Chap 6 Overview of

Commercial Ship Management

What is Ship Management• When a ship is purchased for importing and exporting goods, a ship management team is required to maintain and operate the vessels.• The function of the management team is to provide the owner with support throughout the occupancy or charter of the vessel. • Vessels can range in sizes and function.•Most Management companies provide the owner or operator with crew on board. • When the ship comes out of the Ship Yard (where the ship is built) the management company takes it over providing technical support to the owner.• Most Management companies also offer other services as inspection prior to purchase and supervision during building.

Ship Management Services

Technical SupportAssignment of port engineer, superintendent and/or port captain to perform superintendent functions such as:

•Management of maintenance and repair plans •Shipyard supervision •Ensuring compliance with regulatory agencies •Coordination of vetting inspections and post-inspection action planning •Safety and security assessments and awareness training as required •Internal/external audit corrective action implementation

Crewing Expertise

* Experienced in handling both domestic and international crewing requirements* Crew travel arrangements made in-house by our travel department* Labor relations personnel with extensive experience working with the seafarer labor unions, having developed and negotiated many CBAs

http://www.crowley.com/What-We-Do/Vessel-Management/Overview

Safety, Quality and Environmental Assurance

* have extensive experience in developing and implementing well-documented management systems governed by clear procedures and guidelines.* All processes meet the requirements of ISO 9000 and 14000, ISM Code and Responsible Carrier Program

ISO 9000 is a series of standards, developed and published by the International Organization for Standardization (ISO), that define, establish, and maintain an effective quality assurance system for manufacturing and service industries

ISO 14000 is a series of environmental management standards developed and published by the International Organization for Standardization ( ISO ) for organizations. The ISO 14000 standards provide a guideline or framework for organizations that need to systematize and improve their environmental management efforts.

Procurement

•Maximize value for the clients by utilizing discounts and purchasing power earned through our worldwide corporate operations and the contracts we maintain with numerous vendors and suppliers. • have the services of a dedicated buyer who have prices and procures materials, supplies and spares. •A logistics manager arranges the delivery of supplies and coordinates delivery with port agents and vessels. •A dedicated buyer is responsible for the purchase of bunkers for vessels and is able to utilize volume discounts across the fleet.

Insurance

Insurance Co’s Pledge.

* have the ability to assist in the placement of all types of marine insurance coverages on behalf of customers. •offer a full service claims staff with extensive experience in handling marine claims

What is Insurance* Insurance is a form of risk management in which the insured transfers the cost of potential loss to another entity in exchange for monetary compensation known as the premium. * Insurance allows individuals, businesses and other entities to protect themselves against significant potential losses and financial hardship at a reasonably xaffordable rate. We say "significant" because if the potential loss is small, then it doesn't make sense to pay a premium to protect against the loss. After all, you would not pay a monthly premium to protect against a $50 loss because this would not be considered a financial hardship for most.

• Insurance is appropriate when you want to protect against a significant monetary loss.

•Take life insurance as an example.• If you are the primary breadwinner in your home, the loss of income that your family would experience as a result of our premature death is considered a significant loss and hardship that you should protect them against. • It would be very difficult for your family to replace your income, so the monthly premiums ensure that if you die, your income will be replaced by the insured amount.• The same principle applies to many other forms of insurance. If the potential loss will have a detrimental effect on the person or entity, insurance makes sense.

Accounting and Finance Management

* work in partnership with the vessel owner/operator to develop and execute operating budgets •Preparation of annual budgets and execution of monthly performance tracking helps identify variances and trends with the same certainty as our own vessels •Contract administration functions including re-billing, documentation management and tax reporting

Legal Support

• maintain both internal and external legal counsel teams with combined expertise in all phases of international laws and regulations • able to continue providing best-in-class legal support, designed a training module for the Foreign Corrupt Practices Act (FCPA).

Chartering

• Depending on the size and duration of the project, can offer a selection of specialized owned assets or provide alternatives through any brokerage network • can assist the company in identifying possible alternatives for chartered tonnage or dealing with a charter claim • can conduct on hire/off hire vessel condition surveys and provide complete technical findings and reports.

What is ship husbandry?

* An agent appointed by the owner of a ship, and invested with authority to make the requisite repairs, and attend to the management, equipment, and other concerns of the ship he/she is usually authorized to act as the general agent of the owners, in relation to the ship in her home port

* A vessel may require much more than simple ship agency services when in port. The need often arises for husbandry services, which can sometimes mean the involvement of a different agent to that which is handling the port call.

Husbandry Services

Documented Ship InspectionUnderwater Repairs & MaintenancePropeller Polishing & Hull CleaningMarine SalvageOthers:• Crew handling - meet & greet,• hotel bookings, • Shore pass arrangements, etc. • Crew welfare - doctor, dentist, mail, and prepaid telephone calling cards • Spares clearance and delivery Inward & outward clearance Liaison with local authorities • Follow-up activities with workshops, contractors etc.• Bunker fuels and lubricants • Communication assistance

Marine Insurance

* covers the loss or damage of ships, cargo, terminals, and any transport or cargo by which property is transferred, acquired, or held between the points of origin and final destination.* Cargo insurance is a sub-branch of marine insurance, though Marine also includes Onshore and Offshore exposed property (container terminals, ports, oil platforms, pipelines); Hull; Marine Casualty; and Marine Liability.

Cargo Insurance

Cargo Insurance•The purpose of cargo insurance is to cover goods in transit – during land transport as well as transport by sea or air. • It is essential for cargo insurance that a loss is recoverable only by an insured who at the time of loss has an insurable interest in the goods. • The insurable interest or obligation to take out insurance is usually determined by a term of delivery, such as Incoterms.

Trade terms published by the International Chamber of Commerce (ICC) that are commonly used in both international and domestic trade contracts. Incoterms, short for "International Commercial Terms," are used to make international trade easier by helping traders in different countries understand one another.

Overview of Insurance Coverage

o Hull insurance o Total loss insurances O War insurance o Loss of hire insuranceO P&I insurance O Cargo insurance

1. Hull insurance

* What objects are covered * What objects are not covered * Scope of cover; overview* Total loss* Damage* Collision liability

Total loss insurances

* Addition to the hull insurance mainly applicable in A total loss situation.Hull interest,: - Aimed at covering the portion of the value that are

not included in the assessed insurable value - Presumes that assessed value lower than actual

value* accepted even if higher, but limited.

Excess Clause

3. War insurance* Introduction* Scope and termination* Total loss* Damage* Loss of time* Owners liability* Occupational injury

Loss of hire

o Cover loss of incomeo Limited scope: o Main rule: tied to damage covered under hull insurance, o But some added situations, o Total loss not covered o Calculation of losso Deprived of income due to damageo time lost and daily income

P&I insurance

* Protection and indemnity* (Skuld and Gard ) P & I eg. Of company.* The mutual aspect* The International Group

Protection and indemnity insurance,

• commonly known as P&I insurance, is a form of marine insurance provided by a P&I club. A P&I club is a mutual (i.e. co-operative ) insurance association that provides cover for its members, who will typically be ship-owners, ship-operators or demise charterers.• Unlike a marine insurance company, which is answerable to its shareholders, a P&I club is the servant only of its members.

Indemnity: to protect (someone) by promising to pay for the cost of possible future damage, loss, or injury.

• Both P&I clubs and conventional marine insurers are governed by the provisions of the Marine Insurance Act 1906. • Marine insurers provide cover for known quantifiable risks, mainly Hull & Machinery insurance for shipowners, and Cargo Insurance for cargo owners.• P&I Clubs provide insurance cover for broader indeterminate risks, such as third party liabilities that marine insurers are loath to cover. • Third party risks include a carrier’s liability to a cargo-owner for damage to cargo, a ship’s liability after a collision, environmental pollution and war risk insurance; (although some marine insurers are also prepared to cover war risks).

• It follows that any given cargo may be insured twice: the shipper/cargo-owner will take out conventional cover, and the carrier will have P&I cover.• If the cargo is lost or damaged, the cargo-owner should first make a cargo claim against the carrier; but the latter may avoid liability because either (i) he did not cause the loss, or (ii) the Hague-Visby Rules grant exemption from liability .• In such a case, the cargo owner will claim against his own insurer. • If the cargo-owner fails to claim first against the carrier, but claims against his own insurer, the latter (having reimbursed their client) will, through subrogation, be able to pursue the claim in their own right against the carrier.

Subrogation is the right for an insurer to pursue a third party that caused an insurance loss to the insured. This is done as a means of recovering the amount of the claim paid to the insured for the loss

P&I insurance, cover

P&I insurance, cover * Ship owners liability through indemnity * Only listed liability, not general * Only legal liability, not ex gratia** payment* Both contractual and tort liability* But; only in direct connection with the running of the ship. * With no sum insured

** When something has been done ex gratia (by favour), it has been done voluntarily, out of kindness or grace. In law, an ex gratia payment is a payment made without the giver recognising any liability or legal obligation.

tort liability

Definition•Legal obligation of one party to a victim as a results of a civil wrong

or injury. • This action requires some form of remedy from a court system.• A tort liability arises because of a combination of directly violating

a person's rights and the transgression of a public obligation causing damage or a private wrongdoing.

• Evidence must be evaluated in a court hearing to identify who the tortfeasor/liable party is in the case.

P & I Club• Commonly known as P&I insurance, is a form of marine insurance provided by a P&I club.• A P&I club is a mutual (i.e. co-operative ) insurance association that provides cover for its members, who will typically be ship-owners, ship-operators or demise charterers. • Unlike a marine insurance company, which is answerable to its shareholders, a P&I club is the servant only of its members.•Both P&I clubs and conventional marine insurers are governed by the provisions of the Marine Insurance Act 1906.• Marine insurers provide cover for known quantifiable risks, mainly Hull & Machinery insurance for shipowners, and Cargo Insurance for cargo owners.• By contrast, P&I Clubs provide insurance cover for broader indeterminate risks, such as third party liabilities that marine insurers are loath to cover.• Third party risks include a carrier’s liability to a cargo-owner for damage to cargo, a ship’s liability after a collision, environmental pollution and war risk insurance; (although some marine insurers are also prepared to cover war risks).

Cargo insurance

Cargo insurance * property damage covering* Total loss* Shortage* Damage* Salvage measuresDoes not cover* Liability * General economic loss

Cargo Claims1. Immediate Notification for SurveyGive immediate notification to insurer or surveyor as specified in the Certificate of Insurance.If the name specified is a Survey Agent, obtain the survey report for submission to insurer.For Claims in Malaysia, notify AXA's KL Office as below or the respective branch offices.Ground Floor, Wisma Boustead, 71 Jalan Raja Chulan, 50200 Kuala LumpurTelephone: 03-2170 8249 / 2170 8396 · Fax No: 03-2031 6393 . E-Mail address: claims@axa.com.myIf you are not able to contact us during the weekends or on holidays, you may contact our panel surveyor directly as below.Maphilindo-Insight Sdn Bhd - Port KlangPerson to contact: Lim Eng Ben (012-2676955) or Capt Khoo (/012-2673886)Office Phone : 03-31651668

2. Apply Joint Survey* If the loss is discovered at the Port, Airport or third party premises or on board the vessel prior to discharge, notify the Port Authority, Carriers, Bailees or other relevant party for joint inspection/survey before taking delivery of the goods. Obtain the necessary report to substantiate the loss and clause the delivery note.3. Clause the Delivery Order/Note* Ensure that goods received are inspected and in good order before giving clean receipts. In no circumstances, except under written protest, to give clean receipts where goods are in doubtful condition. Always retain as much evidence as it practical about the loss eg. the packaging materials, crates, boxes and the containers and damaged seals and take photographs wherever practical. If the container is found to be defective, eg. holes, dented and defective insulation on the doors, this must be claused / noted in the delivery order.

4. Write to all responsible 3rd PartiesTo give notice in writing to carriers or other bailees within 3 days on the delivery of the cargo if the loss or damage is not apparent at the time of taking delivery.5. Loss MinimisationTake all measures to minimise the loss and preserve the cargo where applicable. Avoid and minimise further damages and/or deterioration. Do not leave damaged goods unprotected and exposed as it will suffer further damages. Wetted goods should be unpacked, dried and preserved.

CLAIM PROCEDURE FOR MARINE

CLAIM PROCEDURE FOR MARINE• Marine claims can arise at any given location at any time during the course of transit. In such a case it is difficult to contact the policy issuing office immediately & immediate survey is almost always needed. • Thus in the case of a marine loss the insured can get a surveyor deputed from the nearest office immediately in case of a domestic transit loss. In case of transit loss in an overseas consignment the settling agent of the insurance company as mentioned on the face of the certificate should be contacted for assessing & settling the loss there & then.

STEPS SHOULD BE TAKEN IN EVENT OF LOSS OR DAMAGE

i. Take immediate steps to minimize loss.ii. Inform nearest office of the insurance company or claim

settling agent mentioned on the policy.iii. In case of damage to goods whilst on ship or port, arrange for

joint ship survey or port survey.iv. In case of Declaration Policy - the consignment should be

declared within the limit of balance sum insured.v. In case of loss / damage in transit, a monetary claim should be

lodged with the carrier within the time limit to protect recovery rights.

vi. Damage / Shortage Certificate from the carrier.vii. In case any damage is suspected in transit, open delivery

should be insisted upon the carrier and their certificate should be obtained.

DOCUMENT OF THE TITLE

Are documents which give ownership to cargo. Major documents of title are policy, contract of affreightment and invoice.Original PolicyMarine can have single or several policies, all of which should be submitted for claim. Since it is freely assignable, details are checked.Contract of AffreightmentThis would include Lorry receipt, bill of lading, railway receipt and airway bill.A clean Contract of Affreightment is necessary for hassle - free claim settlement and endorsed contract of affreightment would serve as a proof if cargo were damaged at inception.InvoiceIs used to check the Sum Insured taken under the policy. This reflects the true value of cargo.Packing ListMissing items and valuation has to be arrived at by checking with the packing list.

Survey ReportThis has two major aspects, namely identifying the cause and quantifying the amount of loss.LETTER OF INDEMNITYWhen the insured is not able to provide the original policy, the letter of indemnity comes into play.Claim FormThis form gives the basic details about a policy.Claim BillExpenses incurred to reduce loss is claimed here.

Letter Of SubrogationThis is a main recovery document. It is issued before the recovery document is issued.

http://www.intertanko.com/upload/presentations/protection%20%20indemnity%20HK%202002.pdf – the P & I Club

Definition of 'Subrogation'A term denoting a legal right that is reserved by most insurance carriers. Subrogation is the right for an insurer to pursue a third party that caused an insurance loss to the insured. This is done as a means of recovering the amount of the claim paid to the insured for the loss.

Post Fixture Shipping Operations job

* The main role of a Post Fixture Operative is concerned with vessel scheduling and voyage planning. This is a job that would suit someone who has experience in chartering and is highly organised.

A Post Fixture Operative will be based at the company’s offices. You will work as part of a team and will be involved in daily contact with external agencies such as ports and HM Customs and so good communication skills are essential in this role

What does a Post Fixture Operative Job description include?

* You may be required to charter ships on a voyage or time charter. In this instance you will liaise directly with chartering and shipping companies.* A Post Fixture Operative is responsible for voyage planning, which includes giving arrival notices both at load and discharge ports.* You will request BL instructions, check stowage plans for accuracy and feasibility, ensuring that relevant information is passed to interested parties who require the information to ensure smooth operation.* You may also be responsible for the co-ordination and follow up between captains, ship owners, agents and stevedores in loading and discharging ports.* Working with cargo operations will also involve calculating fees eg port disbursements and settlements, as well as freight cost estimations for customers.

Key skills and qualifications of a Post Fixture Operative:

i. Applicants should be educated to a high standard.ii. Previous experience as a Post Fixture Operative may be

required, or experience in some area of voyage planning may be acceptable.

iii. Strong organisational skills are a key requirement of this position and the ability to file correspondence.

iv. As a Post Fixture Operative you will be engaged in daily conversation and communication with both customer and external agencies, and so you must have excellent verbal and written communication skills.

v. You must have a high level of understanding of Microsoft office and any other computer software associated with the shipping industry.

Laytime• In commercial shipping, laytime is the amount of time allowed (in hours or days) in a voyage charter for the loading and unloading of cargo. If the laytime is exceeded, demurrage is incurred.• If the whole period of laytime is not needed, despatch may be payable by the shipowner to the charterer, depending on the terms of the charter party (despatch does not apply to tanker charters).•Laytime and laydays are often confused as referring to the same idea.• Laydays refers to the time when a ship must present itself to the charterer. If the ship arrives before the laydays specified, the charterer does not have to take control or start loading (depending on the type of charter). If the ship arrives after the laydays, then the contract can be cancelled – hence laydays are often presented as the term Laydays and Cancelling and can be shortened to Laycan.

•The point when laytime commences is determined by a Notice of Readiness (NOR), which the master or agent of the ship must give to the charterer when the ship has arrived at the port of loading or discharge. •* The NOR informs the charterer that the ship has arrived at the port and is ready in all respects to load or discharge

The Charterer’s Obligations:

a. The obligation of charging and discharging the Goods:b. The obligation of paying the freight:

LaytimeIn commercial shipping, laytime is the amount of time allowed (in hours or days) in a voyage charter for the loading and unloading of cargo. If the laytime is exceeded, demurrage is incurred. If the whole period of laytime is not needed, despatch may be payable by the shipowner to the charterer, depending on the terms of the charter party (despatch does not apply to tanker charters)

* Laytime and Laydays are often confused as referring to the same idea. * Laydays refers to the time when a ship must present itself to the charterer. If the ship arrives before the laydays specifed, the charterer does not have to take control or start loading (depending on the type of charter). If the ship arrives after the Laydays then the contract can be cancelled - hence Laydays are often presented as the term Laydays and Cancelling and can be shortened to Laycan.[2

The point when laytime commences is determined by a Notice of Readiness (NOR), which the master or agent of the ship must give to the charterer when the ship has arrived at the port of loading or discharge. The NOR informs the charterer that the ship has arrived at the port and is ready in all respects to load or discharge.[

How to Calculate LaytimeLaytime is the time, determined by the charterer, allowed for loading and discharging cargo. The laytime is spelled out in the voyage charter, and the wording of the laytime clause in the voyage charter is critical, since delays associated with the voyage are borne exclusively by the ship owner, and delays in harbor may be distributed between the ship owner and the charterer. If delays occur in the acts of loading or discharge, the charterer must pay the owner a fee, called "demurrage," for time lost in port. If loading and discharge are completed early, the ship owner pays the charterer a fee called "despatch."

Read more: How to Calculate Laytime | eHow.com http://www.ehow.com/how_5243962_calculate-laytime.html#ixzz25tJrS6fc

Instructions1 Read the laytime clause of the voyage charter. Note how the charter determines the ship to be an "arrived ship" and what Notice of Readiness must be given, if any.2 Make a note of how much time, usually described in running hours or days, is allowed by the charter for loading or discharge of the cargo. Also make a note of any exceptions to this, such as work stoppages for weather or port holidays.

Read more: How to Calculate Laytime | eHow.com http://www.ehow.com/how_5243962_calculate-laytime.html#ixzz25tKyYfMz

3. Record, from the voyage charter, the time that loading or discharge is to commence. Also, record who is to receive the Notice of Readiness to load or discharge--whether the shipper, receiver, charter or their agent. 4. Read the charter's laytime clause and determine the requirements for giving the Notice of Readiness. Do charter exclusions allow the Notice to be given before the loading or discharge berth is available? Must all port and customs clearances be completed before the Notice is given? If not, then the charterer will be liable for demurrage fees upon the Master's certification that the vessel is ready in all respects for loading or discharging.

Read more: How to Calculate Laytime | eHow.com http://www.ehow.com/how_5243962_calculate-laytime.html#ixzz25tLHYK3n

5. Check the Charterer's (or Receiver's) Inspection report for evidence that the vessel was not ready to load or discharge in all respects. If it was not, laytime does not count. 6. Calculate the laytime. If the number of running hours or days spent loading or discharging the cargo, after the Notice of Readiness is properly given, varies from the contractually agreed amount of time, then the laytime is paid by the charterer as demurrage or the ship owner as despatch, at the hourly or daily rate specified in the voyage charter. For example, if the voyage charter specifies $416.76 an hour for demurrage or despatch and the unloading time varies from the time in the charter by 18 hours, multiply $416.76 by 18. The demurrage or despatch fee is $7,501.68.

Read more: How to Calculate Laytime | eHow.com http://www.ehow.com/how_5243962_calculate-laytime.html#ixzz25tLtRGOk

Demurrage

The term demurrage originated in vessel chartering (notably voyage chartering) and refers to the period when the charterer remains in possession of the vessel after the period normally allowed to load and unload cargo (laytime). By extension demurrage refers to the charges that the charterer pays to the shipowner for its extra use of the vessel.[1] Officially, demurrage is a form of liquidated damages for breaching the laytime set out in the governing contract (the charter party). The demurrage sometimes causes a loss to the seller as it increases cost of the total freight.[

The reverse of demurrage is despatch. If the charterer requires the use of the vessel for less time than the laytime allowed, the charter party may require the shipowner to pay despatch for the time saved.

In the context of Maritime law, dispatch money refers to an amount paid by a ship-owner to the charterer of a vessel. This money is paid to the charterer of a vessel if the cargo is unloaded at the port rapidly or much before than actually provided for in the agreement between the charterer and the ship-owner. This is also known as dispatch. This money is actually given in the form of a reward to the charterer for unloading the goods quickly.

Dispatch Money

A forward freight agreement

1. FFA is a financial forward contract that allows ship owners, charterers and speculators to hedge against the volatility of freight rates.

2. It gives the contract owner the right to buy and sell the price of freight for future dates.

3. FFAs are built on an index composed of a shipping route for tanker or a basket of routes for dry bulk, contracts are traded ‘over the counter’ on a principal-to-principal basis and can be cleared through a clearing house

What it means!In finance, a forward contract or simply a forward is a non-standardized contract between two parties to buy or to sell an asset at a specified future time at a price agreed upon today.A hedge is an investment position intended to offset potential losses/gains that may be incurred by a companion investment. In simple language, a hedge is used to reduce any substantial losses/gains suffered by an individual or an organization. A clearing house is a financial institution that provides clearing and settlement services for financial and commodities derivatives and securities transactions