2INDIAN MARITIME HISTORY Indian Maritime Administration was born in 1929 in the form of three Mercantile Departments (MMDs) – Mumbai, Chennai and Kolkata.They were set up fundamentally to implement the first international convention on ‘Safety of Life at Sea’ (SOLAS) Convention, 1974 and Loadline Convention.
3INDIAN MARITIME HISTORY The main objectives of MMDs are to administer the various Merchant Shipping Laws and rules relating to safety of ships and life at sea, registration of ships, tonnage measurement, crew accommodation, surveys for load line, safety construction, prevention of pollution, inquiries into shipping casualties and wrecks, etc.
4INDIAN MARITIME HISTORY Mercantile Marine Department, is headed by the Principal Officer, and supported by Nautical Surveyors, Engineer Ship Surveyors, Radio Inspector, Seamen Welfare Officer and supporting staff.
5INDIAN MARITIME HISTORY In September 1949 the Directorate General of Shipping was established at Mumbai.It is an attached office of the Ministry of Shipping, Govt. of India and deals with all executive matters, relating to merchant shipping.Implementation of shipping policy and legislation, development of coastal shipping and various other aspects related to the Indian shipping industry comes under its purview.
6The oceans and seas cover seven-tenths of the globe. India has a long coastline of 5,560 Kms.
7India is served by twelve major ports, that account for more than 75% of the total sea borne trade, and 185 small and minor ports, administered by the state maritime boards, many of which are doing exceptionally well, especially in the coastal shipping areas.
8India is the fifth largest nation supplying manning complements of efficient certified officers and ratings to the world.Indian seafarers have a quality of their own and are most sought after by the world shipping companies.
9The share of cargo transported through inland waterways in India is barely 1%. The potential for navigable inland waterways in India, comprising of river system, canal backwaters, creeks and tidal inlets, is immense.
10A major chunk of India’s sea-borne cargo is accounted for by crude and petroleum products. India has become a new key destination for crude supply.
11Transportation of energy sources is going to be the major thrust area in the years to come. The prospect has attracted several global players into India.This is just a beginning – a curtain raiser for the shape of things to come.
13BUNKERS - fuel consumed by the engines of a ship; Compartments or tanks in a ship for fuel storage. BARGE - flat-bottomed boat designed to carry cargo on inland waterways, usually without engines or crew accommodations. Barges can be lashed together and either pushed or pulled by tugs, carrying cargo of 60,000 tons or more.
14CARRIERS - owners or operators of vessels providing transportation to shippers. CARGO HANDLING - the act of loading and discharging a cargo ship.
15NAUTICAL MILE - distance of one minute of longitude at the equator, approximately 6, feet. The metric equivalent is 1852 meters.KNOT - unit of speed in navigation which is the rate of nautical mile (6,080 feet or 1,852 meters) per hour. HULL - shell or body of a ship.
16QUAY - A structure attached to land to which a vessel is moored. ABAFT - A point beyond the midpoint of a ships length, towards the rear or stern.AFT - in, near, or toward the stern of the vessel.
17ASTERN - A backward direction in the line of a vessel's fore and aft line; Behind. If a vessel moves backwards it is said to move astern; Opposite to ahead.AT SEA - in marine insurance this phrase applies to a ship which is free from its moorings and ready to sail.
18BEAM - the width of a ship. Also called breadth. BOW - the front of a vessel.BRIDGE - used loosely to refer to the navigating section of the vessel where the wheel house and chart room are located; Erected structure amidships or aft or very rarely fore over the main deck of a ship to accommodate the wheelhouse.
19DANGEROUS CARGO - all substances of an inflammable nature which are liable to spontaneous combustion either in themselves or when stowed adjacent to other substances and, when mixed with air, are liable to generate explosive gases or produce suffocation or poisoning or tainting of foodstuffs.
20TANK BARGE - A barge designed for the carriage of liquid bulk cargoes. TANK CLEANING - removal of all traces of a cargo from the tanks of a tanker normally by means of high pressure water jets.
21HARBOR MASTER - A person usually having the experience of a certificated master mariner and having a good knowledge of the characteristics of the port and its whole area. He administers the entire shipping movements that take place in and within reach of the port he is responsible for.
22CLASSIFICATION SOCIETY - worldwide experienced and reputable societies which undertake to arrange inspections and advise on the hull and machinery of a ship. An autonomous organization that supervises vessels during their construction and afterward, in respect to their seaworthiness, and the placing of vessels in grades or "classes" according to the society's rules for each particular type. It is not compulsory by law that a ship owner have his vessel built according to the rules of any classification society; But in practice, the difficulty in securing satisfactory insurance rates for an un-classed vessel makes it a commercial obligation.
24The Indian Register of Shipping (IRS) is an internationally recognized independent ship classification society, founded in India in 1975.
25Within a short span of 16 years, IRS (Indian Register of Shipping) has become an associate member of the International Association of Classification Societies (IACS), the major international body of classification societies.Admission in IACS is granted only to the best and signifies high standards, excellent reputation and professional competence.
26IRS (Indian Register of Shipping) provides professionally competent, completely independent and highly efficient third party technical inspection and certification services for all types of ships and structures.These services have also been expanded to cover a range of offshore and industrial projects.
28MARPOL 73/78 - the international convention for the prevention of pollution from ships, 1973, as modified by the protocol of 1978.MEPC - marine environment protection committee, a major committee within the International Maritime Organization.
29Although safety was and remains International Maritime Organization’s (IMO's) most important responsibility, a new problem began to emerge –MARINE POLLUTION
30The growth in the amount of oil being transported by sea and in the size of oil tankers was of particular concern and the Torrey Canyon disaster of 1967, in which 120,000 tonnes of oil was spilled, demonstrated the scale of the problem.
31During the next few years International Maritime Organization (IMO) introduced the International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978 relating thereto (MARPOL 73/78).It covers not only accidental and operational oil pollution but also pollution by chemicals, goods in packaged form, sewage, garbage and air pollution.
32MARPOL Annex VI Prevention of Air Pollution from Ships (entry into force 19 May 2005)
33Emissions From Shipping Emissions from shipping can be an issue for local authorities with major ports.Also, as emissions from other sources decline, global emissions from shipping are becoming more and more significant, with this source expected to account for 60% of total SO2 emissions in the EU by 2010.
34However, bunker fuel emissions from international shipping had so far been excluded from any commitment in the protocol.After looking at the magnitude of greenhouse gas emissions from international shipping, the best solution was for International Maritime Organization (IMO) to agree on a global shipping emissions target that would be comparable to targets of industrialised countries.
35In 1997, the 3rd conference of parties to the UN framework convention on climate change adopted the Kyoto Protocol as a consequence of increasing evidence of a manmade global warming of the atmosphere.Binding greenhouse gas emission reduction targets for industrialised countries were agreed upon.
36Shipping is a global industry and efforts to reduce emissions are most effective when agreed and implemented at an international level.Annex VI to MARPOL 73/78 is a International Maritime Organization (IMO) regulation which aims to prevent and reduce air pollution from ships.
37The MARPOL 73/78 Annex VI Regulations for the Prevention of Air Pollution from Ships entered into force on May 19, 2005.The regulation set limits on sulphur oxide (SOx) and nitrogen oxide (NOx) emissions from ship exhausts, and prohibit deliberate emissions of ozone depleting substances.
38The agreement set a global sulphur cap of 4 The agreement set a global sulphur cap of 4.5% by mass for all heavy marine bunker fuels, and a 1.5% cap by mass for fuels burnt in special SOx Emission Control Areas (SECA).Alternatively, ships must fit an exhaust gas cleaning system or use any other technological method to limit SOx emissions in these areas.
39The agreement also set limits on NOx emissions from diesel engines. As NOx emissions from shipping are primarily from engines, the MARPOL Annex provides a mandatory technical specification for ship engines manufactured since 1st January 2000.
40The global limit for the sulphur content of marine bunkers set by the Regulations at 4.5% m/m is not expected to have much operational impact as the incidence of marine fuels exceeding this level is not high.The main impact will be felt when the Baltic and North Sea/English Channel SOx Emission Control Areas (SECAs) become operational on May 19, 2006 and in November 2007, respectively, further limiting sulphur content of fuels to 1.5% m/m.
41IMO has currently agreed on the designation of two SECA’s as per below: The Baltic Sea Area which will enter into force on the 19th May 2006.The North Sea Area and the English Channel has also been agreed, but due to the amendment process in IMO, it will not enter into force as a SECA until 19th November 2007.
42It is expected that further SECA’s will be designated in the future and IMO has set forth certain criteria for designating such SECA’s.
43For the sake of good order, it should be noted that the limitations in sulphur content applies to all fuel oils (heavy fuel oils, marine diesel oils and gas oils) and regardless of use on board (i.e. In combustion engines, boilers, gas turbines etc.).
44Currently, the average sulphur content in fuel oils is in the region of 2.7%. Results of a comprehensive number of fuel samples tested indicate that only 0.2% of the fuel oils tested have a sulphur content exceeding the required 4.5%.
45However, it also indicates that only 4% of the fuel oils supplied today have a sulphur content of 1.5% or less.It has been estimated that the low sulphur fuel oil demand in the SECA’s will be in the region of million tons per year, of which approximately 0.7 million tons per year is available in north west Europe today.
46It is generally acknowledged that the above will lead to increased prices for low sulphur fuel oils and a price hike from 25 to 100 USD/ton has been indicated depending on method of production and market availability/demand.
47Although it has been indicated that the total world wide availability of low sulphur fuel is adequate with the current SECA’s and associated low sulphur limit (1.5%), it is highly uncertain as to whether the availability will be adequate in world wide ports.
48It should further be noted that currently, low sulphur fuel is in general only available to operators with contract agreements with oil majors.Future spot availability is thus dependent on the developments in market demand and price after entry into force of SECA’s.
49Currently only marine gas oils used for voyages within the EU are regulated by the Sulphur content of liquid fuels directive 99/32/EC.The maximum sulphur limit for these fuels since 1st July 2000 has been 0.2%.This will be reduced to 0.1% from 1st January 2008.
51A bunker transfer process has to comply with the following operational requirements: Safety requirementsOperational requirementsDocumentation requirements
52Safety requirements Safety is the corner-stone of any good operation. In the absence of safe working procedures and practices, no operation or venture will succeed.
53Safety requirements Important safety requirements: Personal protective equipment in use.Dangers of toxic gases addressed.Permit to work system followed.Life saving appliances kept in readiness.Pollution prevention gear kept in readiness.Fire-fighting equipment kept in readiness.
54Operational requirements Important operational requirements are:Pre-transfer checks carried out.Sampling procedures understood and adhered.Equipment onboard kept in optimum condition.Personnel onboard are well rested.Material Safety Data Sheets circulated.
55Documentation requirement A complete bunkering operation shouldinclude the following documentation:Bunker requisition formStatement of factNon-cargo tank declaration / inspection formTank measurement / calculation formBunker delivery note
56Documentation requirement A complete bunkering operation shouldinclude the following documentation:Meter delivery reportSample witnessing and receiptNote of protest from cargo officer (if applicable)
58CLASSIFICATION OF VESSELS VESSELS TYPEDWT RANGE (MT)FROMUPTOSMALL VESSELBELOW16499GENERAL PURPOSE (GP)1650024999MEDIUM RANGE (MR)2500044999LONG RANGE I (LR-1)4500075999LONG RANGE II (LR-II) --AFRAMAX76000120000SUEZMAX140000160000VERY LARGE CRUDE (VLCC)200000320000ULTRA LARGE CRUDE (ULCC)& ABOVE
59TYPES OF TANKERS CRUDE OIL. PRODUCT –BLACK OIL –WHITE OIL. COMBINATION CARRIER (OBO).VEGETABLE CARRIER.CHEMICAL TANKER.LPG CARRIER.TYPES OF TANKERS
60BULK CARRIER - ship specifically designed to transport vast amounts of cargoes such as sugar, grain, wine, ore, chemicals, etc.
64CONTAINER SHIP - A ship constructed in such a way that she can easily stack containers near and on top of each other as well as on deck. Container ships usually carry in the range of 25,000 to 50,000 deadweight tons.
66TANKER - A tanker is a bulk carrier designed to transport liquid cargo, most often petroleum products. Oil tankers vary in size from small coastal vessels of 1,500 tons deadweight, through medium-sized ship of 60,000 tons, to the giant VLCCs (very large crude carriers).VLCC - very large crude carriers: tankers between 200,000 and 300,000 dwt.ULCC - ultra large crude carriers. Tankers larger than 300,000 dwt.
71REEFER - Refrigerator ship, a vessel designed to carry goods requiring refrigeration, such as meat and fruit. A reefer ship has insulated holds into which cold air is passed at the temperature appropriate to the goods being carried.
73VEHICLE CARRIER - Ship with facilities for vehicles to drive on and off (roll-on roll-off); a system of loading and discharging a ship whereby the cargo is driven on and off on ramps. Equipped with large openings at bow and stern and sometimes also in the side, the ship permits rapid loading and discharge with hydraulically operated ramps providing easy access.
75GAS CARRIER - Liquefied natural gas carrier, perhaps the most sophisticated of all commercial ships. The cargo tanks are made of a special aluminum alloy and are heavily insulated to carry natural gas in its liquid state at a temperature of -285°F. The LNG ship costs about twice as much as an oil tanker of the same size.
82WHAT IS TANKER CHARTERING? A PROCESS INVOLVES NEGOTIATIONS BETWEEN SHIP OWNERS & A CHARTERER (OIL CO.) FOR HIRING A SHIP (TIME/VOYAGE OR COA BASIS) FOR CARRIAGE OF CRUDE OIL/POL AT MOST COMPETITIVE RATES, TERMS & CONDITIONS.FREIGHT RATES ARE INFLUENCED BY VARIOUS INTERNATIONAL SUPPLY DEMAND FORCES & OPPORTUNITY COSTS.INTERNATIONAL FREIGHT MKT. HAS NEITHER FLOOR LEVEL NOR ANY CEILING.DIRECT NEGOTIATIONS OR THRU BROKERS MOSTLY ON /PHONE/FAX WITH PROPER DOCUMENTATION/AUDIT TRAIL/RECORDING.
83WHAT IS TANKER CHARTERING? A BRIEF NOTE GIVING FIXTURE RECAP ON MAIN TERMS THROUGH /FAX IS EXCHANGED BETWEEN PARTIES AS EVIDENCE OF CONTRACTAS PER INTERNATIONAL INDUSTRY PRACTICE, CHARTERING IS NOT A TWO BID PROCESS (I.E.TECH.& PRICE) BUT IS A COMPOSITE BID SYSTEM INVOLVING TECHNO-COMMERCIAL EVALUATION OF MULTIPLE PARAMETERS LIKE SPEED/DEAD FRT./YEAR BUILT ETC. HAVING ITS VARYING IMPACT ON COSTCREDENTIALS OF SHIP OWNERS IS CHECKED THROUGH IMB/ BIMCO/BROKERS BEFORE NEGOTIATIONCONSIDERABLE FINANCIAL EXPOSURE FOR BOTH – CHARTERER & SHIP OWNERS.
84TYPE OF CHARTER VOYAGE CHARTER FOR ONE VOYAGE 1 OR 2 LOAD PORT/ DISPORTSFREIGHT, DEMURRAGE DEAD FREIGHTBUNKER PORT CHARGES ON SHIP OWNERS A/C.CARGO RELATED CHARGES ON CHARTERERS A/C.TIME CHARTERFOR TIME/PERIOD.VESSEL AT CHARTERERS DISPOSAL.MONTHLY CHARTER HIRE IN ADVANCE.BUNKER & PORT CHARGES ON CHARTERERS ACCOUNTCARGO RELATED CHARGES ON CHARTERERS A/C.
91TANKER COST DRY DOCKING CHARGES. DEMURRAGE/DETENTION/DEV. DUTY ON SHIPS’ STORES.PORT DISBURSEMENT.ADVANCE TO MASTER.
92OWNER(Revenue)CHARTERER(Transport)THE CHARTER PARTY(A contract)VOYAGEBAREBOATTIMEConsecutivevoyageTrip Time CharterContract ofAffreightment
93CHARTERING DECISIONS : TIME Vs. VOYAGE In a UPGOING & STRONG tanker market a ship owner would like to give a tanker on a voyage charter basis to earn higher freight rates from voyage to voyage basis.In case the market indicates falling trend of freight rates the ship owners would like to give the ship on long time charter basis to protect himself from the losses.If the Charterer is sure about the long term employment and exercises utmost diligence in the usage of the vessel he should opt for a time charter especially in up going frt. market.Time charter rates comparison with voyage charter rates as on for following size of vessels :
94TANKER TIME CHARTER Types of Time Charter : Trip Time Charter - Short period, flexibility to charterers, commonly practiced veg.oil, chemicals,dry bulk cargo.Time Charter - Voyage expenses, pumping at loadport and disport on charterers account.
95TANKER TIME CHARTERDuty to maintain- Due diligence by owners to maintain and restore the vsl to required condition, charterers right to putoff the vsl.Limits of trading period- Charterer’s option.Final voyage-Redelivery, where & when.Trading limits-WIWL
96TANKER TIME CHARTER Lay days/Canceling-Charterer’s option. Owners to provide-All provisions, wages, Ins.etcCharterers to provide-Generally for dry cargo.Rate & Payment of Hire-Delay in payment, tanker withdrawal clauses and etc.Instructions and Logs-Performance monitoring.Directions and conduct of vessel’s personnel
97TANKER TIME CHARTER Bunkers-Supply of quality bunkers. Supernumeraries-Representative on Board.Sub-letting-Liabilities from mal-performance.Loss of vessel-Total loss or Constructive loss.Off-Hire – Shelf time form specifies the time.Periodical dry docking-Area of dry docking.
98TANKER TIME CHARTERPerformance clause-Speed, bunker consumption and port stay.Salvage-Apportionment of expenseLien – Each party’s rights of lien.Exception – Unplanned repairs & breakdown.Injurious cargoes – Explosives.
99TANKER TIME CHARTER Laying up – Charterers and Owners to consult. Requisition by Govt.Protective clauses – Both to blame collision clause, New Jason clause, Clause Paramount.TOVALOP & ITOPF – P&I Club Insurance.Law and Litigation – English law.
100VOIYAGE CHARTER CRUDE : LPG : VOYAGE – RASTANURA TO VIZAG SMAX ( MT) $ / MTLS FREIGHT $ 3.95 MILLION RS CRORES AT WS 335LPG :VOYAGE – RASTANURA TO VIZAGVLGC (39000 MT) $ / MTLS FREIGHT $ 1.95 MILLION RS CRORES
101OMC AND INDIAN SHIPPING INDUSTRY Almost 70% of imported crude for OMC is carried by Indian FleetEntire indigenous crude is transported by Indian fleet for OMCOut of total 18 product tankers on Time Charter to Oil Industry, OMC handles 11 of themOMC is about to start direct chartering of vessels shortly
102CHARTERING PROCEDURE Contd… Floating of enquiryReceipt of offersEvaluation of offersNegotiations / countersFixtures on “Subjects”Charter Party
103WE SHOULD KNOW …… Tanker Market structure Worldscale A F R A Factors which have influenced freight market levels
105THE SHIP BROKER Collects and distributes information about the markets Acts as an intermediary for a negotiationProvides the skill and expertise to deal with the post fixture administration & operationsEthical standards ???
106THE TANKER MARKET Works very quickly Address commission Brokerage Negotiations on phone or MessengerRecap via or FaxAsbatankvoy is widely used standard Charter party with additional clauses
107FACTORS INFLUENCING FREIGHT MARKETS Political eventsOil demandNew building activityTanker scrappingExternal pressures
109In 1948 under the auspices of United Nations, an international conference in Geneva adopted a convention formally establishing International Maritime Organization, or IMO.The purposes of the Organization is to encourage and facilitate the general adoption of the highest practicable standards in matters concerning maritime safety, efficiency of navigation and prevention and control of marine pollution from ships.
110Statutory requirements laid down by IMO can be broadly classified into the following : Maritime safetyMarine pollutionLiability and compensationOthers
111Statutory Requirements – Maritime Safety SOLAS (Safety Of Life At Sea)LOADLINECOLREG (Regulation for Preventing Collision at Sea)INMARSAT (International Maritime Satellite Organization)STCW (Standards of Training, Certification and Watchkeeping for Seafarers)SAR (Search And Rescue)
112Statutory Requirements – Marine Pollution MARPOL (Prevention of Pollution from Ships)OPRC (Oil pollution Preparedness, Response and Co-operation)AFS (Anti-fouling Systems on ships)Control and management of ships ballast water sediments
113Statutory Requirements – Liability and Compensation CLC (Civil Liability for Oil Pollution Damage)FUND (International Fund for Compensation for Oil Pollution Damage)HNS (Hazardous and Noxious Substances)Bunker Oil Pollution Damage
114Statutory Requirements – Other Subjects FAL (Facilitation of International Maritime Traffic)TONNAGE (Tonnage Measurement of Ships)SUA (Suppression of Unlawful Acts)SALVAGE
119The SOLAS Convention is generally regarded as the most important of all international treaties concerning the safety of merchant ships.The first version was adopted in 1914, in response to the Titanic disaster.
120The main objective of the SOLAS Convention is to specify minimum standards for the construction, equipment and operation of ships, compatible with their safety.A number of certificates are prescribed in the Convention as proof that this has been done.
121Control provisions also allow Contracting Governments to inspect ships of other Contracting States if there are clear grounds for believing that the ship and its equipment do not substantially comply with the requirements of the Convention - this procedure is known as Port State Control.
122A few areas covered under SOLAS are: ConstructionFire protectionLife saving appliancesRadio communicationSafety of navigationCarriage of cargoesManagement of safe operation of shipsEnhance maritime safety and security
124LOAD LINE - The line on a vessel indicating the maximum depth to which that vessel can sink when loaded with cargo. Also known as marks.INTERNATIONAL LOAD LINE CERTIFICATE - A certificate which gives details of a ship's freeboards and states that the ship has been surveyed and the appropriate load lines marked on her sides. A classification society or the Coast Guard issues this certificate.
125The stability of ships can be seriously affected by overloading, especially if the cargo shifts during the course of the voyage.The practice of marking ships to indicate how low they may safely rest in the water when loaded goes back several centuries.
126The first seafarers who set to sea in wooden canoes thousands of years ago must have already - perhaps by trial and error - worked out the optimum freeboard for their vessels.They discovered that overloading the vessel could have severe consequences.
127It has long been recognized that limitations on the draught to which a ship may be loaded make a significant contribution to her safety.The first official loading regulations are thought to date back to maritime legislation originating with the island kingdom of Crete in 2,500 BC when vessels were required to pass loading and maintenance inspections.
128The 1930 Load Line Convention was the first international agreement for universal application of load line regulations and applied to seagoing ships in international trade.
129The minimum freeboard was designed to provide a standard of "reserve buoyancy" (the volume of the watertight hull above the load waterline), while the protection of openings in the hull and superstructures, such as hatches, ventilators, air pipes, scuppers, overhead discharges and the access openings in the end bulkhead of superstructures were an important consideration in the assignment of freeboard.
130All assigned load lines must be marked amidships on each side of the ship, together with the deck line.