ICM300-Chartering and Charterparty Analysis

Module Provider: ICMA Centre
Number of credits: 20 [10 ECTS credits]
Level:7
Terms in which taught: Spring term module
Pre-requisites:
Non-modular pre-requisites:
Co-requisites:
Modules excluded:
Module version for: 2017/8

Module Convenor: Dr Photis Panayides

Email: p.panayides@reading.ac.uk

Summary module description:
The aim of this course is to provide in-depth and holistic understanding of charter markets, chartering practice and charter party analysis in dry cargo and tanker shipping. Content includes the procedures and practices in chartering merchant ships in the dry cargo and tanker markets, their commercial employment under various forms of chartering and the detailed calculation of financial (freight) performance, voyage planning and laytime estimations. The module provides an in-depth analysis of charter party forms and adopts a legal and commercial perspective to analyze significant clauses and to explain various specialized terms in dry cargo and chartering contracts. The market structure of dry cargo and tanker industries are also analyzed and an overview of the practitioners involved (brokers, owners, charterers) is provided as are the sources of data and information required to initiate, negotiate, agree, execute and assess a successful charter party contract in the dry bulk and tanker markets.

Aims:

Assessable learning outcomes:
The course focuses on the two main markets for chartering ships, dry cargo and tanker shipping. After taking this course students will be able to:

• Understand the players and processes involved in freight market and chartering practice
• Know and comprehend the key clauses in time and voyage charterparties
• Analyze the terms, conditions and respective obligations, responsibilities and accountabilities in charterparty contracts
• Calculate freight income and expenses related to the chartering of ships
• Appreciate the concept of laytime in voyage chartering
• Calculate laytime given a set of relevant data
• Design and analyze voyage plans including voyage estimate calculations given a set of relevant data
• Be familiar with specialized terms, abbreviations and notation used in chartering

Additional outcomes:

Outline content:
1 Freight Markets and Market Practice The session will highlight and describe the market participants, the types of ship employment and will analyze the specific and specialized exchanges and notation used in chartering negotiations in the dry cargo markets

Lecture 1: Shipping and Chartering
• World shipping
• The dry cargo market
• The tanker market
• The container market
• Oil & tanker trades
• Dry bulk trades
• Container trades
• Who is who in chartering business
• Chartering forms
• Charter party types
• The role of a shipbroker
• Why use a broker

Lecture 2: The Chartering Process
• The chartering process
• Orders
• Positions
• Negotiations/counter offer
• Firm offer
• Fixtures reporting

2 Dry Cargo Chartering Contracts There are several contracts used in dry cargo chartering for voyage and time charters. The session will adopt a legal/commercial perspective to analyze in-depth the various significant clauses in dry cargo chartering contracts and explain various terms and specialized abbreviations.

Lecture 3: Dry Cargo Chartering Contracts
• Charter parties
• Charter party basics
• Warranties
• Frustration
• Shipowner’s implied terms
• Implied terms for the charterer
• Claims
• Responsibilities during loading/discharging
• Berth and port charters
• The charterer’s duties under a voyage charter
• The Voyage Charter Party
• GENCON
• Time charters
• Off hire
• Redelivery
• Withdrawal
• The Time Charter Party
• BALTIME
• NYPE 93
• The Bill of Lading

3 Freight Calculations and Laytime The session aims to analyze the freight calculations involved in assessing the amount of income due to a shipowner and payable by a charterer. In doing so the session will analyze the methods and times of payment, the various risks involved, additions and deductions as well as the definition, description and calculation of laytime in voyage dry cargo chartering.

Lecture 4: Time Chartering – Calculating Hire
• How hire is calculated
• When hire is payable
• Where hire is payable
• Ballast Bonus
• Bunkers
• Delivery and redelivery
• Deductions from hire
• Deviation
• Hire payments exercises

Lecture 5: Voyage chartering - Freight Calculations
• Voyage chartering
• Freight
• Where freight is payable
• When freight is payable
• How freight is calculated
• Alternative means of calculating freight
• Freight taxes
• Exercise

Lecture 6: Laytime
• Laytime
• Laytime/laycan
• The calculation of laytime can be divided into six stages:
1. Contract
2. Statement of Facts
3. Duration – sub-divided into three categories
4. Commencement of Laytime
5. Cessation
6. Calculation
• Laytime calculation exercise

4 Dry Cargo Voyage Estimation Voyage estimating is an important skill for chartering practice. This session will describe a methodology for voyage estimation including the delineation of an itinerary, voyage plan, duration and bunker consumption, cargo quantity, voyage expenses and income.
Lecture 7: Voyage Estimating
• Stages of Voyage Estimating
1. Itinerary
2. Cargo Quantity
3. Expenses
4. Income
5. Result, Freight and Nett Freight
• Time Charter Estimating
• T/C equivalent
• Example/exercise

5 Tanker Chartering and Market Practice The session introduces the tanker market structure, the use of Worldscale and the factors influencing freight in tanker markets. It also analyzes the steps and circumstances involved from an order being quoted up to the agreement of a fixture and other aspects of

Brief description of teaching and learning methods:
The course is made up of 28 hours of class time split into seven 3-hour formal lectures and seven 1-hour seminars. Each of the seven classes will cover specific parts of chartering policy and practice. The course will analyze both dry cargo and tanker chartering which represent the main markets of chartering practice in the shipping industry. Dry cargo chartering will be covered in four of the seven sessions and tanker chartering in the remaining three.

Lectures will be used for the exposition of theory. The purpose of seminar classes is to discuss non-assessed problem sets and case studies. The techniques used to achieve the stated module objectives and assess its learning outcomes will consist of a combination of teaching, question/answer sessions and discussions, case discussions and assignments. The module is assessed on an individually prepared case study that is submitted during the course (50%) and a formal final exam (50%). The case study will include work on theoretical and commercial aspects of chartering and will require the submission of a 2,000 word report. The final exam will assess the achievement of the whole spectrum of the course aims.

Contact hours:
  Autumn Spring Summer
Lectures 21
Seminars 7
Guided independent study 172
       
Total hours by term 200.00
       
Total hours for module 200.00

Summative Assessment Methods:
Method Percentage
Written exam 50
Written assignment including essay 50

Other information on summative assessment:

Formative assessment methods:

Penalties for late submission:
Penalties for late submission on this module are in accordance with the University policy. Please refer to page 5 of the Postgraduate Guide to Assessment for further information: http://www.reading.ac.uk/internal/exams/student/exa-guidePG.aspx

Length of examination:
2 hours

Requirements for a pass:
50% weighted average mark

Reassessment arrangements:

Additional Costs (specified where applicable):
1) Required text books:
2) Specialist equipment or materials:
3) Specialist clothing, footwear or headgear:
4) Printing and binding:
5) Computers and devices with a particular specification:
6) Travel, accommodation and subsistence:

Last updated: 31 March 2017

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