1 2 3 Marketing and securing of cargoes are generally done by shipowner through the charterers or cargo brokers Cargo are normally fixed ether on spot charter or contract of Affreightment (COA) COA benefit the charterer as shipping space are guaranteed at their disposal at regular intervals and charterer can sell forward with freight idea in hand. COA freight is fixed for the period of a contract (2-3 yrs) or may be adjusted annually as agreed. 4 Spot fixture exposes the shipowner to the uncertainties of the market. At the same time, he is competing for the same cargo with other shipowners whose vessels are open on or about the same place and period. Normally, the shipowner will advise broker the position of the vessel, i.e date and place vessel will be open and ready for loading Broker will then heck the market to see whether vessel position can match any cargo available 5 Reverse is also possible where charterer put their cargo in the market to match against any ship available at that time and location. Usually ships that fit the laycan and offering the most competitive rate would be able to secure the cargo. Those that fail the bid will have to find alternative employment elsewhere. Negotiation then begin.. Offer to charterers will include..e.g the case of shipowner position 6 1. Name of vessel 2. Charterer 3. Laycan, description of a cargo and quantity 4. Freight rates 5. Load and discharge port 6. Laytime clauses.e.g time permitted, rate i.e mt/hr 7. Description of a vessel 8. Demurrage clause e.g USD 16,000 per day, pro-rata 9. Commission level 10. Time limit the offer is valid 11. Freight payment clause (freight prepaid, or as per CP) 7 From Raffles Shipbroker.. We are pleased to confirm the following clean fixtures concluded today 06 th June 2013 Charterparty dated : 06 th June 2013 Charterer : Azreen Cleo MJ Amin Sdn Bhd Owner : Faiz Ong Shipping Line Sdn Bhd Vessel : Bunga Sree Nor Hazirah Last Cargo : Palm Oil Itinerary : Bintulu 11/12 therafter Lahad Datu 8 For : 30,000 mt, loading/berth Bintulu, discharging/Rotterdam, Laycan: Freight: USD 888k Demurrage: USD 2500/day Heating : As per CP/shipper instruction Full cleaning: Owners agent: Raudah Mustaqim, Immediately upon completion of cargo, freight is payable to owners designated bank account within 3 working days of releasing bill of lading. 9 1. LPG/LNG/Gas Tankers Natural, Petroleum Gas, sophisticated freezing system 2. Product Tankers- Clean Petroleum Product, Dirty Petroleum Product, Lubricating/Machine Oil 3. Crude Tankers- crude oil 4. Dedicated Vegetable Oil Carriers- Vegetable oil (palm oil, soya bean), molasses, wine 5. Chemical Tankers- petrochemicals, clean petroleum products, caustic soda, palm/vegetable oils They are specially designed with cargo tanks or compartments for transportation of (all above) in BULK 10 In tanker business, there are six (6) sizes 1. Handy (10,000-59,000) dwt 2. Panamax (60,000-79,000) dwt 3. Aframax (80, ,999) dwt 4. Suezmax (120, ,999) dwt 5. VLCC (over 250,000) dwt 6. ULCC (over 350,000) dwt draft >25 meters length >380 meters, breath 60 meters 11 12 Three (3) ship types: 1) Chemical Parcel Tanker, average size 15,000 dwt, over 75% of the tanks are segregated with separate cargo handling facilities, and the average tank size 2,700, over 75% of tank are segregated 3) Chemical Product Tanker with 51-75% tanks segregated, average tank size >2,700 cubic meters Cargo pipe lines categories/variescargo tanks are served directly by a single bottom line to each cargo pump Independent line system/minimum chances of contamination of cargoes 13 Engage in one or two type of services: 1. Clean Trade; engine fuel carried only in tanks coated with inorganic, non-ferrous compounds to eliminate contamination from the corrosion of the tank bulkhead 2. Black (dark oil or dirty) trade; carry crude residual, darker oils up to diesel grades High viscosity (dense) heated tank equipped with coils through which super heated water or steam is circulated, transferred ashore by ships pump (10,000 tons per hour) Tanker casualties, vigilant onboard, terminals, port approaches, anchorage at berth, throughout tank cleaning, maintenance work Crude oil washing of cargo tank removing sludge, ballast with clean water Danger of hydro-carbon vapour during ballasting/loading Network of vapour collection pipes that direct the cargo gas from cargo tank directly ashore for processing 14 One directional flow of traffic e.g Saudi Arabia to Japan through Strait of Lombok (giant tankers ULCC draft >25 meters, >350,000 tons dwt, >380/60 meters) Specialized terminals required for loading and unloading integrating the schedules of operations of tankers and refineries. e.g Bintulu Safety is critical/paramount gas explosion. Tankers casualties..double-hulled tankers (inner/outer 10 feet in between) as a precaution/mendatory. Hazardous properties of commodities transported: flammability, toxicity, corrosivity, and reactivity. 15 In the case of chemical tanker there is a need for heating coils; tank coatings; special valve operating gear; and safety systems. Tank coatings are used to deal with corrosivity and reactivity Different tank protection methods are used stainless steel for corrosive cargo, and zinc silicate or epoxy coatings tanks has a separate cargo-handling system with its own submerged cargo pump and separate pipelines to the manifold located amidships, where the cargo lines can be connected to hoses leading to storage tanks onshore. 16 All gas tankers, be it LNG, LPG fall into one of these categories of containment system and there are three options. 1) The first is to use a self-supporting tank system, which sits on a cradle which separates it from the hull. 2) The second is the membrane system which moulds the tank to the hull, which provides its strength, with insulation sandwiched between the tank membrane and the hull. The membrane must be able to cope with extreme temperature changes 3) The third option is the prismatic system, which is a hybrid, using self-supporting tanks with an inner and outer skin, but tied into the main hull structure. 17 18 Although the design details vary enormously, the gas is liquefied onshore prior to loading and there are three ways to keep it liquid during transport: a) by pressure; b) by insulating the tanks; or by c) liquefying any gas which boils off and returning it to the cargo tanks (petroleum gas remains liquid at around 48C). In the case of LNG tankers, there are a mix of petroleum gases such as propane, butane and isobutene and chemical gases such as ammonia, ethylene, propylene, butadiene and vinyl chloride. Most of these gases liquefy at temperatures ranges from 0.5C to 50C, but some liquefy at much lower temperatures (e.g. ethylene at 103.9C). Gas tankers must be able to maintain gas at the required temperature during transport. 19 Broadly speaking, petrochemical gases are transported in semi-refrigerated or fully pressurized vessels under 20,000 cubic meters, and LPG and ammonia gases are transported in fully refrigerated vessels, ranging in size from 20,000 cubic meters to 80,000 cubic meters, for long-haul, large-volume transportation. Some semi-refrigerated vessels can carry ethylene (104C) and ethane (82C); and in a few cases LNG. 20 In the case of LNG, it is a high-volume commodity and very price-sensitive, so the cost of transport plays a major part in the trades economics and ship design. LNG tankers generally form part of a carefully planned gas supply operation involving a substantial investment in shore-based liquefaction and regasification facilities. The ship ranged in size up to 153,000 cubic meters, with a new generation of 270,000 cubic meters vessels ordered for the long-haul Middle East to USA trades, Malaysia to Japan, and South Korea. 21 Natural gas liquefies at 161.5C, at which temperature it is reduced to 1/630 times its original volume. LNG tanker is a very sophisticated and expensive vessel, but the broad features are similar to the other tankers such as LPG. The big difference is the engineering skills, materials and technology required to load, transport and discharge a liquid cargo at a temperature of 161.5C. Next Financial contribution/investment-----charter rate... Sale ..CAPEX/OPEX 22 Brokers in London and NY produced the Worldwide Tanker Nominal Rate Scale (Worldscale)..applicable worldwide. 1. Worldscale Association (London) Ltd 2. Worldscale Association (Newyork) Incorporated Membership open to shipowners, brokers, and charterers If the contracting parties agreed on the publish rate the quotation is recorded at. W.100.. 23 Factors/items to be considered: 1. The voyage Pt A to Pt B, the distance, the number of days at sea. 2. The laycan (time allowed during gassing degasing.demurrage and despatch) 3. Bunker price 4. Bunker consumed during voyage bunker r.o.b 5. Port charges at loading/unloading ports 6. Plus the publish rated Worldscale quoted by L &NY Freight rate quoted in USD per metric ton. Rates are revised annually and become effective on January 1. 24 Contracted Rate.on long term charter e.g between shipowner and charterer e.g MISC Bhd/PETRONAS Factors to be considered: 1. As (1-5) plus a) crew cost(salary/allowance/bonus/leave pay), medical, outfit, crew joining repatriation, b) vessel operating cost such as maintenance, drydock, spares, surveys, 2. Capital cost/depreciation, interest/coc, amortization, taxation, dividend 3. Plus shore expenses/overhead plus MARGIN (say 20%). That is the charter rate/day 4. PETRONAS picks up this number plus its costs+MARGIN.sale price/cubic meter to say Japanese Buyer 25 Safety checklist/relevant documents with regard to preloading, loading, cargo during transit, and discharging safety procedures must be strictly adhered to. Relevant documents such as certificate of fitness, cargo manual/specification files, banned cargo list, stability booklet, and computer loading programme are important When cargo are booked, it is necessary to plan the cargo stowage in the most efficient manner to ensure: No contamination Minimizing the effect of heating Speeding loading and discharging operation (fast port turnaround) 26 Compliance to vessels stability and stress conditions Ease of tank cleaning and planning for the next cargo For this purpose, the cargoes are first checked against the vessels certificate of fitness and determined if allowed to be carried onboard The following to be checked before stowage into tank a. IMO ship type and MARPOL category b. Compatibility with coatings 27 c. Compatibility chart with respect to the possible chemical reaction with other cargo onboard d. Heating requirement of cargo loaded and in the surrounding tanks e. Special requirement such as nitrogen padding f. Charter party term (e.g whether commingling allowed or not, last cargo??) g. National Institute of Oilseed Product (NIOP) regulation for cargoes bound for US h. EU List of Last Acceptable Cargo 28 Agents, surveyors and charterers are notified well before vessels arrival on her loading programme Charterers are informed on the cargo option vessel will load Communication with agent established to ensure installation, custom and various port authorities are well informed of vessel programme Master cleans and prepares vessel, ready for loading On arrival, Master tenders Notice of Readiness to Charterer/Shippers in writing, basis as per CP 29 Vessel issues Pre-Inspection, Combine Master and Clean tank Certificate to surveyor Vessel will issue letter of protest when circumstances arises Statement of fact are done according to loading operations Master will issue Authority to sign a Bill of Lading to agent Prior sailing, vessel to be issued with heating instructions Laytime statement are meantime prepared in the head office and if there is any demurage the charterers are billed accordingly 30 During sea passage, the vessel will maintain the cargo as per shippers instruction Temperature will be maintained as per heating instruction Pressure is checked regularly Discharged port agent and charterers are informed of the vessel progress and her arrival time at destination On arrival, cargo quantities are checked against loaded quantities Discharge are closely coordinated/monitored between vessel and various receivers 31 The custom authorities generally requires following particulars in the custom declaration forms: Particulars relating to transport e.g mode of transport / identification of means of transport Particulars relating goods e.g country of origin/country of destination / description of packages (number, type, marks and weight ) and tariff description of the goods Particulars for assessment of duty/taxes (for each description) e.g tariff classification / rate of duties and taxes / gross weight or the other quantity and value Other particulars e.g area where preferential is claimed / reference to documents submitted to support the declaration such import/export / license / date and signature of the declarant 32 The owner of the cargo is responsible for custom declaration. Accurate and proper preparation of the Custom declarations is highly essential. This is where most importer and agent default and have caused untold displeasure and inconvenience to the Custom authorities. Special attention must be paid to the full description The proper presentation of Customs declaration is one of the most important aspect of import and export operations and to avoid inconvenience due significance and attention must be given to it by the person responsible for preparing the forms. 33 Supporting Documents The following documents area required to be submitted to Customs in support of the Custom declaration forms :- For import of Goods Bill of lading or consignment note, where appropriate Commercial Invoice relating to the goods Bank documents such as Letter of credit Packing list/weight (which are sometimes embodied in the invoice Import License For export of goods Commercial Invoice Consignment Note Foreign Exchange Documents (if required) Export License (if required) Issues on provisioning, storing, scheduling, repairing, bunkering (long distance from home port) Unforeseen deviation, rerouting on short notice, unexpected delay Few ports/terminals can accommodate super tankers,. transhipped into shallower-draft vessels for delivery to shore side installation Safety (rules and procedures respected), causality, contamination. 35 Few drydock are large enough to accommodate these giants VLCC/ULCC > 440,000 DWT, 455/60 meters Security of cargoes during preloading, transit, unloading Maintaining cargo quality during voyage Precaution regarding tank materials and coating 36 THANK YOU 37