Assignment on Dry Cargo Charterparties Agreement

Running head: CHARTERING
CHARTERING
Name of the Student:
Name of the University:
Author Note:

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Table of Contents
Dry cargo ship specification.......................................................................................................2
Overview of the voyage charter.................................................................................................3
Discussion on charter party contract..........................................................................................5
Hypothetical voyage estimation.................................................................................................6
Hypothetical Laytime Calculation.............................................................................................8
References................................................................................................................................12

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Dry cargo ship specification
In the present global competitive market, the shipping business plays a crucial part in
international trade. The shipping industry is vital for the economic evolution of the nation as
ships are used to transfer consignment from one place to another, thus increasing trade and
fulfilling the demand of the current market situation.
Chartering of ships refers to a contract where a charter hire a ship from its owners and
use it for the business purpose (Andenes and Klepelv 2019). Two chartering techniques are
more popular such as voyage charter or time charter. In this article, we will be focusing on
voyage charter, which attribute to a single voyage agreement between shipowner and charter
(Berner 2015). After acquiring the cargo ship, it is the charterer who will be owner of ship,
and charterer needs to pay some amount of money known as freight to ship-owner of the ship
(Angelopoulos, Duru and Chlomoudis 2016).
In this report, we are going to discuss dry cargo ships that are used to transport cargo
from one place to another. Dry cargo ships refer to those ships that are used to carry solid dry
goods and have the feature to tolerate heat and cold, some of the examples are ores, products
of steel, forest products, coal, and many more (BAŞTUĞ, DEVECİ and YILDIRIM 2016).
The article focuses on the handysize cargo ship that mainly refers to oil tankers or small bulk
carriers.
Handysize Ship
Handysize carry a variety of cargo types such as grains, logs, woodchips, metal ore,
and many more. Generally, handysize vessels are used to work within the regional trade
routes and capable of carrying small bulk goods in parcel size. The report will mainly focus
on the bulk carriers that refers to vessels with single-deckers and are not able to load
containers. One of the popular and mostly used bulk carriers is handysize and has a

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deadweight about 15,000 tons to 39,000 tons. Handysize bulker is equipped with five cargo
holds.
The handysize tankers are used to load refined products, and the deadweight is approximately
between 25,000MT and 40,000 MT.
Overview of the voyage charter
Handysize carriers are mainly referred to as the traditional workhorses of the dry bulk
market. One can effectively use the handysize vessel if they have the exact market knowledge
and good customer relationship (Chou and Chen 2017). Even shipbrokers can enter the
market as an owner and can voyage a charter with low investment costs (Dai et al. 2015). If
the present shipping business is taken onto consideration, then from a transparent sector, it
has become a niche market environment (Eba et al. 2018). One of the main specialized
market in handy-sized are geared bulk that comes with equipped shipboard cranes or derricks
for loading or discharging of cargo (Kakkos et al. 2016). It is assumed that Norwegians and
the Greeks are vital players in this market.

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Pola Maritime is one of the Cyprus base shipping company mainly dealing with
handysize vessels. All carriers owned by the company are open boxed shaped and ice-class
that can deal with the challenging route and carry cargoes. According to some sources, the
fleet activity of Pola maritime mainly focused on the Trans-Atlantic trade that operates from
the Baltic Sea to the East coast of the US and South America. The carriers mainly transport
cargoes such as steel, coal, grains, fertilizers, soybean, and minerals (Karahalios, Yang and
Wang 2015). The word freight mainly comes when there is a case of a voyage charter. The
amount that is paid to the owner for a voyage charter is known as freight (Kumar 2016). The
freight amount includes operating budget of owner, profit margin of owner, and the cost of
fuel between ports.
Mainly a freight is paid to the shipowner for the services that will be provided that is
for the transportation of goods or via sea, and if the shipowner fails to provide the service,
then there will be no question of freight (Kalouptsidi 2014). Even if the geographical location
is taken into account for understanding the concept of voyage charter, then it must specify
that there is always a predetermined route that needs to be followed by the shipowner for
delivering the specified cargoes (Plomaritou 2014).
Usually, a freight is payable after the delivery of the goods has taken place or the
goods have reached to its final destination. However, freight can be payable via three ways
that are upon the right and accurate delivery, fully prepaid, or after reaching its final
destination (Plomaritou and Menelaou 2020). On a hypothetical basis, if one needs to
measure the freight rate, then it is different for each handysize bulk carries as the freight is
estimated either taking into consideration the amount of goods loaded or carried or a lump-
sum freight (Peng et al. 2018).

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In this report, we are considering the Pola Maritime as the base shipping company
that is lending a handysize vessel for a voyage charter. The company is one of the renowned
international dry bulk vessels and almost specialized in all types of bulk carriers, starting
from handysize to Panamax sizes (Porathe, Prison and Man 2014). The company enters into
a charter party contract by evaluating all the relevant information and efficiently analyzing
the market condition; thus, experience a low-level risk from the counterparty (Sambracos and
Maniati 2015).
Discussion on charter party contract
In this case, we are assuming that Pola maritime is the shipowner, and it is entering
into a charter party contract with a party. Generally, a proposed voyage consists of four parts
appraising, planning, executing, and monitoring. Before entering into a charter party contract,
all these four factors must be taken into consideration (Plomaritou and Nikolaides 2016).
Appraisal of all the relevant information must be carefully evaluated. Planning of the voyage
needs to done carefully (Ünal and Derindere Köseoğlu 2014).
We are assuming that a charter contract is a voyage contract; it is a well-known fact
that in case a voyage charter freight amount is the only remuneration, and it is gained only
after the goods are reached to its final destination. The navigation team of the handysize
vessel must have the skill and ability to deal with the risk and must be able to handle and use
all the types of equipment of the vessel.
Even the pilot of the vessel must have clear coordination with the navigation team.
The master must make an total assessment of intended voyage and then must coordinate all
the findings to the navigation officer and other deck officers thosewill be included in the
voyage charter. This assessment will give an idea of all the risk and the danger areas involved
in the entire voyage process. After the appraisal process, the master stating all the danger

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areas involved must do the planning and giving an advanced warning for the existence of any
type of navigational hazard. It is always asked to used longer routes instead of shorter
hazardous routes. However, there are some charterparty clauses that needs to be modified by
the shipowner as the charterparty contract must be profitable for both the parties.
Period and delivery: The period of the charter party can be extended by the charter by giving
information to the owner. The owner needs to deliver the vessel to the charterers at the port or
place as decided. The charteres has the option to cancel the charter party contract if the vessel
is not delivered as per the specified time.
The charter could be entitled to deduct from next hire because of any expenditure incurred on
behalf of owner that is for the owner account under this charter party contract.
Any fines, or any amount of taxes levied in during of smuggling by the master officers and
crew. The vessel shall be off-hire for any time lost as a result thereof. Specific services shall
be rendered by the crew member such as bunkering, docking and undocking shifting
operations in ports, maintaining power during loading and discharging operations, and many
more other activities must be efficiently mananged by the crew.
It must be preplanned what are all the areas where the vessel must not go, and even
specific safety measures must be taken to avoid any type of risk. Monitoring of the vessel is a
continuous process and must ensure that all the things are going as per the pre-set plan.

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Hypothetical estimation of order and position
The vessel must be used for transporting lawful cargo. Cargotthat are illegal, or injurious for
nature must not be transported without owners prior concent

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It is the liability of the charterer to pay for any damage or loss related to the use of
any fuels that are not according to the specification as decided earlier. Even the owner of the
ship is not liable for any type of reduction in speed performance of the ship.
In the above case, the voyage charter contains all the relevant information that was
offered by the firm (Wen et al. 2017). However, if there are any other terms and conditions
that must be mutually negotiated and accepted following charter party proforma. This is
assumed to be a standard contract form, which will be implemented. The offer will be
authentic if the details mentioned above are specified and accepted.
Hypothetical voyage estimation
Cargo details
45000 / 10% GRAINS
Load: 1/C Rosario, Cyprus
Discharge: 15H Paranagua, USA
Loading pace: 20,000 satpmshex
Unloading pace: 10,000 shinc
Laycan: 22-29
December
2.20% addcom + 1.25% brokerage
Vessel
M/V AB 1 Bulk
Carrier
Open USA 29
December
58,000 dwt SDBC ON Draft 12.2 meter ssw
pace and utilization
Fuel oil 13.5 knots/ 25mt(laden)
14 knots/21mt ballast
MDO (Diesel Oil) 1.5mt at sea 1 mt in port
Other specification
vessel delivery place USA
Vessels will carry 49,500 mt BULK GRAINS
cost of bunkers: USA costs IFO usd 423/ MDO US$ 572 pmt
Port price in Rosario US$ 10,000 ; Paranagua US$ 55,000
varied costs: US$ 5,000
Cost suez cananl: US$ 203,000

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1 day transit in suez canal
Daily net lease of vessel: US$ 10,000 per day prorata
loading of cargoes take 3.12 days
Unloading of cargoes will take
4.95 days
laden lenght 7,307 NM
repositioning leg lenght 583 nm
additional time required for sailing because of
bad weather: 1 day
12 hours both ends is the turn time
Step 1: Calculate period of
voyage
Ballast leg = 865nm/336 (14knots* 24 hrs) = 2.57 days
Laden leg = 7307nm/324 (13.5 knots* 24 hrs) = 22.5 days
repositioning leg = 583nm/336 (14* 24 hours) = 1.74
days
Overall sailing days = 26.81
+ total days in port = 9.07
+ day allowed due to bad weather
= 1 day
+ Suez transit = 1 day
approximated voyage duration = 37.88 days
Step 2: Calculation of bunker costs
IFO
Ballast leg (21mt pd * 2.57 days) = 53.97metric ton
Laden leg (25 mt pd * 22.5 days) = 562.5 metricton
Repo leg (21 mt pd *1.74 days) = 36.54metric ton
expense: (653.01 mt * US$ 423) = US$ 276,223
Diesel oil at sea: (1.5 mt pd * 26.81 days) = 40.22 mt
expense: 40.22 * US$ 572 = US$ 23,006
In Port utilization
(9.07 days * 1 mt MDO) = 9.07 metric ton MDO 8 US$ 572
expense = US4 5,188.04
overall bunker price = US$ 304,417
Step 3: Calculation total cost
Total cost = USD10,000 pd *37.88d= US$
378,800

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Step 4: Outcomes
Total Costs of voyage
Total fuel price US$ 304,417
expenses incurred in
port: US4 65,000
TC in price US$ 378,800
Other varied expenses US$
5,000
Cost incurred in suez canal US$
203,000
expenses US$
956,217
+ Commission
(2.5% +1.25%)
of 3.75 percent of Total expenses US$
35,858
overall Voyage expense US$
992075
Freight price for the voyage:
US$ 992075/5000 mt cargo = US$ 20.00
mt
Hypothetical Laytime Calculation
Laytime refers to the period for loading and discharging chartered voyage ships. The
calculation of laytime is possible depending on three primary methods reversible,
averageable, and reasonable or non-reversible laytime. Based on open data and information,
we are preparing a laytime calculation.
Sundays and holidays expected unless used and weather working days.
An XYZ charter party by doing all the modification and rider clause offers for:
Cargo: 49,500 mt minimum to full load capacity of vessel at charters option.
Laycan of loading: 1600 metric ton per WWD SHEX u.u
Laycan of unloading: 1200 metric ton per WWD SHEX u.u
The laycan policy is as follows: the loading and unloading laytime activity will starts at
1 pm. If the readiness notice is given before noon or 8 am, then next working day, if the

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advice mentioned during office hours afternoon. Notice at loading port given to shipper
named in box17. Time used before the outset of laytime should be taken into
consideration. While waiting for the berth amount of time lost will be counted as
loading or unloading period as the situation may be.
Demurrage rate is USD1,800 per day/ pro-rata for all working time lost. The
dispatch amount will be calculated ½, demurrage rate for all working time saved.
Demurrage and despatch, if occurred, must be settled by the owners and charterer.
Statement of facts.
The arrival of a vessel: 14.00, Thursday 22 December
Berthed of a vessel: 15.30, 22 December
Readiness tendered notice: 14.00, 22 December
Readiness accepted notice: 14.00, 22 December
Quantity of cargo: 49,500 metric tons
Commencement of loading: 16.00, 29 December
Completion of loading: 10.30, 29 December
Laycan during loading: 3d.10h.30m (5500/1600)
duration to count from 0800, 23 December
Working hours/ meal hours of the port: midnight. To midnight each day except on
Sundays and holidays unless required.
LAYTIME
CACULATI

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ON
DATE
D
A
Y
time
used
Total
time
consumed
Toatal
time
saved REMARKS
D H M D H M D H M
22-Dec
T
H
U
14.00 NOR
tendered
16.00 :
commercial
loading
22-Dec
T
H
U 0 8 0 0 8 0
time used
before L/T
commences
23-Dec
F
RI 1 0 0 1 8 0
08.00 : L/T
commences
24-Dec
S
A
T 0
2
1
3
0 2 5
3
0
0800-1030:
loading
25-Dec
S
U
N 0 4 0 2 9
3
0 0800-1200: rain
26-Dec
M
O
N 0 0 0 2 9
3
0
Public holiday:
no cargo work
27-Dec
T
U
E 1 0 0 3 9
3
0 Normal
28-Dec
W
E
D 1 0 0 3
1
0
3
0 0
2
3 0
0100 L/T
EXPIRES
29-Dec
T
H
U 0
1
0
3
0 0
1
0
3
0
10:30
Completed
loading
TOTALS : 4
2
0 0 3
1
0
3
0 1 9
3
0 TIME LOST
Demurrage : 1d 9 hours 34m @ 1800.00 per day and pro-rata = $2512.50
28 December rain happened afterexpirey of laycan. The clause of once on demurrage
always on demurrage is applied in this situation.

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