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CHARTERINGDinesh N. Kutty

FIXTURE NEGOTIATION

OFFERENQUIRY COUNTERFIXTURE

CONCLUSION

VOYAGE

CARGO

PARCEL SIZE

LOADPORT

DISPORT

LAYDAYS

LAYCAN

TIME CHARTERING

TYPE OF SHIP

DURATION

TRADING AREA

CARGO

SPL.REQUIREMENTS

VOYAGE

DESCRIPTION-SHIP

PARCEL SIZE

FREIGHT

DEMURRAGE

C / PARTY.

TIME CHARTER

DESCRIPTION

T/C PARTICULARSSPEED

BUNKER CONSUMP.

PERIOD – RATE

EXCEPTIONS -CP

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CHARTERING NEGOTIATIONS- IMPORTANT ASPECTS

1. FIRM OFFER

2. COUNTER (there could be one/two or several counters exchanged)

3. RECAP OF TERMS (FIXED ON SUBJECTS)

4. CLEAN RECAP (FINAL FIXTURE RECAP)

5. EXECUTION OF CHARTER-PARTY.

SUBJECTS1. SUBJECT STEM.

2. SUBJECT SUPPLIERS.

3. SUBJECT RECEIVERS.

4. SUBJECT CHARTERERS MANAGEMENT APPROVAL.

CHARTERING NEGOTIATIONSStep 1: Enquiry

(Generally, Cargo enquiry inviting offers from owners through one or more broking channels)

Step 2: Offer(Offer from Owners to Charterers giving details and main-terms)

Step 3: Counters(Counters are exchanged on Accept / Except basis)

Step 4: Vessel put on Subjects(After agreeing main terms, vessel on Charterers Subjects meaning Subject to - Cargo Stem in order, - Approval from Suppliers /Loadport- Approval from Receivers/Disport and - Charterers Management Approval

Step 5: Subjects recap are drawn by the brokers with all main terms agreed.

Step 6: Charter- Party terms are negotiated.

Step 7: If all subjects are in order, Charterers shall lift subjects and vessel stands clean fixed. Clean fixture meaning, Shipping contract is on and Charterers and Owners are bound by the terms agreed between them.

Step 8: Charter-party is executed.

TWO GOLDEN RULESFOR CHARTERING PRACTITIONERS

• ALWAYS ACT WITHIN YOUR AUTHORITY(working within one’s warranty of authority)

• NEVER TO OFFER SAME SHIP TO MORE THAN ONE CHARTERER AT A GIVEN POINT OF TIME.

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FIRM OFFER –VOYAGE CHARTER- A CASE STUDY

(sent 27 August 2009/ 1700 IST)1. VALID : 27 AUGUST 2009 / 1800 HRS IST

2. FOR ACCCOUNT OF: GLENCORE, SINGAPORE

3. NAME OF SHIP: M.V. JAL DHOOT (OWNERS: PANUNION SHIPPING)BUILT: 1997, IMO NO: 83211224CLASS: ABS, DWT: 47352.5LOA: 189 M, BEAM: 30.4 MHOLDS /HATCHES : 5 NOSCRANES: 5 CRANESCRANE SWL : 25 TONNES

4. CARGO DESCRIPTION: COKING COAL IN BULK MIN 45,000 MT MAX. 47,000 MTIN OWNERS OPTION

5. LOAD PORT(S) / BERTH(S): 1 SB/ 1 SP NEW CASTLE, AUSTRALIA (AA)

6. DISPORT(S)/BERTH(S): 1 SB/ 1 SP KAWASAKI OR CHIBA IN CHOPTION

7. LAYDAYS/CANCELLING: 15 SEPT (0001 HRS) – 25 SEPT (2359 HRS)

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FIRM OFFER –VOYAGE CHARTER (Contd…)

8. LOAD RATE: 15000 MT PD WWD SHINC

9. DISCHARGING RATE: 10000 MT PD WWD SHINC

10. FREIGHT: USD. 25 PER MT, FIOST BASIS 1/1

11. DEMURRAGE RATE: USD. 18000 PDPR ( 50 % Despatch)

12. LOAD / DISCH COSTS: FIOST (CHARTERERS ACCOUNT)

13. ADDRESS COMMISSION: 1.25% ADDRESS COMMISSION

14. BROKERAGE: TOTAL 2.5% ( 1.25% per broker)

15. CHARTERPARTY FORM: LATEST GENCON

16. SUBJECTS: ALL SUBJECTS 2 DAYS AFTER FIXING MAIN TERMS.

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COUNTER –VOYAGE CHARTER(sent 27 August 2009/ 1745 IST)

-counter from charterer to owner

COUNTER BASIS ACCEPT / EXCEPT

1. REPLY BY : WITHIN 15 MINUTES

2. NAME OF SHIP: M.V. JAL DHOOT (Does the vessel have AHL?)

3. LAYDAYS/CANCELLING: 15 SEPT (0001 HRS) – 20 SEPT (2359 HRS)

4. DISCHARGING RATE: 15000 MT PD WWD SHINC

6. FREIGHT: USD.20 PER MT, FIOST BASIS 1/1

7. DEMURRAGE RATE: USD. 12000 PDPR ( 50 % despatch)

8. ADDRESS COMMISSION: 2.5 % ON FREIGHT & DEMURRAGE

9. ALL C/P TERMS GENCON 1993 SUB-REVIEW

10. ALL SUBJECTS 3 WORKING DAYS (2 DAYS FOR MAIN TERMS AND 1 DAY FORC/P TERMS)

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COUNTER –VOYAGE CHARTER(sent 27 August 2009/ 1755 IST)

-counter from owner to charterer

COUNTER BASIS ACCEPT / EXCEPT

1. REPLY BY : WITHIN 15 MINUTES

2. M.V. JAL DHOOT HAS AHL. INSPECTED BY AMSA IN MAY 2009

3. FREIGHT: USD.22 PER MT, FIOST BASIS 1/1

4. DEMURRAGE RATE: USD. 15000 PDPR ( 50 % Despatch)

5. SUBJECTS: REPEAT LAST

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CASE STUDY (Contd….)1. CHARTERERS AGREED TO OWNERS LAST COUNTER AND

VESSEL WAS PUT ON SUBJECTS ON MAIN TERMS (SOCHARTERERS SUBS VALID TILL 29 AUGUST 2009 1800 HRSIST).

2. BROKERS PREPARE AND SUBMIT SUBJECTS RECAP.

3. CHARTERERS AND OWNERS EXCHANGE COUNTERS ON C/PTERMS.

4. THE SUBJECTS ARE LIFTED BY CHARTERERS BEFORE EXPIRYOF TIME AND VESSEL IS CLEAN FIXED.

5. BROKERS PREPARE AND SUBMIT CLEAN RECAP.

6. CHARTER-PARTY IS EXECUTED.

CHARTERING PRACTICE – A CASE STUDY (TANKERS)

9TH AUGUST 2007

1ST SEPT 2009

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ENQUIRY

SUITABLE CRUDE OIL TANKER TO LIFT ABOUT 90 TMT – 100 TMT NHC IN AGRANGE INTENTION. KUWAIT EXCL. IRAQ IN LAYDAYS 11-12 SEPT 2009 FORDISCHARGE SINGAPORE RANGE ON VOYAGE CHARTER, FREIGHT PAYABLELUMPSUM, LESS THAN 15 YEAR OLD PREFERRED.

FIRM OFFER –VOYAGE CHARTER(sent 1st September 2009/ 1700 IST)

1. VALID : 1 SEPT 2009 / 1720 HRS IST

2. FOR ACCCOUNT OF: MITSUI OIL PTE. LTD., SINGAPORE

3. NAME OF SHIP: M.T. OCEAN CROWN (OWNERS: OCEAN GROUP)BUILT: 2003, IMO NO: 89011224CLASS: LRS, DWT: 113018 MTLOA: 244.16 M, BEAM: 42.035 MVSL IS DOUBLE HULL & COILEDTTBOOK APPROVED BY SHELL, BP & PETRONAS

4. CARGO DESCRIPTION: ABOUT 90,000 MT – 100,000 MT NHC, 1/2 GRADE WVNS.

5. LOAD PORT(S) / BERTH(S): 1 SB/ 1 SP MINA AL AHMADI

6. DISPORT(S)/BERTH(S): 1 SB/ 1 SP SINGAPORE

7. LAYDAYS/CANCELLING: 11 SEPT (0001 HRS) – 12 SEPT (2359 HRS)

8. ITINERARY: MT OCEAN CROWN SAILED VISAKHAPATNAM 27 AUG 2009 ETA FUJAIRAH FOR BUNKERING 7 SEPT 2009 ETA MINA AL AHMADI 10 SEPT 2009 AGW, WSNP. 14

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FIRM OFFER –VOYAGE CHARTER (Contd…)

9. FREIGHT: L/S. USD. 1.5 MILLION BASIS 1/1

10. DEMURRAGE RATE: USD. 25,000 PDPR

11. LAYTIME: 72 HOURS SHINC

12. TOTAL COMMISSION: 3.75% INCLUDING 1.25% ADD. COMM & 2.5% BROKERAGE TO BE SHARED EQUALLY BETWEEN WEBER, SINGAPORE AND SHIPNET, NEW DELHI ON ALL FREIGHT & DEMURRAGE PAYABLE.

13. CHARTERPARTY FORM: ASBATANKVOY

14. SUBJECTS: CHARTERERS SUBJECTS VALID TILL 3 SEPT 2009 1800 GMT.

RIDER CLAUSES.

1. CONOCO WEATHER CLAUSE TO APPLY.

2. OWNERS OPTION TO BUNKER AT LADEN PASSAGE.

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COUNTER –VOYAGE CHARTER(sent 1 Sept 2009/ 1740 IST)

-counter from charterer to owner

COUNTER BASIS ACCEPT / EXCEPT

1. REPLY BY : WITHIN 10 MINUTES

2. NAME OF SHIP: M.V. OCEAN CROWN (Has the vessel called Mina Al Ahmadi?)

3. CARGO DESCRIPTION: ADD “ CHOPTION TO LOAD UPTO FULL CARGO BASED ON TANK CAPACITIES”

4. LAYDAYS/CANCELLING: 11 SEPT (0001 HRS) – 12 SEPT (1600 HRS)

5. DISCHARGE PORT(S): 1 SB/ 1 SP/ 1 STS SINGAPORE

6. FREIGHT: L/S. 1 MILLION BASIS 1/1

7. DEMURRAGE RATE: USD. 15000 PDPR

8. ADDRESS COMMISSION: 2.5 % ON FREIGHT & DEMURRAGE

9. LAYTIME: 96 HOURS SHINC

10. CHARTERERS SUBJECTS VALID TILL 4 SEPT 2009 / LONDON CLOSING

RIDER CLAUSES

1. OWNERS OPTION TO BUNKER IN LADEN PASSAGE ENROUTE WITHOUT ANY MAJOR DEVIATION FOR PASSAGE FROM LOADPORT TO DISCHARGE PORT.

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COUNTER –VOYAGE CHARTER(sent 1 September 2009/ 1755 IST)

-counter from owner to charterer

COUNTER BASIS ACCEPT / EXCEPT

1. REPLY BY : WITHIN 5 MINUTES

2. M.T. OCEAN CROWN LAST CALLED MINA AL AHMADI IN NOVEMBER 2008

3. FREIGHT: USD. 1.15 MILLION (FIXING)

4. DEMURRAGE RATE: USD. 20000 PDPR (FIXING)

5. LAYTIME: 84 HOURS SHINC

6. SUBJECTS: REPEAT LAST

RIDER CLAUSES

1. ALL STS COSTS AT DISCHARGE PORT TO BE FOR CHARTERERS ACCOUNT.

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CASE STUDY (Contd….)1. CHARTERERS AGREED TO OWNERS LAST COUNTER AND VESSEL WAS PUT ON

SUBJECTS ON MAIN TERMS. (SO CHARTERERS SUBS VALID TILL 3 SEPT 2009 1800HRS GMT).

2. BROKERS PREPARE AND SUBMIT SUBJECTS RECAP.

3. CHARTERERS AND OWNERS EXCHANGE COUNTERS ON C/P TERMS.

4. THE SUBJECTS ARE LIFTED BY CHARTERERS BEFORE EXPIRY OF TIME ANDVESSEL IS CLEAN FIXED.

5. BROKERS PREPARE AND SUBMIT CLEAN RECAP.

6. CHARTER-PARTY IS EXECUTED.

END CASE STUDY

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DOS AND DONTS FOR A CHARTERING MANAGER (IN OWNERS OFFICE)

DOS

1. CHECK CHARTERERS BACKGROUND.

2. GET THE NAMES OF LOAD PORT / DISPORT, IDENTIFY RESTRICTIONS AT THESE PORTS AND OTHER REQUIREMENTS.

3. CLEAR DESCRIPTION ON CARGO QUANTITIES AND VESSELS MAX. LOADABLES. CALCULATION OF FREIGHT IF ON CARGO QUANTITIES SHOULD BE CLEARLY TRANSACTED AND MENTIONED IN COUNTERS AND FIXTURE RECAP.

4. COMPLIANCE TO MANDATORY CONDITIONS AT LOADING AND DISCHARGING PORTS VIZ. COFR, FITTINGS OF AHL, HELI PADS ETC.

5. CHECK WITH AGENTS REGARDING LOAD/ DISCHARGE RATES ACHIEVED.

6. REALISTIC VOYAGE ESTIMATE. (KEEP PROFORMAS OF VOYAGE ESTIMATES READY).

7. STUDY THE CURRENT MARKET RATES (DO NOT BELIEVE IN RUMOURS).

8. CLARITY ON LOAD / DISCHARGE TERMS VIZ. SHINC, SHEX, FIO ETC.

9. LAYDAYS.

10. CHARTER-PARTY – CP FORM, UNDER TCP CRTICAL TERMS VIZ. TERMS OF HIRE, TRADING LIMITS, PLACES OF DELIVERY AND RE-DELIVERY, ON-HIRE / OFF-HIRE SURVEY, WAR CLAUSES AND ICE CLAUSES, CARGO EXCLUSIONS ETC.

DONTS

1. DO NOT NEGOTIATE ON THE BASIS OF “TBN” CHARTERERS.

2. DO NOT USE TOO MUCH OF ABBREVIATED LANGUAGE IN OFFER/COUNTERS

2. DO NOT BACK TRADE.

3. DONOT OVER-DESCRIBE OR UNDER-DESCRIBE VESSEL PERFORMANCE WHEN VESSEL IS PUT ON TIME CHARTER.

4. DO NOT AGREE FOR VERY LONG TIME FOR CHARTERERS SUBJECTS.