Converting Knowledge into Money in Converting Knowledge into Money in difficult Market Conditionsdifficult Market Conditions

Case Studies in Chartering & Case Studies in Chartering & Operations Operations

Presented by Presented by

CK SharmaCK SharmaManaging DirectorManaging Director

OPG Power Generations Pvt LtdOPG Power Generations Pvt Ltd

10th March 2016Shipping Academic Seminar

Leela Hotel Mumbai

Perils in ShippingPerils in Shipping High Value Assets. Bad Weather. Pollution Risk. Navigation Hazards. Pirates. Dangerous Cargoes. War Zones. Dangerous Countries. Cyclical Industry Bad Owners/Charterers Maritime Frauds Commercial Risks

Pleasures Of ShippingPleasures Of Shipping Perennial Business. Encashable Property. Big Investment. Income on sale and purchase of the

ship. Huge cash flows. World wide business. Moveable Assets Shipowner’s Status in Society

Golden Kiku A case of Part II of Gencon C/P:

The vessel was fixed to load Iron Ore from ECI to China under Gencon 94 C/P.

At Discharge Port, near Shanghai, pilot Anchored midway at a safe place during river transit for 8 hours due to fog.

Charterers raised Despatch claim of USD 3000/- deducting Shifting time from Anchorage to Berth.

On deep scrutiny of Line 115 of Part II of Gencon CP it was revealed that the wording is “MOVING TIME” from anchorage to berth will not count as used laytime. Therefore, 8 hours of time lost “waiting” at a place en-route from Anchorage to berth was used laytime. Usually it is written & believed that “Shifting Time” is not to count as used laytime.

Charterers counter claimed USD 15,000 Demurrage invoking line 115 of the Gencon Part II. This was paid by Charterers without protest.

Cargo discharge at wrong disport 1 Owner protecting unscrupulous Operator:

In the year 2002 a Dubai based Operator Hired a vessel from a reputed Owner & loaded Containers from Bombay for Umm Quasar from 5 shippers for carrying project cargoes. He got extra set of OBLs prepared at loadport showing Dubai as disport. Agent was unaware of the purpose & was conned.

Cargo was discharged in Bandar Abbas & vessel was redelivered to Head Owners showing the fake documents to Owners.

Then the Operator asked the Shippers to pay freight again for reaching the cargo to Umm Quasar.

Some of the Shippers paid the freight again but one of them went tough.

Cargo discharge at wrong disport 2 This Shipper went to Bandar Abbas and hired a vessel

to ship the cargo himself to Umm Quasar. Then filed a case against the Head Owner for all costs.

Head Owners fearing difficulty, changed the name of the vessel and stopped her trading in India.

Shipper got the vessel arrested at Singapore Anchorage during her bunkering & obtained P&I Club’s Guarantee.

Head Owner contested the case on the strength of documents given by the Operator.

The Operator closed his shop in Sharjah and disappeared.

Head Owner lost the case & had to pay up full costs including legal costs to the Shipper.

Case of Dropping Anchor on Power Line in Venezuela

Communication is key in Shipping business

Abrupt orders can lead to disasters P&I Cover is essential. Training is most important for even

the smallest job.

Bunkers as per C/P 1 Chartering Managers often do not give much importance

to Bunker Clause in C/Ps. In hands of a cunning Owner it can be a deadly weapon.

In a coastal voyage from ECI to WCI a Clause was agreed mainly as under: Charterers to redeliver the vessel with same quantity bunkers as

on delivery. Bunkers to be supplied from an a reputed Supplier such as Chevron/Texaco/Shell etc.

Vessel loaded at Vizag where the only supplier of bunkers is IOC. Owner refused to take bunkers.

Upon completion discharge at an anchorage point in WCI, where bunker supply is not possible, the Owner invoked the bunker clause and refused to accept redelivery of the vessel till bunkers were supplied OR Charterers to pay full ballast cost up to Fujairah.

Bunkers as per C/P 2 Charterers advisor saved the situation by

issuing message with following points: The C/P provided for a reputed supplier like

Chevron/Texaco/Shell, etc Indian Oil is covered under ETC. Indian Oil is a fortune 500 company and has supplied

bunkers to millions of vessel calls in Indian Coast. Therefore, IOC is equivalent to Chevron/Texaco/BP, etc for the bunker to be supplied.

Chevron/Texaco/Shell have never supplied bunkers at Indian Coast nor are likely to supply in foreseeable future. This makes the contract condition impossible to perform, thereby VOID as per English Law.

Owners withdrew the case and settled amicably.

Case of Cashew cargo from West Africa to

Cochin Trading can not be effectively done

without knowledgeable Shipping back up.

Never load a cargo without pre-sale where there are Cartels amongst buyers.

If you get caught in a Trading Trap then immediately get out and cut losses that would follow.

Factors affecting Freight - 1 Type of cargo Unit weight of cargo/Stowage Factor Loading/Discharging terms Load port/Discharge port DA Load Port/Discharge port congestion Reliability of Charterer Weather conditions Duration of voyage Type of ship/Age of the ship Market conditions Problems record of Load port/Discharge

Port Possibilities of getting next business after

completion of voyage Competition

Factors affecting Freight - II To be filled in by Participants:

– Commodity demand– Port Infrastructure & cost– World Economic Scenario– Fuel Cost– Age of vessel– Urgency of the Customer– Changing Consumption pattern– Chance of back-haul cargoes– Nature of cargo– Competition from other Modes like

truck/Railways/Pipeline