For many masters, much of his or her working life may be directed by one or more charter parties and their management approach can either be reactive or positive and pro-active.
The contractual web
The first and critical point always to bear in mind is that the charterparty expresses the requirements of that essential component of every business, the customer and the matrix of customers to whom the master may be responsible can be complex. Bearing in mind that a time charter is a contract for the use of a particular ship while a voyage charter is a contract for the hire of cargo space or capacity within the vessel, it is important to understand how:
Both charter parties can coexist (and the chain can be lengthened if sub-charters exist), and why.
Both charter parties impose different requirements and duties upon the vessel and her master.
For the master and his team, the management responsibilities
can
be complex and multilayered in that he may well have responsibilities to, and to a greater or lesser extent, be under the direction of:A time-charterer, who will issue sailing orders, is interested in such matters as speed and consumption and can instruct the master as to the signing of bills oflading,
A voyage charterer, who is primarily concerned about a vessel's timely arrival at load or discharge ports with holds or tanks in an appropriate condition and cargo gear in good working order,
• The holder of a bill oflading, that evidence of a contract to carriage and who, when risk and title pass, to the receiver maybe a third party to whom the vessel and the owner assume responsibilities and duties, while at the same time
Managing the vessel on behalf of the owner with regard to such critical matters as personnel, the safe prosecution of the voyage and the routine maintenance of the vessel; and
Ensuring that the business and customers receive a satisfactory service without exposing the owner or vessel to avoidable contractual liabilities.
Seaworthiness
Throughout all of this contractual web, one common obligation can be identified, and one which also relates to the vessel's insurance. The master has a prime, and in some cases absolute responsibility that the vessel should be seaworthy. The requirements of the obligations of seaworthiness and for a voyage charter, cargoworthiness, can be found in 'Commercial Management for Shipmaster' and other Nautical Institute publications. Suffice it to say that the legal obligation is greatest at the commencement of each voyage or stage ofa voyage - and that a disgruntled cargo owner or voyage charterer will endeavour to remove the owner's ability to limit his liability (as under the Hague Rules etc.) by challenging the seaworthiness of the vessel.
Planning and preparation
Masters should receive voyage orders from charterers and, hopefully and especially in the case of
a time charter, from owners, highlighting the main points of the charterparty. These vary enormously in quality and are frequently written from the point of view ofa charterer wanting a job done rather than the master addressing his complex matrix of responsibilities. Sadly, too, charter parties often arrive late, if at all. A first task, therefore, is to build up a library offrequently used charter parties and to ensure that the officers forming the management team are aware of their major requirements, their special peculiarities, and the obligations which they place on the vessel.
Charter parties can make dry reading so a little inventiveness is required. One approach is to make a chronological list of those aspects of a charterparty that affect the conduct of the vessel as she executes the charter voyage and correlate this with the relevant charterparty clauses, scattered as they will be in different places in different charter parties.
Voyage charters
For a voyage charter, some of the headings may be:
Charterer, shipper and freight
This identifies the customer and, crucially, how freight is paid. Charterparty and bill oflading fraud is not unknown - if a strange and new name appears as charterer or shipper, it might, especially in new trading areas, be sensible to make discreet enquiries as to the shipper's reputation.
Arrival
This establishes the immediate navigational requirement and, together with the discharge port, the bunker requirement (bearing in mind that to deviate to bunker once cargo is on board should have the agreement of the shipper or, perhaps more accurately, the person who has (insurance) risk in the cargo at the time of deviation.
Cargo to be loaded
Thiswill establish, together with the required time to arrival, any cleaning required which might be needed for holds or tanks. If there is doubt about the exact level of cleanliness or preparation, the appropriate time to ask is when there is time left to take action.
La~an and NOR
The method and time of tendering notice of readiness is an area where a pro-active approach can
sometimes be advantageous for vessel and owner.
There is, for example, little to be gained by burning bunkers to arrive just too late to tender NOR before a weekend or local holiday and when (according to a careful reading of the charterparty) it might not be possible to tender NOR.
Conversely, it may well be worth buming extra bunkers in order to tender NORjust before a weekend of no cargo work, giving the vessel a maintenance
weekend in port 'on demurrage'. The requirements for a valid tender of NOR warrant careful reading, especially with regard to the place and method of tendering as well as the vessel's preparedness to accept cargo and ballast condition.
Bear in mind that the shipper must make a number ofimportant decisions based on the ETA given by the master, decisions relating to moving the cargo into the port, ordering berths, labour and equipment which, if badly timed can waste money. Bear in mind too that if a vessel misses her Cancelling Date, the charter can be terminated and the owner find himselfwith an unemployed vessel and probably a very weak negotiating position.
80ft port, saft berth
An important and sometimes complex consideration, especially when trading to new areas.
In assessing whether a port is safe or unsafe, the master needs to consider three factors:
Is the port physically safe? E.g., is there sufficient water depth? What are the anticipated (seasonal!
unseasonable) weather conditions? Has war or other internal hostilities broken out? etc.
Is the basic p ort infrastructure safe? In other words are the systems such as pilotage, aids to navigation, tugs, etc., adequate?
Can the event or occurrence which makes him consider that the port might not be safe, be described as abnormal or could it reasonably be foreseen?
La,ytime and demurrage
Although 'once on demurrage, always on demurrage' slips easily off the tongue, before a vessel can earn demurrage, NOR must be correctly tendered and accepted. The owner needs careful and timely information to support his demurrage claim which, all too often, has to be negotiated and chased after the cargo is discharged and the voyage is ostensibly complete.
Cargo and billf oflading
The core reason for the charter and linked closely to the notes on bills of lading. The master should ensure as early as possible that he is satisfied with the obligations placed on him with respect to receiving cargo and signing for it and the liabilities to which he can expose the owner, especially with regard to third party receivers holding an endorsed bill oflading.
It is important to note if a Clause Paramount stipulates the inclusion of clauses relating to the Hague (or other) Rules into the bills oflading thus enabling the owner the ability to limit his liability. Consultation with a (husbanding) agent or the local P&l Club Correspondent may be advisable and the master should be ever watchful for attempts at the fraudulent use of bills oflading.
112 THE NAUTICAL INSTITUTE
Additional clauses
Careful attention should be given to any additional, typed clauses which may extend the obligations and responsibilities of vessel and master.
Time charters
Time charters, as already mentioned, perform a different task and generate different requirements and responsibilities such as:
Description ofvesstl
It is important that this is correct, for if not, the charterer is sure to discover the discrepancy and, if possible, turn it to his commercial advantage. It is surprising how many discrepancies there can be between two descriptions ofthe same vessel.
DeliveTY, redelivery, h1repqment andcanceHaJion Diverse but related clauses all with a common thread. It is not unknown for certain time charterers to load a vessel, pay the first time charter payment, sell the cargo and then to disappear with the proceeds.
This leaves the owner and the vessel with a direct obligation to the 'innocent' holder of the bill oflading to deliver the cargo to the named port of discharge, without any further payment.
On and ojJ-h;re surveys
Be aware that the offhire survey may be conducted by different people at some future time, but it will be compared against the description of the vessel contained in on-hire survey (and charterparty). A wise master approaching the end of a charter, reads the original off-hire survey with care.
Owners/charterers to provide
An obvious clause for careful reading, but it is particularly important as it helps to define the responsibility and authority interface between charterer and master.
Stife berths, trading limits, sailing orders and libtrty clauses
All fairly straightforward clauses but once again they define the master's responsibilities and his particular responsibility for the safety of the vessel and her navigation.
Cargo and cargo work
This helps to define the vessel's responsibilities and the charterer's responsibilities in respect of all cargo related aspects. It is important to establish a good line of communication with the time charterer's manager or representative responsible for the operation of the charter. This is an area where the need to protect the owner's interests can confli ct with what is operationally the most expedient solution - it is an area where the master's experience and forethought can be invaluable.
Spted tmdcl1nsumptil1n andbunkers
An area ripe for dispute which requires a sensible and pragmatic approach, especially if the chartering
department have been over enthusiastic about the vessel's performance. Masters - and the chartering department should be aware that it is becoming increasingly easy to retrospectively check satellite records of meteorological condition.
Ojf-bire
Another area where careful planning and forethought can help to avoid or minimise loss of hire.
Passage and tinil1lilJn
The cargo owner has the right to expect that the laden voyage is undertaken with due dispatch and, in general terms, without deviation. Unwarranted or unagreed deviation can prejudice the owner's right to limit his liability (with respect to claims from the charterer or cargo owner) under such conventions as the Hague or Hague-Visby Rules.
Cmgo
claimsfor damage or deterioration of goods on passage are often made and as well as attending to such matters as ventilation (ifrequired) a careful record of the actions taken to care for the cargo during the passage is important. Sea water damage due to exceptional weather - or due to
illfitting hatch seals or the vessel being driven too hard? Retrospective satellite imagery can often establish how exceptional the weather
was!Deltlel"}
The master has two overriding objectives at the discharge port(s).
To ensure that the cargo is delivered to the rightful receiver, and
To protect the owner's position if necessary with regard to the payment of freight and demurrage.
This accomplished it is time to plan and prepare for the next voyage.
Summary
Charter parties, whether voyage or time - or a combination of both, play a vital and central role for a large sector ofthe shipping industry. Professionally, a master needs to approach the challenges they pose in a knowledgeable and pro-active manner and ensure that his or her management team grows in their understanding of their commercial as well as their techni cal resp ons i b il ities.
References
R L Tallack Commercial Management/or Ship masters
The Nautical Institute 1996.
• Managing Risk in Shipping