Chapter 2: Shipping

References
 International Convention for the unification of certain
rules relating to Bills of lading 1924 – Hague Rules/
Convention 1924
 Protocol to Amend the International Convention for
the Unification of Certain Rules of Law Relating to
Bills of Lading – Hague-Visby Protocol 1968
 SDR Protocol 1979
 United Nation Convention on the carriage of goods
by sea- Hamburg Rules/ Convention 1978
 Bộ luật hàng hải Việt Nam 2005
Outline
I. Introduction to shipping
1. General factors
2. Infrastructures
II. Methods of vessel charter
1. Liner charter
2. Voyage charter
I. Introduction to Shipping
1. General factors
One of the transportation module to carry cargo
internationally via sea by ship vessel
 Advantages:
 Large quantities of freight can be safely stored and move in
one go
647.000 MT
MSC Oscar – 193.000 MT
I. Introduction to Shipping
 Advantages:
 Shipping is a viable and cost- effective way for moving a
large amount of goods over long distances (cheap freight)
=> Why cheap freight?
 Shipping is an important factor within the international
transport chain
I. Introduction to Shipping
 Disadvantages
 Slow speed
 Probability of risk occurring
Goods transported by sea
 Large quantity
 Quite low price
 Do not need to deliver quickly
 Not be easily affected by shipping conditions
I. Introduction to Shipping
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)
2. Infrastructure
2.1. Merchant vessels
2.1.2. Specifications
 Ship’s name

 Port of Registry:

A vessel’s 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
=> tax, registration fee, regulations to adhere
2. Infrastructure
2.1. Merchant vessels
2.1.2. Specifications
 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. Infrastructure
 Classification
 Lloyd’s Register of Shipping, London/UK – LR
 American Bureau of Shipping, New York/USA – AB
 Bureau Veritas, Paris/France – BV
 Germanischer Lloyd, Berlin/Germany – GL
 Det Norske Veritas/Norway – NV
 Nippon Kaiji Kyokai/Japan – NK
 Registro Italian Navale/Italy - RL
 Draught/Draft: is the vertical distance from the keel to the waterline
 Light Draught: the draught of the ship when its carry no goods
 Loaded Draught: maximum draught when the ship is full loaded
 The maximum permitted draught varies according to the seasons and waters in
which she plies
Draft
 Meanings of draught?
 Draught of ship vs draught of port?
Load lines/The Plimsoll Mark

Source: Branch, A. E., 2007, p. 13)

Question
 What is the most suitable loadline to load goods in
international transport?
 2. Infrastructure
 Displacement: the weight of the ship and all that it contains- cargo,
fuel, water, stores, crew and effects
 Light weight/ 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)= LD + weight of cargo + stores used for
itinerary
 Carrying capacity: measure of ship`s carrying capacity
 Deadweight tons/capacity(DWC): the difference between the
displacement and the light weight
DWC = HD – LD
❑ Dead Weight Cargo Capacity (DWCC): = DWC – weight of stores used
for itinerary
=> Which one is fixed?
2. Infrastructure
 The gross register tonne (GRT)- The total
cubic measurements of the ship (including
engine room, bunker tanks for fuel and water,
seamen’s accommodation) => Meanings?
 The net register tonne (NRT): is the available
cubic capacity for cargo=> Meanings?
1 RT = 100 ft3 (2.8316 m3)
 Cargo space: Other descriptions of the ship’s cubic
capacity
 Grain space: the ship’s capacity to hold bulk cargo
 Bale space: the ship’s capacity to hold packed cargo
Questions
 How to optimize both NRT and DWCC?
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. Infrastructure
2.2.3. Requirements for an efficient port
 Well- equipped with the most modern handling facilities
=> Vessels turnaround time
 A well- organized container yard, for both storage and handling of containers
Wharf and crane
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.
II. Methods of vessel charter
 Liner charter
 Voyage charter
1. Liner Charter
1.1. 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
1. Liner Charter
1.2. 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
 High freight
1. Liner Charter
1.3. A liner company’s organization
✓ 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: company’s 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
1. Liner Charter

1.4. What is a liner agent?

A person or company that acts on the shipping line’s
behalf and carries out their business while the vessel
remains in the shipping line’s jurisdiction
1. Liner Charter
1.5. The order of liner charter
 Step 1: Shipper let a ship broker find a suitable ship
 Step 2: The ship broker chooses a carrier
 Step 3: The ship broker 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 ship broker 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.
Booking note
Question

 Why should we hire a ship broker?

 What are the risks of hiring a ship broker?

 Why there is no contract in liner shipping?

1.6. Ocean Bills of Lading

1.6.1. Definition and functions

 Definition: 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
 Issuing time:
◼ Shipped on Board
◼ Received for shipment
 Receiver: shipper (exporter or representative)
1.6. Ocean Bills of Lading
 Functions
 Evidence of the contract of carriage
◼ Why is BL only the evidence of the contract, not the contract?
◼ What is the meanings of being evidence?
 Confirmation of shipment
 Document of title (title of ownership)
=> Why only BL has the function of being document of title?
1.6. Ocean Bills of Lading

1.6.2. Main types of B/L

1.6.2.1. 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
 The shipping company will deliver the shipment to its
consignee on presentation of an identification.
 Is non- negotiable document

Quest: if the consignee can’t go to receive?

1.6. Ocean Bills of Lading
1.6.2. Main types of B/L
1.6.2.1. Base on the negotiable ability of B/L
 Straight B/L

 Advatages
 Disadvantages
 Is used where the goods have been paid for or do
not require payment (donation or gifts)
1.6. Ocean Bills of Lading

 Order B/L: bill of lading that made out to the order

of a person for delivery of the goods and that can
be transferred by endorsement to third parties.
 To order means?
 Who can be authorized person?

- To order of shipper

- To order of bank

- To order or consignee

=> Order of … (blank)?

 The order B/L can be negotiated by endorsement
procedure.
1.6. 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
◼ W/R: without recourse
1.6. Ocean Bills of Lading

Order B/L
 Advantages
 Disadvantages
1.6. 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.
 How to recognize?
 ThisB/L can be simply transferred by handing the
document.
 Advantages and Dis.?
1.6. Ocean Bills of Lading

1.6.2.2. Base on the issuing time

 Shipped on board B/L: B/L that is released after cargo is shipped/laden
on board. This document is an important evidence for completing delivery
liability of the sellers.
 Note: FOB, CIF, CFR Incoterms 2010
 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.
=> Accepted in set of documents for LC? Why?
+) 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.
+) Deliver the goods through a middle man: a forwarder, a multimodal
transport operator, or a consolidator.
=> What should the seller do?
1.6. Ocean Bills of Lading

1.6.2.3. 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.
1.6. Ocean Bills of Lading

1.6.2.4. Other types

 Surrender B/L

 Seaway Bill (Branch, A. E., 2007, p.237)

 SWBs are non- negotiable, they cannot be issued “to order”
or “to order of”
 The shipper’s 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
1.6. Ocean Bills of Lading
1.6.3. Content of B/L
1.6.3.1. 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
1.6. Ocean Bills of Lading
1.6.3. Content of B/L
1.6.3.1. Reverse side of B/L
 Definitions: carrier, shipper, consignee
 The extent of carrier’s responsibility
 Excepted Perils
 Regulations on loading, discharging, preserving goods
 Regulations on Freight and Charges
 War, Strike, riots, civil, commodity clauses
 Late delivery clauses
 General average clause
 Both to blame collision clause
 Supreme Clause
1.7.Legal Systems in shipping
1.7.1 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
1.7.2.National law
 Vietnam Maritime Code, 2015
1.8. Extend of carrier’s liability to the
goods- International legal systems
1.8.1. 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”
1.8. Extend of carrier’s 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:
 the shipper, or a person acting on his behalf;

 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:
 by handing over the goods to consignee;

 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;
 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.
 1.8. Extend of carrier’s liability to the
goods- International legal systems
1.8.2. Basis of liability: carrier’s liability on loss resulting from loss of or
damage to the goods
1.8.2.1. 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.
 1.8. Extend of carrier’s liability to the
goods- International legal systems
1.8.2. Basis of liability
1.8.2.2. 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.
 1.8. Extend of carrier’s liability to the
goods- International legal systems
1.8.2. Basis of liability
1.8.2.2. Main liabilities
 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.”
 1.8. Extend of carrier’s liability to the
goods- International legal systems
1.8.2. Basis of liability
1.8.2.3. 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
e) Act of war
f) Act public enemies
g) Arrest or restraint of princes, rulers or people, or seizure under legal
process
h) Quarantine restrictions
i) Act or omission of the shipper or owner of the goods, his agent or
representative
 1.8. Extend of carrier’s liability to the
goods- International legal systems
1.8.2. Basis of liability
1.8.2.3. Excepted perils
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
1.8. Extend of carrier’s liability to the
goods- International legal systems
1.8.2. Basis of liability
1.8.2.3. Excepted perils
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
1.8. Extend of carrier’s liability to the
goods- International legal systems
1.8.3. 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 900/1000.
1.8. Extend of carrier’s liability to the
goods- International legal systems
1.8.3. 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.
1.8. Extend of carrier’s liability to the
goods- International legal systems
1.8.3. 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
1.8. Extend of carrier’s liability to the
goods- International legal systems
1.8.3. 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
1.8. Extend of carrier’s liability to the
goods- International legal systems
1.8.3. Limitation of liability
 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.
1.8. Extend of carrier’s 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:
 Carrier’s 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
1.9. Extend of carrier’s liability to the goods- Maritime Code of
Vietnam, 2005
1.9.1. 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.”
1.9.2. 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.
1.9.3. 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
 1.10. Claims and actions
1.10.1. Notice of loss, damage or delay
 Notice of loss, damage or delay is the consignee’s 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
1.10. Claims and actions
1.10.2. Claim and actions
1.10.2.1. Claimer
 Shipper
 Consignee
 The holder
 The insurer
1.10. Claims and actions
1.10.2.2. 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
1.10. Claims and actions
1.10.3. 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.
2. Voyage Charter
2.1. Definition and features of Tramp vessel
2.1.1. Definition: The tramp, or general trader as she is often called, does not
operate on a fixed sailing schedule, but merely trades in all parts of the
world in search of cargo, primarily bulk cargo.
2.1.2. 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
 Carriage, freight, loading and discharging expense conditions are
clearly prescribed in the contract of carriage
2. Voyage Charter
2.2. Voyage Charter Party
2.2.1. Definition
A charter party is a contract whereby a ship owner agrees to place his ship, or
part of it, at the disposal of a merchant or other person (known as the
charterer), for the carriage of goods from one port to another port on being
paid freight, or to let his ship for a specified period, his remuneration being
known as hire money.
2.2.2. 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 discharging 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 Master’s 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 berth at La Havre port

 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 (Branch, A. E., 2007, p.311-2)
 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 charterer’s liability is in contrast to the carrier’s 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
2.3. Content of voyage charter 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, Sundays and holidays excepted, unless used)
- 15 WWD, S.H. EX, E.U (Cargo to be loaded in 15 weather
working days, Sundays and holidays excepted, even if
used)
 2.3. Content of voyage charter party
 The laytime starts from the moment that the NOR (Notice of
Readiness) 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
2.3. Content of voyage charter 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.
2.3. Content of voyage charter 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.
 Maxim: “Once on demurrage, always on demurrage”

 Demurrage rate = 2 X dispatch rate

 Demurrage money = demurrage time X demurrage

rate
2.3. Content of voyage charter 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 rate= 1/2 X demurrage rate

 Dispatch money = Dispatch time X Dispatch rate

2.3. Content of voyage charter 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
2.3. Content of voyage charter party
2.3.10. Carrier/ship owner’s 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.
 2.3. Content of voyage charter 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”
 2.3. Content of voyage charter 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
 2.3. Content of voyage charter 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 cargo’s 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”.”
Remarks
 Pros and Cons of Shipping
 B/L; its functions; types of B/L
 Legal system in shipping
 Liner charter vs. Voyage charter
 Gencon form
 “Both to Blame Collision” clause