligence before a voyage, to ensure that:
+) the ship is durable and solid, is able to stand the wind
and waves in normal conditions.
+) the ship is properly manned equipped and supplied for
the trip: fresh water, food, fuel
+) all parts of the ship in which goods are to be carried,
including the holds, refrigerating and cool chambers, are
ready to receive, transport and preserve the goods.

8. Extend of carriers liability to the


goods- International legal systems
8.2. Basis of liability
8.2.2. Main liabilities
Hague and Hague Visby Rules:

Trading liability: the carrier shall properly and carefully load, handle, stow,
carry, keep, care for, and discharge the goods carried.
Issuing B/L: after receiving the goods into his charge, the carrier or the
master or agent of the carrier shall, on demand of the shipper, issue to the
shipper a B/L.

Hamburg Rules: Presumed fault or neglect principle:


The carrier is liable if the occurrence that caused the
loss, damage or delay took place while the goods were
in his charge, and he may escape liability only if he
proves that he, his servants or agent took all measures
that could reasonably required to avoid the occurrence
and its consequences.

8. Extend of carriers liability to the


goods- International legal systems
8.2. Basis of liability
8.2.3. Excepted perils
* Hague and Hague Visby Rules
a)
Act, neglect or default of the master, mariner, pilot or the servants
of the carrier in the navigation or in the management of the ship.
Navigation
Management of the ship
b)
Fire, unless caused by the actual fault or privity of the carrier
c)
Perils, dangers and accidents of the sea or other navigable waters
d)
Act of God

Act of war

Act public enemies

Arrest or restraint of princes, rulers or people, or seizure under


legal process

Quarantine restrictions

Act or omission of the shipper or owner of the goods, his agent or


representative

8. Extend of carriers liability to the


goods- International legal systems
8.2. Basis of liability
8.2.3. Excepted perils
Hague and Hague Visby Rules:
j) Strikes or lockouts or stoppage or restraint of labour from
whatever cause, whether partial or general
k) Riots and civil commotions
l) Saving or attempting to save life or property at sea
m) Wastage in bulk of weight or any other loss or damage
arising from inherent defect, quality or vice of the goods
n) Insufficiency of packing
o) Insufficiency or inadequacy of marks

8. Extend of carriers liability to the


goods- International legal systems
8.2. Basis of liability
8.2.3. Excepted perils
Hague and Hague Visby Rules:
p) Latent defects not discoverable by due diligence
q) Any other cause arising without the actual fault or privity
of the carrier, or without the fault or neglect of the agents
or servants of the carrier, but the burden of proof shall be
on the person claiming the benefit of this exception to
show that neither the actual fault or privity of the carrier
nor the fault or neglect of the agents or servants of the
carrier contributed to the loss or damage
Hamburg Rules: Presumed fault or neglect principle

8. Extend of carriers liability to the


goods- International legal systems
8.3. Limitation of liability: the maximum amount of money
that the carrier should compensate for unit of damaged
or missing goods in case the value of the goods is not
enumerated in B/L or other documents evidencing the
contract of carriage.
Hague Rules: 100 GBP per unit or package of missing or
damaged goods
Hague- Visby Rules: 10 000 francs per package or unit
or 30 franc per kilo of gross weight of the goods lost or
damaged, whichever is the higher.
A franc means a unit consisting of 65.5 miligrammes of
gold of millesimal fineness 900.

8. Extend of carriers liability to the


goods- International legal systems
8.3. Limitation of liability
Hague- Visby Rules: for those goods that
are consolidated in container, pallet or
other transport articles:
If the B/L does not enumerate what is
contained in the container, the container is
one shipping unit
If the B/L enumerates the contents of the
container individually, each of the packages is
a unit

8. Extend of carriers liability to the


goods- International legal systems
8.3. Limitation of liability
SDR Protocol: 666.67 units of account per
package or unit or 2 units of account per
kilo of gross weight of the goods lost or
damaged, whichever is the higher.
The unit of account is the SDR as defined
by the IMF

8. Extend of carriers liability to the


goods- International legal systems
8.3. Limitation of liability
Hamburg Rules: 835 units of account per package or
unit or 2.5 units of account per kilo of gross weight of
the goods lost or damaged, whichever is the higher.
For those goods that are consolidated in container or
other transport articles:

If the B/L does not enumerate what is contained in the


container, the container is one shipping unit
If the B/L enumerates the contents of the container individually,
each of the packages is a unit
In case where the article of transport itself has been lost or
damaged, the article of transport, if not owned or otherwise
supplied by the carrier, is considered one separating shipping
unit

8. Extend of carriers liability to the


goods- International legal systems
8.3. Limitation of liability
Hamburg Rules:
The unit of account is the SDR as defined by the IMF
Those states which are not members of the IMF and whose law
does not permit the application of the SDR may, declare that the
limits of liability provided for in this Convention to be applied in their
territories shall be fixed by 12 500 monetary units per package or
other shipping unit or 37.5 monetary units per kilogramme of gross
weight of the goods.
The monetary unit corresponds to 65.5 milligrammes of gold of
millesimal fineness nine hundred.
The liability of the carrier for delay in delivery the goods is limited to
an amount equivalent to 2.5 times the freight payable for the goods
delayed, but not exceeding the total freight payable under the
contract of carriage of goods by sea.

8. Extend of carriers liability to the


goods- International legal systems
Summary:
There are 2 international legal systems that are applied
in shipping field (Hague and Hamburg Rules)
The Hamburg Rules effect a more balance and equitable
allocation of risks and responsibilities between carriers
and cargo owners
Progressive points of Hamburg Rules:
Carriers liability is based on the principle of presumed fault or
neglect
Regulates of Deck cargo, live animals, cargo consolidated in
containers, pallets and other transport articles
Regulates liabilities of contracting carriers and actual carriers

9. Extend of carriers liability to the goodsMaritime Code of Vietnam, 2005


9.1. Period of Liability
- Art. 74: The responsibility of the carrier for the goods under this Code
covers the period during which the carrier is in charge of the goods at the
port of loading, during the carriage and at the port of discharge.
9.2. Basis of liability
- Extend of liability: loss, damage, and delay in delivery
- Enumerate 3 main liabilities and 17 excepted perils for the carrier, but the
carrier may escape liability only if he proves that he, his servants or agent
took all measures that could reasonably required to avoid the occurrence
and its consequences.

9.3. Limits of liability


- 666.67 units of account per package or unit or 2units of account per kilo of

gross weight of the goods lost or damaged, whichever is the higher.


The unit of account is the SDR as defined by the IMF
This amount of money is converted at the exchange rate that officially
announced in Vietcombank at the time of making payment
- Goods consolidated in containers, pallets and other transport articles: same
as the Hague Visby rules
- Delay in delivery: same as the Hamburg rules

10. Claims and actions


10.1. Notice of loss, damage or delay
- Notice of loss, damage or delay is the consignees notice in writing
specifying the general nature of such loss or damage, which sent to
the carrier in a certain period of time.
- If the loss or damage is apparent: COR (Cargo Outturn Report)
- Hague and Hague Visby rules: the consignee must send this notice to
the carrier before or at the time of delivery the goods
- Hamburg rules: the consignee must send this notice to the carrier not
later than the working day after the day when the goods were handed
over to the consignee.

If the loss or damage is not apparent: LOR (Letter of Reservation)


- Hague rules: 3 days after the day when the goods were handed over to
the consignee
- Hamburg rules: 15 consecutive days after the day when the goods were
handed over to the consignee

Delay in delivery (for Hamburg rules only): the notice has been
given in writing to the carrier within 60 consecutive days after the
day when the goods were handed over to the consignee

10. Claims and actions


10.2. Claim and actions
10.2.1. Claimer
- Shipper
- Consignee
- The holder
- The insurer
10.2.2. Claiming documents
- Purposes:
- Proving the benefits of the claimer to the shipment
- Proving of the happened loss/damage and the measure of them
- Demonstrating such loss/damage belongs to the carrier
- Papers, Documents:
- B/L
- Commercial Invoice
- Packing list
- COR
- ROROC
- Certificate of short landed cargo
- LOR
- Survey report/certificate
- Other papers/ documents

10. Claims and actions


10.3. Limitation of Actions
The Hague Rules: any action to the carriage of goods
under this rules is time- barred if judicial or arbitral
proceedings have not been instituted within the period of
1 year
The Visby- Rules: 1 year and may be extended in the
period of no more than 3 months.
The Hamburg rules: 2 years and may be extended at any
time during the running of the limitation period by a
declaration in writing to the claimant.
The limitation period commences on the day on which the
carrier has delivered the goods or part thereof or, in
cases where no goods have been delivered, on the last
day of which the goods should have been delivered.

B. Voyage Charter
1.
Definition and features of Tramp vessel
1.1. Definition: Tramp vessel carries the goods among 2 or many
oceans ports depend on the demand of the cargo owner. The
carriage is based on a transport contract.
1.2. Features:
Tramp vessel sail only when there is a sufficient quantity of cargo
on board; they do not operate on a fixed sailing schedule.
These vessels generally carry cargo in bulk, such as coal, grain,
timber, sugar, ore, fertilizer, cement clinker, copra, bauxite and
phosphates
Tramp vessels speed is relatively slower than liners one
Carriage, freight, loading and discharging expense conditions are
clearly prescribed in the contract of carriage

B. Voyage Charter
2. Voyage Charter Party
2.1. Definition
The charter party is the written agreement between the ship owner
and the charterer and is in fact the enactment (or charter) of their
negotiations that contains the agreed terms and conditions.
2.2. Standard forms
Recommended charter parties offer numerous advantages:
- they are used commonly;
- they are suited for several traffics and are everywhere available;
- their wordings is nearly watertight and they are generally accepted
by the courts;
- they are without any doubt fair to both parties.
- Uniform standard forms: GENCON, NUVOY, SCANCON
- Specific standard forms: NORGRAIN, CEMENCO, CUBARSUGAR,
RUSSWOOD, EXONVOY, MOBILVOY, SHELLVOY

2.3. Content of voyage charter


party
2.3.1. Introduction
the name and the address of the contracting
parties
the name and a short description of the ship
the position of the ship
the date the ship expected to load
the loading and charging ports or places
the cargo
the freight

2.3. Content of voyage charter


party
2.3.2. Vessel clause
name of the ship: Ship named Hope and/or
substitute sister ship
age of the vessel
flag
type of ship
speed of the ship
classification society and the class
length and breadth
draft

2.3. Content of voyage charter


party
2.3.3. Expected ready to load
The date on which the ship must be ready to start
loading must be indicated in the contract.
- On Nov 25, 2009, the named ship must be ready to start
loading at the loading port
- On about Nov 25, 2009, the named ship must be ready
to start loading at the loading port
=> Anyway, the ship owner (or the operator) must keep
the charterer (or his broker) informed (via tel, fax, telex,
email) of the arrival the ship in the first (or only) port of
loading. (Notice of arrival- NOA)
- Canceling date: the latest date on which the vessel must
be ready to load at the port.

2.3. Content of voyage charter


party
2.3.4. Cargo
- Name of cargo:
- Clearly states the name of cargo
- And/or: 1000 MT rice and/or maize
- And/or any lawful goods

- Packing: types of packing, marks and numbers


- Quantity:
- X metric tons
About X metric tons:
5% more or less in Owners option (moloo)
5% more or less in charterers option (molco)
5% more or less in Masters option (molmo)

2.3. Content of voyage charter


party
2.3.5. Port of loading, port of discharge
A fixed berth, e.g.: berth 2 at Haiphong port
A fixed port: one safe port La Havre
A fixed area : one safe port/ one safe berth Australia
one good/safe port Northern range
A port or an area to be indicated later: US gulf for order
Several ports: berth 1 at Fort the France and one safe berth at port
of Spain
Anyway, the loading and discharging ports in the charter party must
be safe ones in terms of both of nautical and political features.

There is no nautical and political obstacles to reach the port/berth with a


loaded ship
at all times of the tide always afloat
Not always afloat but safely aground (NAABSA)

Note: or so near thereto as she may safely get and lie always
afloat

2.3. Content of voyage charter


party
2.3.6. Freight and charge
Freight in the ordinary mercantile sense, is 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.
Freight rate: the freight per unit of cargo
Freight unit: weight (heavy goods), volume/ measurement (light
goods)
Quantity:
On taken quantity
Delivery quantity

Time to pay:
- In advance: Freight Prepaid/ Freight payable at Loading port
- Freight to Collect:
+) Freight payable on commencement of discharge
+) Freight payable concurrent with discharge
+) Freight payable on completion of discharge)
+) freight payable on actual and proper completion of discharge

2.3. Content of voyage charter


party
2.3.7. Loading/discharging expense
Liner term/ Gross term/ berth terms
Free In and Out (FIO): exempt the carrier from the loading and
discharging expenses, the charterer will bear these costs- FIOST
FI: exempt the carrier from the loading cost, but he should bear the
discharging cost. The charterers liability is in contrast to the carriers
one.
FO
=> Those above terms and conditions about Loading/discharging
expense should accompanied by the freight rate in the charter party.
The most important things is during negotiation, the charterer should
choose the most suitable Loading/discharging expense condition so
that:
+) he can avoid to pay double Loading/discharging expenses for
the carrier and the shipper
+) he can save foreign exchange
+) he may create favorable conditions for Loading/discharging
the cargo

2.3. Content of voyage charter


party
2.3.8. Laydays/ Laytime: is the time, which according to the
charter party, is allowed for the loading and discharging
of the cargo (the allowed time)
* Manners:
according to a fixed number of days/hours which are
necessary for the loading and/or discharging operations
without a fixed number of days/hours (with customary
dispatch, customary quick dispatch, as fast as the vessel
can receive, etc.)
according to a quantity to be loaded or discharged

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party
* Unit expressions
Running days/consecutive days/days
Working days
Working days of 24 consecutive hours
Weather working days
Sundays and holidays
- 15 WWD, S.H. EX, U.U (Cargo to be loaded in 15
weather working days of 24 consecutive hours,
Sundays and holidays excepted, unless used)
- 15 WWD, S.H. EX, E.U (Cargo to be loaded in 15
weather working days of 24 consecutive hours,
Sundays and holidays excepted, even if used)

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party
The laytime starts from the moment that the NOR is
tendered and accepted by the charterer, unless the
charter party stipulates differently.
Before accepting the NOR, the cargo owner should
check:
The ship must have arrived at her loading/discharging berth as
indicated in the charter party
The ship must in all respects be ready to load or discharge
the ship is in order with all formalities such as custom formalities,
quarantine formalities, etc.

Note: W, W, W, W
-

WIPON: Whether in Port or not


WIBON: Whether in Berth or not
WIFON: Whether in Free Pratique or not
WICON: Whether in Custom Cleared or not

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party
* GENCON standard form:
The laytime starts from 1p.m if the NOR is
tendered in office hour before 12a.m
The laytime starts from 6 a.m of the next day if
the NOR is tendered in office hour after 12a.m
Excluded time starts from 1p.m of Saturday or of
the working day before holiday to 7a.m of the
next Monday or the day after the holiday.

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party
2.3.9.Demurrage/ Dispatch
* Demurrage
If the ship needs more time to load or discharge
than foreseen by the laydays, then the ship will
be in days of demurrage. The Charterer will
have to pay for this a certain compensations to
the ship owner called demurrage.
Once on demurrage, always on demurrage
Demurrage rate = 2 X dispatch rate
Demurrage money = demurrage time X
demurrage rate

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party
* Dispatch
Dispatch money is a compensation which the
ship owner must pay to the charterer when the
ship is loaded and/or discharged more rapidly
than provided by the laydays that were foreseen.
Dispatch money for all time saved
Dispatch money for all working time saved
Dispatch = 1/2 X demurrage rate
Dispatch money = Dispatch time X Dispatch rate

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party
* Calculation of demurrage/ dispatch money
Mutually complement
Individually complement
* Statement of facts
Time sheet:
Date and hour of arrival in the roads or in the port
Date and hour of arrival in the loading or discharging place
Date and hour on which the ship is ready in all respects to start loading or
discharging, as stated in the NOR
Date and hour on which the NOR was tendered
Date and hour on which the NOR is accepted by charterer, receiver or his agent
Date and hour on which, according to the charter,, the laydays started
Loading and discharging speed according to charter party
Statement of days, which could not be worked
Statement of the time allowed for loading and discharging
Date and hour on which the loading/discharging was terminated

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party
2.3.10. Carrier/ship owners responsibility and exceptions
Responsibilities:
- To make the vessel in all respects seaworthy by due diligence
- Secure that the vessel is properly manned, equipped, and supplied
- Issue B/L after receiving the goods
- Guide for loading and discharging the shipment
- Liable for loss, damage or delay in delivery of the goods caused by
nautical fault
- Control the vessel with proper speed, avoid deviation unless in case
of force majeure.
Exceptions:
- Act of God
- Perils of the sea
- Force majeure
- Hostile activities

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party

2.3.11.Arbitration and law


Arbitration is a kind of private court assigned by both parties in the
contract. They obey all of its rules spontaneously.
All disputes arisen out of the charter party may be solved and
addressed only if there is an arbitration negotiation in advance or an
arbitration clause in the charter party.
Requirements for An arbitration negotiation/clause:
+) Full and correct name of arbitration organizations
+) Procedural law/rule to deal with the matter
+) Place and Language for judging, number of arbitrators
Sample of arbitration clause:
All disputes arising out of or in relation to this contract shall be finally
settled by the Vietnam International Arbitration Center at the Vietnam
Chamber of Commerce and Industry in accordance with its
Arbitration Rules

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party
2.3.12. Both to Blame Collision
If the (Carrying) ship comes into collision with another ship as a result of the
negligence of the other ship and any act, neglect or default in the navigation
or the management of the carrying ship, the Merchant undertakes to pay the
carrier or where the Carrier is not the owner and in possession of the
carrying ship to pay to the Carrier as trustee for the owner and/or demise
charterer of the carrying ship, a sum sufficient to indemnify the Carrier
and/or the owners and/or demise charterer of the carrying ship against all
loss or liability to the other or non carrying ship or her owners, insofar as
such loss or liability represents loss of or damage to or any claim
whatsoever of the Merchant, paid or payable by the other or non carrying
ship or her owners to the Merchant and set off recouped or recovered by the
other or non carrying ship or her owners as part of their claim against the
carrying ship or her owner or demise charterer or the Carrier. The foregoing
provisions shall also apply where the owners, operators or those in charge of
any ship or ships or objects, other than, or in addition to the colliding ship or
objects, are at fault in respect to a collision; contact, stranding or other
accident.

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party
Nu tu ch hng A m va tu khng hng B do hu
qu s sut ca tu B v do hnh vi s sut hoc li lm
ca thuyn trng, thy th, hoa tiu hay ngi phc v
trong vic chy tu v qun tr tu ch hng A, th ch
hng trn tu A s bi thng cho ngi chuyn ch
(Tu A) mi mt mt hoc trch nhim i vi tu khng
hng B n mc mt mt hoc trch nhim ny tng
ng vi mt mt hoc h hng m ch hng c tu
khng hng B hoc s bi thng v n c i
chiu, gim tr hoc trch gi nh lmt phn khiu ni
ca tu B i vi tu A. Quy nh va c cp cng
s p dng ti ni no m ch tu, ngi iu hnh
hoc ngi qun l tu hay phng tin no khc m
phm li lm trong mt v tu m va.

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party
2.3.12. General Average and New Jason Clause
General Average shall be adjusted in London unless otherwise agreed in
Box 22 according to York- Antwerp Rules 1994 and any subsequent
modification thereof. Proprietors of cargo to pay the cargos share in the
general expense even if same have been necessitated through neglect or
default of the Owners servant.
If General Average is to be adjusted in accordance with the law and practice
of the US of America, the following clause shall apply: In the event of
accident, danger, damage or disaster before or after the commencement of
the voyage, resulting from any cause whatsoever, whether due to
negligence or not, for which, or for the consequence of which, the Carrier is
not responsible, by statute, contract or otherwise, the goods, Shippers,
Consignees or owners of the goods shall contribute with the Carrier in
general average to the payment of any sacrifices, losses or expenses of a
general average nature that may be made or incurred and shall pay salvage
and special charges incurred in respect of the goods. If a salving ship is
owned or operated by the Carrier, salvage shall be paid for as fully as if the
said salving ship or ships belonged to strangers. Such deposit as the Carrier
or his agents may deem sufficient to cover the estimated contribution of the
goods and any salvage and special charges thereon shall, if required, be
made by the goods, Shippers, Consignees or owners of the goods to the
Carrier before delivery.

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party
Ch hng hoc ngi gi, ngi nhn hng c bn
phn ng gp tn tht chung bt k him ha, tai nn
xy ra trc hoc sau hnh trnh ca con tu, bt k
nguyn nhn xy ra tn tht chung nh th no bao gm
c nguyn nhn bt cn ca tu m tu c hng
min trch cn c theo lut php, hp ng hoc cch
no khc. H s tr ph cu h v nhng chi ph c bit
pht sinh i vi hng ha. Ph cu h s c tr ton
b y cho d tu cu h thuc s hu ch tu hay
s hu ca ngi ngoi. S tin k qu ng gp tn
tht chung do ngi chuyn ch hoc i l ca h d
kin coi nh y s c ch hng, ngi gi hoc
ngi nhn hng giao np trc khi nhn hng.

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