Answer to the question on previous post - can a shipowners cancel?

Once again thanks for the great question and thank you to the many contributors who pretty much answered the question perfectly.

Note that im not a lawyer and without knowing the exact circumstances and charterparty clauses.

I do however offer the general opinion that -  a shipowner cannot cancel a contract under these circumstances but fortulately is protected by way of demurage / detention clauses (in the cp).

Legally speaking demurrage or detention constitutes DAMAGES awarded against a charterer for taking longer than stipulated to load or discharge a ship.

The question of whether the damages fall under 'demurrage" or "detention" probably depends on the circumstances and also on the cp.

There is a great lesson here for shipowners. This is a story about delays but it is also a story about sound ship trading practice.

Although a shipowner cannot be expected to premeditate every move in the market, a shipowner / ship operator when fixing a cargo with say a laycan 3 weeks away needs to consider many things

1. The current voyage he is undertaking and the likelihood for delays

2. The charterparties for both the current and next voyage and whether there is flexibility or even scope to cancel the contract. What kind of laycan cancelling clause have you used is another example of smart cp negotiations skills that can help you before a problem arises.

3. Current market conditions......if the market is about to explode best to fix a cargo that you are certain will run smoothly and quickly so you are set to take advantage of the next opportunity

To name a few..........

If the market were to drop (instead of rise during the voyage period) the shipower would be very happy with any delays locking in a damages claim at higher than current market levels. So it goes both ways.

In a game of poker - sometime you win, sometimes you lose. Advice to the shipowner is "limit the damage and move on"!

cheers
VS

A great question - can a shipowner withdraw a ship if cargo is late?

From a reader

qte

Can shipowner cancel the contract or witraw from it if the delay is caused by the charterer (for example: the goods intended for loading are not ready)? The delay prolonged the time beyond stipulated laycan, and the shipowner has next contracted laycan for another charterer so he should cancel this C/P to acheve the next one.

If this is the case, does the shipowner has a right to charge the charter the deadfreight or some kind of compensation for losing time due to chartere's delay?

Thanks in advance.

unqte

Anyone help this person out???

Free beer for any right answer..

CO2 fitted ships

One of my current crop of students has asked a good question. What constitutes a CO2 fitted ship?

Not all ships are fitted with a CO2 fire fighting systems in their cargo holds. The systems are quite expensive and those ships that are fitted are able to load combustible cargoes that other ships cannot. Cotton seeds are one such cargo.

Sometime these ships command a premium in the market..

The details

The Co2 system consists of a fire detection system (smoke detectors) and an alarm system, along with Co2 cylinders. During an indication of fire in the cargo hold, the gang of co2 bottles are released depending upon the cargo permeability (how much space is empty over the cargo for co2).

When there is a fire in any of the cargo hold compartments, the smoke is sucked into the sampling pipes and is passed through diverting valves in to the wheel house, thus warning the bridge personnel about the fire. Simultaneously, the sample from the pipes is passed over a smoke detector which senses the smoke and activates the audio visual alarm indicating the outbreak of fire.

There are other fire fighting systems available to shipowners but the Co2 system is easily the most popular...

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Re current crop of students.

A great mix from some of the worlds largest brokerage firms and even a few cargo charterers aswell. To those who didn't enrol you missed a chance to network with people controlling millions of tonnes of cargo. And those cargo principals who are thinking of enrolling next time.....you should. Its a great way to improve your knowledge, expand your horizons and make friends in other fields...

Great fun and this is a really good crew to teach..

We all rock

VS

Volatility - Handies vs Capes

Why is it that the smaller ship market segment is less volatile then larger sizes?

Good Question  (see previous post) and some excellent answers.  Thanks for the contributions and you are all spot on. And btw Gambalistic will go into my linguistic repertoire from now on! Love it...

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Here is my take

The markets for larger ships have been more volatile than smaller ships for following reasons.

1. The market for larger ships is dominated by a small amount of larger players. This means that any significant change in market conditions will result in large market fluctuations. In shipping speak this means 3 things. The market is dominated by a) China b) coal and Iron Ore and C) Larger corporate style shipowners who control more than a handful of ships.

2. The market for smaller ships is dominated by many smaller players. This means that any change in market conditions does not necessarily affect the price of ships to a huge extent. Smaller ships go everywhere and carry everything. There are thousands of shipowners some controlling just one vessel and therefore unable to be a price maker in any way.

3. The world has built more larger ships than small ships, over recent times. Meaning that an over-supply of larger ships has led to a weakening market. Smaller ships, until recently, were being ignored by major players and are now facing catch-up. This means that a relative undersupply has meant firmer rates.

4. Larger ships and the trades they pursue are more likely to get involved in congestion issues, leading to decreased supply and more volatile rates.

Hope this helps. Anyone else care to add more reasons feel free. Any more ripper questions keepem coming.

The Virtual Shipbroker

Great question from a reader - who has an answer?

qte

 

Hi VS,

Read your blog on the regular, and have a question I've been wanting your opinion on.

Why are smaller ships (e.g. Handysize) more resistant to both upside and downside risk than their larger cousins?

A simple viewing of charter rates of dry bulk vessels shows capesize are extremely variable where as the smaller you get the steadier the graph.

Would love your opinion.

Thanks in advance.

Felix

 

unqte

 

Ok - Ill leave this one open to readers. Anyone willing to agree and offer an opinion why this is the case?

 

Cheers

The Virtual Shipbroker

 

 

Study with the Virtual Shipbroker

Have to say that I have had amazing response to the upcoming course.

Reminds me how global the industry is! Also testament to the course are the applicants from some of the worlds largest shipbroking and chartering firms. It seems this humble little "hands on" course is gaining growing acceptance from shipping more established players.

Personally I am not surprised. In a stagnant / slightly depressed market, any personal edge is worthwhile.

For those who have sent me emails with expressions of interest I have replied to most of you and will be sending out official offers to enrol in the coming weeks.

For those of you still considering if you want to enrol there is still time but you will need to send me an email pretty soon. Need to know who you are and why you would like to be a part of the study program.

As an aside its great to see that the market has jumped a little lately. Onwards and Upwards!

Yours
VS

VS Dry Cargo Certificate - New intake coming soon

(Costs added below)

I have had alot of interest recently enquiring about the next intake for the above mentioned course.

Below is typical of the emails I receive

This one from a trainee with a shipping company in Continental Europe

qte

Unfortunately, this is not what i have imagined, they are so busy so they can not spare time to teach me and again, mostly, i have to learn everything by my self... and not everyone teach me honestly. I know that there is people that they do not like young men, they try to teach us slightly and wrongly so we can never be like them.

unqte

I hear ya! This was my experience as a young person aswell. And those that do have a formal trainee program IMO take too long to get to the NUTS and BOLTS.

I maintain that a new entrant with proper intensive training should be able to start fixing ships within 3 months. Its a no brainer!

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Anyway - the course has been highly successful with over 20 graduates since its inception 2 years ago.

Check the study tab above for full details of what to expect

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Whats the scoop?

Next Intake - I will be calling for applications sometime in the next 3-6 weeks (keep an eye out), for a start shortly after.

Cost - No change since last intake: USD 975.00 (USD 925.00 if you have already purchased the books)

Feel free to email intial interest anytime you want. Will help me get a grasp on numbers.

Keep Rocking

The Virtual Shipbroker

Who pays commission?

Pasted from a previous thread example-of-difficult-client

Quote

The Virtual Shipbroker said...

I am often heard to mutter the word GOOSE when talking about principals and competing brokers but in a slightly different context to what Suraz alludes too above (but thats a whole different story).

But yes Suraz - at the end of the day the shipowner may be the one writing the checks but it is the charterer who actually pays the "price" of a commission. They pay the price in the form of a higher freight rate or higher TC rate charged by the shipowner. Its factored in the cost. So if a shipowner cries foul about paying your brokerage remind them that surely they allowed for 1.25 percent in their calculations before they quoted on the business! One thing is for sure - nothing in shipping is for FREE - the idea that shipowners would pay a brokerage (without somehow getting it back) is naive.

Cheers
VS

unqte

VS