This video introduces the fundamental concepts of chartering in commercial shipping, covering key players, cost components, and different types of chartering agreements, designed for those new to the field or preparing for ICS exams.
Mind Map
Click to expand
Click to explore the full interactive mind map • Zoom, pan, and navigate
Do you want to learn the basics of Chartering or are you trying to clear the ICS exams? Or
are you looking for a career path change? Or are you a completely new person who would like
to learn about the new concepts of Chartering? In this video, we'll be looking into this. Hey,
what's up my name is Akash from ShipScope brings you the best platform to learn about commercial
shipping subjects.In the chartering 101 series, we will be looking into the basics of chartering,
we will be looking into the dry cargo chartering, tanker chartering and finally, we will be
finishing up with tips and tricks - on how to clear the ICS exams. If you're new here consider
subscribing to it at any point in the time. Also, check out the notes and links in the description
below and also guys whatever we are going to cover right now all the comprehensive lecture slides
are on my website so you can always go there get it downloaded it even consists of ICS's papers,
past question paper and my own lecture notes which will help you to understand the whole topic very
well so what are you waiting for let's get into the video shall we?. hi guys welcome to chartering
101 from ShipScope so in today's content we will be studying about players in shipping,
different types of brokers types of cargo types of ships cost component and finally we'll be ending
our lecture one where types of chartering so who are the players in chartering guys the first
one is ship oh no charter ship broker freight forwarder and ships agent particularly we will
be focusing upon these three ship owner is in the market with the ship or with a space in the ship
to own a revenue so what a ship owner is he's the owner of the ship he owns the whole ship he
gives this ship to the charter and charter is the one who gives him the cargo to carry from point A
to point B safely he can be a singular single vessel or independent no ship owner he can be
large shipping companies as well and he can even get into pool you know to become a ship owner now
what are charters Charter is a person he is there to hire the ship or the space in the ship he's the
one who's actually giving the cargo to a ship owner he enters into a contract with the ship
owner for transporting the goods he's entitled also to pay the freight on the consignment which
is once it is unloaded he can be a shipper guys he can be a receiver he can be a consigning or
a speculator or a trader or an agent it can be even small firms mole trading houses as well
governmental organization can be charters and shipping companies to the third person we are
going to talk in the chartering business if the ship broker he is the middleman he is the one who
connects the principles which are ship owners on the Charter he does this whole activity in order
to earn something called as brokerage he can be an announced broker he can be a competitive
broker as well so there are different types of local the first one is the owners broker
chartreuse broker or a competitive brokers so the owners broker is a broker who is representing on
owners behalf in a negotiation similarly what a charter broker is he is insuring Charteris
interest into a negotiation so what does an exactly a ship broker do Asha broker can be
in different disciplines number one he can be in two FNP he can be in two cargo dry cargo he could
be two tank a broker so depending upon what area he specializes him can be that person he's the one
who's actually making the fix should happen he's the one who actually provides the liquidity to the
market he fixes the vessels on either on a time charter or a spot shorter now we will be studying
about different types of charter as we go ahead he also maintains the tonnage and record within
the company's database so what happens is we will be looking into in a lecture - we will be looking
how the whole chartering process applies but today this is an introduction so we will be looking what
each and every person does and what things are just the basics we are just going to charge the
basics in this lecture okay the the ship broker here is involved in various stages of negotiation
as we will come to know in the upcoming lecture series he involves buyers and selling of goods he
even keeps a database he keeps a very close watch on the markets how the markets are interpreting
so he he is on constant touch with all these principles throughout the world depending on
what region what commodity that he wants to carry and he wants to specialize and he always keeps the
principle updated how the markets are going up and down so if a commodity price goes down it is
good for a charter to into the market so he'll definitely keep a watch and he will inform the
Charter when to get in similarly an owners recur will look into priceless and he will see this the
best place to you know if the commodity price is huge and the freight prices are even nice he
will he will tell the principal the owner to get into the market and fix the ship so what are the
types of brokers we are looking in first one is dry cargo buckle he's the one who actually looks
into dry commodities okay we'll be seeing what kind of ships there are what kind of cargos we
are going to look for similarly a tanker broker who specializes just in tankers tankers can be
in such as crude oil black oil white oil chemical tankers LPG LNG these are you know comes in the
tanker side and there's something always future's looking which we call it as FF a contrast but we
won't be touching much into this right now in the lecture series will be particularly
focused upon the dry cargo followed by the tanker short run since we have come up with the types of
cargoes as you can see from the slide there are two is the cargoes can be generalized one is the
general cargo which is called as a unitized one everything is packed into one compact form which
comes at the unitized cargo similarly the loose curve we can be in form of the bulk one so in the
unit is it can be breakable form it can be new or it can be contacts rised in the bulk cargo we have
something called as liquid we have then dry in liquid we have LNG chemicals vegetable oil firms
it consists of around roughly around 35 percent of tonnage total tonnage and dry beliefs such
as commodities as iron or grain soy being sweet both sides and all these come under the drive
all commodities before this we once we get into the char train we need to understand what ship
sizes and how the ships are fine especially in the dry bulk segment we have the smaller smaller
size which is called as handy size it goes which is around 20 to 40,000 deadweight tonnage then
there is this second one as the Handy max slightly bigger which has 40 to 50,000 deadweight tonnage
then we go into Supra which is 50 to 60,000 after that the panel which is 60 to 80 or post Panamax
which is also called as baby capers which is less than 125 and cape toys or VOCs which are
like cave size between 125 to 2-0 and viola C is a very large or carriers which is more
than 220 thousand deadweight tonnage so what the reason behind having these abbreviations for the
specific type of businesses because when you fix a ship and even if you are speaking to a ship broker
he uses these terms like if he wants to fix the Panama carrier in speakings to he's speaking to
another broker who is in a different country once the ship broker says it's the Panamax carrier the
other person knows that dimension in his mind okay so he gets a whole idea that how big the
how how big the vessel is going to be roughly like so that is how and even in Baltic indices
we understand but all these things we'll cover in our upcoming lectures similarly guys when we have
the tanker classifications we can see there there there is this is how the tanker looks like the
smallest vessels are general purpose and medium range which is the general purpose around ten to
twenty five thousand deadweight tonnage the second one is the medium range which is between 25 to 45
thousand 45,000 deadweight tonnage then comes the LR one after and allowed to a lot one is 45 to 80
after all is 80 to 120 degree tonnage allowed to with 80 to 160 degraded varnish and then the big
vessels we the VLC sees and the UL series which is your very large crude oil carrier and ultra large
crude carriers VLC C is 160 to 320 dead weight and the UL feces can be between 320 to 550 degree
another thing which we should see guys is this the the smaller vessels are mostly for the refined
products the the medium sizes can carry the crude oil and the refine and the bigger vessels mostly
carried through crouton so in the cost component before we get into the types of chartering we
need to understand how the cost component works in shipping so roughly the cost can be divided
into five different segments the worst one is the capital cost operating cost periodic cost voyage
cost and cargo handling cost so guys I mean when I say fixed cost fixed cost is is the component
which comprises of capital operating periodic and variable costs are which cost and cargo
handling cost now we will see what these each and every cost represents so what is the capital cost
capital cost are related to the cost of capital that has been employed for the purchase of the
shipping asset that means the money required to buy the whole ship is called as the capital cost
operating cost operating cost of so that the it is a kind of cost which helps to maintain the
the vessel into a seaworthy condition in order to have a smooth operations of his vessel he needs
to maintain that that expenses whatever expenses comes under this region is called as operating
cost so what all things can it be divided into it can be crew cost the crew which are deployed
on the ships it can consist of crew wages it can even consist of repatriation cost it even consists
of supplies what are supplies are required there a lot of machinery which needs to be lubricated stow
supplies its own it's on a frequent basis repairs and maintenance are carried out on ship insurance
is there and management fees if you try to give you a vessel to to a management firm they hand
in the vessel on your behalf putting the crew and other supplies so there is also a management fees
which comes under these operating expenses here by mulch defense there is a small table which I
could come up with it consists of all the vessels rough leaves from some vessels and in which in
which it just says the operating expenses of a V LCC for a day is roughly around ten thousand six
seventy US dollars per day so this will help us understand how much a vessel cost for a day and
this will help us to also understand the voyage estimate questions we will we will be doing void
estimate questions in in the upcoming lecture series so we will see we will take these factors
into account to and will calculate the net revenue of the profits net loss of thee of this ship Oh No
the third component is the periodic cost so the periodic cost is something the cost component
which specially covers the periodic inspections of the vessel so there can be intermediate services
for that 2.5 years special surveys are even carried out within 5 5 years so there is one
requirement guys I mean what are period it cost is periodic cost or something where people where the
ship owner has to put money in order to get his vessel seaworthy so ask the soleus which is safety
of life at sea all the merchant vessels require an inspection of a hull or dry docking which is
twice I mean it is needed twice in five years so this is some rate these are regulations which are
put put up by solos in order to get it done so these all cost whichever which the the cost which
are undertaken in this section comes under this periodic cost the fourth one is a wish first now
the which cost is something which is subjected to a voyage if a charter if a vessel undertakes
a wish whatever cost which are incurred comes under the approach for so what all these what
all these are oh is one first one is the fuel cost can reduce so again it's the fuel itself is one
of the major cost in shipping because the bunkers which we carry VLS fol SFO mgu IFO these are fuel
oil and these are expensive each and every day vessels consume a huge amount of oil and each
and every tonne is roughly costing around $400 per ton so that multiplied by 20 30 tons of a vessel
can you know it is a huge cost per day so though we have to consider that into which cost similarly
it is we have something called as canidius as well can I do is we can see in Suez Canal or we
can see in Panama Canal and then there's something called a storage in pilotage - agent pilotage is a
procedure where a ship when it enters the load put or when it goes from the discharge food it
needs doing a Richmond it needs a pilot who comes on board and he directs the ship into the local
waters because he has the expertise to do that so the cost which is incurred in that comes under
this section there's something called a sport agency fees - you need to appoint an agency
before you head into a pool so the cost which is related to that comes under the agency and there
are also called a sport expenses where a ship when it boots in a place it will be requiring a bird so
the amount of money paid to the bus comes under the expenses and the last one we have is called
as cargo handling cost so what are these cargo handling ghosts they are related to the cost of
cargo loading in this turning operation and they respect your loading discharge you know loading
and discharge port it means guys especially in the dry cargo segment we have something called
us you know I mean when a ship comes in it needs to be trimmed it needs to be you know Studios need
to be put in so we will look into the cargo handling cost and how things happen is in a
charter party if there is liner turn the these costs are borne by the ship owners if it's FIO
terms it is borne by the charter but we will look into it as we go ahead now since we've understood
the five components of course which is co PVC c4 capital o for operation P for periodic V for
voyage and C again for the cargo handling that is how I learned Co PVC where the cost components in
the short-run now since you understood the whole cost component let's get into the types of short
reign so we have void charter time shorter trip time shorter bareboat charter consecutive voyages
and we will be looking into cos so I will just give you a brief glimpse of what each and every
charter is the void charter so why charter is something guys it is meant for a specific
voice okay and it is a contract between a ship owner and shorter it is also known as known as
spot contrast okay so it happens on a charter body what is the total party chatter body is a document
between the ship owner and a talker which a in which it there are terms conditions and all the
details of you know to execute a voyage again the both the party is the principal's the Charter and
the ship owner at the end of the Charter why do they have to sign and execute the whole contract
we will see some of the charter party forms in our lectures but today's lecture what the void
charter means is the ship is hired for just for one one specific voyage the particular the one of
the most important thing here to notice is all the costs are borne by the ship owners because nothing
is borne by the charter as behalf it has a bit of weight between the load put on the discharge put
the Charter pays the vessel owner per ton or lump sum business the owners pay though all the course
which includes poured fuel crew everything the payment is known as the freight so what is late
I'm late I'm with something the total amount of time given in order to complete the cargo
operations to a charter is called as late time if it exceeds there is something called as damage and
effect you know if it's done within the stipulated time period we call it despite what we will be
looking into these topics as we go ahead lectures then we have something called as time shorter
days no time shorter is something which in which the vessel is hired for a particular period okay
what it means is the ship owner gives I mean his vessel to the charter and charter employs it for a
specific time period that being said a ship owner pays for the fixed first so what are the fixed
personnel it's fixed costs are the capital cost operating cost and the periodic cost these costs
are covered by the ship owners below but when it comes down to the time chartering the the variable
with the variable part the variable costs are being covered by the Charter which is your cargo
handling cost and the voyage cost are taken care by the shuttle here the in this kind of short room
it is hired on a daily basis on a pro-rata basis every day a specific time charter hire is being
paid by the Charter to this ship owner let's say if he hires a whistle he'll be paying ten thousand
dollars per day or twelve thousand dollars per day okay so this comes under the time chotto and you
see the Charter hired is paid in advance by the charter of to the ship owner time charter pays
for the fuel as we dispersed about this now trip time shorter trip time Charter is a combination
of a voyage and a time Charter the beauty of this contract is that it is the the responsibilities
are as similar as the time shuttle that means the the cost components are being taken I mean
the cost components are as similar as what the time Charter is the fixed cost are being borne
by the ship owner and the variable cost are borne by the Charter and it's not as similar as time
charter because now the period the period depends upon when the voyage finishes okay intention we
we covered the period of TCT depends upon voyage that's the main part it's not as of the current
time but the responsibilities are as similar to the time shorter the fourth one is they'd be a
boot shorter now bebo charter is also called as a demonstrator normally what happens why people
go for their boot order is the the the contract itself is on a very long basis not me that means
the vessel is given to the Charter for periods like five years 10 years 15 20 years it can be
that big and there is something called as demise clause in the bed port charter after a certain
period of time the Charter is ready to buy the whole asset the ship from the ship owner for a
stipulated price okay it's not going to be home for you as the time progresses it will be is after
10 years down the line the Charter has you know the right to buy the asset at a lesser lesser
price here as far as the costs are concerned all the cost are borne by the Charter except
the capital cost and the insurance cost except that each and every cost is borne by the shorter
the master order is common for tankers and bulk so now we have consecutive voyages a situation where
the ship is deployed for just not one voyage but for series of voyage on a conjugative basis I'll
give you an instance let's say a ship is carrying coal from Australia Sydney Australia towards Hong
Kong and it comes back again to the same load pool this is one of the best examples of the
consecutive voyage guys so it keeps on doing the same route same cargo people go for consecutive
voyages generate L element is dominating now what a few is now Co EE is a contract between ship one
and charter in which ship what are agrees to carry a good for the Charter and ship or to
give the Charter the use of the whole part of the ships cargo carrying space for a specified voyage
for a specified time the charterer agrees to pay the specified price called slate for the carriage
of goods let's imagine the fact that HPCL in this chant was petroleum launched twelve million metric
tons of oil from Arabian Gulf towards west coast of India so charter can either go for like voyages
like spot widest number of what voyages which will be quite complex for him because so many
shipments and keeping a track of so many shipments it's quite difficult one has been off so he enters
into a co e in which he gives the flexibility to the ship owner that trip owner was that you carry
12 million million metric ton of cargo oil from Arab Arabian Gulf towards west coast of India in
one year of time so this gives the flexibility the ship owner to use he's not limited to one
particular vessel he can use different number of vessels and for him he is already good for him the
security is that he is already good one year of employment so this this is what a CAE is but the
last lecture side guys I've come up with a table in which the cost components are highlighted as
we can see there's a co PVC which is capital operating periodic voyage and cargo handling
cost and there are three main major types of charters which is the spa charter which time
shorter and vibrato the all the costs undertaken in my charter are borne by the ship owner again
guys when it comes down to cargo handling cost it can be liner if the Charter body said liner terms
are present then the ship owner will bear the cost if it's fi o fi o s fi with three terms then the
Charter bears so cause but we will look into it as we go ahead in the time shorter the fixed cost
fixed cost or capital operating a periodic are borne by the ship owner but the variable cost
component is borne by the charterer where which is virgin cargo Hanley Coast when it comes out of a
boat noise the capital cost is the only course which is borne by the ship owner rest all the
costs are borne by the Charter one thing to note is that the insurance regarding to the capital
cost are also borne by the ship owner in this case with this we finish off the lecture 1 thank you
since you have finished the first lecture I would like to hear from you guys in the comment section
below hit the like button if you liked the video and also remember one of the most important steps
and feedback from from you guys so feel free to connect me on LinkedIn and possible message so
thanks for checking out the video guys subscribe if you have it already in the next lecture we
will be looking into chartering process until next time shift Co is bringing you the best
platform to learn about the commercial shipping subjects keep on learning it and we will talk soon
Click on any text or timestamp to jump to that moment in the video
Share:
Most transcripts ready in under 5 seconds
One-Click Copy125+ LanguagesSearch ContentJump to Timestamps
Paste YouTube URL
Enter any YouTube video link to get the full transcript
Transcript Extraction Form
Most transcripts ready in under 5 seconds
Get Our Chrome Extension
Get transcripts instantly without leaving YouTube. Install our Chrome extension for one-click access to any video's transcript directly on the watch page.
