C K SharCase Studies in Chartering & Operations - Converting Knowledge into Money March 2016

1. Converting Knowledge into Money inConverting Knowledge into Money in
difficult Market Conditionsdifficult Market Conditions
Case Studies in Chartering &Case Studies in Chartering &
OperationsOperations
Presented byPresented by
CK SharmaCK Sharma
Managing DirectorManaging Director
OPG Power Generations Pvt LtdOPG Power Generations Pvt Ltd
10th
March 2016
Shipping Academic Seminar
Leela Hotel Mumbai

2. Perils in ShippingPerils in Shipping
High Value Assets.
Bad Weather.
Pollution Risk.
Navigation Hazards.
Pirates.
Dangerous Cargoes.
War Zones.
Dangerous Countries.
Cyclical Industry
Bad Owners/Charterers
Maritime Frauds
Commercial Risks

3. Pleasures Of ShippingPleasures Of Shipping
Perennial Business.
Encashable Property.
Big Investment.
Income on sale and purchase of the ship.
Huge cash flows.
World wide business.
Moveable Assets
Shipowner’s Status in Society

4. Golden Kiku
 A case of Part II of Gencon C/P:
 The vessel was fixed to load Iron Ore from ECI to China
under Gencon 94 C/P.
 At Discharge Port, near Shanghai, pilot Anchored midway
at a safe place during river transit for 8 hours due to fog.
 Charterers raised Despatch claim of USD 3000/- deducting
Shifting time from Anchorage to Berth.
 On deep scrutiny of Line 115 of Part II of Gencon CP it was
revealed that the wording is “MOVING TIME” from
anchorage to berth will not count as used laytime.
Therefore, 8 hours of time lost “waiting” at a place en-
route from Anchorage to berth was used laytime. Usually it
is written & believed that “Shifting Time” is not to count
as used laytime.
 Charterers counter claimed USD 15,000 Demurrage
invoking line 115 of the Gencon Part II. This was paid by
Charterers without protest.

6. Cargo discharge at wrong disport 1
 Owner protecting unscrupulous Operator:
 In the year 2002 a Dubai based Operator Hired a
vessel from a reputed Owner & loaded Containers
from Bombay for Umm Quasar from 5 shippers for
carrying project cargoes. He got extra set of OBLs
prepared at loadport showing Dubai as disport. Agent
was unaware of the purpose & was conned.
 Cargo was discharged in Bandar Abbas & vessel was
redelivered to Head Owners showing the fake
documents to Owners.
 Then the Operator asked the Shippers to pay freight
again for reaching the cargo to Umm Quasar.
 Some of the Shippers paid the freight again but one
of them went tough.

7. Cargo discharge at wrong disport 2
 This Shipper went to Bandar Abbas and hired a vessel
to ship the cargo himself to Umm Quasar. Then filed a
case against the Head Owner for all costs.
 Head Owners fearing difficulty, changed the name of the
vessel and stopped her trading in India.
 Shipper got the vessel arrested at Singapore Anchorage
during her bunkering & obtained P&I Club’s Guarantee.
 Head Owner contested the case on the strength of
documents given by the Operator.
 The Operator closed his shop in Sharjah and
disappeared.
 Head Owner lost the case & had to pay up full costs
including legal costs to the Shipper.

8. Case of Dropping Anchor on
Power Line in Venezuela
Communication is key in Shipping business
Abrupt orders can lead to disasters
P&I Cover is essential.
Training is most important for even the
smallest job.

9. Bunkers as per C/P 1
 Chartering Managers often do not give much importance
to Bunker Clause in C/Ps. In hands of a cunning Owner
it can be a deadly weapon.
 In a coastal voyage from ECI to WCI a Clause was
agreed mainly as under:
 Charterers to redeliver the vessel with same quantity bunkers as
on delivery. Bunkers to be supplied from an a reputed Supplier
such as Chevron/Texaco/Shell etc.
 Vessel loaded at Vizag where the only supplier of
bunkers is IOC. Owner refused to take bunkers.
 Upon completion discharge at an anchorage point in
WCI, where bunker supply is not possible, the Owner
invoked the bunker clause and refused to accept
redelivery of the vessel till bunkers were supplied OR
Charterers to pay full ballast cost up to Fujairah.

10. Bunkers as per C/P 2
 Charterers advisor saved the situation by
issuing message with following points:
 The C/P provided for a reputed supplier like
Chevron/Texaco/Shell, etc
 Indian Oil is covered under ETC.
 Indian Oil is a fortune 500 company and has supplied
bunkers to millions of vessel calls in Indian Coast.
Therefore, IOC is equivalent to Chevron/Texaco/BP,
etc for the bunker to be supplied.
 Chevron/Texaco/Shell have never supplied bunkers at
Indian Coast nor are likely to supply in foreseeable
future. This makes the contract condition impossible
to perform, thereby VOID as per English Law.
 Owners withdrew the case and settled amicably.

11. Case of Cashew cargo from
West Africa to Cochin
Trading can not be effectively done without
knowledgeable Shipping back up.
Never load a cargo without pre-sale where
there are Cartels amongst buyers.
If you get caught in a Trading Trap then
immediately get out and cut losses that would
follow.

12. Factors affecting Freight - 1
Type of cargo
Unit weight of cargo/Stowage Factor
Loading/Discharging terms
Load port/Discharge port DA
Load Port/Discharge port congestion
Reliability of Charterer
Weather conditions
Duration of voyage
Type of ship/Age of the ship
Market conditions
Problems record of Load port/Discharge Port
Possibilities of getting next business after
completion of voyage
Competition

13. Factors affecting Freight - II
 To be filled in by Participants:
– Commodity demand
– Port Infrastructure & cost
– World Economic Scenario
– Fuel Cost
– Age of vessel
– Urgency of the Customer
– Changing Consumption pattern
– Chance of back-haul cargoes
– Nature of cargo
– Competition from other Modes like
truck/Railways/Pipeline