Summaries of the Six Disciplines Flashcards
Dry Cargo Chartering
a) For whom does the practitioner work?
b) What form of contract is there between that entity and the practitioner?
c) What does the work involve?
d) What types of documentation does the practitioner normally use?
e) How is the practitioner paid?
For whom does the practitioner work?
Dry cargo chartering brokers represent either the charterer or the shipowner
What form of contract is there between the principle and the practitioner?
Exclusive brokers; the principle directs all of their business through them
This requires the broker to advise the principle on market conditions and ensure they always get the best possible deal
Exclusivity can be total, or only in one part of the world (e.g. a grain exporter may use one broker in the FE but another in Europe)
The most pure from of an exclusive broker would be a member of the principle’s own company, e.g. the chartering department at Cargill
Competitive brokers; principles give their business to multiple brokers who then compete with one another to return with suitable offers
Intermediate brokers still exist but are rare due to modern communication
What does the work involve?
Finding fixtures for ships or finding ships for cargoes that need to be moved
What types of documentation does the practitioner usually use?
Charterparties
How is the practitioner paid?
Brokerage; usually 1.25% commission to each broker involved in the transaction
Tanker chartering
a) For whom does the practitioner work?
b) What form of contract is there between that entity and the practitioner?
c) What does the work involve?
d) What types of documentation does the practitioner normally use?
e) How is the practitioner paid?
For whom does the practitioner work?
Either the charterer or the shipowner
What form of contract is there between the principle and the practitioner?
As with dry cargo chartering; however most tanker charterers work specifically for an oil company/similar, and only one broker is involved in the transaction, typically representing the ship owner (this one broker may be exclusive or competitive, although competitive brokers are much more common due to the economy of urgency)
What does the work involve?
Finding fixtures for ships or finding ships for cargoes that need to be moved
What types of documentation does the practitioner usually use?
Charterparties
How is the practitioner paid?
Brokerage; usually 1.25% commission to each broker involved in the transaction
Ship Sale and Purchase
a) For whom does the practitioner work?
b) What form of contract is there between that entity and the practitioner?
c) What does the work involve?
d) What types of documentation does the practitioner normally use?
e) How is the practitioner paid?
For whom does the practitioner work?
Either the buyer or the seller of marine property
What form of contract is there between the principle and the practitioner?
Brokerage agreement/commission agreement
Both the seller and the buyer will use separate brokers
What does the work involve?
Working for a buyer; understanding of different ship types and different machinery, designs, and builders to advise clients what’s best suited in their situation
Working for a seller; placing the ship in front of the greatest number of potential buyers via their brokers in the shortest possible time period
What types of documentation does the practitioner usually use?
Memorandum of agreement once negotiations have been concluded
Bill of sale
How is the practitioner paid?
Commission, usually ranging from 2.5% for smaller ships to 1% on larger ships
Ship operations and management
a) For whom does the practitioner work?
b) What form of contract is there between that entity and the practitioner?
c) What does the work involve?
d) What types of documentation does the practitioner normally use?
e) How is the practitioner paid?
For whom does the practitioner work?
Shipowning enterprises; in large shipowning companies, this will be undertaken within the shipowning company itself. Small scale owners or organisations who don’t view ship ownership as a core undertaking will outsource to specialist ship management companies
What form of contract is there between the principle and the practitioner?
Usually individual contracts drawn up by the owner and management company
What does the work involve?
Crewing, storing, technical, insurance, operations and commercial
Companies can be employed to cover just one or several of these, e.g. it is common to outsource crewing but choose to manage the remainder in-house
What types of documentation does the practitioner usually use?
Varies depending on individual contract
How is the practitioner paid?
Varies depending on individual contract
Port agency
a) For whom does the practitioner work?
b) What form of contract is there between that entity and the practitioner?
c) What does the work involve?
d) What types of documentation does the practitioner normally use?
e) How is the practitioner paid?
For whom does the practitioner work?
The owner (or despondent owner) of the ship, or the charterer in a time charter agreement
What form of contract is there between the principle and the practitioner?
Port agency contract
What does the work involve?
Looking after the needs of the ship immediately before, during and immediately after port
What types of documentation does the practitioner usually use?
How is the practitioner paid?
Agreed port fees/tariff (agreed prior to arrival), usually on a sliding scale depending on the size of the ship
Liner agency
a) For whom does the practitioner work?
b) What form of contract is there between that entity and the practitioner?
c) What does the work involve?
d) What types of documentation does the practitioner normally use?
e) How is the practitioner paid?
For whom does the practitioner work?
Liner operators, independent on behalf of shippers
What form of contract is there between the principle and the practitioner?
No set form, but FONBASA has a draft form called the Standard Liner and General Agency Agreement
What does the work involve?
Dealing with the ship, e.g. customs, health and port authorities, stevedores, terminals etc
Dealing with outward cargo – marketing; taking freight bookings, gather cargo information, respond to shipper’s questions
Dealing with outward cargo – documentation; standard shipping notes, dangerous goods notes, BLs
Dealing with outward cargo – containers; container control departments
Dealing with inward cargo; manifests, cargo claims
Dealing with the principle; reconciling financial accounts, paying the ship owner
What types of documentation does the practitioner usually use?
BLs
How is the practitioner paid?
Commission on gross freight earned
