Charter Party Compliance for Tank and Bulk

Charter Party Compliance for Tank and Bulk

By Capt. Hardeep Singh Mundae, Senior Manager, Marine and Operations

Thome Group Tgn Charter Party Optimized


A Charter Party (CP) is a contract of carriage of goods between the shipowner and charterer. The owner of a ship lets the ship to charterers for use in transporting a cargo but the owners/ vessel manager continues to control the navigation and management of the vessel.

Voyage related instructions, as relayed from the charterers (or commercial operator), must be followed exactly unless there is any safety or other operational restrictions, in which case Thome marine and the technical team should be contacted.
We expect our captains and chief engineers to have commercial awareness, when taking a decision, so that the vessels’ commercial performance is optimal. In turn, this will boost the vessels’ profitability. Commercial awareness is not only about knowledge, it’s a way of thinking. We must understand the markets in which our vessels operate.

Let’s look into some of the areas which can affect vessels’ performance, if not handled properly, thus resulting in claims /CP disputes;

Speed & Performance:
As per the CP, the owners set the vessel to perform on a speed / consumption within certain tolerances. The speed and performance of the vessel has to be tracked / handled on a day to day basis. If the approach to this matter is reactive (after you receive a claim) then it’s mostly too late to counter it. Day to day weather conditions / vessel performance need to be monitored. At times, these claims come in after few months and by that time an entire crew may have changed. Therefore, it is imperative to maintain proper records. Without proper records, owners will not be able to work out if a vessel has underperformed.

Bunkers on Delivery (BOD) / Bunkers on Redelivery (BOR):
Usually, the clause in the RECAP of the fixture is BOR=BOD. However, to accommodate more cargo, the Masters need to ensure compliance with the charterers / owners instructions when requesting a bunker stem survey. The Master / CE checks the bunker quantity against the expected schedule and ensures that a buffer is kept for any expected delays at load / discharge. On hire / Off hire bunker surveys are another means that the charterers’ bunker surveyors coerce the onboard crew to accept excess. The simple rule is that any bunker quantification has to be as per the bunker log book figures.

Bunker change over:
The vessel / owners regularly receive claims for any loss due to the incorrect changeover of the fuels in SECA / ECA regions. There are instances of commingling or contamination of LSMGO by IFO or LSMGO to IFO tank. The loss to owners depends on the degree of contamination and the subsequent consequences. Issues like these can have a huge commercial impact on vessels’ earnings. Say for instance if a vessel needs to deviate to take more LSMGO, ora vessel is held in port due to a noncompliance, then there might be other additional associated costs like port dues and barge costs for the prompt stem supply.

Stowage plans:
These plans are made on the basis of pre-nomination quantities as advised by the charterers. It is possible that a vessel at times does not have all the details when making the pre-nomination stowage plans (specially for bulk carriers). In such cases, Masters need to highlight this matter to the charterers to ensure the owners are not liable for any cargo quantity loaded issues. Stowage plans should clearly mention arrival and departure drafts for all ports and mention the intended bunker stem verses charterers’ instructions.

Off hire events:
Any time when the vessel does not perform as per the vessels’ description in the CP, it makes the owners liable as per the CP off hire clause. The most common case of off hire is main engine failure and crane breakdowns. Owners can however exercise their rights to mitigate losses during an off-hire event, for instance during cargo gear damage that is due to alleged rough handling by stevedores during cargo operations. It is imperative to say that vessels’ equipment, including ME and cranes, have to be maintained as per the planned maintenance system and proper records kept.

Carriage of Cargo:
In terms of apparent quality and quantity, it is the owners’ responsibility to deliver the cargo from load port to the discharge port as per the issued OBL (Original Bill of Lading). Though the cargo quality is not entirely in vessels’ / owners’ control and often upon arrival at port it is too late to claim for the poor quality of the cargo (especially for dry cargoes) that was loaded. Hence, the cargo has to be closely reviewed upon / during loading operations. There has to be sufficient records onboard the vessel to demonstrate the cargo was carried as per industry / shippers’ instructions and discharged in apparent good condition. Any claims for water contamination, bunker tank heating contamination, loss of quality, rust formation (for dry bulk cargoes) has to be defended by thorough record keeping and reporting of the carriage conditions. Quantity disputes can be controlled by following a strict draft survey (for bulk carriers) and final ullage (for tankers). To protect the owners’ interest, LOP (letter of protests) should be issued. Certain dry bulk cargoes require P&I attendance in load ports.