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Hi. I am a shipping company director, transport academic, author, family man and all round nice guy. I have worked as shipbroker, shipowner, freight trader and bulk charterer, in senior positions, with some of the largest and most disrespected (joke) companies in the world. Ask my advice on all things shipping and you will receive my blunt and always honest answer. Hang around to learn more about chartering and ship broker salaries, chartering and ship broker jobs, chartering and shipbroker recruitment agencies, cheap freight, maritime education, chartering and ship broker qualifications, become a ship broker, tips on how to be a successful bulk shipping executive, philosophy, Zen and the art of shipbroking, and much more. Yours The Virtual Shipbroker (recently proclaimed the guru of shipbroking) Copyright © 2009-17 by Virtualshipbroker

Friday, October 9, 2009

APS vs DOP - Voyage Calculation essential concept

This post is to explain a little more about some of the essential concepts involved in 'voyage estimating'.

This one is a doozy....and has confused many a trainee and experienced shipping person over the years. Shipowners understand the concept by in my experience brokers have a rudementary idea, and charterers even less of an idea (especially voyage charterers)

APS vs DOP ship delivery.

Definitions first

APS = Arrival pilot station (at new port)
DOP = delivery dropping outward pilot station (at last port of discharge from previous voyage)

Second important point: These are time charter terms not voyage charter terms.

So when negotiating a time charter the two parties will need to agree at a delivery point for the ship. At first glance this may sound like a no brainer. The delivery should be at the first load port I hear you say.....but wait just one moment. Like a taxi cab most ships need to travel empty to the next load port....so the question is 'who pays for the empty ballast leg to the load port?'

Common sense may suggest that the shipowner should pay but the reality in most situations is that it is the charterer who usually foots this bill. Having said that the 'delivery point' of a vessel in any time charter negotiation is a MAJOR point of discussion and choice can come down to the prevailing market conditions at that particular time.

All charterers try and get APS delivery because that means they only start paying hire at the load port (ie arrival pilot station). All shipowners try and get dop delivery (dropping outward pilot station at last port of discharge - previous voyage) because it means the charterer pays from the moment the ship leaves the last discharging port of the previous contract.

You can see by this example why it is important for charterers to source ships as close as possible to their own loading port.......

The problem here is that most loading areas are not by defintion discharging areas. 99 percent of time charter contracts involve an empty ballast leg before the vessel picks up the next cargo...

There is so much more that can be written on this subject and I will add a few things as we go along. Any questions just drop me a line....

15 comments:

  1. You explanation is perfect . I was a little confused about those terms. I would like to add that when the market is bad and the ship-owner is desperate to charter his vessel and moreover is willing to pay for the ballast leg to the load port then he chooses APS, otherwise in a good market APS+BBonus or DOP with the eqivalent amount of money

    one specific day is DOP=APS+BB/days

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  2. Quite right Panos - thanks for stopping by.

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  3. There is something else I would like to ask ,I know DOP as dropping outwards pilot not as delivery. Is it another term or one can use the same to express DOP? and when we use redelivery DOP? and the term fully fixed.

    Thank you very much

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  4. Hello Panos you are quite correct

    Dropping outward pilot is the correct term as it can be used for both redel or delivery. Nice to see someone reading...

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  5. IF USE APS WHEN STARTING VESSEL ON HIRE

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  6. Dlosp - dropping last outward sea pilot?

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  7. how to calculate voy draft and loadability ..tks

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  8. PLS EXPLAIN HOW CALCULATING THE APS NUM GIVEN, TO DOP MONEY AND OPPOSITE, WHEN THERE IS NO BBONUS GIVEN...I.E CHARTRS WANT TO PAY USD 13K APS DELY WITHOUT ANY BBONUS AND ARE NOT KEEN TO DOP INDICS...HOW CAN I TRANSFORM THIS NUM TO DOP NUM?

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  9. If your dop number you want is 12,ooo then you need to add the extra ballasting days to the loadport. Si it could be 4 days. You add this cost and your price will become higher...

    so your dop number could be 12k but your aps number could be 13k...

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  10. I have started reading your blog a few weeks ago and am really enjoying it.
    I have some questions.
    What is BBonus?
    Regarding the last comment, how is the APS and DOP price determined?
    You say DOP could be USD 12k and APS could be 13k.
    Does this mean when DOP is used in charter party, the actual hire of the time charter is lesser than when APS is used? Did i understand correctly?
    Cheers.

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    1. say, for example that the loading port is canakkale and discharge port is Shanghai. Say, It is roughly 40 days on ship at speed of 13 knots. If owner is asking 12k/day, he would make, 480k. But if the owners ship is not at canakkale and is at say, odessa, then he would have to ballast his ship from odessa to canakkale. that costs money. If the distance is 3 days, thats 3x12 = 36k opportunity cost lost if he agrees to aps (delivery at load port). In dop he would get that money too (43 days x 12k). Or, to answer another question, he could agree aps delivery + ballast bonus (not a per day amount, its a fixed sum of say 25k). The per day rate would stay the same in this case at 12k. If no ballast bonus, then he would incorporate the ballasting cost into the daily rate.

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  11. Hi Jong

    yes in the charterparty it will stipulate the delivery spot and the hire rate. So logically an aps delivery will probably have a higher rate than a dop delivery.

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  12. Hi!
    Tell me pls something like 'del Canakkale via BlSea redel EMed - 6k daily' can be automatically considered as DOP rate? I mean if the owner finished his previous biz let's say in Piraeus and then he ballasted his vessel to Canakkale to hold it there idle waiting for new proposals. In this case Canakkale can't be actually called as 'last port of discharge'. So can this 'del Canakkale via BlSea redel EMed' still be considered as DOP?
    P.S. Hope my definitions and explanatios are clear. Many thanks.

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    Replies
    1. Hi - I will post an answer in a separate posting

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