Terms for Sea Shipping

8/4/2019 Terms for Sea Shipping

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Essential Terms & Definitionsfor International Sea Shipping

Navigation: The art and science of conducting a ship safely from one point to another.

IMO: International Maritime Organization.

BIMCO: The Baltic and International Maritime Council.

FOC (Flag Of Convenience): Vessels are often registered in so-called Flag of convenience. The Ship-owner has

then the right to sail its vessels under any Flag he likes. So far there are cheap registered flags like Liberia Flag,Panama flag, Bolivia flag, Bahamas Flag, Malta Flag etc which provide a real financial benefit to the ship-

owner. Under these flags the rules regarding crew, safety environment issues etc. are not very strict. FOC helpsthe ship owner to hide his identity too.

Maritime Law: Shipping law - Law of the Sea (Law of the sea Convention-LOSC).

TZ: Territorial Sea-12 miles.

CZ: Contiguous Zone 12 miles.

EEZ: Exclusive Economic Zone -200 miles

- Continental Zone (High Sea)

- Innocent Zone.

Pratique: License or permission to use a port.

B/L: (Bill of Lading) A document signed by the carrier which acts as a Contract of Affreightment, a receipt andevidence of title to the cargo.

Types and methods of Tonnage measurement: There are five main kinds of tonnage in use in shipping business.

These are deadweight, cargo, displacement, gross and net tonnages.

D.W.T (Deadweight Tonnage): This express the number of tons ( of 2240 pounds) a vessel can transport ofcargo, stores and bunker fuel. It is the different between the number of tons of water a vessel displaces height

and the number of tons it displaces when submerged to her load line. Dead weight tonnage is used

interchangeably with deadweight carrying capacity. A vessel capacity for weight cargo is less than its total

deadweight tonnage.

Cargo Tonnage: Is expressed in terms of a weight or measurement for cargoes.

Displacement: Displacement of vessel is the weight to tons of 2240 pounds of the ship and its contents. It is the

weight of water the ship displaces. Displacement light is the weight of the vessel without stores, bunker fuel or

cargo. Displacement loaded is the weight of the vessel plus cargo, passengers, fuel and stores.

Gross Tonnage: Applies to vessels not to cargo. It is determined by dividing by 100 the volume in cubic feet ofthe vessels closed in spaces, and is usually referred to as the Gross Registered Tonnage. It is used as a basis for

pilot age and dry dock-dues and tonnage dues. Additionally, it is employed for statistical purposes, when

comparing ships sizes and basis for protection, and indemnity club entries.

Net Tonnage: Is a vessels gross tonnage less than after deducting space occupied by crew, machinery, fuel and

other accommodation which does not represent earning capacity of the ship. A vessels net tonnage expresses


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the space available for the accommodation of passengers and stowage of cargo and is usually referred to as Net

Registered Tonnage (N.R.T)

MT: Metric Tonne (i.e. 1,000 kilos).

KNOT: A measurement of speed equal to one nautical mile (6,076 feet) per hour.

Ballast: Heavy weight, often sea water, necessary for the stability and safety of a ship which is not carrying

cargo.

Affreightment: A contract for the carriage of goods by sea expressed in a charter party or by the terms and

conditions of a bill of lading. This contract to carry by sea or to provide ship for that purpose in return formoney payment called Freight. Such contract may be in one or two forms.

COACP: Contract of Affreightment Charter Party.

COA: Contract of Affreightment - Owners agree to accept a cost per revenue tonne for cargo carried on a

specific number of voyages.

Back Letter: Where a seller/shipper issues a 'letter of indemnity' in favour of the carrier in exchange for a cleanbill of lading.

Super Cargo: Person employed by a ship owner, shipping company, charterer of a ship or shipper of goods to

supervise cargo handling operations. Often called a port captain.

Fixing: Chartering a Vessel.

PC: Period of Charter. The word Charter Party is derived from carta partitta means (divided document) which

refers to the ancient practice of writing out the terms of the contract in duplicate on one piece of parchment and

then dividing it down the middle, thus providing each party with a copy. Is a contract between the charter and

the ship-owner by which the forms, hires from the latter the use of the ship either for certain length of time- saytwelve months when it is called a time charter or for a certain voyage, usually called Round Voyage. It is a

contract for chartering a ship. When the shipper charters a ship from the ship-owner for a period a specified

voyage or specified time, the contract made between them is witnessed by a document called the charter party.

This document must be signed by the shipper and the ship-owner or their agents. On this document is stated thenumber of lay days i.e. the number of days the ship is allowed to remain in port to load and unload. If the

number of lay-days exceed, the shipper must pay an extra amount known as Demurrage.

Preamble: Introduction to a charter party.

Types of charter parties: There are basically 2 types of charter parties demise and non-demise. It should be

pointed out that some shippers said there are 3 types of charter parties. These 2 (time and voyage) types of

charter parties are just terms and conditions found in a charter parties agreement represent the wishes of the

parties to the contract.

1-A Demise or Bareboat (BAREBOAT CHTR): This charter party arises when the charter is responsible for

providing the cargo and crew while the ship-owner merely provides the vessel. In consequence, the charter

points the crew thus taking over full responsibility for the operation of the vessel, and pays all expenses

incurred. A demise charter party is for a period of time which may vary from a few weeks to several years.

2-A non-Demise: Arises when the ship-owner provides the vessel and her crew while to the charters merely

supplies the cargo. It may be a voyage charter for a particular voyage in which the ship owner agrees to carrycargo between specified ports for pre-arranged freight. The majority of tramp Cargo shipments are made on avoyage charter basis. Alternatively it may be a time charter for a stated period or voyage for a remuneration

known as hire money. The ship-owner continues to manage his own vessel, both under non-demise voyage or

time charter parties under the charters instructions. With a time charter it is usual for the charter to pay port


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dues and fuel costs, and overtime payments incurred in an endeavour to obtain faster turn rounds. It is quite

common for liner companies to supplements their services by taking tramp ships on time charter, but thispractice may lessen as containerisation develops. Several types of non-demise voyage charter.

Gross form of Charter: This is probably the most common form of charter used by tramps ships today. In this

form, the ship-owner pays all the expenses incurred in loading and discharging and also all ports charges.

F.I.O Charter: Under this charter, the charter pays for the cost of loading and discharging the cargo, hence the

expression of F.I.O (Free in and Out). The ship-owner is still responsible for the payment of all port charges.

Lump Sum charter: In this case, the charter pays a lump sum of money for the use of the ship and the ship-

owner guarantees that a certain amount of space (i.e. bale cubic metres) will be available for cargo, along withthe maximum weight of cargo that the vessel will be able to carry. A Lump sum charter may be on either a

gross basis or F.I.O basis. Such a charter is very useful when the charter wishes to load a mixed cargo.-Theship-owner guarantees that the space is available and it is to the charter to use that space to his best advantage.

The above forms of charter are all quite common today and in each case the ship-owner pays the port charges.

Net Form: In this charter, in addition to paying for the cost of loading and discharging, the charter also pays all

the port charges for the time the vessel is ready to load up until the completion of discharge i.e. the charter pay

the outward port charges at the first port of loading and the inward port charges at the port of discharge, plus allport charges at any intermediate port. This form of charter is very useful to a ship-owner if he is arranging for

his vessel to go to port about which he knows very little as his voyage expenses should not vary much from his

or original estimate. It is also advantageous for the ship-owner if there are several ports of call to be made.

Fixture: Conclusion of shipbrokers negotiations to charter a ship - an agreement.

Force Majeure: Clause limiting responsibilities of the charterers, shippers and receivers of cargo.

Frustration: Charterers when cancelling agreement sometimes quote 'doctrine of frustration' i.e. vessel is lost,

extensive delays.

CRT: Cargo Retention Clauses, introduced by charterers based on shortage of delivered cargo because of

increased oil prices.

The Duties and Responsibilities of Shipbrokers: The function of the shipbroker reduced to the simplest terms ofbringing together the two parties concerned namely the owner of the ship and the owner of the cargo, and the

brokers income is derived from commission payable by the ship-owner on completion and fulfilment of thecontract. In addition to fixing vessels the most important part of a shipbroker duty lies in acting as agent for the

ship-owner. As such he is responsible for everything which may concern the vessel whilst she is in his port. His

duties range from customs formalities and requirements to deal with the crew, from arranging the loading and

discharge of the vessels to dealing with collisions and the hundred and one other matters far too numerous to

mention. His work as an agent will at times, require him to be available at all hours of the day and night in

order to render any service or assistance which my be necessary to the ship, her master and her owners.

Apart from agency work (which requires a high degree of skill and experience), ship-broking may be

subdivided as follows:

- Owners broker: He acts for ship owner in finding a cargo for the vessel.

- Charter Agent: He acts for the merchant seeking tonnage to carry his goods

- Sale and Purchase Broker: His concern is acting on behalf of the buyer or seller of the ships and in bringingthe two parties together.

- Coasting Broker: he deals with vessels, usually small trading round the coast, to and from ports.

- Tanker Broker: some shipbrokers make a speciality of dealing with tankers which is a market of greatimportance.- Cabling Agent: The same given to shipbrokers who specialise in working business emanating from overseas

markets, for example the New York market. Despite the fact that that cabling has largely been superseded by

modern methods of communication the name survives. It will therefore be seen that whilst the shipbroker is


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essentially the middle man between the two principals concerned in a charter party and on occasions acts as the

agent for the ship. The profession can be sub-divided into session any of which requires specialised knowledge.

CAF: Currency Adjustment Factor.

CB: Closing of Business.

MB: Merchant Broker.

Congestion: Port/Berth Delays.

Bunkering: Bunkering is the act of fuelling Vessels.

FENDER: A cushion, placed between ships, or between a ship and a pier, to prevent damage.

BOB: Bunker on Board.

Bunkers: Name given for vessels Fuel and Diesel Oil supplies (Originates from coal bunkers).

Breaking Bulk: Is the expression used for opening a hatch at port of delivery and removingcargoes.

Anchorage: A place suitable for anchorage in relation to the wind, seas and bottom.

Manifest: Inventory of cargo on board.

Bruken Stowage: is the expression if much space is lost in stowing packages of irregular shape . this space is

termed Bruken stowage.

BBB: Before Breaking Bulk. Refers to freight payments that must be received before discharge of a vessel

commences.

ASPW: Any Safe Port in the World.

MOORING: An arrangement for securing a ship to a mooring buoy or pier.

FP: Free Pratique: Clearance by the Health Authorities.

NON-REVERSIBLE: (Detention). If loading completed sooner than expected, then saved days will not be

added to discharge time allowed.

FDEDANRSAOCLONL: Freight Deemed Earned, Discount less And Non-Returnable (Refundable) Ship And

Or Cargo Lost Or Not Lost

TYPES OF SHIPS AND TRADE ROUTES: The type of merchant vessel employed on a trade route is

determined basically by the traffic carried. Broadly speaking the type of vessels as stated above may be sub-

divided into three to enable us to determine the trade route as it applied.

Liners : The are vessels that ply on a regular scheduled service route between groups of ports. They sail onscheduled dates, at fixed times of arrival at the ports of call, irrespective of whether they are full or not. Hence

in liner operations the regular scheduled, route service is the basis of this particular division and it is vitally

important to the ship-owner that everything is done to keep sailing and arrival dates, otherwise his prestige willquickly decline. Liner operation involves an adequately sized fleet, and a fairly large shore establishment. Theliner company therefore tends to be a large concern.


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Tramp Ship: May be owned by professional individual ship-owners by partnerships or companies they have no

set routes or fixed times, but go wherever a cargo can be found. They usually carry products sent in bulk, suchas coal, oil and minerals frequently being chartered by traders for a given or particular voyage. Unlike Liners,

the freight rates for tramps vessels are determined by bargaining between ship owners and cargo owners at the

Baltic Exchange London. There is greater competition for freight consequently on account of the large number

of ship-owners who have not combined to the same extent as, the Liner companies. Tramps ship are particularly

susceptible to world conditions being in great demand during a period of high trading activity or laid up in

various harbours and estuaries during a depression in world trade. The tramp owner must be an opportunist,

taking a profitable cargo whenever he can find it. A cargo liner may sometime be switched to tramping if thereis insufficient trade to justify liner work.

Tramps charge according to the following factors:- The Bulk and the weight of the cargo

- The space available in the ship i.e. if the tramp is almost full it charges less and vice versa.-It takes into account the return outward journey of the cargo i.e. when it has no cargo to carry

on its outward journey it charges higher rate.

BENDS: Both Ends (Load & Discharge Ports).

Specialized vessels: A number of cargo ships are designed for carrying a particular commodity or group ofCommodities:

- Car/Vehicle carriers (roll-on-roll-off)

- Tankers crude oil

- Fish carriers

Intermodal: Carriage of a commodity by different modes of transport, i.e. sea, road, rail and

air within a single journey.

Free Board: Free board is the distance measured amidships from the loading line to the free board deck of a

vessel (main deck in single or tween deck (Tween Decker-TW) vessels and shelter deck in shelter deck vessels.

The penalties for overloading are severe. The master has full authority to see that his marks are not submerged,and through neglecting to observe this precaution may lose his certificate of competency, which is the worst

possible punishment any master may receive.

SB: Safe Berth.

Shipping Days:There are several types of time used in shipping

ETA: Estimated Time of Arrival

ETC: Estimated Time of Completion

ETD: Estimated Time of Departure

ETS: Estimated Time of Sailing.

Lay days: Day agreed for loading and discharging

LYCN: Laycan (Layday Cancelling Date).

Weather working days: Days for loading and discharging when the weather permits.

WP: Weather Permitting. That time during which weather prevents working shall not count as laytime.

WPD: Weather Permitting Day.

DAPS: Days all Purposes (Total days for loading & discharging).


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Running days: Consecutive days counting all days, Saturdays, Sundays, Bank holidays etc. the same.

Working days: A day of 8 hours constitutes a working day, therefore a 24 hours day would be considered as

three (3) working days.

WWD: Weather Working Day.

Ship Sailing Day: Ship sailing day is the last day on the sailing card that the vessel is expected to leave the port

of loading.

Closing Date: The date when a ship ceases to load cargo is shown on the sailing card and known as the closing

date. Up to such time the ship will be receiving and load cargo.

Tally Clerk: his duty is to keep a check and list of all cargo stowed in the vessel. Tallying is done by recordingin books on cards or on sheet, the mark, port numbers, and numbers of packages, or containers, weight.

measurements with any remarks regarding condition.

SOP: Statement of Facts ( Shipping Agency work).

Shipping Conference Lines: The different trades are organised whereby all shipping companies trading in

certain areas meet and discuss matters of general interest, control tariffs of rates for specific goods and

generally control and protect the interest of all members. Some shipping conferences list:

EAC East African Conference

Europe Southern Africa Conference

ILCO IntraMed libya Conference

IEMCO Italy/East Mediterranean Conference

C.I.M.A.T-Conference IntraMedMalta/Tunisia

SALERNO/UK Ireland Continent & Scandinavian

SEAC South Europe American ConferenceARABIC GULF

Marco Mediterranean/Arabia Conference

NORTH AMERICA ( Atlantic, Pacific and Gulf)/ MED CAN Conference

Mediterranean/Canadian Freight conference.MED PAC Conference Mediterranean North Pacific Coast Freight Conference

MEDFEC Mediterranean/Far East Conference..etc

Advantages of Shipping Conference:

- Avoidance of wasteful competition

- The reasonable assurance that, members have a good chance of realising a profit freight rates are determined

by the conference

- Stability of rates which enables manufacturers and merchants to make forward contracts for goods and so

diminished undesirable and uncertainty in international trade.

- Regulation and frequent sailings which enable the shipper to plan his supplies to overseas markets and avoid

the need to carry large stocks, and the operator to maximise the use of his vessels.

- Equality of treatment, that is the rate quote applies to all shipper whether they are large or small.

- Economics of service which enable operator to concentrate on providing faster better ship.

Night flyers: A part from Shipping companies which belong to shipping conferences there those shipping

companies operating ships in these routes at cut prices rates. They are known as Night Flyers in shipping

circles and they are most unreliable both in operation and frequency of sailing.

ARBITRATION: Arbitration is the method by which disputes are settled. The majority of Charter parties and

bills of lading contain an arbitration clause, stating that claims or disputes shall be referred to an arbitration and

the manner in which arbitration shall be carried out. From a commercial stand point, the two main advantages


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are the speedy manner in which claims and disputes are settled. To ensure the safe guidance of case through the

court a highly experienced legal adviser otherwise known as Arbitrator is necessary, and the more experiencedand successful such representatives is the higher are the costs which must be met.

Demurrage and Despatch: The charter party often provides that the charter will load at the port of despatch or

discharge at the port of discharge or both, within a given number of days. These days are known a lay days.

Where no lay days are provided for, the charter is required to load and unload within a reasonable time. The

charter party often provides that, if the charter fails to load, or to unload, within the lay days, he shall be entitled

to do so within a given number of additional days, which are known as demurrage days, in consideration of thepayment of demurrage. Demurrage is usually made payable at a given rate per day of the demurrage days, taken

by the charter to load or unload. A term for the payment of demurrage will be interpreted as referring only to

the loading or unloading, at the port expressly mentioned in the charter party in connection with demurrage.When the charter party provides for demurrage, but no lay days are stipulated, the demurrage will be payable

after a reasonable time for loading has elapsed.

Where lay days are stipulated, and the parties have not agreed to provide for demurrage days, the charter is inbreach of contract if he fails to load within the lay days. Where the parties have agreed to provide for

demurrage days, failure to load within the lay days does not constitute a breach of contract, but merely entitles

the ship owner to demurrage under the charter party, but if the charter fails to complete the loading within the

demurrage days, he is in breach of contract. The damages for breach of the contract to load are frequentlyknown as demurrage, and have been so called judicially, but the term is inaccurate, where the charter I sin

breach, the damages are measured in the usual way, and are not limited to the sum fixed as demurrage unless it

is agreed that this sum shall also be payable a liquated damages for breach of contract. Where the charter party

contain provisions for lay days, or for lay days and demurrage days, both at the port of loading and at the port

of discharge, and the charter either loads or unloads in less than the lay days allowed him he cannot set off the

days thus saved against the demurrage, or damages for breach of contract due from him as a result of his

exceeding the lay days at the other party. There may, however, be an express provision in the charter party b

which the ship owner agrees to pay or to credit despatch money to the charters if he loads or unloads in less

than the lay days and a provision in the charter party for averaging demurrage will be interpreted as an

agreement for despatch money to be credited.

DEM: Demurrage (Quay Rent). Money paid by the shipper for the occupying port space beyond a specified

"Free Time" period.

Lloyds Register: This is an organisation distinct from the society of Lloyds which gives particulars regardingthe construction and characteristics of almost every ship. The register was first published in 1774 and is still

voluntarily maintained by ship-owners. Published annually, it gives full details of all the ships of the world ofaver 100 tonnes. For each vessel, it states:

- The date and place of construction

- The materials o f which it is built

- The dimensions and tonnages

- The quality and condition of the ship as details in the latest survey.

In addition, the organisation carries out survey and gives technical advice on vessels of all flags at regular

intervals. A satisfactory Lloyds classification is a guarantee to an underwriter that he may accepts the risk of the

vessel.

Liabilities of the Carrier by sea: At common law, the common carrier, and probably also the public carrier is

liable for any loss or damage is due to either:- An act of God

- An act of the Queens enemies

- The fault of the owner or shipper- The inherent vice of the cargo- Jettison

- Fraud by the cargo owner


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LIABILITY OF THE CARRIER FOR NEGLIGENCE: The carrier by sea is under the same liability for

negligence as in the common carrier of goods by land, and if liable for contributory negligence he is liable forany loss or damage resulting from an act of God or the Queens enemies, the fault of the cargo owner or shipper

or inherent vice.

Excepted Perils: At common law the carrier is entitled to exclude or limit his liability by express terms in the

contract to any extent. In contract to which the HAGUE RULES (Code of minimum conditions for the carriage

of cargo under a Bill of Lading) do not apply. It is usual for the carrier to exclude his liability for any loss or

damage to the goods caused by certain specified causes, which are usually included in the contract are:

- Act of God- Act of the Queens enemies

- Restraint of Princes and rules

- Perils of the seas- Fire

- Barratry- Piracy

- Robbery- Collisions stranding and accidents of navigation, and sometimes leakage and breakage

LIMITATION OF SHIPOWNERS LIABILITY: In order to lessen the liability of a ship-owner for damages

through loss or injury arising at sea, the legislature has imposed limitations upon the amount which my berecovered in certain actions against a ship-owner. The owner of the ship is not liable to make good to any extent

whatever any loss or damage happening without his actual fault or privacy in the following cases:

1- Where any goods, merchandise or other things whatsoever taken in or put on board his ship are lost ordamaged by reason of fire on board the ship.

2- Where any gold. Silver, diamonds, watches, jewels or precious stones taken in or put on board his ship,the true nature and value of which have not at the time of shipment been declared by the owner or

shipper thereof to the owner or master of the ship in the bill of lading or otherwise in writing, are lost or

damaged by reason of any robbery, embezzlement mating away with or secreting.

Freight: The carrier is entitled to be paid freight for goods which she carries in ship, and the shipper of the

goods is liable to pay the freight, unless it is expressly agreed that freight, shall not be payable, if the carrierexpressly agrees to carry the cargo freight free, or if his right to the freight is subject to a set of the purchaser or

mortgages of the ship or other assignee of the contract of carriage of these goods or can claim it only subject to

set off, the master has no implied authority to agree to carry goods freight free on behalf of the carrier.

There are six (6) different types of Freight:

- Dead Freight: payment for space booked but not used.- Back Freight: freight charged for the return of goods or container which have not been accepted at the

port of delivery. Should a shipper forward goods to a consignee who refused to take delivery, back

freight may be charged

- Lump sum Freight: It is the agreed amount of freight charged for the shipment of goods which are notbased upon quantity. The freight is payable irrespective of the amount of cargo delivered

- Minimum Freight: It is the charging of a minimum sum of Freight irrespective of the actual weight ordimensions of the consignment.

- Pro Rata Freight: Under certain circumstances this would be a proportional amount of the freight paid inrelation to the part of the voyage accomplished or to the part of the cargo delivered.

- Advance Freight: It is the amount payable before the voyage and recoverable only if the ship-ownerdeliberately contributes to the loss. If the ship should sink or be total loss on her outward trip or cargo

be lost by an accepted peril, the cargo owner is unable to obtain the return of his freight if paid inadvance.

VPD: Vessel Pays Dues.

MARINE INSURANCE: Marine Insurance is a contract whereby the insurer undertakes to indemnify the

assured, in manner and to the extent thereby agreed against marine losses, that is to say, the losses incident to

marine adventure. Indemnity is provided against the majority of losses which can occur during transit. The


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marine insurance market comprises insurance companies, Lloydss underwriters and private underwriters and in

practice, each insurer pools the premiums received from the assured, in order to pay claims and expenses, tobuild reserve funds against future losses, and to secure a small margin of profit. The large majority of ship-

owners resort to marine insurance in the open market for the protection of their ships, freight, and other interest

against marine perils. Heavy capital values are locked up in ships, the loss of which could prove financially

crippling to the strongest shipping companies.

Insurable Interest: The purpose of a marine insurance contract is to reimburse the insured for a loss suffered as

a result of the operation of an insured peril. Tog suffer a loss the assured must have an interest in the insuredproperty exposed to peril. Section 5 of the Marine Insurance Act. 1906, is very important for it defines

insurable interest which is one of the fundamental requirements of insurance. This is as follow: Marine

Insurance Act. 1906 ( Section 5):1. Subject to the provision of this Act, every person has an insurable interest who is interested in marine

adventure.2. In particular person is interested in a marine adventure where he stands in any legal or equitable relation to

the adventure or to any insurable property at risk therein, in consequence of which he may benefit by the safetyor due arrival of insurable property, or may be prejudiced by its loss, or by damage thereto, or by the detention

thereof, or may incur liability in respect thereof. According to section 5 of 1906, if a person cannot suffer a loss,

then he has no insurable interest. Therefore, in practice, the subject matter of the insurance is always called the

interest. The subject matter in a cargo policy is the cargo and this is called a cargo interest. The sameapplies to an insurance on a ship where it is customary to show the interest as Hull an Machinery and this is

called a Hull interest. In practice marine insurance are segregated into two broad categories. These categories

are Cargo interest and Hull interest respectively. Cargo interest embrace all types of interest related to the

cargo whereas Hull interest obviously related to the ship.

Cargo interest:

- Ownership

- Shipping costs

- Insurance charges

- Anticipated profit

- Partial ownership- Defeasible interest

- Contigent interest

- Bottomry & Respondentiap

- Commision- Liability

- Cargo Specie

Hull interest:

- Ownership

- Partial ownership

- Insurance charge

- Charterers interest

- Charterers Freight

- Freight

- Disbursements

- Mortgagees interest

- Contractual Liability

- Third party liability- P&I Interest

- Incidental Interest

Insurance Charge: The ship-owner usually insures his vessel for a period of twelve months. He pays thepremium when the policy is issued and recovers it in the freight he earns during the ensuing 12 months. If the

vessel becomes a loss during that period, the freight earning ceases so the ship-owner in unable to earn the

premium in respect of the balance of the 12 months premium. Because he may lose the premium in this way he,


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has an insurable interest in the premium and may insure it. Since the premium is deemed to be recovered in the

freight earned the insurable interest reduces as time goes on so it is customary to reduce the sum insured in thepolicy by 1/12th each month. If the sum insured in the premium policy is 1200 at inception after 6 months it

will have reduced to 600 and in the last month of the insurance it will stand at 100. This type of interest is

generally called premiums reducing interest of course , if the policy is for a voyage policy on premiums in

practice. In theory, the ship-owner is expected to replace the lost vessel and to insure the replacement. He will

want to recover, from the loss, sufficient premium to pay for the new insurance which is another reason why he

has an insurable interest in his premium.

Charterers interest: Where a person requires the use of a complete vessel either for a voyage or a period of time

he usually charter the vessel. This means he hires the vessel under either a voyage charter party or under a time

charter party. He might even hire the vessel under a charter party by demise, in which case he leases the vessel.Under an ordinary charter party the charterer simply has the right to have his goods carried by the vessel, but he

has no possession or control of the vessel, so has no insurable interest in it, the ship-owner remainingresponsible for the ship. Under a charter party by demise, however, the charterer provides the stores, fuel,

master and crew, and the possession and control of the ship are with the charterer. Here, the charterer has aninsurable interest in so far as he is responsible for the loss of or damage to the vessel. This form of Charter

party is not common today.

Charterers freight: Where a charterer pays money in advance of hire of a vessel there may be a provision in thecontract that no part of the hire money is returnable in event of loss. Alternatively, the charterer may in advance

but may agree to pay X per day for a given period even if the vessel is lost or damaged during that period. In

both circumstances the charterer has an insurable interest in the money paid or payable. Freight: Where cargoes

are carried and shipper pays the money for the carriage in advance. This money is called advanced freight.

The definition of the word freight can be found in the first schedule to the Marine Insurance Act, 1906,

advance freight is not returnable generally so the insurable interest is vested in the cargo. In certain cases the

freight on bulk cargoes is payable on the amount discharge at destination. The amount discharged is called

out-turn and since the freight is payable on the out turn it is not payable until the ship has discharged so if

any loss of cargo occurs there is a loss of freight. Hence, the ship-owner has an insurable interest in this freight.

Because freight is seldom at the ship-owners risk, many ship-owners use their freight interest to effect a

separate insurance for 12 months on total loss only terms. In event of a total loss this policy provides anadditional amount to the hull policy proceeds.

Disbursements: During the course of a voyage a master may find it necessary to expend sums of money for the

furtherance of the voyage. Such out of pocket expenditure is called disbursements and in theory, theseamounts are recovered in the freight payable at destination. The ship-owner has then an insurable interest in

disbursements but, in common with freight in modern practice, this interest is rather nebulous because so muchfreight is paid in advance. Mortgagees interest: Ship-owner finds it necessary to mortgage his vessel to obtain

money for running his business. Such a ship-owner retains his insurable interest in the ship even though it is

security for a loan. The mortgagee, is the person or company who lends the money, also has an insurable

interest in the ship to the extent of his loan and the charges due on the loan. (I.A 1906 section .14).

DA: Disbursement Account.

P& I Interest: There are many insurable interest which the ship-owner cannot insure in the ordinary market. It

has become the practice for ship-owners to join mutual clubs to protect themselves from loss in respect of these

interest. Such mutual clubs are called P & I Clubs

P & I Clubs: The abbreviation means Protection and Indemnity. The club covers the collision liability notborne by the market, loss of life, personal injury, damage to harbours, wharfs and other objects, removals of

wreck, infringement of rights, quarantine expenses, shipwreck indemnity to master and crew, liability to cargo

and other interest not covered by the ordinary marine insurance market. Where small craft are concerned and inthe cases of ship construction and ports risks the ordinary marine market underwrites P&I interest, butotherwise, it leaves them to the clubs.


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Time Bar: Time after which legal claims will not be entered. The machinery for the negotiation of seamen and

officers remuneration.

The History: The condition of employment of seamen are the subject of statutory legislation and regulations

under the Merchant Shipping Act.1970. A voyage is still a venture subject to many hazard and difficulties. To

complete the venture successfully, relative rights, duties and restrains must be enforced on all who share the

venture. These special circumstances have given rise to legislation in most countries to restrict and protect

seamen in their employment. Under the merchant shipping Act of 1910 the contract of employment is made

between the ship-owner and the crew. The contract is expressed in a document called The Articles ofAgreement. A number of the clauses are taken directly from the Merchant Shipping Act.1970. The Ship-owner

is the contracting party, but seamen must sign Articles of Agreement prior to the intended voyage. In many

other maritime countries, seamens Article of Agreement are similarly controlled. A maritime conference of theInternational labour office in 1926 adopted a convention on Seamens Article of Articles of Agreement and

prescribed the form and conditions of such agreements. This convention was ratified by twenty-five countries,Later, at an International conference at Seattle, many provisions regarding minimum wages and standard of

accommodation were adopted.

The Articles of Agreement contain various particulars concerning a diverse number of items relating to the

voyage. These include:

1- Nature of the voyage and length of time or period of engagement2- Number of crew, and the capacity in which each serves3- Amount of wages to be paid4- Time of commencement of work5- Scale of provisions to be supplied6- Regulations regarding fines etc

The crew agree by signing the agreement to serve, obey and be diligent in carrying out their duties, and a time

of danger to do everything possible to save the ship, without regards to the work or without expectation of extra

pay for the extra work undertaken in such a time. Should they refuse such extra duties in a time of stress then

such refusal may be deemed an act of willful disobedience.

There is no necessity for ship-owner to sign on any sailor as a member of his crew who does not understand

English sufficiently to carry out the orders of the officers. The nature of the voyage and the duration is usually

stipulated in a manner sufficient to cover all time taken on the voyage, for the crew may, on the termination of

their period of engagement demand their wages and close the contract. This of course, would often leave theowner in an awkward position, especially, if the contract terminated at a remote or inconvenient spot. The

number of crew and amount of wages is invested in the agreement, such wages being paid according to a scaleand fees. The date of commencement of work and provisions supplied and the regulations regarding fines

imposed are also inserted. A seaman on signing the agreement may leave a proportion of his wages to his own

account with a saving bank or to his wife, father, mother, grandmother, grandfather, child, grandchild, brother

or sister. No other person is entitled to receive an allotment.

Abuse and trading on this allotment of the Seamens wages led to these stipulations and it is in the interest of all

seamen that such person shall be only those mentioned above. In the case of wives the production of a marriage

certificate is satisfactory evidence for the payment of such allotment. Allotments are payable either monthly, or

half-monthly from the time when wages are earned until the voyage is terminated, but allotments cease when a

seamen deserts or leaves his ship. A seaman may also obtain an advance note when he signs the agreement.

This is an advance of wages, chiefly for the purpose or providing him with money to purchase necessaries for

the voyage in prospects.

The seamen has a maritime lien on the ship for the payment of wages. This lien however does not extent to the

cargo. If a seamen deserts then he immediately forfeits his wages and any effects that he may leave on boardmy be sold. All cases of desertion must be entered in the ships log. Expenses by way of hospital or medicalattention incurred by the seamen are payable by the owners of the ship without deduction from the wages of the

seamen. The engagement of the crew terminates if the vessel is sold and when an owner sells a vessel he has no

right to transfer the crew, and must therefore terminate the agreement. The crew usually has the option of


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signing a fresh agreement with the new owners. Where a vessel becomes a wreck or is disabled and unable to

proceed upon her voyage, then the owners of the ship my claim the cancellation of the agreement by reason ofthe fact that the voyage is frustrated and it is impossible to fulfill or continue it. In the event of a sudden

cancellation of the voyage through wreck or other termination of the adventure, the seamen is entitled to claim

compensation by way of payment of wages for a period of two months, provided that during that period he has

not become otherwise employed.

When a seaman becomes what is known as distressed seamen, he is entitled to repatriation. He may become

distressed by being wrecked or left behind in the case of illness or within certain regulations, if he deserts. Alldistressed seamen my claim return to proper return ports at the expense of the owner in whose employment they

become distressed. A simple example of repatriation is if a seamen is signed on in the United Kingdom and

discharged in Malabo Port, he is entitled to be returned (or repatriated) to Unites Kingdom. The cost ofrepatriation includes maintenance whilst waiting for the ship or airplane upon which they are to be returned,

proper accommodation and maintenance. Today, there many Crew management companies which arespecialised to manage all relevant matters as far as Crew are concerned.

Documents

Terms for Sea Shipping