Shipping Industrial Structure

Copyright © 2015 by Ladi Utieyione.

Library of Congress Control Number:     2015917414

ISBN:              Hardcover                978-1-5144-1884-0

                        Softcover                   978-1-5144-1883-3

                        eBook                        978-1-5144-1882-6

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the copyright owner.

Rev. date: 04/25/2016

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CONTENTS

Personnel and Organizations

Shipe Interest

Cargo Interest

Ancillary Services

Flag

Registration

Jurisdiction

Flag State

Ship

Load Line

Tonnage

Crew

Minimum Standards (ILO 147)

STCW Convention

Crew Agreements

Environment

Other

COLREGS 1972

International Safety Management (ISM) Code

Structure of a Safety M7anagement System

Port State Control

USCG Port State Control Initiative

Loan Security

The Future

Exercise 1: Ship Finance

Types of Maritime Trade

Cargo

Voyage Diagram

Liner Service

Liner Conferences (Conference Lines)

Tramp Operations

Passenger Ships

Other Cargoes

Contracts of Sale

Hague and Hague-Visby Rules

Hague-Visby Rules

Obligations under the HVRs

Deviation under the HVRs

Dangerous Goods under HVRs

Limitation of Liability

Special Agreements

Convention Countries

Demise Charter

Not by Demise

Time Charter Party

Clauses of Time Charter Party

Voyage Charter Party

Clauses of a Voyage Charter Party

Importance of Time and Cargo

Example

Exercise: Choice of Charter

Technical Aspects

Reports and Records

Expenditure Control

Reporting Incidents

Average

Marine Insurance

Insurance Procedure

Insurance Company

Lloyd’s Syndicate

Captive Insurance

No Insurance

Insurance Policy

Institute Clauses

General Average

York-Antwerp Rules (1994)

General Average Adjustments

Shipowner’s Liability

Claims for Liability

Oil Tankers

US Oil Pollution Act of 1990 (OPA)

Categories of Liens

Non-salvage Operations

Sample Note of Protest

ACKNOWLEDGMENT

I’m thankful to God who has giving me the Grace to put this piece of work together, I say a big thanks to my boss’s, colleagues, my clients, my clubs, my friends, my associations, Government parastatals and my company team who has shared experiences with me on my career path. More especially I want to thank my wife and my lovely kids for their patients and support they showed me during the time I took in putting this piece of work together. It’s been an amazing journey for me and everybody that has been in my life’s path during this time.

Every author knows that writing a book is a team effort. Families sacrifice time together, publishing professionals work miracles, friends and associates are asked to review my work, validate ideas or perhaps even write something. My fellow industrial experts are contacted and asked to confirm their views, suggest additional references, and provide insight. I also read other books and conducted thorough research for needed references.

Thanks are due to many individuals, organizations and companies who made their information available to put this piece of work together. Protective and Indemnity Insurance clubs around the globe, case studies between companies, International Maritime Association, International Maritime Contractors, Classification Societies like LLOYDS, ABS, BV, DNV, RINA, etc. My fellow ship owners in Greece, Turkey, China, United Kingdom, United States of America, Africa, The Caribbean, Singapore, Russia, Japan, South Korea, Sweden, Denmark, Norway, Switzerland, Italy, Spain, India, and Australia.

My piece of work has been reviewed by some of the most respected individuals in the industry and the publishing company made it easy for me to publish it.

I am also grateful to you for reading this book.

PREFACE

Dealing effectively with requirements tops the list of the challenges to ship owners, cargo owners, regulatory bodies and auxiliary services in the marine industry. Improving and implementing professional services on ships and cargo practices has been my focus throughout my career. My vision in this book is to help individuals and companies maintain, improve and experience continual growth in their daily shipping operations. I have used common language shipping which enables anyone to understand shipping in a simple way.

My newly-released publication titled Shipping Industrial Structure, is a book that highlights broad shipping and cargo practices. It clearly explains shipping complexity in a simple way for people outside the maritime industry who are interested in knowing the real meaning of shipping business and its norms.

In details, my book explains the interaction between a shipper, charterer, consignee, International marine regulatory bodies, shipping auxiliary services and all kinds of interests on ships, her cargos, and the people behind the scenes enforcing instructions to move vessels adherence to the rules and regulations that govern the industry. Shipping industrial structure demonstrates the process approach, complexities, port authorities, governmental laws and international certified organizations who take care of the shipping cycle operations worldwide.

Shipping industrial structure is designed for students and professionals within and out of the maritime industry. My book is designed for those who wants to understand the industry and how to approach businesses. It’s a book that will give you a thousand idealistic approaches towards establishing your own maritime services.

This book serves as a guide to maritime attorneys, and other marine professionals who are engaged in ship operations and cases in different forms. It has reference points and solutions to issues surrounding the maritime industry. Little mistakes cost companies fortunes and they might never recover from such losses. In my opinion, it’s usually good to have books for your workers and yourself to read. From my experience, incidents never tell you when they will come. The only way you can be prepared to tackle incidents is to read books and have as much information as possible.

Generally, this book is meant for professionals, schools, government officials, marine related crime investigators, and people from other industries.

1. Shipping Industrial Structure

Shipe Interest

A company which operates a ship or ships between advertised ports on a regular basis and offers space for goods in return for freight based on a tariff of rates.

Carrier

The shipowner or charterer or whoever enters into a contract with the shipper for the transportation of merchandise.

Cargo Interest

◆ Shipper

◆ Charterer

◆ Freight forwarder

Shipper

A person or company who enters into a contract with a liner conference, shipping line, or shipowner for the carriage of goods.

The shipper could be the seller of the cargo, the buyer of the cargo, or some third party that solely arranges the transportation of the cargo.

Charterer

A person or organization that contracts to acquire a vessel for a voyage or a period of time to carry his cargo.

Freight Forwarder

An increasing importance is being placed upon the freight forwarder as he takes over many of the functions of the traditional shipowner/carrier yet remains interested in the cargo.

Many of the larger exporting companies maintain an in-house shipping and distribution department that negotiates contracts of affreightment or carriage of goods for the company with the shipping line that trades to the area of the world where the company’s goods are destined.

However, there could probably be a lack of knowledge of exporting procedures and a lack of expertise for negotiating in a smaller company that exports.

Traditionally, the freight forwarder filled the need for expertise with their knowledge of export/import documentation and procedure, plus their wide experience in dealing with shipping companies with regard to contracts and documents.

The freight forwarder can offer services that come under four distinct headings

◆ Purely as a shipper’s agent, procuring transport and shipping services on behalf of the exporter and under his direction

◆ As a forwarder offering a total expertise package to the exporter with regard to routing and choice of mode together with ancillary documentation and perhaps packing service. With regard to transport, he remains an agent for the exporter and bills of lading are made out in the shipper’s name and to the shipper’s account

◆ As a principal, usually multimodal transport operator, taking responsibility for the goods irrespective of who actually carries them. In many cases, he may be the actual carrier for at least part of the transit. He issues the transport documents, combined bill of lading.

◆ As a specialist provider of ancillary self-standing services, such as custom clearance, warehousing, packing, and port agency

Ancillary Services

◆ Brokers

◆ Insurers

◆ Surveyors

◆ Classification societies

◆ Flag state officials

◆ Port management

◆ Stevedores

◆ Port authorities

◆ Coast guard

Broker

The first of these headings is of relevance because of the countless persons I meet who calls himself a broker.

In relation to shipping, the term broker covers a wide and varied list of activities

Agents employed (at a customary or agreed rate of commission or remuneration) to buy or sell goods, merchandise or marketable securities, or to negotiate insurance, freight rates or other matters, for a principal; the sales or transaction being negotiated not in his own name but in the name of the principal. (Marine Encyclopaedic Dictionary)

More specifically brokers connected with the maritime industry can be categorized as follows:

Insurance brokers, who act as the intermediary between the ship-/cargo owner and the underwriters when marine insurance is negotiated. This form of broker could be an individual, but more likely, it will be part of a large organization providing a global service of insurance, consultancy, risk management, and information.

Shipbrokers, who can be further divided into the following:

◆ Sale and purchase brokers, who buy and sell ships for clients (principals) or arrange contracts for building new ships

◆ Shipowner’s brokers, who act for the shipowner with a ship to charter for a voyage; he is approached by the shipowner with a view of finding cargo to carry.

◆ Loading broker/liner brokers, who represent the shipowner or shipping line at the port of loading. He advertises the date of sailing in shipping publications, obtains cargo, and coordinates the arrangements for delivery to the ship and loading, though the actual stowage is decided upon by the cargo superintendent and the ship’s officers. It can also be this broker’s business to sign the bill of lading on behalf of the master and issue it to the shipper (cargo owner) or his agent in exchange for freight, if freight is to be paid in advance.

◆ Charterer’s or merchant’s broker, who acts for the cargo interest and finds ships for the cargo; they will tend to specialize in a particular area or commodity.

◆ Chartering brokers, who act as intermediaries between the shipowner and the charterers or shippers and receivers. They are mostly responsible for the drafting or signing of the charter party.

The parties to the contract may use separate brokers or complete the fixture through the intervention of a mutual broker. This broker usually retains the original documents and issues certified copies to each party.

The broker’s commission, paid by the shipowner, is generally specified in the charter party in the form of a stated percentage of the freight (voyage) or hire (time).

◆ Forwarding agent is employed by the shipper to find a ship, usually on a liner trade, to carry his cargo. It is the forwarding agent’s normal duty to ascertain the date and place of sailing, obtain a space allocation, and prepare the bill of lading.

As different shipping lines tend to have their own form of bill of lading, it is the duty of the forwarding agent to obtain the correct bill of lading, complete it with the necessary particulars, and forward it to the loading broker for signing.

His other duties often include arranging for the goods to be brought alongside the ship, making custom entries and paying any dues on the cargo.

After shipment, the forwarding agent collects the completed (signed) bill of lading and sends it to the shipper.

The forwarding agent will also be employed by the consignee to collect the delivered goods and arrange the inward customs clearance and formalities.

Ship’s agent/shipping agent, though technically not a broker, the ship’s agent does attend to the shipowner’s commercial needs and formalities before, during, and after the ship’s stay in port.

The ship’s agent represents the shipowner with regard to the official requirements needed for the ship to enter port, arranging with the port authorities for the allocation of berthing space to load/unload the ship, advising import and export cargo owners, or the forwarding agent and loading/unloading the cargo.

The ship’s agent will also attend to the customs requirements of the port and pay (to be later reimbursed by the shipowner) all charges and dues the ship incurs.

The agent can often be nominated by the charterer and paid for by the owner. In this case, he could have a conflict of interest, where he is nominally acting for the ship but primarily puts the charterer’s interest first. Care must be taken in approaching charterer’s named agents, and ships should be advised to contact the ship manager’s office on a secure line for advice.

If the shipping company is little used or even unknown to the ship’s agent company, they will usually be ask for advance sums of money to pay disbursements and cash advances to the crew.

Apart from the commercial duties, the ship’s agent will also look after the ship’s noncommercial activities, crew replacement, repatriation and arranging stores, bunkers, water, and money.

With passenger ships, the agent handles all that is needed for the embarkation and disembarkation of the passengers.

Chartering agents are brokers who undertake the import and/or export of commodities in large quantities; they act as an intermediary between the owner and consignee of the goods.

Brokers thus appear to discharge well-developed and separate functions, but in practice, the activities of firms may include more than one of these functions, and the same firm is often acting for both parties, e.g., loading broker and forwarding agent.

Surveyors

Surveyors is a general term used by anybody wanting to inspect the ship or its cargo, its procedures or operation.

They can be associated with the following:

◆ The company superintendents, auditors, etc.

◆ Quality/SEP/ISM code

◆ P & I