Exam 2

Question 1

For a voyage charter, the gross revenue to the Owner is

Answer 1

Freight and demurrage

Question 2

Capital costs

Answer 2

(cost of any vessel financing)
May have an effect on Ows attitude towards long term employment, but usually disregarded when estimating on spot business

Question 3

laying up the vessel

Answer 3

stop using it for a period of time

Question 4

Laytime is usually expressed in either of two ways:

Answer 4

A fixed number of days (or even hours)
A fixed tonnage of cargo per day (or occasionally per hatch/hook/crane per day)

Question 5

Non-reversible laytime

Answer 5

The time used is subtracted from the time allowed at load port, and the same method is followed for the discharge port. Demurrage/despatch, if any, is payable on completion of loading and likewise on completion of discharge
In simple terms, you treat load and disch calculations/laytime usage separately
Non-reversible laytime is the general rule, in the absence of specific agreement to the contrary

Question 6

Reversible laytime

Answer 6

Under this method, the total laytime allowed for the load and discharge ports is calculated and added together, and from that is deducted the total loading and discharging time used. The demurrage or despatch is calculated from the resulting net figure
This method favors charterer’s interests in a couple of ways:
If laytime is exceeded at load port, you can make it up at the disport
Demurrage, if any, can only be calculated after disch. So payment of demurrage to ows is delayed as long as possible

Question 7

WORLDSCALE

Answer 7

code for “new worldwide tanker nominal freight scale”
The tanker industry’s reference for calculating freight rates (like the stock price)

Question 8

Who runs Worldscale?

Answer 8

Calculated and maintained by two non-profit associations, in London and New York. Both Associations coordinate with regard to policy and publication of the schedule. Each association is under the control of a Management Committee which consists of senior figures from leading tanker broking companies

Question 9

Important points about Worldscale

Answer 9

There is no compulsion to use Worldscale (not mandatory)
It is a reference index and does not pretend to protect the user on any particular transaction
Both parties to a contract are free to negotiate any variation of Worldscale if they so choose

Question 10

What are the components of the Worldscale rates?

Answer 10

Vessel dwt (of 75,000 metric tons)
Vessel’s average service speed (14.5 knots)
Bunker consumption

Question 11

What are the constants of the Worldscale rates?

Answer 11

Rates are expressed in US$ per metric ton
Rates are calculated assuming a round voyage from load port or ports to discharge port or ports and back to the first loading port

Question 12

Shex

Answer 12

Sundays and Holidays Excluded

Question 13

Shinc

Answer 13

Sundays and Holidays Included

Question 14

Components of the voyage estimate

Answer 14

do not determine the market
Basically a method for calculating the estimated return to the vessel owner or operator
The estimating aids the owner in deciding which cargoes or employment to pursue

Question 15

Even if used, unless used

Answer 15

EIU and UU

Question 16

working days

Answer 16

comprises 24 hours, running from midnight to midnight. This does not mean that the hours from when time starts to count until the first midnight do not count; it is just that the calculation of whole days starts from midnight

Question 17

Laytime

Answer 17

the period of time allowed the charterer under the provisions of the charter party to load and/or discharge the ship’s cargo

Question 18

Before laytime can commence, there are certain conditions the owner must meet:

Answer 18

The ship must have “arrived” at the loading (or discharging) berth or port as stipulated in the charter party
The ship must be, in all respects, fully prepared to load (or discharge)
The ship must have tendered the Notice of Readiness (NOR) as prescribed, to the shippers (or receivers)

Question 19

NOR

Answer 19

(doesn’t always have to be in writing)
Notice of Readiness

Question 20

calculate laytime

Answer 20

reversible and non-reversible

Question 21

Canal tolls

Answer 21

based on vessel’s canal net tonnage (typ found in description), typically higher than the flag net tonnage, canal authority will usually measure tonnage on vessels first transit and issue permanent tonnage certificate

Question 22

Daily net returns or T/C Equiv

Answer 22

gross revenue - commissions - voyage expenses/total voyage days

Question 23

In regular turn

Answer 23

meaning that the charterer is under no obligation to work the vessel out of his regular turn. Thus laytime will not commence until the vessel is on the berth. This is rarely used today

Question 24

Operating costs

Answer 24

“running costs”
crew wages, stores and supplies, lube oil, maintenance and repair, insurance and any management fees
In more instances, you would not include these costs and would just look at the T/C equiv, in general

Question 25

Economics of the shipping market

Answer 25

Supply and Demand

Question 26

“In turn not exceeding 48 running hours”

Answer 26

meaning laytime starts as soon as the ship’s turn arrives, if this occurs before the 48 hour max time allotted; otherwise when the 48 running hours has expired

Question 27

“Time to commence 24 hours, Sunday and holidays expected, after vessel is ready to unload”

Answer 27

This is the provision at discharge in the AMWELSH charter used in the coal trade

Question 28

Gencon ‘94

Answer 28

If the loading/discharging berth is not available on the Vessel’s arrival at or off the port of loading/discharging, the Vessel shall be entitled to give notice of readiness within ordinary office hours on arrival there, whether in free pratique or not, whether customs cleared or not. Laytime or time on demurrage shall count as if she were in berth and in all respects ready for loading/discharging provided that the Master warrants that she is in fact ready in all respects. Time used in moving from the place of waiting to the loading/discharging berth shall not count as laytime. If, after inspection, the Vessel is found not to be ready in all respects to load/discharge time lost after the discovery thereof until the Vessel is again ready to load/discharge shall not count as laytime.

Question 29

Weather Working Days

Answer 29

if inclement weather prevents the loading/discharging of the vessel on a working day the lost time does not count (ie, is “excepted”) against laytime