CHARTERING Dinesh N. Kutty 1
Peculiarities in tanker trade. Tanker trades are generally unidirectional. Tankers : DPP, CPP & Chemical Gas Carriers : LPG and LNG. Quality of tonnage is critical : Oil Major Approvals. STS operations are rampant. Chartering negotiations are brisk and fast. Freights are calculated on Worldscale. 2
CONCEPT OF WORLDSCALE
WORLDSCALE - INTRODUCTION THE FULL FORM IS NEW WORLDWIDE TANKER NOMINAL FREIGHT SCALE SCHEDULE OF FREIGHT RATES. WORLDSCALE IS AVAILABLE ONLY ON A SUBSCRIPTION BASIS, PUBLISHED ANNUALLY ON 1 ST JANUARY EACH YEAR. WORLDSCALE RATES ARE CONSOLIDATED & FINALIZED BY TWO NON-PROFIT MAKING ORGANISATIONS KNOWN AS WORLDSCALE ASSOCIATION (LONDON) LIMITED AND WORLDSCALE ASSOCIATION (NYC) INC. ABBREVIATED AS WS IN WRITTEN COMMUNICATION, FOR EG:- WS 50, WS 100. 4
HOW IS THE RATE EXPRESSED? THE RATE IS EXPRESSED IN $ / METRIC TONNE USING A STANDARD VESSEL RATE GIVEN IN THE WORLDSCALE BOOK IS REFERRED AS FLAT RATE OR WS 100 WS 300 WOULD MEAN 300% OF PUBLISHED RATES AND WS 50 WOULD MEAN 50% OF PUBLISHED RATES. FOR EXAMPLE: VOYAGE : RASTANURA TO MUMBAI WS 100 (PUBLISHED RATE): USD 7.13 PMT - IF THE FIXUTURE IS CONCLUDED AT WS 120, THEN APPLICABLE FREIGHT RATE WOULD BE : 7.13 X 120% I.E. USD. 8.556 PMT - IF THE FIXUTURE IS CONCLUDED AT WS 70, THEN APPLICABLE FREIGHT RATE WOULD BE : 7.13 X 70% I.E. USD. 4.991 PMT 5
BASIS OF CALCULATION. 1. STANDARD VESSEL: 75,000 MT 2. AVERAGE SERVI CE SPEED: 14.5 KNOTS 3. BUNKER CONSUMPTION : STEAMING 55 TONNES PER DAY PURPOSES OTHER THAN STEAMING 100 TONNES PER ROUND VOYAGE. IN PORT 5 TONNES FOR EACH PORT GRADE OF FUEL 380 CST 4. PORT TIME 4 DAYS (1 LOADING & 1 DISCHARGE) (12 HOURS ADDITIONAL FOR EVERY PORT) 5. FIXED HIRE ELEMENT: USD. 12,000 PER DAY 6
BASIS OF CALCULATION. 6. BUNKER PRICE: USD. 328.75 PER TONNE 7. PORT COSTS: DEPENDING ON PORTS 8. CANAL TRANSIT TIME: 24 HRS FOR PANAMA CANAL 30 HRS FOR SUEZ CANAL 7
ADVANTAGES OF THE SCHEDULE SIMPLIFICATION OF NEGOTIATIONS. WORLDSCALE PUBLISHES TRANSHIPMENT AREAS. WSHTC (Worldscale Hours, Terms & Conditions) TO APPLY. SAVINGS OF TIME AS WORLDSCALE COVERS FREIGHT DYNAMICS FOR WIDER LOADPORT RANGE AND WIDER DISPORT RANGE. UNDERSTANDING MARKET FIGURES BETTER. 8
EXAMPLES OF CALCULATIONS ILLUSTRATION 1 : CALCULATE TOTAL FREIGHT? LOADPORT: RASTANURA DISPORT: MUMBAI QUANTITY: 80,000 MT FREIGHT: WS 65 WS 100 (FLAT RATE) : USD. 7.13 PMT ANSWER: QUANTITY X FREIGHT RATE PMT FREIGHT FIXED = WS 65 RATE AT WS 65 = $7.13 X 65 / 100 = $4.6345 PMT SO, WS 65 = $ 4.6345 PMT TOTAL FREIGHT : 80,000 MT X $4.6345 = USD. 370,760 9
EXAMPLES OF CALCULATIONS ILLUSTRATION 2 : CALCULATE TOTAL FREIGHT? LOADPORT: MINA AL AHMADI DISPORT: SINGAPORE QUANTITY: 90,000 MT FREIGHT: WS 90 WS 100 (FLAT RATE) : USD. 11.16 PMT 10
EXAMPLES OF CALCULATIONS ANSWER: FREIGHT FIXED : WS 90 FLAT RATE (WS 100): USD. 11.16 PMT RATE AT WS 90: $11.16 X 90/100 RATE AT WS 90: $10.044 PMT TOTAL FREIGHT : 90,000 MT X $10.044 = USD. 903,960 11
CONCEPT OF DIFFERENTIALS. FIXED RATE DIFFERENTIALS Differentials to be included as part of the freight payment as a fixed amount in respect of costs incurred by owners. Such differentials are not subject to any percentage variation which the contracting parties have agreed to apply to Worldscale rates. For example : Panama Canal transit USD. 3.57 per ton of net tonnage for Ballast transit Jebel Ali USD. 0.68 per tone of cargo loaded or discharged at Jebel Ali 12
CONCEPT OF DIFFERENTIALS. VARIABLE RATE DIFFERENTIALS Differentials to be added to or deducted from, the applicable rate of freight. Such variable rate differentials are subject to the percentage variation which the contracting parties have agreed to apply to worldscale rates. For example : Barbers Point (USA) When cargo is loaded or discharged at the Tesoro SPM an addition of USD. 0.19 must be made to the Barbers Point rate applicable to the voyage in question. When the cargo is discharged at the Durban SBM crude oil terminal, a deduction of USD. 0.28 must be made to the Durban rate applicable to the voyage in question. 13
EXAMPLE OF FIXED RATE DIFFERENTIAL ILLUSTRATION #3 : LOADPORT: YANBU DISPORT: SINGAPORE QUANTITY: 80,000 MT FREIGHT: WS 90 WS 100 (FLAT RATE) : USD. 16.85 PMT WS STATES USD. 0.27 PER TONNE TO BE ADDED AS FIXED RATE DIFFERENTIAL ON CARGO LOADED OR DISCHARGED AT YANBU 14
EXAMPLE OF FIXED RATE DIFFERENTIAL ANSWER TO ILLUSTRATION #3 : FREIGHT FIXED : WS 90 FLAT RATE (WS 100): USD. 16.85 PMT ( VOY. FROM YANBU TO SINGAPORE) RATE AT WS 90: $16.85 X 90 / 100 = $ 15.165 PMT TOTAL FREIGHT : 80,000 MT X $ 15.165 PMT = $ 1213200-00 PLUS : $ 0.27 X 80,000 MT = $ 21600-00 $ 1234800-00 15
EXAMPLE OF VARIABLE RATE DIFFERENTIAL ILLUSTRATION #4 : LOADPORT: RAS GHARIB DISPORT: JAMNAGAR (SPM) QUANTITY: 80,000 MT FREIGHT: WS 110 WS 100 (FLAT RATE) : USD. 11.36 PMT WS STATES when cargo is loaded or discharged at the Jamnagar SPM Terminal, a variable rate differential of $ 0.49 to added to WS published rate. 16
EXAMPLE OF VARIABLE DIFFERENTIAL RATE ANSWER TO ILLUSTRATION # 4 : FREIGHT FIXED : WS 110 FLAT RATE (WS 100): USD. 11.36 PMT ( VOY. FROM RAS GHARIB TO JAMNAGAR ) (+) V.R.D: USD. 0.49 USD. 11.85 RATE AT WS 110: $11.85 X 110 / 100 = $ 13.035 PMT TOTAL FREIGHT : 80,000 MT X $ 13.035 PMT = $ 104,2800-00 17
EXAMPLES OF FREIGHT CALCULATIONS ILLUSTRATION # 5: VESSEL: M.T. CINTA TRADER (DWT: 118263 MT) LOADPORT: JEBELDHANA DISPORT: MOMBASSA MIN. QUANTITY: 100,000 MT FREIGHT: WS 70 O/A 50% B/L QUANTITY: 105,100 MT WS 100 (FLAT RATE) : USD. 10.94 PMT PLEASE CALCULATE FREIGHT FOR THE TOTAL LOADED QUANTITY? 18
EXAMPLES OF CALCULATIONS ANSWER TO ILLUSTRATION # 5 : FREIGHT FIXED : WS 70 FLAT RATE (WS 100): USD. 10.94 PMT (FOR VOY FROM JEBELDHANA TO MOMBASSA) RATE AT WS 70: $10.94 X 70 / 100 = $ 7.658 PMT TOTAL FREIGHT : A) 100,000 MT X $ 7.658 = $ 765800-00 B) 5,100 MT X $ 7.658 X 50% = $ 19527-90 TOTAL FREIGHT = $ 785327-90 19
EXAMPLES OF FREIGHT CALCULATIONS ILLUSTRATION # 6: VESSEL: LOADPORT: DISPORT: MIN. QUANTITY: FREIGHT: B/L QUANTITY: FLAT RATE : M.T. SEA QUEEN (DWT: 2,91,850 MT) KHARG ISLAND (IRAN) ULSAN (SBM NO.1) 200,000 MT WS 50 O/A 50% UPTO 2,40,000 MT O/A 25% FOR QUANTITY ABOVE 2,40,000 MT 261,400 MT USD. 23.66 PMT FOR LOADING AT ANY PORT IN IRAN, FIXED RATE DIFFERENTIAL OF USD. 0.22 PMT ON LOADED QUANTITY TO BE ADDED. FOR CARGO OPERATION AT ULSAN SBM NO.1 A VARIABLE RATE DIFFERENTIAL OF USD. 0.22 TO BE DEDUCTED FROM WS PUBLISHED RATE. PLEASE CALCULATE FREIGHT FOR THE TOTAL LOADED QUANTITY? 20
EXAMPLES OF CALCULATIONS ANSWER TO ILLUSTRATION # 6 : FREIGHT FIXED : WS 50 FLAT RATE (WS 100): USD. 23.66 PMT (FOR VOY FROM KHARG TO ULSAN) Less : V.R.D 0.22 PMT USD. 23.44 PMT RATE AT WS 50: $ 23.44 X 50 / 100 = $ 11.72 RATE AT WS 70: $ 11.72 PMT TOTAL FREIGHT : A) 200,000 MT X $ 11.72 = $ 2344000-00 B) 40,000 MT X $ 11.72 X 50% = $ 234400-00 C) 21,400 MT X $ 11.72 X 25% = $ 62702-00 DIFFERENTIAL (FRD of $ 0.22 on Quantuty loaded) D) 261,400 MT X $ 0.22 = $ 57508-00 TOTAL FREIGHT = $ 2698610-00 21