The single most important stakeholder is the Charterer and the relationship with him is very critical, more than money, ship’s credibility is also involved. It is the best thing to as per the documented terms and cooperate as much as possible. The relationship with the other stakeholders are explained in the subsequent topics
Preamble: Chartering is an important activity in the shipping industry. In some cases a charterer may own cargo and employ a ship broker to find a ship to transport the cargo. Supply and demand, type of ship, ship in the right area at the right time determine the freight rate.
Some Charterers may own ships, either directly or by time charter, look for cargo but most charterers regularly hire ships, or space on ships, to transport goods/products/passengers. A charterer may also be a party without a cargo who takes a vessel on charter for a specified period from the owner and then trades the ship to carry cargoes at a profit above the hire rate, or even makes a profit in a rising market by re-letting the ship out to other charterers.
Ship Charterers need to be in touch with the market to find the most suitable and cost effective transport options. They get the market intelligence through their brokers. Ship Charterers will plan a voyage, calculate the costs involved in all the activities of the voyage
Time Charter Equivalent is a standard shipping industry performance measure used primarily to compare period-to-period changes in a shipping company’s performance despite changes in the mix of charter types.
Ship Charterers play an important role at the deep end of ship operations, helping to pair ships with suitable cargoes. As the controllers of cargoes, charterers keep the world’s shipping fleet in business. Ship Chartering companies are a diverse group – can be an oil Major, or a huge trading house dealing in Agro products to mined materials, or mine owners etc.
The Charterer gives business to the ship and has a financial stake, earns more if the performance of the ship is good. Depending on the congestion in the load or discharge port or based on the current logistics chain/plan, the Charterer may demand more or less speed, will expect the all cargo gears to function without any break down etc. In short since huge money is involved, in case of a loss in performance, the charterer would like to blame the ship and will pay reduced money to the Ship owner.
If the charterer loses money, the ship will be blamed and since the shipping industry is a closed community, the ship is likely to loose the name with the brokers/ charterers etc. If the Charterer makes money from the ship, the market for the ship goes up or simply the credibility improves..
To avoid unnecessary complications, the agreed terms are clearly documented, depending on the type of ship and the type of charter, normally a standard contract form called a charter party is used to record the exact rate, duration and terms agreed between the ship owner and the charterer.
Stakeholders
IntroductionVarious stakeholders have different roles and responsibilities in the transportation of breakbulk cargo from its point of origin to its destination. The stakeholders include those with a direct interest in the cargo, third party service providers, transporters and carriers, surveyors and regulators. More than anything else, what makes moving breakbulk cargo such a complex and challenging undertaking is the unavoidable participation in the process by many different players at many different times.
Stakeholders Process
Two major Stakeholders are
Ship agents and brokers can be the large global marine service providers with representatives in all the world’s major ports or small family run concerns operating in one or two ports in a country, the role of a ship agent is to represent the interests of the ship owner or charterer while the ship is in port by providing assistance or advice as required.
The ship agent is defined in the new IMO FAL Convention, which comes into force on 1st January 2018, as follows:
Ship agent: The party representing the ship’s owner and/or charterer (the Principal) in port. If so instructed, the agent is responsible to the Principal for arranging, together with the port, a berth, all relevant port and husbandry services, tending to the requirements of the Master and crew, clearing the ship with the port and other authorities (including preparation and submission of appropriate documentation) along with releasing or receiving cargo on behalf of the Principal.
The following are the key roles for the Agent thus appointed
- Booking the vessel in and out of the port, and arranging the pilot and tug boat services
- Providing information on the crew and any passengers to the local immigration authorities
- Ensuring the ship’s documentation complies with international regulations prior to Customs inspection
- Preparing quarantine pre-arrival report (QPAR) which provides details on the crew, the ship’s previous route and any deaths or illnesses which may have occurred during the voyage
- Advising Customs of the ship’s arrival and reporting the cargo on board
- Logistics involved with provisions and fuel
- Providing the stevedore’s ship planner with the manifest which gives detailed information on the cargo to be handled
- Liaising with stevedores and terminal operators regarding the safe handling of containers, break-bulk and bulk liquids, and ensuring that the ship’s master is aware of shore requirements
- Organising crew changes, any associated immigration documentation and arrangements such as booking flights
- Paying the crew
- Handling ship services including repairs and maintenance
In practice however, the agent can act for any of the parties involved in the voyage and in any capacity as agreed between the agent and the principal.
Broker: Ship broking activity may also be handled by ship agents, but the ship broker is to act as an intermediary between
- The ship owner/charterer for fixing the cargo or the vessel or
- The buyers and sellers of ships.
Ship brokers will be for one of the following types of brokerage:
- Owners brokers are appointed by ship owners to secure vessel or cargo charters for their vessels. Their main interest is to protect the owner by negotiating the best terms.
- Charterers brokers work under instruction from the charterer and are expected to circulate and negotiate his order for tonnage to secure the most favourable fixture for the cargo interests.
- Most brokers provide their services to both owners and charterers on a no win, no fee basis.
Sale & Purchase brokers represent one party in a deal to buy or sell new or secondhand tonnage.
The broker is normally involved
- Presenting the business to potential clients,
- Negotiating the main terms of a contract,
- Finalising the details of the contract and
- Following the deal through to its conclusion.
Ship brokers also provide their clients with a wide range of market intelligence and advice.
For more information on their roles and responsibilities, please see the website of ‘The Federation of National Associations of Ship Brokers and Agents ‘– FONASBA