Chapter 3: Marine transportation

in International Commerce

Features, Position and Scope of Marine transportation

Facility of marine transportation

Charter procedure
I. Features, Position and Scope of Marine transportation

1. Features
Advantages Disadvantages

Speed is
Marine routes are Slow
formed naturally
Depending on
Climate
situation
Transporting
capacity is large

Ocean freight is Low

I. Features, Position and Scope of Marine transportation

2. Position
- Square of sea is 2/3 of the earth square -> Marine
covers for 80% of the total cargo transportation in
international commerce
3. Scope of marine usage
- Marine transportation is proper with the large amount
of cargo movement for the medium and long distance.
 II. Facility of marine transportation

1. Route of marine transportation

1.1 Basing on the operating scopes
. Domestic marine routes
. International marine routes

1.2 Basing on the usage

. Regular marine route
. Irregular marine route
. Special marine route
 II. Facility of marine transportation

2. Sea port
Sea port is a place which vessels depart, arrive and
anchor. Seaport provides the services for vessels and
cargoes on vessels.
 II. Facility of marine transportation

* Types of sea port

Commercial port Military port

Fishing port Sheltered port

 II. Facility of marine transportation

3. Merchant Vessel
Merchant vessel is used to transport cargoes or
passengers for commercial purpose.
 II. Facility of marine transportation

3. Merchant vessel (cont.)

* Types of Merchant Vessels
. Basing on structure: one board or many board vessel

. Basing on usage: cargo ship or passenger ship

. Basing on business: liner or tramp vessel

. Basing on flag: national flag or convenience flag (Eg:

Panama flag)
 II. Facility of marine transportation

3. Merchant vessel (cont.)

* Types of cargo vessels
. General cargo ship
 II. Facility of marine transportation

3. Merchant vessel (cont.)

* Types of cargo vessels
RO-RO Vessel LO-LO Vessel
 II. Facility of marine transportation

3. Merchant vessel (cont.)

* Types of cargo vessels
Lighter abroad ship Liquid ship
 II. Facility of marine transportation

3. Merchant vessel (cont.)

* Types of cargo vessels
Car vessel
 III. CHARTERING

* Modes of Chartering
A. Liner chartering (Booking ship space)

B. Voyage chartering

C. Time chartering
 III. CHARTERING

A. Liner chartering (Booking ship space)

1. Concept:

The liner (tramp ship) is the ship along a fixed route,

through a fixed port, transport the goods according to
the fixed shipping schedule announced in advance.
 III. CHARTERING

A. Liner chartering (Booking ship space)

2. Features of liner

- Ship transports with the announced schedule.

- The main shipping document is the bill of lading (B/L)

- The shipper must follow the terms regulated on B/L.

- Ocean freight is usually included in the

loading/unloading cargo fee on the ship and quoted
by the ocean lines’ tariff.
 III. CHARTERING

A. Liner chartering (Booking ship space)

3. Advantages and Disadvantages

* Advantages:

. The volume of cargo can be loaded without limits.

. The carrier is responsible for the loading and

unloading of cargoes.

. Dealing the chartering terms conveniently

. Shipper can calculate the cost conveniently

 III. CHARTERING

A. Liner chartering (Booking ship space)

3. Advantages and Disadvantages

* Disadvantages:

. Ocean freight is popularly higher than the voyage

chartering

. The position of ocean lines is usually higher than the

shipper’s.
A. LINER CHARTERING (BOOKING SHIP SPACE)

4. Booking note and Liner chartering steps

* Booking note is the document which the shipper

request the ocean lines to book the space on the
vessel.
 A. LINER CHARTERING (BOOKING SHIP SPACE)

* Liner chartering steps

Step 1: The shipper decides the port of loading and the

port of discharge then search the carriers (forwarders).

Step 2: The shipper provides the consignment’s

information and inquire the shipping rates with the
carrier.

Step 3: The shipper send the booking note and receive

the space confirmation of carrier
 A. LINER CHARTERING (BOOKING SHIP SPACE)

* Liner chartering teps (cont.)

Step 4: The shipper transport the consignment to the

port of loading

Step 5: The shipper sends the shipping instruction to

the carrier in order to compose the bill of lading.

Step 6: The shipper confirm the content of B/L, receive

the B/L from carrier, then settle the payment for the
carrier.
 A. LINER CHARTERING (BOOKING SHIP SPACE)

5. Documents of liner chartering

5.1 Shipping instruction:

5.2 Other documents: MSDS, Letter of Indemnity (LOI)

5.3 Bill of Lading

 A. LINER CHARTERING (BOOKING SHIP SPACE)

5.3 Bill of Lading

Bill of lading is the document to present for one marine

transport contract which the carrier issues for the
consignor after the cargo or consignment was on board
or was received to load on board.
* Note: when issuing the B/L, the carrier or her agent must sign on the B/L.
 A. LINER CHARTERING (BOOKING SHIP SPACE)

5.3 Bill of Lading (cont.)

5.3.1 The functions of Bill of lading:

- B/L is the proof in which the carrier received the cargo

with the quantity, weight, kind and status as shown on
B/L to transport to the delivery place.

- B/L is the proof which the transport contract is signed

by the shipper and the carrier or the agent of carrier.
 A. LINER CHARTERING (BOOKING SHIP SPACE)

5.3 Bill of Lading (cont.)

5.3.1 The functions of Bill of lading:

- B/L, especially, the original one is the valuable

document, to be used to make the decision relating to
cargo, to receive the cargo.
Original B/L can be transferred from one party to other.
 A. LINER CHARTERING (BOOKING SHIP SPACE)

5.3.1 The types of Bill of lading

* Basing on the loading status

- The Loaded-on-board Bill of Lading

- The Received-to-load Bill of Lading

 A. LINER CHARTERING (BOOKING SHIP SPACE)

5.3.2 The types of Bill of lading

* Basing on the circulation

- Order Bill of Lading

- Straight Bill of Lading

- B/L of Bearer
 A. LINER CHARTERING (BOOKING SHIP SPACE)

5.3.2 The types of Bill of lading

* Basing on the circulation

Order Bill of Lading is the B/L which is not shown the

name and address of consignee in details, is shown “To
order”.

Can show to order of the consignor, the consignee, the

bank or others. If not show to whom, it means to order of
the consignor. Order B/L can be transferred by
endorsement.
 A. LINER CHARTERING (BOOKING SHIP SPACE)

5.3.2 The types of Bill of lading

* Basing on the circulation

Straight Bill of Lading is the B/L which is shown the

name and address of consignee in details, is not shown
“To order” or deleted the phrase “To order”.

Notes:

- Only the party shown on B/L can receive the cargo.

- Can not be transferred by endorsement
 A. LINER CHARTERING (BOOKING SHIP SPACE)

5.3.2 The types of Bill of lading

* Basing on the circulation

Bill of Lading of Bearer is the B/L which is shown “to

Bearer”. Any one who bear the B/L can receive the cargo.

Notes:

- It is risky for the consignor because anyone can receive

the cargo if bearing the B/L
 A. LINER CHARTERING (BOOKING SHIP SPACE)

5.3.2 The types of Bill of lading

* Basing on the notes on B/L

Clean Bill of Lading is the B/L in which is not mentioned

any bad notes or status of cargo appearance and
packaging

UnClean Bill of Lading is the B/L in which is mentioned

any bad notes or status of cargo appearance and
packaging
 A. LINER CHARTERING (BOOKING SHIP SPACE)

5.3.2 The types of Bill of lading

* Basing on the route of transportation

- Direct Bill of Lading

- Thorough Bill of Lading

- Multimodal Bill of Lading

 A. LINER CHARTERING (BOOKING SHIP SPACE)

5.3.2 The types of Bill of lading

* Basing on the party issues the B/L

Master Bill of lading (MBL) is the B/L which is issued by

the ocean lines or by the service provider

House Bill of lading (HBL) is the B/L which is issued for

the customer.
 A. LINER CHARTERING (BOOKING SHIP SPACE)

5.3.2 The types of Bill of lading

* Basing on the party submit the B/L to receive the cargo

Original Bill of lading is the B/L in which the consignee

must show and send for the carrier’s agent to receive the
cargo.

Surrendered Bill of lading is the B/L which the B/L was

sent the carrier at the port of loading.
 A. LINER CHARTERING (BOOKING SHIP SPACE)

5.3.3 The content of Bill of lading

The front page of B/L

The back page of B/L

 A. LINER CHARTERING (BOOKING SHIP SPACE)

5.3.4 The rules regulating to Bill of lading

02 main international convention

Hague-Visby Rules: relating to the bill of lading

Hamburg Rules (1978)

 B. VOYAGE CHARTER

1. Concepts

Voyage vessel is the vessel which transports goods

between or among many ports as per the shippers’
requests by the voyage charter party (C/P).
 B. VOYAGE CHARTER

1. Concepts (cont.)

Voyage charter is the activities which the shippers contact

the ship owner or the representative of the ship owner to
charter the whole of the vessel or a part of the vessel to
transport the cargoes from one or many ports of loading
to one or many ports of discharge.
 B. VOYAGE CHARTER

2. Features

- Voyage vessel transports cargo as the shipper’s

schedule

- The charter party and the bill of lading are the main
documents in which regulates the relationship between
the ship owner and the consignors.

- The shippers can flexibly deal the terms and conditions

with the ship owner or her representatives.
 B. VOYAGE CHARTER

2. Features (cont.)

- The shipping rate can be included in the

loading/unloading fee or not.

- The shipping rate can be calculated by gross weight,

volume or lumpsum.

- The ship owner can be the carrier or not.

- The voyage vessel is chartered to transport for the

consignment with the big volume or bulk cargo
 B. VOYAGE CHARTER

3. Advantages and Disadvantages

* Advantages

- High flexibility

- The shipping rate is cheaper than the liner’s rate

- The shippers can negotiate the terms and the conditions

with the carrier

- The speed of carriage is high

 B. VOYAGE CHARTER

3. Advantages and Disadvantages

* Disadvantages

- The technique of voyage charter is high and complex

- The shipping rate is sensitive and highly fluctuated

 B. VOYAGE CHARTER

4. Basic steps of voyage charter

Step 1: The shipper contact the carrier or the charter

broker to charter the whole of vessel or a part of the
vessel.

Step 2: The broker finds the suitable vessel for the

shipper.

Step 3: Negotiate and sign the charter party

Step 4: Implement the charter party

 B. VOYAGE CHARTER

5. Charter Party (C/P)

5.1 Concept: the charter party is the document in which

the carrier commits to transport the cargoes from one or
many ports to one or other ports to deliver for the
consignees. The shipper pay the shipping fees and the
relating fees for the carrier.
Note: the shipper and the ship owner do not usually sign the
C/P directly, but via the brokers.
 B. VOYAGE CHARTER

5.2. The relationship between C/P and B/L

As the Vietnam Marine rules, the C/P is the document to

adjust the relationship between the carrier and the
shipper.

As the Vietnam Marine rules, the B/l is the document to

adjust the relationship between the carrier and the
consignee at the port of discharge.
 B. VOYAGE CHARTER

5.2 The relationship between C/P and B/L (cont.)

When there is the disputation, it can be solved as the

following cases:

Case 1: the consignee is also the party signed the C/P =>
basing on the C/P.

Case 2: the consignee is not the party signed the C/P =>
basing on the B/L.
 B. VOYAGE CHARTER

5.2 The relationship between C/P and B/L (cont.)

When there is the disputation, it can be solved as the

following cases:

Case 3: the transferred B/L => basing on the B/L.

Case 4: the B/L mentioned to the C/P => basing on the

C/P
 B. VOYAGE CHARTER

5.3 The laws is applied for the C/P

. The national laws is applied for the C/P.

. The arising issue out of the C/P, to use the national laws
at the country happening the disputation.

. In reality, the marine laws of United Kingdom or United

States are applicable in the charter party.
 B. VOYAGE CHARTER

5.4 The basic terms in the C/P

. The parties

. The specification of vessel: name, nationality,

manufactured year, manufactured place, class, flag,
dimension, structure, speed, quantity of cranes, number
of staff, the current position of the vessel, insurance of
liability.
 B. VOYAGE CHARTER

5.4 The basic terms in the C/P

. The parties

. The specification of vessel: name, nationality,

manufactured year, manufactured place, class, flag,
dimension, structure, speed, quantity of cranes, number
of staff, the current position of the vessel, insurance of
liability.
 B. VOYAGE CHARTER

5.4 The basic terms in the C/P (cont.)

- The time of the vessel arrives the port to load cargo with
3 conditions:

. The vessel already arrived at the commercial area of

port

. The vessel is available for the loading of cargo

. Notice of Readiness to load/discharge (NOR) was sent

to the shipper.
 B. VOYAGE CHARTER

5.4 The basic terms in the C/P (cont.)

- Terms relating to cargo: must show name, type of

package, mark, quantity, volume, gross weight,
specification, dimension, etc… in details.

- Port of loading, port of discharge, terminals, quantity of

terminals, ordinal number of terminal, whom to pay for
the fees and charges to displace between terminals.
 B. VOYAGE CHARTER

5.4 The basic terms in the C/P (cont.)

- Terms relating to shipping rates, payments

. Shipping rates: to be calculated on volume or weight or

type of package, etc…

. Payment terms: Prepaid or Collect, or a Prepaid part

and To collect a part; place of payment; exchange rate;
deposit.
 B. VOYAGE CHARTER

5.4 The basic terms in the C/P (cont.)

- Terms relating to loading/unloading: as arranged

- Terms relating to Loading/unloading time; Bonus/Penalty

. Loading/unloading time is the time to complete the

stuffing or discharge the cargo onto the vessel

. The loading/unloading time is sooner/later as plan to be

rewarded/fined

The rewarding rate = ½ the penalty rate

 B. VOYAGE CHARTER

5.5 The forms of C/P

- Popular form of C/P is used for the general cargo. For

Eg: Genon form

- Specific form of CP is used for the particular shipment or

the fixed route
 B. VESSEL TIME CHARTER

1. Concept

The vessel time charter is the case in which the ship owner
lease the whole vessel along with the labors or not in the
period of time.
The charterer must cover for the fees and charges to
operate the ship as the contract.
 B. TIME VESSEL CHARTER

2. Advantages and Disadvantages

* Advantages:

- The charterer actively use and operate the vessel.

- The shipping rate is cheaper than liner rate and voyage

rate.

- The ship owner can earn the profit exactly.

 B. TIME VESSEL CHARTER

2. Advantages and Disadvantages

* Disadvantages:

- The charterer must cover for the fuel fees which is usually
high and fluctuated.

- The charterer can encounter the risky issues or big

problem in the case that he/she has no experience to
operate the vessel.
THANK YOU FOR ATTENTION
 B. VESSEL TIME CHARTER

3. Time charter agreement

The agreement of the vessel time charter is usually

included in certain basic terms and conditions:

. Parties, descriptions of vessel, period of charter, delivery

of port/place, canceling date and time, trading limits, type
of cargo, notice of redelivery, fuel, laws and attribution,…