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Ship Charter Rates

18-November-2024 Daily Updated Ship Charter
Rates

Handy Charter Rates

• Handy open Continent to East Coast South
America (ECSA) fixed around $7,500
• Handy open Continent to East Coast North
America (ECNA) fixed around $10,500
• Handy open East Coast South America (ECSA) to
Continent fixed around $15,500
• Handy open US Gulf (USG) to Continent fixed
around $14,500
• Handy open North Coast South America (NCSA)
to Continent fixed around $14,500
• Handy open South East Asia (SEA) to China fixed
around $13,500
• Handy open Thailand to Japan-Korea fixed
around $13,500
• Handy open Indonesia to Japan-Korea fixed
around $13,500
• Handy open China to South East Asia (SEA) fixed
around $12,500
• Handy open Japan-Korea to Thailand fixed
around $12,500
• Handy open Japan-Korea to Indonesia fixed
around $12,500

Supramax Charter Rates

• Supramax open Continent to Far East fixed
around $17,500
• Supramax open Black Sea to Far East fixed
around $17,500
• Supramax open East Mediterranean (EMED) to
Far East fixed around $17,500
• Supramax open US Gulf (USG) to China fixed
around $19,500
• Supramax open North Coast South America
(NCSA) to China fixed around $19,500
• Supramax open China via Australia to China fixed
around $10,500
• Supramax open China via North Pacific (NOPAC)
to China fixed around $10,500
• Supramax open China to West Africa (WAFR)
fixed around $11,500
• Supramax open US Gulf (USG) to Continent fixed
around $18,500
• Supramax open Continent to US Gulf (USG) fixed
around $9,500
• Supramax open West Africa (WAFR) via East
Coast South America (ECSA) to China fixed around
$14,500
• Supramax open West Africa (WAFR) via East
Coast South America (ECSA) to Continent fixed
around $9,500
• Supramax open China via Indonesia to East
Coast India (ECI) fixed around $11,500
• Supramax open China via Indonesia to China
fixed around $10,500
• Supramax open West Coast India (WCI) via
South Africa (SAF) to China fixed around $10,500

Ultramax Charter Rates

• Ultramax open Continent to Far East fixed around
$18,500
• Ultramax open Black Sea to Far East fixed around
$18,500
• Ultramax open East Mediterranean (EMED) to Far
East fixed around $18,500
• Ultramax open US Gulf (USG) to China fixed
around $20,500
• Ultramax open North Coast South America
(NCSA) to China fixed around $20,500
• Ultramax open China via Australia to China fixed
around $11,500
• Ultramax open China via North Pacific (NOPAC)
to China fixed around $11,500
• Ultramax open China to West Africa (WAFR) fixed
around $12,500
• Ultramax open US Gulf (USG) to Continent fixed
around $19,500
• Ultramax open Continent to US Gulf (USG) fixed
around $10,500
• Ultramax open West Africa (WAFR) via East Coast
South America (ECSA) to China fixed around
$15,500
• Ultramax open West Africa (WAFR) via East Coast
South America (ECSA) to Continent fixed around
$10,500
• Ultramax open China via Indonesia to East Coast
India (ECI) fixed around $12,500
• Ultramax open China via Indonesia to China fixed
around $11,500
• Ultramax open West Coast India (WCI) via South
Africa (SAF) to China fixed around $11,500
• Ultramax open Mozambique to China fixed
around $16,500 + $165,000 BB
• Ultramax open South Africa (SAF) to Pakistan
fixed around $18,500 + $185,000 BB
• Ultramax open Thailand to Bangladesh fixed
around $15,500
• Ultramax open Oman to East Coast India (ECI)
fixed around $16,500
• Ultramax open South Africa (SAF) to Indonesia
fixed around $17,500 + $180,000 BB
• Ultramax open Pakistan via UAE to East Coast
India (ECI) fixed around $16,500
• Ultramax open Brazil to East Mediterranean
(EMED) fixed around $19,500
• Ultramax open Brazil to West Africa (WAFR) fixed
around $19,500
• Ultramax open West Africa (WAFR) to North
Spain fixed around $12,500
• Ultramax open East Mediterranean (EMED) to
Nigeria fixed around $10,500
• Ultramax open Mozambique via South Africa
(SAF) to Baltic fixed around $11,500
• Ultramax open Pakistan to China fixed around
$12,000
• Ultramax open South Africa (SAF) to West Coast
India (WCI) fixed around $15,500 + $150,000 BB
• Ultramax open West Coast India (WCI) to East
Africa (EAFR) fixed around $12,500
• Ultramax open East Coast India (ECI) to North
China fixed around $15,500
• Ultramax open Brazil to Bangladesh fixed around
$15,500 + $550,000 BB
• Ultramax open East Coast India (ECI) via
Thailand to Bangladesh fixed around $14,500
• Ultramax open East Mediterranean (EMED) to
West Africa (WAF) fixed around $12,500
• Ultramax open West Coast India (WCI) to China
fixed around $14,500
• Ultramax open China via GOA to Turkiye fixed
around $16,500
• Ultramax open Philippines via Indonesia to
Thailand fixed around $15,500
• Ultramax open Philippines via Indonesia to
Vietnam fixed around $16,500
• Ultramax open South Korea via GOA to Egypt
fixed around $17,500
• Ultramax open Spain via ARAG to West Africa
(WAFR) fixed around $16,500
• Ultramax open Germany to West Africa (WAFR)
fixed around $17,500
• Ultramax open North China to Singapore fixed
around $14,500
• Ultramax open Oman to East Coast India (ECI)
fixed around $16,500
• Ultramax open US Gulf (USG) to Turkiye fixed
around $21,500
• Ultramax open North China via GOA to ARAG
fixed around $17,500
• Ultramax open NOLA to ARAG fixed around
$21,500
• Ultramax open UAE to Qatar fixed around $9,500
• Ultramax open West Coast India (WCI) to China
fixed around $14,500
• Ultramax open Oman to Bangladesh fixed around
$17,500
• Ultramax open South Africa (SAF) to Pakistan
fixed around $16,500 + $160,000 BB
• Ultramax open UK to Egypt fixed around $17,500
• Ultramax open Hong Kong via Indonesia to South
China fixed around $14,500
• Ultramax open Hong Kong via Indonesia to South
China fixed around $14,500
• Ultramax open Singapore via Indonesia to China
fixed around $16,500
• Ultramax open North China via GOA to Egypt Red
Sea fixed around $16,500
• Ultramax open ARAG to Turkiye fixed around
$16,500
• Ultramax open Bangladesh via Indonesia to West
Coast India (WCI) fixed around $13,500
• Ultramax open Vietnam to Bangladesh fixed
around $15,500
• Ultramax open UAE to US Gulf (USG) fixed
around $9,500
• Ultramax open North China to Brazil fixed around
$14,500
• Ultramax open Philippines via Indonesia to North
China fixed around $15,500
• Ultramax open UK via Baltic to West Africa
(WAFR) fixed around $16,500
• Ultramax open West Coast India (WCI) via UAE
to Bangladesh fixed around $15,500
• Ultramax open Sri Lanka via Indonesia to
Bangladesh fixed around $9,500
• Ultramax open West Africa (WAFR) to China fixed
around $15,500
• Ultramax open East Coast India (ECI) to West
Coast India (WCI) fixed around $16,500
• Ultramax open Singapore via Indonesia to
Bangladesh fixed around $16,500
• Ultramax open East Coast India (ECI) to South
China fixed around $12,500
• Ultramax open Singapore via Indonesia to
Thailand fixed around $12,500
• Ultramax open UAE to Bangladesh fixed around
$14,500
• Ultramax open Japan via Australia to Indonesia
fixed around $15,500
• Ultramax open West Africa (WAFR) to North
China fixed around $16,500
• Ultramax open ARAG to Turkiye fixed around
$18,500
• Ultramax open Malaysia via Indonesia to North
China fixed around $15,500
• Ultramax open Finland to Bangladesh fixed
around $21,500
• Ultramax open Japan via NOPAC to South Korea
fixed around $11,500
• Ultramax open Oman to Bangladesh fixed around
$14,500
• Ultramax open South Korea via NOPAC to
Philippines fixed around $13,500
• Ultramax open North China to Indonesia fixed
around $11,500
• Ultramax open US Gulf (USG) to Turkiye fixed
around $20,500
• Ultramax open South China via Indonesia to
Thailand fixed around $11,500
• Ultramax open South Africa (SAF) to China fixed
around $18,500 + $180,000 BB
• Ultramax open Singapore via Indonesia to South
China fixed around $11,500
• Ultramax open US Gulf (USG) to South China
fixed around $22,500
• Ultramax open US East Coast (USEC) to Poland
fixed around $21,500
• Ultramax open Argentina to Ecuador fixed around
$18,500
• Ultramax open South Africa (SAF) to Netherlands
fixed around $18,500
• Ultramax open South Korea via Australia to
Bangladesh fixed around $16,500
• Ultramax open Oman to Bangladesh fixed around
$14,500
• Ultramax open West Coast India (WCI) to China
fixed around $12,500
• Ultramax open UAE to Bangladesh fixed around
$16,500
• Ultramax open South China to Bangladesh fixed
around $15,500
• Ultramax open South Africa (SAF) to China fixed
around $18,000 + $185,000 BB
• Ultramax open South China via Indonesia to
South China fixed around $9,500
• Ultramax open Qatar to Bangladesh fixed around
$15,500
• Ultramax open UAE to Bangladesh fixed around
$15,500
• Ultramax open Pakistan to Kenya fixed around
$12,500
• Ultramax open South Africa (SAF) to East Coast
India (ECI) fixed around $15,500 + $150,000 BB
• Ultramax open Indonesia to South China fixed
around $16,500
• Ultramax open South Korea via North Pacific
(NOPAC) to Philippines fixed around $9,500

Period Charter Rates

• Handy open Far East chartered out around
$11,000 for a long period (1 year)
• Supramax open Far East chartered out around
$13,000 for a long period (1 year)
• Ultramax open Far East chartered out around
$14,000 for a long period (1 year)

Bulk Carrier Charter Rates Week

46
Supramax Daily Charter Rates USD/Day

Atlantic Pacific
Supramax Continent/FE
RV RV

(USD/Day) 15,209 12,575 19,179

Panamax Daily Charter Rates USD/Day

Atlantic
Panamax Continent/FE FE/Contine
RV

(USD/Day) 9,455 17,284 6,038

1 Year Time Charter Rates

(USD/Day)

Handysize Supramax Ultramax Panamax K

38K 58K 64K 75K 8

11,000 13,000 14,000 12,000 1

Handysize Period Time Charter Rate USD/Day

Supramax Period Time Charter Rate USD/Day
Ultramax Period Time Charter Rate USD/Day
Panamax Period Time Charter Rate USD/Day
Kamsarmax Period Time Charter Rate USD/Day
Capesize Period Time Charter Rate USD/Day
Newcastlemax Period Time Charter Rate USD/Day
Dry Bulk Shipping
Dry bulk trades have been transformed over the
past three decades. The average size of ships
engaged in dry bulk trades has doubled in size. Dry
bulk trades have in fact evolved from the tramp
shipping market. Tramp markets were served by
small, general-purpose ships. Historically, general-
purpose ships were steaming the ports in search of
business, spot market cargoes. Shipowners use a
global network of shipbrokers to seek cargoes for
their ships. Shipbrokers perform a fundamental
function in providing information to both
shipowners and charterers. As cargo lot sizes and
ship sizes have increased, there is a tendency for
significant charterers to use long time charters,
consecutive voyage charters, and contracts of
affreightment. Despite the growth in these types of
contracts, there is still a huge volume of spot
charters and spot ship chartering is a very
competitive market.

The dry cargo market can be defined using two

basic methods:

Tramp Ship

Tramp Market Characteristics

Tramp Ship

In 1959, Hector Gripaios defined the tramp ship as

a “deep-sea tramp ship carry any cargo between
any port at any time, always providing that the
venture is both legal and safe”. In 1972, Prof.
Metaxas’ book “The Economics of Tramp Shipping”
was published. Prof. Metaxas defined the tramp
ship as “ship with a tonnage of 4,000 DWT or
above, which in the long-run does not have a fixed
itinerary, and which carries mainly dry cargo in
bulk over relatively long distances and from one or
more ports to one or more ports is an ocean or
deep sea tramp”. Both tramp ship definitions
emphasize the fact that tramp ships have no fixed
pattern of employment. The minimum ship size
and deep-sea nature of the tramp ship is
introduced by Prof. Metaxas.

Tramp Market Characteristics

Defining the dry cargo market with specific ship

characteristics have some drawbacks. In the dry
bulk shipping market, cargo volumes and average
lot sizes have increased since the 1970s. Hence,
the average size of most ship types dramatically
increased. Modern dry bulk ships are more
specialized than the old tramps and dry bulk ship
size reached up to 400,000 DWT. On the other
hand, larger ships require larger capital
requirements, shipowners are only prepared to risk
the commitment to such large ships if shipowners
have long-term contracts. Handysize, handymax,
panamax, capesize bulk carriers are more
specialized and are often employed on contracts of
affreightment (COA). Contracts of affreightment
(COA) permits the shipowner to meet the
charterer’s requirements by using more than one
ship. The modern definition of the dry bulk market
would need to include the development of these
long-term contracts. Freight rates for these long-
term contracts are still influenced by the spot
market. Dry cargo definition that is based upon
market characteristics might be more applicable.

In dry cargo markets, most shipping contracts

between charterers and shipowners become well
known to all the market participants through
shipbroking companies. Therefore, all
participants in dry cargo markets know the
prevailing levels of freight rates and can make
decisions accordingly.

Dry cargo markets include many types of contracts

such as spot fixtures, consecutive voyages,
contracts of affreightment (COA), time charters.
Dry cargo markets’ clearest definition may be
found in the market characteristics rather than in
the particular specification of the ship.

The dry bulk freight market is a very competitive

market and very close to the perfectly competitive
market model. Important features of a perfectly
competitive market model:

1. Every supplier seeks to maximize profits

2. Numerous buyers and sellers in the market

3. The service offered by each shipping company is

exactly the same as every other company

4. Easy exit from and entry to the market.

5. Full information is available to all participants in

the market place

The dry cargo market fulfills all of the features of a

perfectly competitive market model. Shipowners
and charterers seek to maximize their profits. A
large number of shipowners and charterers in the
dry bulk market. No single shipowner or single
charterer of the dry bulk market can influence the
behavior of freight rates. Dry bulk freight rates
cannot be fixed. Dry bulk freight rates are driven
by overall demand and supply conditions. All
shipping companies in the dry bulk market offer
the same service, same cargo space, and safe
transportation of cargo in a timely manner.
Assuming that the analysis is based on ships of an
acceptable standard. Entry and exit from the dry
bulk market are fairly easy. Easy does not mean
costless. A person can enter the dry bulk market
by buying a secondhand ship or by ordering a
newbuilding ship and becomes a shipowner. New
shipowners would not suffer a cost disadvantage
from entering the dry bulk market. On the other
hand, if the shipowner earns unsatisfactory profits
and sees no long-term prospects for recovery, then
the shipowner can put the ship up for sale and exit
dry bulk market. If the shipowner would incur a
loss when selling the ship, this could be a barrier
to exiting. If many shipowners cannot make
profits, and buyers are few, shipowners can either
lay up or scrap the ship. If the ship is scrapped, a
dry bulk market exit occurs. Entry and exit are
easy in dry bulk market because existing
shipowners have no way of preventing such a
process. In the dry bulk market, full market
information is available to all participants by Baltic
Exchange. Shipbrokers act as information
transmitters. Shipbrokers ensure that all dry bulk
market players are kept fully informed of any
event that might affect the market.

One crucial characteristic of a competitive dry bulk

market is that shipowners have no individual
influence over market freight rates. Profit is made
in the margin between revenues and costs. The
only element that shipowners have control over
cost. Competitive markets tend to be driven by
cost trends, rather than by demand features.

Dry Bulk Market Trends Over the Past 30

Years

Over the past 30 years, the total volume of

cargo has more than doubled at an annual
average compound growth rate of 4.5% per
year. Demand growth is much more uneven on a
year-to-year basis over the past 30 years. The
highest rate of growth to be observed occurred in
2010, at 12.1%. 2010 growth rate is about three
times the long-term average. Since 1995, ship
tonnage growth rate has fluctuated between
-2.8% and 12.1%. Over the past 30 years,
shipping demand growth tends to move in cycles of
good years, medium years, poor years, and back
again. In other words, freight rates rate peaks,
declines, becomes negative, recovers again.
Shipping cycles exist around a rising trend in the
total volume of cargo moved.

In the period 1999-2015, the growth rate of

tonne-mile demand has varied between -2.7%
and 13. 1%. In the period 1999-2015, tonne-mile
demand increased by 5.2% per year compound,
on the other hand, cargo tonnes moved grew by
4.5% per year. Differences in the growth of
tonnage demand and tonne-mile demand imply
that journey distances have fluctuated. The
average haul has declined from 5,508 miles in
1999 to 5,437 in 2015. In the period 1999-2015,
the growth rate of the dry bulk fleet has
averaged 5.7% per year. In sum, between 1999-
2015, supply capacity has exceeded demand. Ship
supply capacity should properly be measured in
terms of tonne-mile. Furthermore, the laid-up
fleet has been steadily declining since 1992.

Cost Structure of Tramp Ship Operators

Tramp ship operators have to identify and split

their costs between fixed and variable costs in
the short run. In the shipping business, most
variable costs related to producing shipping output,
in other words undertaking a voyage. The
distinction between avoidable (variable) and
unavoidable (fixed) costs is also useful when
making operational decisions.

Ship Lay-up Decision

Tramp ship operators to lay up a ship or to

continue to trade is a complex decision. If the trip
loses money i.e. freight revenues are less than the
total costs, then the ship could not be laid up.
Because lay-up is not a costless activity, lay-up
costs money. During the lay-up, some costs will be
reduced. On the other hand, the ship has to be
maintained, provided with some power, anchored
safe lay-up position, and skeleton crew provisions
must be provided. Unavoidable (fixed) costs will be
incurred by the shipowner whether the ship trades
or lays-up. Fixed costs are common in both
situations whether the ship trades or lays-up.
Hence, fixed costs cannot affect the outcome of
the lay-up decision. For example, the shipowner
estimates that daily operating costs are $12,000
for a ship in a trading condition and $5,000 in lay-
up. $4,000 of this cost is assumed to be the capital
cost of owning the ship. Capital cost is a fixed cost
and unavoidable. Therefore, capital costs can be
canceled out. Relevant costs become $8,000 per
day when trading and $1,000 per day when laid
up. Assume that the shipowner is now offered a
voyage business which takes 40 days and voyage-
related costs of $400,000 in the period. On a total
cost basis, the owner will require $880,000 in
revenues. If the ship has a 44,000 DWT carrying
capacity, this implies a rate of $20 per tonne of
cargo delivered. But suppose the market rate is
only $18. Should the shipowner lay up the ship?. If
the shipowner lays up the ship, the shipowner
faces extra costs of $40,000 (40 days x $1,000
lay-up costs per day). If shipowner takes business,
shipowner gain $792,000 ($18 x 44,000 metric
tons ) in extra revenues . But they spend operating
costs of ($8,000 x 40 days) + $400,000 =
$720,000. Therefore, the shipowner gains
$72,000, compared to the loss of $40,000
resulting from lay-up. Shipowners should take a
voyage charter business, even though the rate is
less than the full cost of the trip. On the other
hand, the same conclusion would be reached if the
capital costs of $4,000 per day had been included.
Here above example ignored any additional lay-up
costs itself. Including lay-up costs would
emphasize that trading will often take place at
market rates which are less than the long-run
costs.

In order to decide to lay up a ship, the shipowner

should develop a model of the breakeven level of
freight rates needed to maintain trading. Here
above hypothetical lay-up example has implicitly
assumed that the shipping company has one ship
in operation. On the other hand, a large number of
dry shipowners operate large fleets. As the number
of ships operated by a company increases, unit
costs decrease. Tramp operators tend to have a
higher proportion of their costs as variable costs
when compared to liner ship operators.

The distinction between short-run fixed and

variable costs is not clear cut. Short-run fixed
and variable costs depend on:

nature of the problem

type of ship

time period

Here above lay-up example, some items of daily

operating costs could be avoided (variable
costs). On the other hand, if the shipowner was
considering between two trading options, the
entire daily running cost could not be avoided and
becomes a fixed cost. Shorter the time period
under consideration, the greater the proportion of
costs that will be fixed costs. Once a ship is at its
loading berth (voyage is commenced), practically
all costs become fixed costs (unavoidable).

Breakeven Analysis in Determining Minimum

Freight Rates

In order to determine the minimum freight rates,

breakeven analysis is a very well-known method to
present information on revenue and costs. In the
breakeven analysis, the normal procedure is to
calculate the load factor (level of utilization)
required to breakeven point.

Profit: actual load factor (utilization level)

exceeds the calculated number

Loss: actual load factor (utilization level) below

the calculated number

In liner shipping, ships operate on a timetable and

liner ships have to sail whether or not ships are
fully loaded. Therefore, defining the load factor
(utilization level) may well be significant in liner
shipping. On the other hand, usually in dry bulk
shipping, dry bulk ships are full cargo loaded (high
utilization levels). Dry bulk ships do not operate on
a timetable and sail whether or not they are fully
loaded.

Instead of applying the model to working out the

breakeven load factor, it can instead be employed
to work out the breakeven rate. The Breakeven
rate is the freight rate which will ensure that a full
cargo load will generate sufficient revenue to
cover costs. Dry bulk freight rates are quite
volatile. Therefore, it is useful to calculate the
minimum freight rate required to breakeven
the point.

Freight Rates Breakeven Analysis is based on the

following assumptions:

1. The basic unit of analysis is the ship

2. Costs and revenues are assumed to be linear

3. Plentiful market players. Shipowners and

charterers cannot influence the market freight
rate on their own.

4. The actual freight rate is taken as fixed since no

individual has any ability to alter freight rates.
Market players are price takers

The slope of the Total Revenue line represents the

market price; since total revenues rise in line with
volume carried, the price is constant all the way
along the Total Revenue line. Total fixed costs are
the same, no matter what cargo quantity is loaded.
Total variable costs are the difference between
total costs and total fixed costs. At the cargo
quantity level (Q) where total revenue equals
total cost (Total Cost = Total Revenue =
Equilibrium Point) is the Breakeven Freight Rate.
This cargo quantity (Q) is called the Breakeven
Quantity because it is at this point that total
revenues cover both variable and fixed costs.

In a shipping company, the lower the proportion

of variable costs to fixed costs, the greater the
scope for the freight rate to fall below the long-
run total cost. This is one of the factors that
explain the sharp fluctuations that are observed
in freight rates in the dry cargo trades when
contrasted with liner trades. Dry bulk companies
have high variable costs, liner companies have
high fixed costs. In depressed markets, dry bulk
shipowners may well accept short-run trip
charters at rates well below those required to
cover their long-run costs, if the proportion of
variable costs are low.

Modeling Dry Cargo Shipping Market

The shipping market can be separated into specific

segments. During modeling and analyzing the dry
cargo shipping market, the following assumptions
are made:

1. Each shipowner is seeking to maximize profits

(or minimize losses)

2. Each charterer is seeking the lowest freight

rate (consistent with an acceptable quality of
service offered by the shipowner)

3. A large number of fixtures and all market

participants are informed

4. Perfect competition

There is a downward-sloping relationship between

the cargo volumes required to be moved and the
level of freight rates, other things being equal.
The higher the freight rate, the smaller the
demand for cargo movements and vice versa.
Demand for dry cargo tonne-miles is a derived
demand. Derived demand price elasticity basic
principles:

Final products’ price elasticity

Existence of close substitutes

The proportion of transport costs in the final

product

Derived demand price elasticity example: grain.

Grain movements are driven by:

Production trends in different regions of the

world

Drought, weather conditions, and crop yields

Changing patterns of food consumption

Gain is used to making bread, pasta. Furthermore,

the grain is used to feed animals to produce meat.
Final products such as bread, pasta, meat all have
a low price elasticity of demand. Most empirical
evidence suggests that bread, pasta, meat are
price inelastic. Major grain exporters are located
in South America, US Gulf, and Australia.
Therefore, grain has to be moved by sea, because
air transport is a very expensive alternative and
not feasible. Currently, freight rates are about 6%
of the final price of most traded commodities.
Market demand is likely to be extremely inelastic
with respect to changes in freight rates. The
shipping demand curve can be represented as an
almost vertical line. An extremely inelastic
shipping market conclusion is for the shipping
market as a whole. In some trade routes, the
demand on that route might be more sensitive to
changes in that route’s freight rate. Shipowners
always seek out trade routes that are more
profitable. On the other hand, the ability to switch
a ship from one route to another at relatively short
notice implies that freight rates should not get too
out of line with each other.

Shipping Supply

In the dry bulk shipping business, under

competitive conditions, shipowners should never
accept a freight rate that is less than the
Average Variable Cost (AVC). Furthermore,
different ships have different costs, because of
different ages, flags, or crew costs. Assume that all
average variable costs of all bulk carriers on the
market were known and that a ranking could be
organized starting with the dry cargo bulk ship
with the lowest average variable cost to the
highest. If shipping freight rates were high enough
and cargo volumes large enough, all these dry bulk
carriers would be employed. Now, if the shipping
freight rate is steadily reduced, ships with high
variable costs (avoidable) will cease trading first.
As freight rate is lowered more, more dry bulk
carriers are forced into idleness, until none is
trading. Capital costs should play no role in the
lay-up decision in the short run since capital
costs have to be met whether or not the ship is
being traded. Older ships will tend to have higher
operating costs than newer ships, so the majority
of laid-up ships are the older ships of the fleets. In
the short-run period, ships’ variable costs can be
altered by varying the ship’s speed. Lower ship
speed means lower output and lower costs. When
demand is low and so freight rates are low, the
loss of shipping output is more than offset by the
benefits of slow steaming. The shipping supply
curve becomes steeper in slope as maximum
tonne-mile production is attained. Because:

Additional tonne-miles being created near full

capacity are being created by the more
inefficient ships in the fleet the ones with
higher variable costs. High variable cost ships
add a lot to costs without adding that much
extra to output

Speed increases are a limited way of raising

output. Extra costs of fuel consumption increase
more rapidly than the extra output

The shipping supply curve eventually becomes

vertical which represents the notion of full
capacity utilization. In the short term, no
more shipping output can be obtained from the
existing fleet.

Equilibrium Freight Rate

The shipping market is defined as the interaction of

supply and demand. Demand and supply both
together determine the equilibrium freight rate
(P) and quantities (Q) moved at that freight rate.
Shipping demand conditions are affected by the
volume of world trade, which is driven by overall
economic activity, and changing degrees of
openness towards trade by individual nations. As
demand volumes increase, there is a relatively
small rise in the market freight rate and a large
rise in tonne-miles produced at the beginning. But,
as demand volumes keep increasing, the increase
in demand is translated into large increases in
freight rates, because supply is very limited supply
becomes very inelastic. This model can be used to
examine short-run fluctuations in shipping market
conditions, but not the long-run period. Because,
in the short-run period, the existing stock of ships
is limited. But, in the long-run period, altering the
stock of ships (newbuilding and scrapped ships)
shifts the equilibrium point. In the short-run
period, when demand increase, freight rates move
up very sharply and supply does not increase
much. Existing shipowners make large profits and
this situation encourages shipowners to order
new ships. In the second-hand market, the value
of existing ships also rises. Shipping market
players expect that profits are going to be healthy
in the future. Increased number of newbuilding
orders will translate into a rightward shift in the
supply curve in the long term and this will lead to
a fall in freight rates if demand remains the same.
In the short-run period, when demand decrease,
this situation cause reduction in supply and a rise
in ship lay-ups. In the short-run period, when
some ships will be trading at freight rates which do
not cover full costs. Operating slightly below
variable costs is acceptable in the short-term, but
it is not sustainable in the long-term. Therefore,
some ships will be laid up or scrapped. The
scrapping of ships leads to help raise freight rates
if the supply shifts far enough.

Higher or lower freight rates create incentives to

increase or to decrease tonne-miles supplied
through the following mechanisms:

higher or lower freight rates encourage a higher

or slower ship speed

higher or lower freight rates will encourage

shipowners with high variable cost ships to
scrap or lay-up

In the long-run period, fluctuations in freight

rates and lay-up numbers encourage shipowners
to:

Embrace or reject newbuilding orders

Progress or delay scrapping ships

Expectation of Shipowners

A key factor influencing shipowners’ decision to

scrap or order new ships is the expectations of
future levels of freight demand and freight
rates. Future expectation is crucial in determining
how the shipping market reacts to short-term
changes in demand and freight rate levels. If
shipowners are optimistic about the future freight
rates and demand, falling rates in the short term
may not lead to a longer-term reduction in
shipping capacity. If shipowners are pessimistic
about the future freight rates and demand, any
short-term market downturns may lead to a
shortage of capacity if demand grows at an
unexpected place. Shipowners’ future expectations
can be very volatile. Volatility helps to explain the
sudden increases and sudden falls of freight rates,
particularly when political events, wars, or other
events can have strategic impacts on dry cargo
markets.

Here above fright rate model implies:

A strong positive correlation between

demand growth and new orders when the
present stock of ships is highly utilized with low
levels of lay-up

Freight rates should be sensitive to short-run

market conditions. Freight rates reflect both
present market and future expectations

Exceptional events such as wars, political

event, embargoes, closure of canals generate
significant increases in freight rates when the
present stock of ships is highly utilized

A strong positive correlation between freight

rates and new orders, with periods of high rates
associated with higher than average orders,
lower than average lay-ups, and scrapping

In the period between 1947-1984, based on a

notional value of 100 for 1965, without inflation
effects, later shipping booms would look larger
and the earlier shipping booms look smaller.
There are substantial periods of demand growth in
which freight rates do not fluctuate all that
dramatically. In these flat periods:

Plenty of ship capacity available to meet any

increase in demand

Expansion of demand is matched by the correct

expansion of capacity, brought about by
accurate expectations generating the correct
level of ordering

Shipping spikes are generated by external

events that are not completely anticipated by
the shipping market. Shipping spikes are
generated by external events such as wars or
war-related events. For example, the 1973
shipping crises. Growth in demand for shipping
services was very high in the late 1960s and early
1970s. Many shipowners ordered new large ships.
However, in September 1973, the shipping boom
came to a halt with the six-day Arab-Israeli war.
Suez Canal closed and the Arab oil embargo on
countries seen as pro-Israel triggered a 400% rise
in the price of crude oil delivered a huge shock to
the Western economies that had been previously
growing quite rapidly. Western economies’ growth
faltered and income fell in 1974. Lower economic
growth means lower growth in the demand for
shipping.

Shipping rate peaks of 1970 and 1973 correspond

to two of the years of highest annual growth of
tonne-mile demand:

1970 Annual tonne-mile demand growth 3%

1973 Annual tonne-mile demand growth 2%

Shipping demand actually fell by 2.3% in 1975. In

1984, demand grew at 10.2%, but there is no
peak in the freight rates in 1984. The difference in
the two situations is due to laid-up tonnage. In
1970 and 1973, very little tonnage was laid-up.
However, in 1984, over 20% of the fleet was laid
up. In 1984, an increase in demand was easily met
from existing ship capacity and no peak in freight
rates.

In 1970 and 1973 peaks, demand is at or near full

ship capacity, so further increases triggered to
generate large freight rate increases as supply
response was very small. But, in 1984, there was
plenty of spare capacity and significant increases in
demand were met with no corresponding rise in
freight rates. The shipping volatility index, based
on 1985 = 100, shows that the average freight
rate has risen sharply since 2003, and so the
volatility of the freight rate. The dramatic change
in the shipping market has been since 2003. Since
2003, intra-year shipping volatility jumps from
around 3% to figures which range between 14%
and 33%.

The dramatic increase in freight rates and volatility

between 2003-2008:

Tonne-mile demand rose at a remarkable rate

between 2003-2008 (over 6% per year)

Fleet capacity did not grow as fast, ships have

to work harder and freight rates spiked

An increase in freight rates did not solve the

problem

Gross profit margins were very large

Between 2003-2008, such huge earnings caused

the scrapping of dry cargo ships to more or less
disappear and generated a record number of
newbuilding orders. Future freight rates are
therefore being affected by the delivery of new
tonnage and prospective future demand growth.
The dramatic increase in freight rates also affected
the price of secondhand tonnage and
secondhand prices became very high. Between
2003-2008, in certain cases, a secondhand ship
became more expensive than its newbuild
equivalent due to delivery time. This is called
ready ship premium.

Reasons for a dramatic increase in freight rates

and volatility between 2003-2008:

In 2001, China entered the WTO (World Trade

Organization). China became a major player in
international trade. China’s economy has grown
at 10% per year compound for many years.
China’s demand for steel China became the
world’s largest steel producer which
increased the demand for steel shipping

Production of steel requires iron ore and

coking coal. China’s demand for both iron ore
and coal rose dramatically

Rapid growth in world trade has stimulated

increased manufacturing. Manufacturing
triggered the demand for raw materials and also
trade has been liberalized.

Many other economies have grown rapidly such

as India

Shortages of suitable ships caused to move

cargoes into two bottoms. Shortage of ship
supply as cargo demand shifted. Transportation
costs rose.

Dynamic Shipping Model

Here above freight rate model concentrated upon

demand and supply conditions. The only additional
factor is the role of shipowners’ future
expectations. Shipowners’ future expectations
help to determine shipowners’ ordering, scrapping,
and operational decisions. In order to determine
the shipowners’ future expectations, we need to
look at past events. Historical data and recent
trends can be projected forward to estimate the
shipowners’ future expectations as to future
demand conditions.

Newbuilding ordering in the early 1970s can be

seen as a response to the widely-held view that
the market was going to continue to grow as
rapidly in the second half of the 1970s as it did till
1973.

If a shipowner anticipates a prosperous period, the

shipowner needs to order as early as possible,
because newbuilding ship construction takes
around two years if there is an available slot at the
shipyards. There are two possible outcomes:

Shipowner’s future expectations are fulfilled,

shipping demand grows as every shipping
market player is expected it to and the capacity
is met

Shipowner’s future expectations turn out to be

incorrect and the unexpected happens. New
ships have been ordered and a large number of
them have been delivered. The shipping market
is oversupplied.

In 1973, shipping market conditions were a

nightmare for shipowners but profitable for
charterers. The shipping market was in turmoil
with large numbers of ships and little growth in
shipping demand. In 2010, a similar situation
occurred, following the 2008 financial crisis. Annual
deliveries of new bulk carriers continued to
increase until 2011 when 97.7 million DWT was
delivered. The scrapping of dry bulk ships also
increased, peaking in 2012 at 32.5 million DWT.
The key difference between the 1970s and 2010s
shipping crises is that laid-up and idle tonnage
remained at low levels in 2010s, with shipowners
opting to slow steam in order to absorb some of
the surplus tonnages. Dry freight markets continue
to be depressed since 2012, notwithstanding
seasonal and other temporary improvements. In
both cases, the 1970s and 2010s shipping crises, a
contributory factor to the over-ordering of
newbuilding ships are that shipping finance was
widely available during a period of growth and
high freight rates. Estimating demand and supply
conditions in the next decade would therefore
make very little sense if an analyst just
examined demand and supply in the current
year.

The current shipping supply available is the

consequence of past decisions by shipowners.

Shipping market players never really learn from

previous mistakes and keep ordering new ships.
Overbuilding will impact on earnings in all shipping
markets. The crucial factor is to order early and
not to be the last shipowner to order. In the
shipping business, once freight rates increase and
the shipping market starts to move, other
shipowners join in and herd behavior will
eventually result in tonnage oversupply. Therefore,
the shipping market generates its own dynamic
behavior model over time, as the shipping
market continually readjusts to new demand
conditions. Poor market conditions influence
newbuilding decisions and orders became relatively
scarce. On the other hand, if demand conditions
alter for the better this lack of new investment
may itself generate another shipping cycle.

Dry cargo markets appear to move through cycles

of boom, recession, slump, recovery, and back to
boom again. Shipping cycles are partly generated
by the cyclical growth in shipping demand.
However, shipping cycles are also a result of the
fact that supply adjustment is a slow process.
Shipping analysts have suggested that there are
cycles of different periods observable in the
shipping market. These different shipping cycles
are overlaying each other. Seasonal pattern of
demand as being the shortest cycle. On top of
that, world demand growth appears to cycle over
5-7 years. Ship supply cycles are longer, on
average 13 years. On top of that, very long cyclical
patterns of around 50 years. Viewing the shipping
market as a dynamic model, as a process in which
demand conditions and supply responses change
over time, gives a much richer picture of the way
the shipping market operates. In sum, ship supply
responds to a change in demand, often spread out
over several periods.

Freight rates are the outcome of a bargaining

process, based on their expectations of future
demand and supply, rather than simply the balance
of supply and demand at a particular place and
time. Shipowners and charterers form expectations
of future freight rates and bargain over the
deviation of future rates from the latest fixture.
The final outcome is influenced by the relative
bargaining power of each shipowner and charterer.
If the charterer has more power freight rate
deviation will be lower than latest fixture. If the
shipowner has more power freight rate deviation
will be higher than the latest fixture. Many factors
can affect the relative bargaining power of
shipowners and charterers, but economic
conditions are the single most important factor in
most situations. In improving economic
conditions, shipowners have bargaining power. In
worsening economic conditions, charterers have
the bargaining power. In bargaining power,
information is also an important factor especially
when information is comprehensive, accurate,
timely, and cheap. Therefore, the role of the
shipbroker is crucial in central to the discussion
on bargaining between shipowners and charterers.
Despite all the improvements in communications
and technology, shipbrokers continue to have a
role in assimilating information for shipowners
and charterers.

Dry Bulk Chartering

What is Ship Chartering?

Chartering refers to the act of contracting a vessel

or a portion of a vessel for the transportation of
goods by sea. This may occur on any type of
vessel and for any type of cargo, including bulk,
general, or specialized cargo, among others.

Chartering plays a crucial role in the shipping

industry and is central to its economic framework.
The Ship Chartering Market is comprised of
Shipowners seeking to charter out tonnage and
Charterers looking to charter in tonnage for
transportation services.

The demand for shipping arises from the need to

transport cargo on behalf of Shippers and Traders.
This demand is satisfied by the Chartering Market,
which manages the transportation requirements.
Shipowners seeking to fill ship capacity with cargo
will do so through the Chartering Market.
Additionally, the Ship Chartering Market caters to
the needs of Ship Operators, who may not possess
cargo per se but operate ships and offer shipping
services.

The complex and efficient Ship Chartering Process

can fulfill the demand for ship transport. It begins
with the parties in need of tonnage and is executed
by the Shipowner who provides that capacity.

The Ship Chartering Market connects the supply of

ships in the global merchant fleet with the demand
for seaborne trade. It caters to the transportation
needs of all types of seaborne cargo and ships.

The Dry Cargo Market and the Tanker Market

experience the most intense ship chartering
activity. Other types of ships can also be chartered
by Ship Operators and Charterers requiring
specialized transportation capacity, but chartering
activity in these markets tends to be less intense
due to the prevalence of long-term chartering
contracts.

The ship chartering process is facilitated by the

Shipbroker, who acts on behalf of the Principal
(Shipowner or Charterer). The Shipbroker is a
skilled individual with experience in the ship
chartering process, as well as a network of
contacts and associates instrumental in efficiently
executing it.

The Shipbroker communicates relevant information

and receives information on ship positions and
cargoes, analyzing all data. Additionally, the
Shipbroker assists in Chartering Negotiations,
which entail the placement of cargo orders and
ship positions by Charterers and Shipowners,
respectively, and the exchange of offers and
counteroffers until an agreement is reached.
Following the chartering negotiations and
agreement, the Shipbroker may be responsible for
drafting the Charterparty (a maritime contract
between a Shipowner and a Charterer) agreed
upon by the parties.

The ship will sail on the agreed routes or be placed

at the disposal of the Charterer for a Voyage
Charter or Time Charter. In a Voyage Charter, the
Charterer must pay Freight, while in a Time
Charter, the Charterer is obligated to pay Hire.
Shipbrokers may also engage in post-fixture work
or work related to the performance of the
Charterparty.

What are the main types of Ship Chartering?

Merchant vessels are in existence for the purpose

of transporting cargoes. With the exception of
certain oil companies, ship owners have little
proprietary interest in the goods being transported
by their ships. Consequently, they rely on others to
hire or charter their ships to generate income. The
two principal forms of ship chartering are Voyage
Charter and Time Charter.

Under Voyage Charter, the ship is chartered to

transport cargo from a designated port or ports
and transport it to another specified port of
discharge, or a range of discharge ports, in
exchange for the payment of freight.

On the other hand, under Time Charter, the

charterer hires the ship for a predetermined period
of time, and pays hire for each day, hour, and
minute that the ship is at their disposal. The most
widely used dry cargo time charter is the New York
Produce Exchange Form (1946).

What is Voyage Charter?

A Voyage Charter or Spot Charter involves

engaging a ship for a single voyage, where the
vessel is tasked to transport cargo from a specific
load port or ports to a discharge port or ports
within a mutually agreed area.

The Shipowner bears the responsibility for all

operational expenses of the ship, including
additional expenses incurred during the voyage,
such as port charges and bunkers, with the
exception of cargo-handling expenses, which are
generally covered by the charterer.

In dry bulk chartering, some charterparties may

specify overtime costs for loading or unloading the
cargo, including who is responsible for paying the
additional charges. Typically, the crew members
are under the Shipowner’s responsibility, while the
charterer is responsible for compensating the
stevedores.

However, in tanker chartering, the issue of cost

does not arise, as the cargo is pumped into the
ship by the shore and, therefore, the shipper
effectively covers the expenses. The ship’s pumps
are then utilized to discharge the cargo, which
incurs a cost for the Shipowner.

What is Voyage Charterparty?

The Voyage Charterparty constitutes a contract

between the Shipowner and a Charterer who seeks
the services of a vessel. The primary aim of this
agreement is to procure the use of a ship and its
crew to transport a consignment of goods from one
port to another on behalf of the charterer.

In exchange for providing the vessel to the

charterer, the owner receives Freight, and in
certain cases, demurrage. Freight refers to the
compensation earned by the owner for providing
the vessel and carrying the charterer’s cargo. The
amount of Freight is typically determined by the
quantity of cargo loaded and will be negotiated
based on the owner’s estimate of the time required
for the voyage.

However, the Shipowner cannot accurately predict

the time that the vessel will spend in port loading
and discharging cargo. Consequently, a fixed
period known as Laytime is allowed for these
operations, and provision is made for the payment
of liquidated damages in case the laytime period is
exceeded, which is referred to as Demurrage.

From an English legal perspective, there is no

prescribed form that the Voyage Charterparty must
adhere to. In fact, this agreement may even be
oral and need not be in writing. However, given the
potential uncertainty and misunderstanding that
oral agreements can give rise to, written contracts
are preferred, and various Standard Form Voyage
Charterparties have been developed and are
commonly utilized.

In the realm of dry bulk chartering, the GENCON

Voyage Charterparty is a widely employed
contract.

What is Freight?

In the context of Voyage Chartering, Freight refers

to the compensation paid by the Charterer to the
Shipowner for the conveyance of cargo.

Typically, the Freight can be paid in one of two

ways – either on a per-tonne basis or as a Lump
Sum. The payment is usually made upon the
delivery of the cargo for tanker shipments or upon
the signing of Bills of Lading for dry cargo
shipments. In some cases, the payment may be
split between these two events, with a portion paid
after the signing of Bills of Lading and the
remaining portion paid upon the actual delivery of
the cargo.

In the domain of tanker chartering, Worldscale is

utilized to calculate the Freight. This method
implies that the Freight amount is not finalized
until the discharge port is nominated. In such
instances, the quantity of cargo to be loaded is
agreed upon beforehand, and the Charterer
generally provides a full cargo. However, as the
Shipowner is uncertain about the exact capacity of
the ship at this stage, it is usually described as a
given tonnage with a fixed percentage MOLOO
(More or Less in Owners’ Option) or
MOLCHOP/MOLCHOPT (More or Less in Charterers’
Option). While using the abbreviation MOLCO is
not advisable, as the handwritten version can be
too similar to its opposite, MOLOO. For instance, if
a shipment is described as 100,000 tonnes 10%
MOLOO, it means that the Shipowner can load up
to 110,000 tonnes or a minimum of 90,000 tonnes.
On arriving at the loading port, the Ship Master
calculates the bunkers, constants, and draft
restrictions to determine the precise quantity of
cargo the ship can load.

What is Charterparty?

In the realm of dry cargo markets, the majority of

shipping agreements concern the transportation of
voluminous, unprocessed materials. The
conventional mode of conveyance for such raw
bulk materials is known as the charterparty.

The term “charterparty” is derived from the Latin

phrase carta partita, meaning “split paper,”
referring to a document that is duplicated so that
each party retains a copy. In certain legal texts
pertaining to shipping, the expression “Contract of
Affreightment” (CoA) is used in place of the term
“Contract of Carriage” (Charterparty).

What is COA (Contract of Affreightment)?

The term “Contract of Affreightment” is a more

precise means of denoting the conveyance of
goods by sea, and within the maritime community,
it has taken on a particular connotation as a
specific type of agreement. These agreements,
known as COAs, are employed when a ship
operator or owner commits to transporting a
specified quantity of goods during a predetermined
time frame.

What is the difference between COA

(Contract of Affreightment and Charterparty?

A Charterparty is a contractual agreement entered

into by a Shipowner and a Charterer. In this
agreement, the Shipowner commits to either
transporting cargo for the Charterer on their vessel
or granting the Charterer access to the entire or
part of the vessel’s hold for the purpose of cargo
carriage on a designated voyage or multiple
voyages, or for a specific time period (as in the
case of a Time Charter).

On the other hand, a Contract of Affreightment

(COA) is another type of agreement between a
Shipowner and a Charterer. A COA is typically used
when the Shipowner or Ship Operator agrees to
transport a particular quantity of cargo over a
predetermined period of time. Unlike a
Charterparty, the COA does not stipulate a specific
vessel.

In a Contract of Affreightment, the responsibility of

delivering ships as per the project’s requirements
lies with the Shipowner or Ship Operator. This
grants them considerable freedom to manage their
fleet to their advantage. Additionally, the
Shipowner or Ship Operator may hire additional
vessels if their fleet is already occupied with more
profitable work.

What is the difference between COA

(Contract of Affreightment and Charterparty?

A Contract of Affreightment (COA) and a

Charterparty are both agreements related to the
transportation of goods via a vessel, but they differ
in terms of scope, nature, and duration. Here are
the key differences between the two:

1. Scope:

Contract of Affreightment (COA): A COA is an

agreement between a shipper (cargo owner)
and a carrier (ship owner) for the transportation
of a specific quantity of cargo over a period of
time. The contract covers multiple voyages or
shipments, and the carrier is responsible for
providing the required vessel capacity to
transport the agreed-upon cargo.

Charterparty: A Charterparty is a contract

between a shipowner and a charterer (the party
hiring the vessel) for the use of a vessel or its
cargo space. It can be for a single voyage
(Voyage Charter) or for a specific period (Time
Charter). The charterer typically has more
control over the vessel, deciding the ports,
routes, and cargo.

2. Duration:

Contract of Affreightment (COA): A COA

generally covers a longer period, ranging from
several months to a few years, depending on
the agreed-upon terms. It is more focused on
the long-term transportation of goods.

Charterparty: The duration of a Charterparty

depends on the type of charter. A Voyage
Charter lasts for a single voyage, whereas a
Time Charter can last for a specific period,
typically ranging from a few months to several
years.

3. Payment:

Contract of Affreightment (COA): The payment

in a COA is usually based on the volume of
cargo transported, referred to as the freight
rate. This rate can be fixed or flexible,
depending on the terms of the agreement.

Charterparty: In a Voyage Charter, the payment

is based on the cargo quantity, while in a Time
Charter, the payment is based on the daily hire
rate for the vessel, which is agreed upon
between the shipowner and the charterer.

4. Flexibility and control:

Contract of Affreightment (COA): In a COA, the

carrier has more control over the vessel,
deciding the routes and scheduling to fulfill their
obligation to transport the cargo. The shipper
has limited control over the vessel.

Charterparty: The charterer has more control

over the vessel, deciding the ports, routes, and
cargo. In a Time Charter, the charterer may
even select the crew and manage the vessel’s
daily operations, with some limitations.

Contract of Affreightment (COA) is an agreement

for the transportation of a specific quantity of
cargo over a period of time, while a Charterparty is
a contract for the use of a vessel or its cargo
space, either for a single voyage or a specific
period. The main differences lie in the scope,
duration, payment, and level of control each party
has over the vessel.

What is Ship Chartering Contract?

In the realm of ship chartering, the Ship

Chartering Contract stands out as a prime example
of a transaction solely driven by the forces of the
shipping market. This type of contract is typically
negotiated within a free market environment and is
subject exclusively to the laws of supply and
demand.

The relative bargaining power of Shipowners and

Charterers is heavily influenced by the prevailing
conditions of the shipping market. As a result, the
Charterparty Terms are negotiated freely without
any interference from statutory regulations.

In practice, Shipowners and Charterers commonly

utilize a customary Standard Charterparty Form
that has been developed specifically for their
business. This Standard Charterparty Form is often
customized with additional clauses known as Rider
Clauses. Depending on the current state of the
shipping market, intense negotiations may ensue
between Shipowners and Charterers over these
Charterparty Amendments, as well as the Freight,
Hire, Demurrage, and Despatch Money.

What is Chartering Fixture?

When a Charterer requires the services of a ship,

they engage the services of Shipbrokers and
provide comprehensive information such as cargo
details, loading and discharging ports, freight
estimates, and the terms of the charterparty. This
process is commonly referred to as an Invitation to
Treat.

The Shipowner, through their Shipbroker, responds

with an Offer that includes crucial details such as
the ship’s name, flag, year of construction, class,
equipment for cargo handling, among other
pertinent details. The Offer also outlines the last
three cargoes, cargo intake levels, loading and
discharging rates, freight rates, laydays/canceling
days, estimated time of arrival, ship position,
demurrage, charterparty, and other specific terms
such as SHEX (Sundays and Holidays Excluded) or
SHINC (Sundays and Holidays Included), eco
speeds, commission, and the time limit for the
offer.

The Shipowner’s offer is conveyed to the Charterer

through the Shipbroker, and if it’s communicated
verbally, it will be followed by a telex or email. The
use of telex is still prevalent in countries that
recognize it since it features an answerback
function that provides evidence of when the offer
was received by the recipient, which is crucial in
establishing whether the offer was timely or not.

Alternatively, the offer can be sent via email,

followed by a phone call to confirm its receipt. The
Charterer can choose to Reject, Accept, Counter,
Accept Except (A/E), or Accept on Subjects.

The Ship chartering negotiations continue with

both parties making Counter-Offers until they
agree on the details and terms of the charter,
except for the subjects. Under English Law, there is
no valid Charterparty (Shipping Contract) until all
the subjects are lifted.

Therefore, after all the subjects are lifted, the

negotiated terms are documented in the
Charterparty. While waiting for the subjects to be
lifted and before the Charterparty is drafted, the
Shipbroker will send a Recapitulation message to
both parties, summarizing all the points agreed
upon during the chartering negotiations.

At this point, the Shipowner and Charterer verify

their messages and corrections to confirm that the
Charterparty reflects what was agreed upon during
the chartering negotiations.

Chartering Fixture is the term used to

indicate that the Charterparty (Shipping
Contract) has been established, and the
negotiations to charter the ship have been
completed.

In some instances, to save time, a Chartering

Fixture may be made based on the previous one.
In other words, the terms and conditions agreed
upon in the previous Chartering Fixture will be
repeated, with certain exceptions. Therefore, both
parties must be clear on what this means.

If a Shipbroker is authorized to sign a Charterparty

(Shipping Contract) on behalf of their Principal
(Shipowner or Charterer), they should indicate the
source of authority, such as telephone, telex,
facsimile, or email authority of the Principal’s name
As Agents Only. The fundamental rule is that with a
signature qualified in this way, a Shipbroker will
not be held personally liable for the performance of
the Charterparty (Shipping Contract). If the name
of the Principal (Shipowner or Charterer) is not
disclosed, then even the qualification of As Agents
Only would not exonerate the Shipbroker from
liability for the performance of the Charterparty
(Shipping Contract).

What is STEM in Ship Chartering?

STEM stands for Subject To Enough

Merchandise, indicating the condition that must
be met before proceeding with the shipment. The
purpose of STEM is to allow Charterers sufficient
time to present the vessel to the Shippers and
verify that they can accommodate the agreed-upon
amount of cargo on the agreed-upon laydays.
STEM is intended solely for determining cargo
availability.

What is STEM (Subject To Enough

Merchandise) in Ship Chartering?

In ship chartering, the term STEM (Subject To

Enough Merchandise) is used when a vessel’s
departure or arrival for loading or discharging
cargo is contingent upon the availability of
sufficient cargo. This term is often included in
charter party agreements, which are contracts
outlining the terms and conditions for the use of a
vessel.

When a charter agreement includes the term

“STEM,” it signifies that the vessel’s readiness to
load or discharge cargo is subject to the charterer
having enough merchandise available at the port
or terminal. If the charterer does not have the
required amount of cargo, the vessel may not be
obligated to commence loading or discharging
operations, and the laytime (the time allowed for
loading or discharging cargo) may not start.

The inclusion of STEM in a charter party agreement

helps to protect the interests of both the ship
owner and the charterer. For the ship owner, it
ensures that the vessel is not left waiting at a port
without cargo, which can be expensive due to port
charges and idle time. For the charterer, it provides
flexibility in managing the logistics of their cargo
and the timing of its arrival at the port or terminal.

It is essential for both parties to clearly define the

conditions and requirements related to STEM in
their charter party agreement to avoid any
potential disputes or misunderstandings.

What is STEM IN ORDER in Ship Chartering?

In ship chartering, the term “STEM IN ORDER”

(Subject To Enough Merchandise) is used to
indicate that the departure, arrival, or loading of a
vessel is conditional upon the availability of
sufficient cargo. This term is often included in
charter party agreements, which outline the terms
and conditions for the use of a vessel.

When a charter party agreement includes “STEM

IN ORDER,” it means that the vessel’s readiness to
load or discharge cargo is dependent on the
charterer having enough merchandise available at
the port or terminal. If the required amount of
cargo is not available, the vessel may not be
obligated to commence loading or discharging
operations, and the laytime (the time allowed for
loading or discharging cargo) may not start.

The inclusion of “STEM IN ORDER” in a charter

party agreement helps protect the interests of both
the ship owner and the charterer. For the ship
owner, it ensures that the vessel is not left waiting
at a port without cargo, which can be costly due to
port charges and idle time. For the charterer, it
provides flexibility in managing the logistics of
their cargo and the timing of its arrival at the port
or terminal.

Both parties must clearly define the conditions and

requirements related to “STEM IN ORDER” in their
charter party agreement to prevent any potential
disputes or misunderstandings.

Ship Chartering Contracts

It is feasible to establish a legally binding Ship

Chartering Contract (Charter Party Form) through
verbal communication. It is within the realm of
possibility to charter a ship via an oral telephone
conversation. There exists precedent
demonstrating that a ship can be chartered orally,
although this practice is not typically employed in
the commercial shipping industry. The validity of
an oral charter and the provisions included in the
charter party will depend on the application of local
contract law with regard to the formation of a
contract.

The form of Ship Chartering and the terms of the

Charter Party may vary to some extent, contingent
upon the nature of the cargo and the type of
vessel involved. Each specialized trade may pose
unique legal challenges and may follow distinct
industry practices.

Charter Party Forms commonly utilized in the

industry can vary by trade, some examples of
which are as follows:

1. GENCON for Dry Bulk Ships

2. BIMCHEMTIME for Chemical Tankers

3. BOXTIME 2004 for Container Ships

4. NYPE (New York Produce Exchange) for Dry Bulk

Ships

5. lntertanko for Tankers

Where can I Lnd a Charter Party Form?

We kindly suggest that you visit the web page of

BIMCO (Baltic and International Maritime Council)
and ASBA (Association of Ship Brokers and Agents)
to obtain the original Charter Party forms and
documents. www.bimco.org and www.asba.org

What is Bareboat Charter?

The concept of Bareboat Charter is based on the

idea that the shipowner has effectively relinquished
complete control and possession of the ship to the
charterer. This type of charter involves the transfer
of control and possession of the ship. When
examining a Bareboat charter, courts will likely
consider the charter itself, as well as any relevant
facts and circumstances, to determine whether the
shipowner retains any rights or responsibilities with
respect to the ship, such as the right or
responsibility to supply the crew or arrange for
ship insurance.

In contrast, a space charter, lot charter, or part

cargo charter involves only a portion of the ship’s
cargo capacity being chartered, rather than the
entire ship. These types of charters are typically
between ocean common carriers who may charter
space from each other to meet customer
commitments.

When a Bareboat Charter is in effect, the charterer

acts as if they are the shipowner, assuming both
responsibility for the ship’s operation and liability
limitation rights that the owner may have. For
example, under the United States Shipowner’s
Limitation of Liability Act, the shipowner is
generally permitted to limit its liability to third
parties arising from the operation of the ship to the
value of the ship and pending freight at the end of
the voyage in which the incident occurred either
when the ship reaches port, or if the ship is lost, at
the time of the loss. This same right is expressly
granted to a charterer that mans, supplies, and
navigates a ship at their own expense or by their
own procurement.

The existence of a Bareboat Charter is also an

essential element under United States law with
respect to whether a non-citizen financial
institution or leasing company may own a U.S.
flagship engaged in the United States coastwise
trade operated by a qualified United States citizen
pursuant to a Bareboat Charter.

If a ship is chartered out as bareboat, the

shipowner generally will not be liable to third
parties harmed through the operation of the ship.
The Bareboat charterer assumes responsibility for
any third-party claims. However, maritime law
treats a ship itself as a person (in rem), so a third-
party plaintiff may seek recovery against both the
bareboat charterer and the ship. As a result, unless
the shipowner has an effective way to obtain
indemnification from the bareboat charterer for
claims against the ship, the shipowner may still be
exposed to some risk of liability to third parties.
Such indemnification provisions are typically found
in bareboat charter forms and are supported by
associated liability insurance requirements.

One exception to the general rule is where the

shipowner takes steps to operate the ship itself,
either directly or through an agent, in situations
such as when the bareboat charterer has
defaulted. In such a case, the shipowner may
become the de facto ship operator and may be
liable for any claims arising during the period in
which they are operating the ship in person.

The bareboat charterer is typically tasked with

maintaining the ship’s condition during the charter
period. However, it is important to note that,
unless otherwise specified in the charter
agreement, the bareboat charterer is not
responsible for reasonable wear and tear on the
vessel. To ensure that a fair assessment is made at
the end of the charter period, most bareboat
charters involve separate or joint surveyors who
thoroughly inspect the ship and produce a detailed
condition report. This report serves as a
benchmark against which reasonable wear and
tear can be measured.

It is worth noting that damage or loss to the ship

can occur regardless of the bareboat charterer’s
fault. Therefore, it is common practice for the
charter agreement to require the bareboat
charterer to maintain hull and machinery
insurance, with loss payable clauses directing
payments to the shipowner.

While a bareboat charter agreement may allocate

responsibility for deductibles, it is more often the
case that the bareboat charterer is responsible for
these costs. Additionally, it is important to bear in
mind that the shipowner is liable for any harm
caused to third parties as a result of the ship’s
operation, particularly in the case of time or
voyage charters.

Bareboat Charter Party Form

We kindly suggest that you visit the web page of

 BIMCO (Baltic and International Maritime Council)
to obtain the original Bareboat Charter Party Forms
and documents. BARECON 2017 www.bimco.org

Voyage Charter Vs Time Charter

When a ship is chartered on a time or voyage

basis, it remains under the operational and legal
control of the shipowner, who is responsible for the
crew, maintenance, and operation of the vessel.
Consequently, any harm caused by the ship may
be attributed to the shipowner, as well as to the
ship itself. It is customary for shipowners to ensure
that they have adequate insurance coverage
against potential risks that may be incurred during
operations under time and voyage charters. To
ensure that the insurance package covers charter
risks, express provisions are often included in time
and voyage charters, specifying the permitted
trades, cargoes, and ports.

In addition, voyage charters and time charters may

include provisions in which the charterer agrees to
warrant the safety of ports and indemnify the
shipowner against the risks of any breaches of the
permitted trade clauses. When a ship is chartered
out as a bareboat charter, the shipowner must be
concerned about liability. In addition to the
contractual rights the shipowner has under the
bareboat charter, the ship itself remains potentially
liable, as if it were a person, in the event of an
accident or other legally cognizable harm. This is
known as in Rem Liability, which is distinguished
from the separate liability that the shipowner or
bareboat charterer may have in Personam Liability,
potentially for the same actions and liabilities.

Shipowners typically warrant the seaworthiness of

their vessels. Every charter agreement is deemed
to include a generally recognized implied warranty
of seaworthiness, even if the seaworthiness clause
is not expressly stated in the charter party.
Seaworthiness means that the ship is reasonably
capable of safely transporting the cargo it has
undertaken to transport within the specified
trading areas, under the conditions that can
reasonably be expected. The shipowner can
expressly disclaim the warranty of seaworthiness in
a charter, and such disclaimers are frequently
found in ship lease finance transactions where the
shipowner is a bank, financial institution, or leasing
company. However, even with an express
disclaimer, shipowners should be aware of potential
liability for any latent defects that may arise prior
to the commencement of a charter that would
render the ship unseaworthy. Generally, the
voyage charterer or time charterer is not liable for
the seaworthiness of the vessel or the negligence
of the ship’s crew.

In cases of time or voyage charter, the shipowner

or bareboat charterer typically retains control of
the vessel, with the charterer merely providing
commercial direction. The ship will operate within
the parameters of the charter, loading and
discharging cargo as required.

Traditionally, voyage or time charterers do not

have authority over crew members and thus
cannot be held accountable for their actions.
However, if the charterer assumes responsibility for
cargo-related operations such as loading, stowage,
or discharging, then the shipowner may be held
liable if any damage or loss occurs.

For long-term bareboat charters, particularly those

with finance arrangements, the bareboat charterer
must ensure compliance with ongoing regulatory
changes at their own expense. Short-term charters
usually see the shipowner retain responsibility for
complying with all relevant flag-state and
international regulations. For example, changes to
international air pollution regulations may
necessitate the use of low sulfur fuels in certain
coastal waters, or the replacement of older boiler
systems. The shipowner typically bears these costs
for vessels under time or voyage charter, whereas
those under bareboat charter may be borne by
either party depending on the specific provisions of
the agreement. This may require a review of the
ship owner’s obligation to provide a compliant
vessel versus the charterer’s obligation to maintain
compliance.

Bunker costs, including fuel for the main engine

and auxiliary engines, can be a significant expense
and are an important consideration in charter
agreements. Under a bareboat charter, the
shipowner assumes no responsibility for bunker
costs as all operating responsibilities are assigned
to the bareboat charterer. In a time charter, the
time charterer is generally responsible for bunker
costs incurred. In voyage charters, responsibility
for bunker costs may be allocated to either party,
depending on their preferences. Charterers must
also allocate responsibility for bunkers that do not
meet quality standards. Substandard bunkers may
damage engines, cause power loss, and result in
salvage costs, delays, or even the loss of the
vessel. Failure to comply with regulations, such as
sulfur content requirements, can result in civil
penalties or detention.

Responsibility for the consequences of using

improper bunkers typically follows responsibility for
the bunker costs, although this is not always the
case. Charterers may not have the technical
expertise or personnel to properly screen and test
bunker providers, and may rely on the ship’s
engineers to do so, even if the time or voyage
charterer is responsible for the bunker costs.

Bill of Lading (B/L) in Ship Chartering

The Bill of Lading serves a multitude of purposes;

however, it primarily functions as the contract
between the shipper of goods and the carrier who
assumes responsibility for transporting said goods.
In the case of a bareboat chartered ship, the
carrier may not be the shipowner, but rather the
bareboat charterer, time charterer, or voyage
charterer. By extending the limitations of liability
and other protective provisions to the shipowner,
the Bill of Lading mitigates the risk of
indemnification claims. Within the shipping
industry, there are fundamental charter terms that
are unique to the field. These terms carry specific
meanings that have become entrenched and often
possess intriguing histories, originating from
significant maritime decisions or ship casualties.
For instance, charter lease payments, also known
as “charter hire,” may be payable regardless of
whether the ship completes the charter or not.
Such provisions, where the charterer has no
routine right of set-off or reduction in the amount
payable to the shipowner, are often referred to as
being payable on a “hell or high water” basis, as in
charter hire shall be payable, come “hell or high
water.” These charter payment provisions are
typically found in bareboat charters and not in time
charters or voyage charters. Time charter hire or
voyage charter hire is typically subject to a right to
set-off if the ship fails to perform under the
charter.

What is FIOS in Ship Chartering?

The abbreviation FIO stands for Free In, Out, and

FIOS stands for Free In, Out, and Stowage. The
terms FIO and FIOS relate to the allocation of
responsibility between the shipowner or bareboat
charterer and the time charterer or voyage
charterer regarding the loading and discharging of
the ship. Under FIOS terms, the charterer takes
responsibility for ensuring that the ship will be
loaded, the cargo stowed, and the ship discharged,
free to the shipowner.

FIOS in ship chartering stands for “Free In and

Out and Stowed.” It is a term used in the
shipping and chartering industry to describe the
conditions under which cargo is loaded and
discharged from a vessel. FIOS is typically agreed
upon by both the shipowner and the charterer
during negotiations and is included in the charter
party agreement.

Under FIOS terms, the charterer is responsible for

the following:

1. Free In: The charterer bears the cost and

responsibility for loading the cargo onto the
vessel at the port of loading. This includes any
stevedoring, labor, and equipment costs
associated with getting the cargo on board.

2. Free Out: The charterer is also responsible for

the cost and responsibility of unloading the
cargo from the vessel at the port of discharge.
Similar to the loading process, this includes any
costs related to stevedoring, labor, and
equipment required for unloading.

3. Stowed: The charterer is responsible for the

proper stowage of the cargo within the vessel.
This means ensuring that the cargo is safely and
securely placed in the ship’s holds to prevent
any damage during transit.

By agreeing to FIOS terms, the charterer takes on

more responsibility for cargo handling, which may
allow for more control over the loading and
unloading process. However, it also means the
charterer is responsible for any additional costs
and potential risks associated with cargo handling.

What is FIO in Ship Chartering?

FIO in ship chartering stands for “Free In and

Out.” It is a term used in the shipping and
chartering industry to describe the conditions
under which cargo is loaded and discharged from a
vessel. FIO is typically agreed upon by both the
shipowner and the charterer during negotiations
and is included in the charter party agreement.

Under FIO terms, the charterer is responsible for

the following:

1. Free In: The charterer bears the cost and

responsibility for loading the cargo onto the
vessel at the port of loading. This includes any
stevedoring, labor, and equipment costs
associated with getting the cargo on board.

2. Free Out: The charterer is also responsible for

the cost and responsibility of unloading the
cargo from the vessel at the port of discharge.
Similar to the loading process, this includes any
costs related to stevedoring, labor, and
equipment required for unloading.

Unlike the FIOS term, which includes “Stowed,” the

FIO term does not cover the responsibility for the
proper stowage of the cargo within the vessel.
Under FIO terms, the shipowner is typically
responsible for ensuring that the cargo is safely
and securely placed in the ship’s holds to prevent
any damage during transit.

By agreeing to FIO terms, the charterer takes on

the responsibility for cargo handling during loading
and unloading but not for cargo stowage. This
arrangement allows the charterer more control
over the loading and unloading process while still
relying on the shipowner’s expertise for proper
stowage.

Demurrage, Dispatch, and Lay Days in Ship

Chartering

Demurrage, Dispatch, and Lay Days are nautical

terms commonly employed in the context of a
voyage charter. A voyage charter is an agreement
between the shipowner and the charterer for the
transportation of cargo from one point to another,
with the charter price being calculated based on
the shipowner’s estimation of the time required for
the voyage. However, the loading and unloading
time of the cargo by the charterer is subject to a
high degree of unpredictability, which is where the
concept of Lay Days comes into play. Lay Days
refer to the number of days allowed for the loading
and discharging of cargo, and are employed to
manage the uncertainty surrounding this activity.

The term Demurrage refers to the compensation

payable by the voyage charterer to the shipowner
in the event that the loading or unloading of cargo
exceeds the agreed-upon Lay Days. Conversely,
Dispatch refers to the compensation payable by
the shipowner to the charterer if the loading or
unloading of cargo is completed in less time than
the allowed Lay Days. It is noteworthy that
traditionally, Dispatch is priced at a rate that is
50% of the Demurrage rate.

These concepts have been developed over time to

ensure the efficient utilization of ships and to
allocate the risks associated with delays to the
party that is best placed to influence the timing of
the loading and unloading activities. In a voyage
charter, the charterer is responsible for the
purchase, utilization, and sale of the cargo, and is,
therefore, in the best position to arrange for an
efficient loading and unloading of the ship.

Dead Freight is another term that is commonly

associated with voyage charters. In many voyage
charters, the charter hire is based on the amount
of cargo to be transported. If the charterer fails to
load the expected amount of cargo, the shipowner
is still obligated to undertake the voyage but will
receive less revenue than anticipated. To manage
this risk, a voyage charter will often specify a
minimum amount of cargo to be transported, and
if the charterer fails to load this amount, they will
be liable to pay an amount known as Dead Freight,
which is calculated based on the shortfall.

In tanker chartering, the concept of vetting is

primarily associated with oil companies that
charter ships to transport their products. Given the
high value of the cargo, the potential for significant
losses due to ship breakdowns or port state
detentions, and the risk of legal and reputational
damage resulting from oil spills or other accidents,
many charterers insist on the right to conduct their
own ship condition inspections before or during
chartering. These inspections, known as vetting
inspections, are often comprehensive and evaluate
the ship’s certificates, physical condition, and crew
qualifications and experience.

Basic Terms in Ship Chartering

In the context of voyage charters, several key

terms and concepts are commonly used to manage
uncertainties and risks related to cargo loading and
discharging, as well as ship conditions:

1. Lay Days: The shipowner allows a certain

number of days for loading and discharging
cargo under a voyage charter. These days are
referred to as lay days, and they help manage
the unpredictability of loading and discharging
times.

2. Demurrage: If the charterer takes longer to

load or discharge cargo than the agreed-upon
lay days, they must pay the shipowner a fee
called demurrage. This concept promotes
efficient ship utilization and allocates the risk of
delays to the party in the best position to
manage loading and discharging times – the
charterer.

3. Dispatch: Conversely, if the charterer

completes loading or discharging faster than the
allowed lay days, the shipowner pays the
charterer a fee called dispatch, typically priced
at 50% of the demurrage rate. This encourages
the charterer to be efficient and rewards them
for saving time.

4. Dead Freight: In voyage charters, the charter

hire is often based on the amount of cargo
carried. If the charterer loads less cargo than
the shipowner expected, the charterer must pay
the shipowner an amount called dead freight,
based on the cargo shortfall. This protects the
shipowner against revenue loss due to carrying
less cargo than anticipated.

5. Vetting: In tanker chartering, vetting is a

critical concept, particularly for oil companies
chartering ships for their products. Due to the
high value of cargo, potential delays, legal
liabilities, and reputational risks from incidents
like oil spills, charterers often insist on
conducting their own ship condition inspections
before chartering or continuing charters. These
inspections, called vetting inspections, can be
extensive, examining ship certificates,
documents, physical condition, and crew
qualifications and experience.

These terms and concepts are crucial in voyage

chartering to ensure both parties have a clear
understanding of their roles and responsibilities
while minimizing risks and promoting efficiency:

6. Notice of Readiness (NOR): The shipowner or

master of the vessel issues a Notice of
Readiness to inform the charterer that the
vessel has arrived at the loading or discharging
port and is ready to commence cargo
operations. This notice marks the beginning of
laytime, the period during which the charterer
has to load or discharge the cargo within the
agreed lay days.

7. Laytime: Laytime refers to the time allowed by

the shipowner for the charterer to load and
discharge cargo without incurring additional
costs. Laytime is usually stated in the charter
party agreement and starts when the Notice of
Readiness has been tendered. The calculation of
laytime can be complex and may involve various
exceptions and conditions such as weather-
related interruptions and holidays.

8. Time Bar: A time bar is a contractual provision

that sets a deadline for a claim to be made by
one party against the other. In voyage charters,
time bars can apply to claims related to
demurrage, dispatch, and other performance-
related issues. If a claim is not made within the
time bar period, the party’s right to claim may
be forfeited.

9. Charter Party Agreement: The charter party

agreement is a legal contract between the
shipowner and the charterer, outlining the terms
and conditions of the voyage charter. This
agreement contains various provisions, including
the agreed freight rate, lay days, demurrage
and dispatch rates, vetting requirements, and
other specific terms related to the carriage of
goods.

10. Freight: Freight is the payment made by the

charterer to the shipowner for the
transportation of goods under a voyage charter.
The freight rate is typically agreed upon in the
charter party agreement and can be based on
factors such as the type and volume of cargo,
distance between ports, and prevailing market
rates.

By understanding and utilizing these terms and

concepts, both shipowners and charterers can
better manage the risks and uncertainties inherent
in the shipping and chartering industry, leading to
a more efficient and secure transportation of goods
across the globe.

Chartering Terms and Abbreviations

We kindly suggest that you visit the web page of

HandyBulk to learn more about the Chartering
Terms and Abbreviations www.handybulk.com

Cesser Clause in Ship Chartering

The “Cesser Clause” is a term commonly used in

charter agreements, which stipulates that the
charterer’s responsibility to pay charter hire will
terminate if, for specified reasons, the vessel
becomes unavailable for the purpose of
transporting or loading and unloading cargo. These
clauses typically arise in situations where the
charterer may have already sold the cargo, even
prior to the delivery of the ship.

Both to Blame Collision Clauses in Ship

Chartering

The purpose of Both to Blame Collision Clauses is

to safeguard the limitation of liability clauses that
are commonly present in charters and bills of
lading. These clauses aim to prevent a loophole
that could arise due to the maritime law’s
allocation of collision damages. According to
maritime law, a court will apportion damages
between the parties at fault based on their
comparative fault. However, both parties will be
held jointly and severally liable to the victims of
their fault. This means that the injured party can
sue either of the parties at fault for the full amount
of the damage, and the paying party can seek
contribution from the other party at fault.

Typically, a ship owner’s liability for cargo damage

is restricted to a specific amount, such as the $500
per package limitation under the United States
Carriage of Goods at Sea Act (COGSA). Therefore,
when a collision occurs due to the fault of both the
cargo-carrying ship and another ship, the cargo
owner’s right to damages from the cargo-carrying
ship may be restricted. However, the cargo owner’s
right to damages from the other ship at fault will
not be limited. As a result, the cargo owner can
sue the other ship for the full amount of its
damages, under the maritime law of joint and
several liability.

The other ship will then seek contribution from the

cargo-carrying ship based on the latter’s degree of
fault, so that the other ship does not bear an unfair
proportion of the damages. In this way, cargo
owners can avoid, and cargo-carrying ships can be
denied, the contractual or statutory limitation of
liability. The Both to Blame clause eliminates this
issue by outlining an indemnification agreement,
under which the cargo owner agrees to indemnify
the cargo-carrying ship owner against any liability
for damages paid to another ship in excess of the
limitation amount.

General Average (GA) in Ship Chartering

General Average (GA) is a customary legal

principle recognized worldwide, which apportions
losses suffered by one party for the collective
benefit of all parties involved in a voyage. It
originates from the shipmaster’s ancient right to
sacrifice certain cargo or property or incur
reasonable expenses to rescue the ship and its
remaining cargo.

For instance, let us consider a scenario where a

ship, carrying a load of cargo, encounters
unforeseen weather conditions that lead to
damage. As a result, the ship requires a salvage
tug to tow it to port, incurring additional costs.
Alternatively, it may become necessary for the
shipmaster to jettison some cargo to save the rest
of the cargo and the vessel. Maritime law has
traditionally regarded such expenses or losses as
eligible for distribution among all beneficiaries.

At the end of the voyage, an average adjuster is

designated to compute the costs of the salvage
claim or the value of the lost cargo, as well as the
value of the saved ship and cargo. Subsequently,
the adjuster usually allocates the loss against the
shipowner and the cargo owners based on the
proportionate interests in the voyage. The charters
often contain clauses that specify the regulations
for determining the procedure for general average.
The most widely acknowledged provisions entail
the application of the York Antwerp Rule 1974.

We kindly suggest that you visit the web page of

HandyBulk and search to learn more about the
General Average (GA) www.handybulk.com

New Jason Clause in Ship Chartering

The New Jason Clause pertains to the concept of

general average. According to the principles of
general maritime law, cargo proprietors are
typically exempt from contributing to general
average if the loss incurred is a result of the
shipowner’s negligence. However, shipowners often
seek to overturn this rule by enforcing the New
Jason Clause, which mandates that cargo owners
are obligated to contribute to general average
regardless of whether the loss was caused by the
shipowner’s negligence.
Handysize Bulk Carrier Chartering

Handysize bulk carriers are versatile vessels that

play a crucial role in the global shipping industry.
Chartering these carriers involves a complex
process of negotiation, communication, and
coordination between various stakeholders,
including ship owners, charterers, brokers, and
agents. In this guide, we will provide an overview
of the handysize bulk carrier chartering process,
along with key considerations to keep in mind.

1. Market Research and Vessel Selection:

Begin by conducting thorough market research
to understand the current supply and demand
dynamics for handysize bulk carriers. This
information will help you to identify suitable
vessels that meet your cargo transportation
requirements. Pay close attention to factors like
vessel size, age, fuel efficiency, and the
availability of loading and discharging
equipment.

2. Chartering Options: There are several types of

chartering options available for handysize bulk
carriers:

Voyage Charter: The ship owner is responsible

for providing a seaworthy vessel, and the
charterer pays a freight rate based on the cargo
quantity and the distance between the loading
and discharging ports.

Time Charter: The charterer rents the vessel

for a specified period, paying a daily hire rate.
The charterer is responsible for covering the
vessel’s operating expenses, including fuel, port
charges, and canal fees.

Bareboat Charter: The charterer rents the

vessel without any crew, provisions, or
insurance. The charterer is responsible for all
operational expenses and management of the
vessel.

3. Negotiating the Charter Party: Once you

have identified a suitable vessel and chartering
option, negotiations will begin between the ship
owner and charterer, typically through a broker.
Key terms to be negotiated include the freight
or hire rate, laytime (the time allowed for
loading and discharging cargo), demurrage
(penalty for exceeding laytime), and any
additional clauses specific to the cargo or route.

4. Fixing the Vessel: Once the terms are agreed

upon, the charter party is signed by both
parties, and the vessel is considered “fixed.” The
charterer will need to provide a Letter of
Indemnity (LOI) to guarantee the fulfillment of
contractual obligations.

5. Pre-fixture Operations: Before the vessel’s

arrival at the loading port, the charterer must
coordinate with the ship owner, agents, and port
authorities to ensure smooth operations. This
includes preparing cargo documentation,
arranging for surveys and inspections, and
coordinating the vessel’s berthing and loading
schedule.

6. Voyage Execution: During the voyage, the

charterer must monitor the vessel’s
performance, fuel consumption, and adherence
to the agreed-upon route. Regular
communication with the vessel’s master and
agents at the loading and discharging ports is
essential to ensure timely operations and
minimize delays.

7. Post-fixture Operations: After the cargo has

been discharged, the charterer must settle any
outstanding financial matters, such as
demurrage claims, and provide feedback on the
vessel’s performance to the ship owner or
broker.

Handysize Bulk Carrier Chartering requires a deep

understanding of market dynamics, careful
selection of vessels and chartering options, and
strong negotiation skills. By following these
guidelines and maintaining open lines of
communication throughout the process, charterers
can successfully transport their cargo while
minimizing risks and maximizing efficiency.

What is Handysize Bulk Carrier?

A Handysize Bulk Carrier is a type of dry cargo ship

that is designed to transport unpackaged bulk
commodities such as coal, grain, iron ore, and
other raw materials. The term “Handysize” refers
to the vessel’s size, which is smaller and more
versatile compared to larger bulk carriers such as
Panamax, Capesize, and Supramax.

Handysize Bulk Carriers generally have a

deadweight tonnage (DWT) ranging from 15,000 to
35,000 tons, making them well-suited for ports
with size restrictions or limited infrastructure.
These vessels are also characterized by their
flexibility in terms of cargo type and trade routes,
allowing them to operate in various markets and
cater to diverse cargo requirements.

The main features of a Handysize Bulk Carrier

include:

1. Multiple cargo holds: Handysize Bulk Carriers

typically have five to seven cargo holds,
providing the flexibility to carry different types
of cargo simultaneously or in separate
compartments.

2. Cargo handling equipment: Handysize Bulk

Carriers are often equipped with their own
onboard cranes or derricks for loading and
unloading, which enables them to operate in
ports without dedicated cargo handling
infrastructure.

3. Draft and beam: Handysize Bulk Carriers have

a relatively shallow draft and smaller beam
compared to larger bulk carriers, allowing them
to access a wider range of ports and waterways.

4. Fuel efficiency: Due to their smaller size,

Handysize Bulk Carriers generally have lower
fuel consumption compared to larger vessels,
making them more cost-effective for certain
routes and cargo types.

Handysize Bulk Carriers play a significant role in

the global shipping industry, particularly in short-
sea shipping and regional trade, where their
versatility and adaptability make them an
attractive option for transporting a wide range of
bulk commodities.

In addition to their versatility, Handysize Bulk

Carriers offer several other advantages in the
shipping industry:

1. Economies of scale: While Handysize Bulk

Carriers may not have the same economies of
scale as larger vessels, they can still transport
substantial quantities of cargo in a cost-effective
manner. This is particularly true for trade routes
with lower cargo volumes, where larger vessels
would not be fully utilized.

2. Niche markets: Handysize Bulk Carriers are

well-suited for niche markets and specialized
trades, such as the transportation of agricultural
products, minor bulk cargoes, and project
cargo. Their ability to access smaller ports and
handle a diverse range of cargo types enables
them to service these markets effectively.

3. Flexibility in changing market conditions:

The adaptability of Handysize Bulk Carriers
allows them to respond to fluctuations in cargo
demand and market conditions more easily than
larger vessels. This flexibility enables
shipowners and charterers to take advantage of
emerging trade opportunities and to mitigate
risks associated with market volatility.

4. Lower port costs: Due to their smaller size,

Handysize Bulk Carriers often incur lower port
fees and charges compared to larger vessels.
This can lead to significant cost savings for both
shipowners and charterers, particularly on
routes with multiple port calls.

5. Reduced environmental impact: Handysize

Bulk Carriers generally have lower fuel
consumption and greenhouse gas emissions
compared to larger vessels. This makes them a
more environmentally friendly option for
transporting bulk commodities, which can be an
important consideration for shipowners,
charterers, and regulators.

Despite these advantages, Handysize Bulk Carriers

also face certain challenges, such as competition
from larger vessels and the need to maintain a
diverse cargo base to ensure profitability. As a
result, it is essential for shipowners, operators, and
charterers to stay informed about market trends,
regulatory changes, and emerging trade
opportunities in order to optimize the performance
of their Handysize Bulk Carriers and to maximize
their return on investment.

Handysize Bulk Carriers play a vital role in the

global shipping industry, providing a flexible and
adaptable solution for transporting a wide range of
bulk commodities. By leveraging their unique
advantages and addressing potential challenges,
Handysize Bulk Carriers will continue to be a key
component of the global maritime trade landscape.

What is Handymax Bulk Carrier?

A Handymax bulk carrier is a type of dry bulk

cargo ship designed to transport large quantities of
dry, unpackaged commodities such as coal, grains,
ores, and other similar goods. The term
“Handymax” refers to a specific size category of
bulk carriers, typically with a carrying capacity
ranging from 35,000 to 50,000 deadweight
tonnage (DWT).

Handymax bulk carriers are smaller than

Supramax carriers (which have a capacity of
around 50,000 to 60,000 DWT) and considerably
smaller than Panamax carriers (which can carry up
to 80,000 DWT). The Handymax category offers a
balance between carrying capacity and operational
flexibility, making them suitable for a variety of
trade routes and cargo types.

Like Supramax carriers, Handymax vessels are

often equipped with on-board cranes that enable
them to self-load and unload cargo. This feature
allows them to operate at ports with limited or no
cargo handling facilities, enhancing their versatility
and making them a popular choice for trade routes
that include smaller ports or less developed
regions.

What is Supramax Bulk Carrier?

A Supramax bulk carrier is a type of dry bulk cargo

ship designed to transport large quantities of dry,
unpackaged commodities, such as coal, grains,
ores, and other similar goods. The term
“Supramax” refers to a specific size category of
bulk carriers, typically ranging between 50,000 and
60,000 deadweight tonnage (DWT).

Supramax bulk carriers are larger than Handymax

carriers (which have a capacity of around 35,000
to 50,000 DWT) but smaller than Panamax carriers
(which can carry up to 80,000 DWT). The
Supramax category was created to fill the gap
between Handymax and Panamax sizes, offering
an optimal balance of carrying capacity, flexibility,
and cost efficiency.

These vessels are equipped with on-board cranes,

which give them the ability to self-load and unload
cargo, allowing them to operate at ports with
limited or no cargo handling facilities. This
versatility makes Supramax bulk carriers well-
suited for a wide range of trade routes and cargo
types.

What is Ultramax Bulk Carrier?

An Ultramax bulk carrier is a type of dry bulk cargo

ship designed to transport large quantities of dry,
unpackaged commodities such as coal, grains,
ores, and other similar goods. The term “Ultramax”
refers to a specific size category of bulk carriers
that generally fall within the Supramax range, with
a carrying capacity of around 60,000 to 65,000
deadweight tonnage (DWT).

Ultramax bulk carriers are a relatively new

classification, offering improved fuel efficiency and
larger cargo capacities compared to traditional
Supramax and Handymax vessels. They are larger
than Handymax carriers (which have a capacity of
around 35,000 to 50,000 DWT) and slightly larger
than Supramax carriers (which have a capacity of
around 50,000 to 60,000 DWT), but smaller than
Panamax carriers (which can carry up to 80,000
DWT).

Like Supramax and Handymax carriers, Ultramax

vessels are typically equipped with on-board
cranes that enable them to self-load and unload
cargo. This feature allows them to operate at ports
with limited or no cargo handling facilities,
enhancing their versatility and making them a
popular choice for trade routes that include smaller
ports or less developed regions. The enhanced
cargo capacity and fuel efficiency of Ultramax
carriers make them an attractive option for
shippers seeking to optimize their supply chains.

What is Panamax Bulk Carrier?

A Panamax bulk carrier is a type of dry bulk cargo

ship designed to transport large quantities of dry,
unpackaged commodities such as coal, grains,
ores, and other similar goods. The term “Panamax”
refers to a specific size category of bulk carriers,
with a carrying capacity of up to 80,000
deadweight tonnage (DWT). The name “Panamax”
is derived from the fact that these vessels are
specifically designed to meet the size limitations of
the original Panama Canal, which connects the
Atlantic and Pacific Oceans.

Panamax bulk carriers are larger than Handymax

(which have a capacity of around 35,000 to 50,000
DWT), Supramax (which have a capacity of around
50,000 to 60,000 DWT), and Ultramax (which have
a capacity of around 60,000 to 65,000 DWT)
carriers. Due to their size, they offer economies of
scale, making them more cost-effective for
transporting large quantities of cargo over long
distances.

Unlike Supramax, Handymax, and Ultramax

carriers, Panamax vessels are not typically
equipped with on-board cranes, as they rely on
port facilities for loading and unloading cargo. This
means that Panamax carriers are more dependent
on the infrastructure available at the ports they
visit, and they are less versatile when it comes to
accessing smaller ports or those with limited cargo
handling facilities.

With the expansion of the Panama Canal in 2016, a

new class of larger vessels called “New Panamax”
or “Neopanamax” was introduced, which can carry
up to 120,000 DWT. These vessels are too large for
the original Panama Canal locks but can transit
through the expanded canal, further enhancing
economies of scale for bulk cargo transportation.

What is Neopanamax Bulk Carrier?

A Neopanamax bulk carrier is a type of cargo ship

specifically designed to fit within the size
constraints of the expanded Panama Canal, also
known as the Neopanamax or New Panamax. The
Panama Canal, a crucial global shipping route,
connects the Atlantic and Pacific Oceans, allowing
ships to avoid the longer and more treacherous
route around the southern tip of South America. In
2016, the canal underwent a significant expansion
to accommodate larger ships, and the new
maximum size of ships that could pass through
was defined as Neopanamax.

Neopanamax bulk carriers are used to transport

large quantities of dry, unpackaged cargo, such as
coal, iron ore, grain, or other bulk commodities.
These vessels are built to optimize the use of the
expanded canal dimensions, which are 366 meters
(1,200 feet) in length, 49 meters (160.7 feet) in
width, and 15.2 meters (49.9 feet) in draft.

By adhering to these dimensions, Neopanamax

bulk carriers can benefit from the shorter transit
time and reduced costs associated with using the
Panama Canal compared to alternative routes. This
allows them to be more competitive in the global
shipping market, contributing to the efficiency of
the international trade system.

What is Kamsarmax Bulk Carrier?

A Kamsarmax bulk carrier is a type of dry bulk

cargo vessel specifically designed to meet the
maximum size restrictions for the berthing and
loading facilities at the Port of Kamsar in the
Republic of Guinea. Kamsarmaxes are a larger
variant of the popular Panamax vessels, which
were initially built to fit the size constraints of the
original Panama Canal.

The primary purpose of Kamsarmax bulk carriers is

to transport dry, unpackaged cargo such as coal,
iron ore, grain, and other bulk commodities. The
size specifications for a Kamsarmax vessel are
typically as follows:

Length overall (LOA): up to 229 meters (751

feet)

Beam (width): up to 32.3 meters (106 feet)

Draft: up to 14.5 meters (47.5 feet)

The Kamsarmax design allows these vessels to

carry more cargo compared to standard Panamax
ships, making them more efficient and economical
for certain shipping routes. Their larger size
enables them to take advantage of economies of
scale, reducing transportation costs per unit of
cargo. Kamsarmax vessels are widely used in the
global shipping industry, particularly for routes that
do not require transiting the Panama Canal or
where the larger Neopanamax vessels are not
necessary.

What is Baby Capesize Bulk Carrier?

A Baby Capesize bulk carrier, also known as a Mini

Capesize or Small Capesize, is a type of dry bulk
cargo vessel that is smaller than the traditional
Capesize carriers but larger than Panamax and
Kamsarmax vessels. Baby Capesizes are designed
to carry unpackaged bulk commodities such as iron
ore, coal, grain, or other raw materials. The
primary advantage of a Baby Capesize is its ability
to navigate through certain ports and waterways
that are inaccessible to standard Capesize vessels
due to size restrictions, while still offering a larger
cargo capacity compared to Panamax or
Kamsarmax ships.

The dimensions of a Baby Capesize bulk carrier

typically fall within the following range:

Length overall (LOA): 225 to 250 meters (738

to 820 feet)

Beam (width): 32 to 43 meters (105 to 141

feet)

Draft: 14.5 to 18 meters (47.5 to 59 feet)

These vessels usually have a cargo capacity of

around 80,000 to 120,000 deadweight tons (DWT).
Their smaller size allows them to access more
ports and loading facilities, offering greater
flexibility in terms of trade routes and cargo
handling compared to standard Capesize vessels.

Baby Capesize bulk carriers are an important part

of the global shipping industry as they bridge the
gap between Panamax or Kamsarmax vessels and
traditional Capesize ships. They contribute to the
efficiency and versatility of the international trade
system by providing more options for transporting
bulk commodities across various routes and port
facilities.

What is Capesize Bulk Carrier?

A Capesize bulk carrier is a large dry bulk cargo

ship designed to transport unpackaged bulk
commodities such as iron ore, coal, grain, or other
raw materials. The term “Capesize” originates from
the fact that these vessels are too large to transit
the Panama Canal and, historically, they needed to
navigate around the Cape of Good Hope in South
Africa or Cape Horn in South America to travel
between the Atlantic and Pacific Oceans.

Capesize bulk carriers have the following typical

dimensions:

Length overall (LOA): 270 to 300 meters (885

to 984 feet)

Beam (width): 43 to 45 meters (141 to 148

feet)

Draft: 18 meters (59 feet) or more

These vessels can carry cargo capacities ranging

from approximately 100,000 to 200,000
deadweight tons (DWT), with some newer, larger
Capesize vessels exceeding 300,000 DWT.

Due to their size, Capesize bulk carriers are not

suited for all ports, and they usually require
specialized deepwater terminals and large cargo
handling facilities to load and unload their cargo.
These ships are commonly used in the global
shipping industry for long-haul, high-volume
routes, such as between Brazil and China for iron
ore, or between Australia and Asia for coal.

The introduction of larger vessels like the Capesize

has brought about economies of scale, reducing
the cost of transporting goods per unit, making
them an essential component of the global
shipping and trade infrastructure.

What is Newcastlemax Bulk Carrier?

A Newcastlemax bulk carrier is a type of dry bulk

cargo vessel that is specifically designed to meet
the size restrictions of the Newcastle Coal
Infrastructure Group (NCIG) export terminal in the
Port of Newcastle, Australia. The primary purpose
of Newcastlemax bulk carriers is to transport large
quantities of dry, unpackaged commodities such as
coal, iron ore, grain, or other bulk materials.

The dimensions of a Newcastlemax bulk carrier

typically fall within the following range:

Length overall (LOA): approximately 300 meters

(984 feet)

Beam (width): up to 50 meters (164 feet)

Draft: up to 18.3 meters (60 feet)

These vessels usually have a cargo capacity of

around 150,000 to 200,000 deadweight tons
(DWT). Newcastlemax bulk carriers are larger than
Panamax and Kamsarmax vessels but slightly
smaller than traditional Capesize carriers. They are
designed to optimize the use of the infrastructure
available at the Port of Newcastle, one of the
world’s largest coal export ports.

Newcastlemax bulk carriers play a significant role

in the global shipping industry, particularly for coal
transportation from Australia to Asia and other
global markets. By adhering to the size
specifications of the Port of Newcastle, these ships
can efficiently load and unload their cargo,
contributing to the effectiveness and
competitiveness of the international trade system.

What is Setouchmax Bulk Carrier?

A Setouchmax bulk carrier is a type of dry bulk

cargo vessel specifically designed to meet the size
restrictions imposed by the Seto Inland Sea in
Japan, which is also known as Setouchi or Seto
Naikai. The Seto Inland Sea is a crucial maritime
transport route in Japan, connecting the Pacific
Ocean to the Sea of Japan. Setouchmax vessels
are built to optimize cargo capacity while adhering
to the constraints of the narrow and shallow
waterways of the Seto Inland Sea.
 A Setouchmax bulk carrier is a bout 203,000 DWT,
being the largest vessels able to navigate the
Setouchi Sea, Japan

Setouchmax bulk carrier has a cargo capacity that

usually ranges between 203,000 and 205,000
deadweight tons (DWT) with maximum draught of
16.1 meters. Setouchmax bulk carriers can
navigate the restricted waters of the Seto Inland
Sea and access various ports in the region.
Setouchmax bulk carriers transport dry,
unpackaged commodities such as coal, iron ore,
grain, and other bulk materials.

By adhering to the size constraints of the Seto

Inland Sea, Setouchmax bulk carriers can
efficiently serve the Japanese shipping industry,
transporting goods within the country as well as to
and from international markets. They play a vital
role in supporting the Japanese economy and
facilitating trade in the region.

What is Lake-Fitted Bulk Carrier?

A Lake-fitted bulk carrier, also known as a Great

Lakes bulk carrier or laker, is a type of dry bulk
cargo vessel specifically designed to navigate the
Great Lakes and St. Lawrence Seaway system in
North America. These ships transport large
quantities of dry, unpackaged bulk commodities
such as iron ore, coal, grain, or other materials
between ports located on the Great Lakes and
along the St. Lawrence Seaway.

Lake-fitted bulk carriers are built to comply with

the size restrictions imposed by the locks and
channels within the Great Lakes and St. Lawrence
Seaway system. The dimensions of a Lake-fitted
bulk carrier generally fall within the following
range:

Length overall (LOA): up to 225 meters (740

feet)

Beam (width): up to 23.8 meters (78 feet)

Draft: up to 8 meters (26 feet)

These vessels have a cargo capacity typically

ranging between 25,000 and 40,000 deadweight
tons (DWT), depending on their size and design.
Some larger Lake-fitted carriers, known as
“Thousand Footers,” can reach up to 305 meters
(1,000 feet) in length and carry over 60,000 DWT.

Lake-fitted bulk carriers are equipped with features

that allow them to efficiently load and unload cargo
at ports with limited infrastructure, such as self-
unloading systems. They play a crucial role in the
regional shipping industry, facilitating the
transportation of goods across the Great Lakes and
connecting the industrial heartland of North
America with domestic and international markets.

What is Seawaymax Bulk Carrier?

A Seawaymax bulk carrier is a type of dry bulk

cargo vessel specifically designed to meet the size
restrictions of the St. Lawrence Seaway, a system
of locks, canals, and channels that connects the
Great Lakes in North America to the Atlantic
Ocean. Seawaymax vessels are built to optimize
cargo capacity while adhering to the size
constraints of the locks and channels within the St.
Lawrence Seaway system.

The dimensions of a Seawaymax bulk carrier

typically fall within the following range:

Length overall (LOA): up to 226 meters (740

feet)

Beam (width): up to 23.8 meters (78 feet)

Draft: up to 8 meters (26 feet)

These vessels have a cargo capacity that usually

ranges between 25,000 and 40,000 deadweight
tons (DWT). Seawaymax bulk carriers transport
dry, unpackaged commodities such as coal, iron
ore, grain, and other bulk materials. They are
smaller than Panamax, Kamsarmax, or Capesize
vessels, but their design allows them to navigate
the restricted waters and lock systems of the St.
Lawrence Seaway.

By adhering to the size constraints of the St.

Lawrence Seaway, Seawaymax bulk carriers can
efficiently serve the North American shipping
industry, transporting goods between the Great
Lakes region and the Atlantic Ocean. They play a
vital role in facilitating trade and supporting the
regional economy by connecting the industrial
heartland of North America with domestic and
international markets.

What is Malaccamax Bulk Carrier?

A Malaccamax bulk carrier is a type of dry bulk

cargo vessel specifically designed to meet the size
restrictions imposed by the Strait of Malacca,
which is a narrow and shallow waterway located
between the Malay Peninsula and the Indonesian
island of Sumatra. The Strait of Malacca is one of
the world’s most critical shipping routes,
connecting the Indian Ocean to the South China
Sea and the Pacific Ocean.

Malaccamax vessels are built to optimize cargo

capacity while adhering to the size constraints of
the Strait of Malacca. The dimensions of a
Malaccamax bulk carrier typically fall within the
following range:

Length overall (LOA): up to 333 meters (1,093

feet)

Beam (width): up to 60 meters (197 feet)

Draft: up to 20.5 meters (67.3 feet)

These vessels usually have a cargo capacity of

around 200,000 to 300,000 deadweight tons
(DWT). Malaccamax bulk carriers transport dry,
unpackaged commodities such as coal, iron ore,
grain, and other bulk materials. They are larger
than Panamax, Kamsarmax, and Newcastlemax
vessels but smaller than some of the largest
Capesize carriers.

By adhering to the size constraints of the Strait of

Malacca, Malaccamax bulk carriers can efficiently
serve the global shipping industry, particularly for
routes that involve transiting the strait. They play
a vital role in facilitating international trade and
supporting the efficiency of the global maritime
transport system.

What is Dunkirkmax Bulk Carrier?

A Dunkirkmax bulk carrier is a type of dry bulk

cargo vessel specifically designed to meet the size
restrictions imposed by the Port of Dunkirk in
France. Dunkirkmax vessels are built to optimize
cargo capacity while adhering to the size
constraints of the port, which has limitations in
terms of draft and the width of its navigation
channels.

The dimensions of a Dunkirkmax bulk carrier

typically fall within the following range:

Length overall (LOA): up to 289 meters (948

feet)

Beam (width): up to 45 meters (148 feet)

Draft: up to 17.5 meters (57.4 feet)

These vessels usually have a cargo capacity

ranging from 110,000 to 190,000 deadweight tons
(DWT). Dunkirkmax bulk carriers are primarily
used for transporting dry, unpackaged commodities
such as coal, iron ore, grain, and other bulk
materials. They are larger than Panamax and
Kamsarmax vessels but smaller than some of the
Capesize carriers.

By adhering to the size constraints of the Port of

Dunkirk, Dunkirkmax bulk carriers can efficiently
serve the European shipping industry, particularly
for routes that involve transiting through the port.
They play a vital role in facilitating regional trade
and supporting the efficiency of the European
maritime transport system.

What is Self-Trimming Bulk Carrier?

A self-trimming bulk carrier is a type of dry bulk

cargo vessel specifically designed to minimize or
eliminate the need for manual trimming during the
loading and unloading process. Trimming refers to
the process of leveling the cargo within the cargo
holds to ensure even distribution of weight,
maintain stability, and facilitate efficient unloading.

Self-trimming bulk carriers are equipped with

features and design elements that enable the
cargo to naturally level itself or be mechanically
distributed during loading, eliminating the need for
manual intervention or additional trimming
equipment. Some key design features include:

1. Hopper-shaped cargo holds: The cargo holds

in self-trimming bulk carriers have inclined sides
or hopper-shaped bottoms, which guide the
cargo towards the center of the hold during
loading, thereby promoting even distribution.

2. Self-unloading systems: Many self-trimming

bulk carriers are equipped with self-unloading
systems, such as conveyor belts or suction
devices, which can quickly and efficiently
remove cargo from the hold without the need
for manual labor or separate trimming
equipment.

3. Improved hatch designs: Self-trimming

vessels may also incorporate improved hatch
designs that facilitate even distribution of cargo
during loading, further reducing the need for
manual trimming.

These design features enhance the overall

efficiency and safety of the loading and unloading
process, as well as reducing the time spent in port
and associated labor costs. Self-trimming bulk
carriers are used to transport a wide range of dry,
unpackaged commodities such as coal, iron ore,
grain, and other bulk materials, making them a
valuable component of the global shipping
industry.

Bulk Carrier Time Charter Rates

Bulk carrier time charter rates are an essential

aspect of the maritime shipping industry. These
rates refer to the amount paid by a charterer to
rent a bulk carrier for a specific period, usually
expressed in dollars per day or per ton. These
rates are influenced by various factors such as the
supply and demand for bulk carriers, the size and
age of the vessel, the route, the duration of the
charter, and market conditions.

In the shipping industry, there are several types of

bulk carriers, each with different capacities and
functionalities. These include:

1. Handysize: With a capacity of 15,000 to

35,000 deadweight tons (DWT), Handysize
vessels are the smallest and most flexible type
of bulk carriers. They are suitable for smaller
ports and can be used for a variety of cargo
types.

2. Handymax/Supramax: These vessels have a

capacity of 35,000 to 60,000 DWT and are
larger than Handysize carriers. They are
equipped with onboard cranes, allowing them to
handle cargo at ports without the necessary
infrastructure.

3. Panamax: Named for their ability to transit the

Panama Canal, Panamax vessels have a capacity
of 60,000 to 80,000 DWT. They are often used
for carrying coal, grain, and other bulk
commodities.

4. Capesize: The largest bulk carriers, with a

capacity of 100,000 DWT and above, Capesize
vessels are too big for the Panama Canal and
must navigate around the Cape of Good Hope or
Cape Horn. They are primarily used for carrying
iron ore and coal.

Time charter rates for these different types of bulk

carriers can vary significantly due to factors such
as vessel size, age, route, and market conditions.
For example, Capesize vessels typically command
higher rates than smaller carriers due to their
larger capacity and the limited number of ports
that can accommodate them.

Market conditions can also greatly affect time

charter rates. During periods of high demand,
rates may increase, while a market oversupply can
lead to lower rates. Additionally, geopolitical
events, seasonal fluctuations, and global economic
trends can impact rates and the overall shipping
industry.

To monitor bulk carrier time charter rates, industry

participants often rely on benchmark indices, such
as the Baltic Dry Index (BDI), which tracks the
daily average of time charter rates for various
vessel sizes and routes. By following these indices,
ship owners, charterers, and other stakeholders
can better understand the current market
dynamics and make informed decisions regarding
chartering bulk carriers.

We kindly suggest that you visit our web page to

obtain the daily updated Bulk Carrier Time Charter
Rates and Dry Bulk Carrier Freight Rates
www.handybulk.com

What is the forecast for Dry Bulk Freight

Rates?

For daily updated Bulk Carrier Time Charter Rates

and Dry Bulk Carrier Freight Rates please check
the top of this page (Ship Charter Rates). For real-
time Bulk Carrier Time Charter and Freight Rate
forecasts or predictions please call Baltic Exchange
reporting shipbrokers. To stay updated with the
latest dry bulk shipping market forecasts and dry
bulk market analysis, you can consult reputable
sources such as shipping industry publications,
market research reports, and financial news
outlets. Additionally, following benchmark indices
like the Baltic Dry Index (BDI) can provide insights
into the overall direction of the dry bulk shipping
market. However, we can provide you with an
overview of the factors that typically influence dry
bulk freight rates and the outlook for the shipping
industry.

Dry bulk freight rates are primarily driven by

supply and demand dynamics, which are
influenced by a variety of factors. These include:

1. Global economic growth: Stronger economic

growth generally translates to higher demand
for raw materials and commodities, leading to
increased demand for dry bulk shipping and
upward pressure on freight rates.

2. Fleet supply: The supply of dry bulk carriers is

impacted by the rate of new vessel deliveries
and scrapping of older vessels. An oversupplied
market with a high number of new vessel
deliveries can lead to lower freight rates,
whereas a tighter supply may push rates higher.

3. Commodity demand: Demand for key dry bulk

commodities, such as iron ore, coal, and grain,
plays a significant role in determining freight
rates. Factors such as industrial production,
urbanization, and global trade policies can
impact the demand for these commodities.

4. Seasonal factors: Dry bulk freight rates often

exhibit seasonal patterns, with higher demand
during certain times of the year. For example,
grain exports tend to peak during harvest
seasons, while coal demand may increase
during the winter months in the Northern
Hemisphere.

5. Geopolitical events: Political developments,

trade disputes, and regulatory changes can have
a significant impact on the dry bulk shipping
market and freight rates.

Given these factors, the outlook for dry bulk freight

rates is subject to change based on the prevailing
market conditions and global economic trends. It is
crucial for stakeholders in the shipping industry to
closely monitor these factors and consider their
potential impact on freight rates.

When attempting to forecast dry bulk freight rates,

it’s important to consider additional factors that
could impact the shipping industry. These may
include:

6. Infrastructure development: Improvements

in port infrastructure, such as increased capacity
or the construction of new terminals, can impact
the demand for dry bulk shipping. This can be
particularly relevant in emerging markets,
where infrastructure development can lead to
increased import and export activity.

7. Technological advancements: Innovations in

ship design, fuel efficiency, and navigation can
have an impact on the overall efficiency of the
dry bulk shipping industry. This may influence
fleet supply, operational costs, and ultimately,
freight rates.

8. Environmental regulations: Stricter

environmental regulations, such as those
related to emissions and ballast water
treatment, can impact the dry bulk shipping
sector. Compliance with new regulations may
lead to increased costs for shipowners and could
affect the supply of vessels if older ships
become uneconomical to operate.

9. Currency fluctuations: Changes in currency

exchange rates can influence global trade
dynamics, which may subsequently impact the
demand for dry bulk shipping. For example, a
stronger US dollar could make commodities
more expensive for countries with weaker
currencies, potentially reducing demand for
imports and affecting freight rates.

10. Bunker fuel prices: The cost of bunker fuel,

which is a significant operational expense for
shipowners, can impact freight rates. Higher
fuel prices can lead to increased shipping costs,
which may be passed on to charterers in the
form of higher freight rates.

Given the complex interplay of these factors,

forecasting dry bulk freight rates can be
challenging. It’s essential for industry stakeholders
to stay informed about the latest market trends
and global developments to make informed
decisions about chartering, investing, or operating
in the dry bulk shipping sector.

To get a better understanding of the market

outlook, you can consult industry experts, read
specialized shipping reports, and attend
conferences or webinars related to the dry bulk
shipping industry. By staying informed and
considering multiple sources of information, you
will be better equipped to anticipate potential shifts
in the market and adjust your strategies
accordingly.

What is the Freight Rate Index?

The Freight Rate Index is a general term that

refers to an index used to track the average freight
rates for various types of shipping, including dry
bulk, tanker, and container shipping. These indices
provide a benchmark for market participants to
assess the current state of the shipping industry
and understand fluctuations in freight rates over
time. They are particularly useful for shipowners,
charterers, traders, and analysts in making
informed decisions about chartering, investing, or
operating within the shipping sector.

Several freight rate indices exist for different

shipping segments, and some of the most
commonly referenced indices include:

1. Baltic Dry Index (BDI): The BDI is a widely

followed shipping index that provides a daily
measure of the cost of shipping dry bulk
commodities, such as iron ore, coal, and grain.
The index is calculated by the Baltic Exchange,
based in London, and takes into account the
average time charter rates for various vessel
sizes, including Capesize, Panamax, Supramax,
and Handysize. A rising BDI typically indicates
stronger demand for dry bulk shipping and
higher freight rates, while a falling BDI suggests
weaker demand and lower rates.

2. Baltic Dirty Tanker Index (BDTI) and Baltic

Clean Tanker Index (BCTI): These indices
track the daily average freight rates for crude oil
and clean petroleum products, respectively. The
Baltic Dirty Tanker Index focuses on the larger
vessels used for crude oil transportation, such
as Very Large Crude Carriers (VLCCs) and
Suezmax tankers, while the Baltic Clean Tanker
Index covers smaller vessels, such as Medium
Range (MR) and Long Range (LR) product
tankers.

3. Shanghai Shipping Exchange (SSE)

Containerized Freight Index: This index
tracks the average freight rates for container
shipping on various trade routes, providing
insights into the container shipping market. The
index is calculated weekly and is based on data
from a panel of carriers, freight forwarders, and
other industry participants.

These freight rate indices, along with others

available in the market, offer valuable insights into
the overall health of the shipping industry and help
stakeholders to gauge the supply and demand
dynamics for different shipping segments. By
monitoring these indices, market participants can
make better-informed decisions about chartering,
investing, or operating in the maritime industry.

How do I Lnd the best dry bulk freight rate?

Finding the best dry bulk freight rate involves

several steps, as well as a thorough understanding
of the market dynamics and factors that influence
freight rates. Here are some key steps to help you
find the best rate for your dry bulk shipping needs:

1. Research the market: Begin by studying the

current state of the dry bulk shipping market.
Familiarize yourself with the factors that
influence freight rates, such as supply and
demand dynamics, global economic conditions,
and seasonal fluctuations. Keep an eye on
benchmark indices like the Baltic Dry Index
(BDI) to get an idea of prevailing market rates.

2. Understand your cargo requirements:

Determine the specific requirements for your
cargo, including the type of bulk commodity you
are shipping, the volume or weight, and any
special handling or storage needs. This
information will help you identify the most
suitable type of bulk carrier for your shipment.

3. Identify suitable routes and ports: Evaluate

the transportation route, including the origin
and destination ports, as well as any potential
intermediate stops. Consider factors such as
port infrastructure, draft restrictions, and
regional regulations that may impact your
shipping options and costs.

4. Obtain quotes from multiple sources: Reach

out to various shipowners, brokers, or freight
forwarders to obtain quotes for your shipping
requirements. Be sure to provide detailed
information about your cargo, route, and
preferred vessel type to receive accurate
quotes. Comparing quotes from multiple sources
can help you identify the most competitive
rates.

5. Negotiate terms: Once you have shortlisted

potential service providers, engage in
negotiations to secure the best possible rate.
Keep in mind that factors such as payment
terms, laytime, and demurrage rates can also
impact the overall cost of your shipment, so be
prepared to negotiate these terms as well.

6. Monitor market fluctuations: The dry bulk

shipping market is known for its volatility, so it’s
crucial to stay informed about market
 developments that could impact freight rates.
Continuously monitor factors such as economic
trends, geopolitical events, and changes in
regulations to identify potential opportunities or
challenges for your shipping needs.

7. Establish long-term relationships: Building

strong relationships with reliable service
providers can be advantageous in securing
favorable freight rates and ensuring consistent
service. Working with a trusted partner can also
help you navigate the complexities of the dry
bulk shipping market more effectively.

By following these steps and staying informed

about the dry bulk shipping market, you can
increase your chances of securing the best freight
rate for your specific needs. Remember that
market conditions can change rapidly, so it’s
important to remain flexible and adapt your
shipping strategy as needed.

How Dry Bulk Freight is calculated?

Dry bulk freight is typically calculated based on

several factors, which may include the type and
size of the vessel, the cargo volume or weight, the
distance between the origin and destination ports,
and prevailing market conditions. Here’s an
overview of the main components involved in
calculating dry bulk freight rates:

1. Ship Type and Size: The size and type of the

bulk carrier play a significant role in determining
the freight rate. Larger vessels, like Capesize,
typically command higher freight rates due to
their greater cargo capacity, while smaller
vessels, like Handysize, may have lower rates.
The age and condition of the vessel can also
impact the rate, with newer and more efficient
ships potentially commanding a premium.

2. Dry Bulk Cargo Volume or Weight: The

amount of cargo being shipped, usually
measured in metric tons, is a crucial factor in
determining the freight rate. Some contracts
may be based on a fixed rate per ton, while
others may use a sliding scale, with the rate per
ton decreasing as the total cargo volume
increases.

3. Distance and Route: The distance between

the origin and destination ports directly impacts
the cost of shipping, with longer distances
generally resulting in higher freight rates. The
specific route taken may also influence the rate,
as factors like congestion, port fees, and canal
transit fees can affect the overall shipping cost.

4. Dry Bulk Shipping Market Conditions:

Prevailing market conditions, such as supply and
demand for dry bulk carriers, can significantly
impact freight rates. During periods of high
demand or limited supply, rates may increase,
while an oversupply of vessels or reduced
demand can lead to lower rates.

5. Time Charter or Voyage Charter: Dry bulk

freight can be calculated based on either a time
charter or voyage charter agreement. In a time
charter, the rate is typically expressed as a daily
rate (dollars per day) for the use of the vessel,
while in a voyage charter, the rate is expressed
as a lump sum or per-ton rate for the entire
voyage. The choice between these two options
can depend on factors like the length of the
voyage, the flexibility required, and the
charterer’s preferences.

6. Additional Costs: When calculating dry bulk

freight, it is essential to consider additional
costs that may be incurred during the shipping
process. These can include bunker fuel costs,
port charges, canal transit fees, and other
expenses related to the voyage. In some cases,
these costs may be included in the freight rate,
while in others, they may be billed separately.

By taking all of these factors into account, you can

calculate the dry bulk freight rate for a specific
shipment. Keep in mind that rates can be subject
to negotiation and may fluctuate based on market
conditions and other variables.

How to Get the Best Dry Bulk Freight

Shipping Rate?

To secure the best dry bulk freight shipping rate, it

is essential to understand the market dynamics
and adopt a strategic approach. Here are some
steps to help you obtain the best rate for your dry
bulk shipping needs:

1. Know your cargo: Understand the specific

requirements of your cargo, including the type
of commodity, volume, weight, and any special
handling or storage needs. This information will
help you identify the most suitable type of bulk
carrier for your shipment.

2. Study the market: Familiarize yourself with

the factors that influence dry bulk freight rates,
such as supply and demand dynamics, global
economic conditions, seasonal fluctuations, and
geopolitical events. Monitor benchmark indices
like the Baltic Dry Index (BDI) to get an idea of
the prevailing market rates.

3. Plan your route: Evaluate the transportation

route, including origin and destination ports, as
well as any potential intermediate stops. Take
into account factors such as port infrastructure,
draft restrictions, and regional regulations that
may impact your shipping options and costs.

4. Obtain multiple quotes: Contact various

shipowners, brokers, or freight forwarders to
obtain quotes for your shipping requirements.
Provide detailed information about your cargo,
route, and preferred vessel type to receive
accurate quotes. Comparing quotes from
multiple sources can help you identify the most
competitive rates.

5. Negotiate terms: Engage in negotiations with

shortlisted service providers to secure the best
possible rate. Don’t forget that factors such as
payment terms, laytime, and demurrage rates
can also impact the overall cost of your
shipment, so negotiate these terms as well.

6. Flexibility in timing: If possible, consider

flexibility in your shipping schedule. Dry bulk
freight rates can be volatile and fluctuate
depending on market conditions. By being
flexible with your shipping dates, you may be
able to capitalize on lower rates during periods
of reduced demand.

7. Foster long-term relationships: Establishing

strong relationships with reliable service
providers can be beneficial in securing favorable
freight rates and ensuring consistent service.
Working with a trusted partner can also help
you navigate the complexities of the dry bulk
shipping market more effectively.

8. Stay informed: Continuously monitor market

developments, economic trends, and changes in
regulations that could impact freight rates.
Staying informed will help you identify potential
opportunities or challenges for your shipping
needs and adapt your strategy accordingly.

By following these steps and maintaining a

thorough understanding of the dry bulk shipping
market, you can increase your chances of securing
the best freight rate for your specific needs. Keep
in mind that market conditions can change rapidly,
so stay flexible and be prepared to adjust your
shipping strategy as necessary.

Dry Bulk Shipping Market Overview

The dry bulk shipping market is a critical segment

of the global shipping industry, responsible for
transporting various bulk commodities such as iron
ore, coal, grain, and other raw materials. These
goods are essential for industrial production,
infrastructure development, and global trade. Here
is an overview of the dry bulk shipping market:

1. Ship types: The dry bulk shipping market

consists of several vessel types, categorized by
size and cargo capacity. The most common
types include Capesize, Panamax, Supramax,
and Handysize vessels. Each vessel type has
specific characteristics that make it suitable for
particular cargo types and trade routes.

2. Dry Bulk Market dynamics: The dry bulk

shipping market is characterized by its
cyclicality and volatility. This is primarily driven
by the supply and demand dynamics of both the
shipping market and the commodities being
transported. Factors such as global economic
growth, industrial production, commodity
demand, fleet supply, and geopolitical events
can significantly impact freight rates and market
conditions.

3. Global Economic Growth: Strong global

economic growth generally leads to increased
demand for raw materials, which in turn drives
the demand for dry bulk shipping. Conversely, a
slowdown in economic growth can result in
reduced demand for commodities and lower
freight rates.

4. Commodity Demand: The demand for key dry

bulk commodities such as iron ore, coal, and
grain significantly influences freight rates.
Industrial production, urbanization, global trade
policies, and other factors can affect the
demand for these commodities, which
subsequently impacts the dry bulk shipping
market.

5. Dry Bulk Fleet Supply: The supply of dry bulk

carriers, determined by the rate of new vessel
deliveries and the scrapping of older vessels,
can impact freight rates. An oversupplied
market with a high number of new vessel
deliveries can lead to lower freight rates, while a
tighter supply may push rates higher.

6. Seasonal Factors: The dry bulk shipping

market is subject to seasonal fluctuations, with
certain times of the year experiencing higher
demand. For example, grain exports typically
peak during harvest seasons, while coal demand
may increase during the winter months in the
Northern Hemisphere.

7. Geopolitical Events: Political developments,

trade disputes, and regulatory changes can have
a significant impact on the dry bulk shipping
market and freight rates. Market participants
need to closely monitor these events to
anticipate potential shifts in market conditions.

8. Benchmark Indices: The Baltic Dry Index

(BDI) is a widely followed shipping index that
provides a daily measure of the cost of shipping
dry bulk commodities. The index is calculated by
the Baltic Exchange and is based on the average
time charter rates for various vessel sizes. The
BDI serves as a barometer for the overall health
of the dry bulk shipping market and can provide
insights into market trends and freight rate
fluctuations.

The dry bulk shipping market is a complex and

volatile segment of the global shipping industry,
heavily influenced by global economic trends,
commodity demand, fleet supply, and geopolitical
events. Stakeholders in the shipping industry must
closely monitor these factors and adapt their
strategies accordingly to navigate the ever-
changing market landscape.

Dry Bulk Shipping Market Size and Share

The global dry bulk shipping market is a significant

segment of the shipping industry, with a market
size of approximately 6.5 billion deadweight tons
(DWT) as of 2023. The market is expected to grow
at a CAGR of 4.5% between 2023-2026, driven by
increasing demand for raw materials and a rise in
global trade.

The market share of the dry bulk shipping industry

is dominated by a few key players, with the top ten
companies accounting for a significant portion of
the market. These companies include giants like
Cargill, Bunge, Archer Daniels Midland, and
Glencore, which operate large fleets of bulk
carriers and have a global presence.

Asia-Pacific is the largest market for dry bulk

shipping, accounting for around 65% of the global
market share. This is primarily due to the region’s
increasing demand for raw materials and a rise in
infrastructure development projects. China is the
world’s largest importer of iron ore and coal, which
are among the most commonly transported
commodities in the dry bulk shipping market.

Europe and North America also account for a

significant portion of the market share, driven by
demand for raw materials in industries like steel
production, power generation, and construction.

The dry bulk shipping market is highly competitive,

with numerous small and medium-sized operators
competing with larger players. The industry is also
subject to significant cyclicality and volatility, with
freight rates and market conditions fluctuating
based on global economic conditions, supply and
demand dynamics, and other factors.

Overall, the dry bulk shipping market is an

essential segment of the global shipping industry,
providing a vital link between producers and
consumers of raw materials. Despite the
challenges posed by market volatility and
competition, the industry is expected to continue
growing over the coming years, driven by
increasing demand for raw materials and a rise in
global trade.

HEADQUARTERS

HandyBulk LLC
Oceania Business Plaza Tower 2000
Street Punta Colon 43th Floor
Panama City, Panama

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