Considerations

Strengths, Weaknesses, Opportunities

and Threats (SWOT)

Understanding the market

Utilizing time chartering in a volatile

market

Scenario – examples

Conclusion2

Profile of the Charterer

- Beneficial cargo owner

- Time charter operator – trip or period

Financial and Operational

Management

3

4

Strengths Weaknesses

Opportunities Threats

TIME CHARTERING

Confidentiality and

control on access to

cargo.

Firm control over the

vessel and the voyage.

Access to varied

tonnage while being

asset light.

Voyage Flexibility

Source of income and

profitability. 5

VOYAGE CHARTERING

Fixed income benefits.

Eliminate the risk of

weather delays

Firm control of

documentation when

payments delayed.

Direct access to the

BCO.

Stronger position on

Cargo Lien.

TIME CHARTERING

Sizeable capital

requirement prior receipt

of freight.

Long time-charter chain.

Financial responsibilities

that can extend to the

time charter operator

that are primarily the

fault of the ship owner.

Extensive investment of

time in determining

voyage feasibility etc6

VOYAGE CHARTERING

Imprecise ability to

evaluate the loss risks due

to weather etc.

Delayed receipt of freight

payments.

Possible loss of

confidential information

to competitors on the

identity of cargo owners

and governing market

freight levels.

TIME CHARTERING

Business opportunity with

no asset burden

Larger and more varied

tonnage base.

Secondary Trading in

Freight Futures and

Derivatives

High Revenue

opportunities in a volatile

market

Subletting opportunities

7

VOYAGE CHARTERING

Maximizing Revenue

which is otherwise

enjoyed by the time

charter operator.

Once again having direct

access to the beneficial

cargo owners for future

contracts/contacts

Beneficial Positioning of

owned tonnage

TIME CHARTERING

Losses due to weather

and port congestion.

Integrity of the Cargo

supplier or Head

Charterer.

Inflexible ship owners.

Intermediate voyage risks

in vessel readiness

Market Volatility.

Especially spectacular

crashes in cases of long

term period chartering

8

VOYAGE CHARTERING

Practical difficulties in

managing cargo liens in

case of non payment of

freight.

Inability to secure

payment of large

demurrage claims from

marginal charterers.

Last minute cancellations

after long sailings to load

port, citing dubious force

majeure conditions.

Baltic Indices – helping to track trends

Trade Patterns – seasonal and regional

Supply and location of Tonnage

Knowledge and access to information

9

10

11

0

3000

6000

9000

12000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

IND

EX

DATE

BDI (2005- 2014)

15 APR 05 / 4824

4 AUG 05 / 1747

20 MAY 08 / 11793

5 DEC 08 / 663

14 NOV 14 / 1256

0

5000

10000

15000

20000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

IND

EX

DATE

BCI (2005-2014)

12

15 APR 05 / 6725

3 AUG 05 / 2319

5 JUN 08 / 19687

2 DEC 08 / 830

14 NOV 14 / 2931

13

1000

2000

3000

4000

Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15

DATE

INDEX

BCI 2014

2 JAN 14 / 3733

4 FEB 14 / 1513

20 MAR 14/ 3129

16 OCT 14 / 1315

4 NOV 14 / 3781

14 NOV 14 / 2931

14

15

Long term contracts.

Trip basis when market expectation is down.

Hedge positions by linking to the relevant Baltic index.

Short term volatility, option to redeliver vessel vs maximizingprofitability

Paper trade in freight against the physical. Allows timecharter operators to bid below market and break even levels.

Combined involvement in partial Ownership and Long TermPeriod chartering. Ship Owners placing part of the fleet inlong terms period charters and a smaller portion of the fleet inspot market positions.

INTERMEDIATE HOLDING

CLEANING DEBACLE

16

TRADING TO BANGLADESH

17

18

Typically the time charterer is :

An opportunist.

Uses his extensive knowledge of the markets.

Combines his finely honed experience and

entrepreneurial spirit… to make money.

Is nimble and asset light.

Aggressive in his approach to making a success of the

venture.

Industrious and invests a large amount time for

preparation.

On the other hand the voyage charterer is :

Primarily the beneficial cargo owner.

Prime focus is on the trade.

Has covered his position with a fixed cost in the

freight.

Risk averse.19

SO …..

TIME CHARTER

OR …..

VOYAGE CHARTER ….

THE DEBATE CONTINUES !!!

20

THANK YOU

21