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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

Wednesday, February 17, 2010

Shinc, Shex and why they are manipulated.

Who can answer this?

qte

Hi VS,
I was wondering why do Voyage Charter quotes alwayz differ from the port quotes. I mean why charterers give SHEX terms when we know its SHINC? Why Loading rate is given 10000 when its 15-20000 in actual ?

unqte
 
Brgds
VS
 
(BTW 50 followers of the blog - wahoo...thank you followers. You will be rewarded with shipping riches and eternal life....wog, wp)

15 comments:

  1. Hi VS,

    Basically SHEX term favours Charterers as it Sundays and holidays are to be excepted from the counting of laytime. Normally this term applies as it would not be usual to carry our cargo operations in some countries. But however it has become common that Charterers quote SHEX terms because it gives them more time to complete cargo operations and finish within the laytime allowed without incurring demurrage. In some cases Charters even quote SHEX EIU (Even If Used) which means layitme will not be count even if cargo operations are carried out on these days. Similarly SHEX UU (Unless Used) refers only to actual time used for cargo operations.

    SHINC terms on the other hand are Ship Owners' terms. It means laytime is continuous including Sundays and other Holidays which is of advantahe to Ship Owners.

    We can also see FXEX (Friday Holiday Excluded) and FHINC (Friday Holiday Included)in the case of Islamic countries as they observe friday as holidays.

    Im not sure whether my answer is fully in relevance to the question asked.

    Pleased to have your comments on above.

    Thks /Rgds
    Varun

    ReplyDelete
  2. Hello Varun.

    Good try but not quite the answerr I reckon. The terms are neither charterers or shipowners terms as they are a function of the sales contract between the buyer and the seller (most of the time anyway)

    Anyone else?

    ReplyDelete
  3. Morning All,

    First of all the SHINC 15-20k terms are of course only achievable when the vsl is alongside berth discharging but there may be congestion so the SHEX terms may allow a safety net for the Chrs.

    Second, most ports operate under normal tarrifs on a SHEX basis. Meaning that when you require them to work SHINC there will be overtime costs for customs/watchmen/stevedores/phyto authorities/etc which all amount to considerable extra costs. Such costs are often offset by the earned despatch during the SHEX time not to count period.

    In some ports the overtime costs are prohibitive especially when your dem/desp rate may be low in which case you will find that the vessel (or rather Shippers/Recveivers) will not work on a SHINC basis.

    Have a great day.

    ReplyDelete
  4. For those who see the funny side of things. Sorry VS, maybe I shouldn't be posting in the midst of a serious discussion but I leave it to your discretion whether this comment should appear on the blog or not. So here goes (credit to unknown person on the now defunct shippingbabes.com):

    a brief glossary of terms for the novice shipbroker over a career of observation.

    • SHINC: Sundays and holidays included
    • SHEX: SHINC plus a dollar
    • CQD: SHINC plus five dollars
    • BOOKING NOTE: Gencon plus ten dollars bends
    • CENTROCON LOAD: A technical term for robbery
    • GROSS LOAD: SHINC plus your grandmother’s age, but you won’t get it
    • MECH LOAD: Similar to Centrocon load but less owner friendly. Alt. Theft"
    • WEATHER WORKING DAYS –CQD: plus four days (eight if grain)
    • HSS: Heavy grains, Soya, Sorghum
    • WHEAT: HSS less fifty cents
    • BARLEY: WHEAT with hair
    • "LIGHTS": A term for grain houses to use in order to lie about what they paid for HSS
    • MILLET: Wheat for poor people and budgies
    • TANKERS: Gearless vessels with no hatches
    • MILO: Who knows?

    ReplyDelete
  5. Hi Gary

    Nice answer (all true)

    I personally think there is one major reason that is being left out.

    Any freight traders want to have a go?

    ReplyDelete
  6. Nice one Suraz - very true. I will keep those handy next time I do a voyage calculation....

    ReplyDelete
  7. Ok guys - here is the short answer.

    Gary is correct that most prevalent reason is that charterers think they are being conservative by allowing for more time then is actually needed. So they think that by agreeing to slower rates that they will somehow protect themselves from demurrage.

    The problem with this idea is that the shipowner factors this extra time into the freight rate. So although they may be saving on demurrage and possible even making some despatch money - the chances are they are losing money overall due to the higher freight rate charged by the shipowner.

    So the truth is that when charterers stuff around with terms that arent back to back with the suggested times from the port authorities, they are doing so at a cost. Charterers think they are being clever but the opposite is sometiem the truth.

    I should explain alittle more about how load and discharge terms are agreed. This will show why charterers do this.

    In the sales contract these loading and discharge terms are agreed (depending on cnf or fob but thats not important for this discussion). Then these terms are used by the charterer in the shipping contract. The charterer is under no obligation to go back to back with the sales terms. This is when many charterers decide to be conservative and slow the terms they give the shipowner.

    Part of the problem is this. Non shipping companies (mining co's trading companies, agri firms) hate it when they see demurrage bills.
    Its very visible and is seen as a huge cost.

    The problem is they do not understand the link between this cost and the freight rate. The higher the demurrage bill may infact be in direct proportion to a smaller freight rate. The lower the demurrage bill may mean they are paying more for freight. So really the overall exercise is borderline futile!

    They appear in different parts of the accounting ledger and different part of the corportate boffins brain!

    If you know how to run a voyage estimation you can see in real life how these costs and revenues interplay with eachother. An important process for any shipping executive to understand. I cant tell you how many contracts and disputes I have resolved very quickly just by understabnding this interplay!

    Yours
    VS

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  8. Say, I am buyer and have chartered a vessel. Will the term SHEX-sundays, holidays excepted, be to my advantage in saving the laytime? If these days are excepted, then it should mean that I can load the cargo during these days and avoid the usage of laytime against me. Is this correct?

    Thanks

    ReplyDelete
  9. Yes that is correct - but guess what? You are paying a higher freight rate. So you save on laytime but the freight rate charged by the shipowner will be higher. If you agreed shinc load the shipowner (in his calculation) would have allowed less time to load and hence given you a cheaper freight rate...

    Moral to the story with laytime - just do as the port recommends and dont try to maniplulate it because at the end of the day you will pay somewhere else...

    cheers / VS

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  10. Ok, so, higher freight rate, because I will be taking a longer time to load a vessel and, thus, higher freight rate to the owner. But, if I agreed on SHINC then, I would be risking the higher usage of the laytime, but less cost on the freight, since the laytime would be shorter. Would you say it is a trade off?

    Is there a way to call you/office?

    ReplyDelete
  11. yes thats the trade off. Sorry i can only be contacted by email. If you want more 'valuable' advice you can hire me as a consultant - like other supersmart companies have decided to do. Im cheap and I save you millions...

    cheers
    VS

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  12. what is your rate and what kind of services do you provide?

    ReplyDelete
  13. Rate = Cheap
    Service = Anything except working with children or animals.

    Check out the Virtual Shipbroker consultancy page of the this website. that should explain. Alternatively send me a private email.

    Cheers
    VS

    ReplyDelete
  14. Can I get advise on this:

    I'm looking to get bulk wood biomass pellets from Mozambique to Hull UK.
    I'm getting confused about all the terms:

    5000t with a stow factor of about 100'/tonne need to pay usd 140 pmt fios
    with 2500t shinc load/2500t shex disch

    What does it mean for me?

    Thanks in advance for your help,

    Best
    Peter Pichler
    Mozambique

    ReplyDelete
  15. Hi there,
    with SHINC conditions with a counterparty, are the BIMCO Superholidays excluded anyway, or shall this be specified in the contract?

    ReplyDelete