Савчук. Foreign trade

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The broker’s reply

We thank you for your letter of 15 March, and confirm our cable of today reading as follows:

MV SCANDINAVIAN READY TO LOAD EARLY APRIL FULL CARGO AT £3.25 GRISBY ABO PLEASE CONFIRM CHARTERING IMMEDIATELY

As soon as we receive your instructions we shall be pleased to go ahead with the fixture.

From charterers to brokers

We have entered into a contract for the supply of motor vehicles and parts, over the next six months, to West Africa and shall be glad to know if you can fix us a time charter for a suitable vessel.

The question of speed must be considered as the ship should be able to make 3 voyages in the time, allowing . . . days for loading and unloading on each voyage.

In view of the general slackness of the market at the moment we hope that you can get us a really good other.

Reply from the brokers

In confirmation of our cable to you today, a copy of which we enclose, we are pleased to say we have found what we think should be a very suitable vessel for your purpose: the M. V. Mercury, cargo capacity . . . tons, average speed . . . knots.

She is, perhaps, a little larger than you require, but the owners are prepared to consider a special rate for a time charter.

Mercury has just completed a charter and can therefore be at Liverpool dock and ready to load by the end of next week.

We hope this fixture will suit you, and as soon as we receive your confirmation we will prepare the charter party.

There is also a considerable business in the buying and selling of ships; the following letter is an example of such transactions.

Offer of ship for sale (from shipbrokers)

We are pleased to inform you that we can now secure for sale the modern motor vessel Hanoverian, of which we enclose details.

The owners’ ideas are about £ . . ., on the basis of fairly prompt inspection and delivery, but we would try for something less.

For your guidance, the vessel is now discharging at Plymouth docks, where she will be lying until 27 September. Prospective buyers may therefore inspect her in this port if they are prepared to decide immediately.

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The owners are willing to give first-class buyers deferred terms of payment provided satisfactory guarantees are forthcoming.

We shall be pleased to hear if the vessel is of interest to you and will then give you any further information you require.

SHIP AGENTS

Ship agents – that is to say agents connected solely with ships, not forwarding agents – may offer their services for the loading and unloading of ships; the following is an example of this type of letter.

Offer of services from ship agents:

We see from Lloyd’s List that your m.v. Orion is expected to discharge at this port about the middle of next month, and we are writing to offer you our services as agents.

Our firm has had considerable experience, having been established here for 30 years, and we are acting as agents to all AngloSaxon chartered vessels calling at this port. We are also agents to a large number of European owners, as you will see from the enclosed list.

You can rely on us to secure your vessel a quick turn round, and we might also mention that we can deal with all matters concerning crews, in accordance with . . .

Articles.

If you decide to let us have the agency we are sure that you will be fully satisfied with the results.

EXPLANATIONS OF REFERENCE

Bulk cargo: This means that the goods do not require packing; such cargoes are usually coal, timber, oil, wheat, etc. (« '»).

The Baltic Exchange is so called because it started as a market for all kinds of produce from Baltic ports, which trade was extended to ships, insurance and aircraft («$ »).

Tramp (trampship): This is a vessel that does not operate on a fixed route as a liner does. Probably derived from the name of a man who went about the country (tramped) working wherever there was work to be done (« – '

, () - -»).

Fixture: Particularly used in connection with chartering (« -

»).

Turn round: As applied to a ship is the unloading, reloading and carrying out of the necessary formalities before the ship can sail again ('. «

' ', . .»).

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In accordance with . . . Articles: This refers to the regulations laid down by different countries concerning the crews of their ships («

. . .»).

CHARTERED VESSELS

These do not follow fixed routes but go wherever they are needed. A company wanting to charter a ship will apply to one of the world markets for shipping such as the Baltic Exchange in London. In the Baltic a broker who acts as the chatterer’s agent works for the company looking for a ship. His job is to find the right kind of a ship at the lowest price possible.

The shipowners who want to charter their ships also apply to brokers in Baltic. The broker’s job is to charter vessels out for their owners at the highest price possible.

The shipowners’ brokers and charterer’s agents (who are also brokers) negotiate the price and the terms of the charter. The final price and terms depend on the market. If there are a lot of ships and few charterers the price will be low. If there is a big demand for ships and not many ships available, the price will be higher. The contact is called a charter party.

Many chartered ships do not visit their owners’ countries, but there is owners receive money for their services in distant waters. Most ships chartered in the Baltic are tankers and other bulk carriers. General cargo carriers, known as tramps, are less common nowadays.

Complete these sentences with words from the passage:

1.Merchant ships, which follow no fixed route, are __ __.

2.Brokers who look for ships for traders are __ __.

3.Brokers who charter out ships for shipowners are __ __.

4.Ship which carry one kind of cargo in large quantities are __ __.

5.The contact which fixes the price and terms of a charter is a __ __.

6.The market in London where ships can be chartered is called the __.

7.General cargo vessels under charter are called __.

8.A company which charters a ship from shipowners is called a __.

Complete these sentences with words from the passage. Remember to put verbs in the right form.

1.I didn’t know which bus to catch because I didn’t know the bus __ .

2.He was looking for work so he __ __ a company which needed workers.

3.The buyer __ the price with the seller.

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4.The customer asked about the company’s __ of business.

5.Beer is not __ in every restaurant.

6.Prices in a market depend on supply and __.

Match the words on the left with words on the right, which have the nearest meaning:

DIFFERENT TYPES OF CHARTERING

One of the factors for distinguishing different types of charter agreements is the use of the ship from a capacity point of view. If the charterer has control over the whole vessel this may be called chartering in full. If the owner cannot find a charterer for the whole vessel, he may divide the space between several charterers, which is known as a space charter.

From a functional point of view an important distinction is made between voyage charter, time charter and bareboat charter.

The voyage charter may cover a single voyage or several consecutive voyages. This form of charter is typical within tramp traffic (free traffic). From a practical point of view, a voyage charter means that the owner promises to carry on board a specific ship a particular cargo from one port to another. Under a voyage charter the owner retains the operational control of the vessel and is responsible for all the operating expenses such as port charges, bunkers, extra insurances, taxes, etc.

The time charter under which the owner puts the vessel at the disposal of the charterer for a certain period of time, during which the charterer controls the commercial operation of the vessel, i.e. decides the voyages to be made and cargoes to be carried, while the owner employs the crew of the vessel and the supervision of the cargo – at least from a seaworthiness point of view.

Depending on the place of delivery/redelivery and the length of the charter period, one may distinguish between time chartered trip, time chartered round voyage and a period time charter.

The bareboat charter (demise charter) means that the vessel is put at the disposal of the charterer for a certain period of time, but here the charterer takes over virtually the entire responsibility for the operation of the vessel and all the

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expenses except the capital expenses. This contract amounts to lease of the ship from the owner to the charterer.

CONFERENCES AND OTHER SHIPPING SERVICES

Cargo liner companies run regular services on fixed routes all over the world. They are called conferences because they hold meetings to agree to routs, timetables and freight rates. They need to do this to make sure too many ships do not arrive and sail from a port at the same time. They also have to decide on the right prices to charge exporters for sending their goods by sea (freight rates). In fact this is the main purpose of conferences.

Most shipowners provide transport services to exporters and importers. But some trades, notably the oil companies, have their own ships for carrying their goods. This makes sense economically where the company is dealing in bulk cargoes over long periods of time.

Another kind of shipowner is the state. Several countries, notably the Communist states, India and Italy, have government-owned shipping services which compete against the conference and tramp shipping companies.

Tick whether these statements are true (T) or false (F):

1.Tramps sail on regular routes.

2.They deal in liners in the Baltic Exchange.

3.Tankers carry oil.

4.Lists of prices for carrying cargoes are freight rates.

5.Oil companies have their own ships.

6.All Italian ships are owned by the Italian government.

Supply one suitable word for each space:

The Baltic Exchange is where merchants _____ ships. The merchants’ representatives are called _____ agents. The shipowners’ representatives are _____

brokers. the Exchange is where the _____ for freight services is met by _____ of various ships which can be _____ to go anywhere for any length _____ time. Agents working for trades and _____ working for shipowners negotiate charter

_____. These lay down the price, name _____ vessel, routes to be covered on

_____ of hire. Prices depend on supply _____ demand. Freight rates are not fixed

_____ liner rates. These are determined by _____ which liner companies of products they are so big they need _____ own ships. For _____ instance oil companies _____ there is a shortage of private _____ or state ownership of ships. Most _____ ships are either tankers or other _____ carriers.

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CHARTER SHIPPING

Charter shipping is a tramp service. The term tramp, as used in the ocean shipping, refers to a cargo ship not operating on regular routes and schedules, and picking up cargo only when it is chartered (hired) from the ship operator.

While conference and non-conference shipping are for general cargoes, charter shipping usually is for bulk cargoes like oil, coal, ore, and grain. Charter shipping has the lowest freight rate per unit of weight or measure.

A charter party is required in charter shipping. The ship operator issues a charter party bill of lading. Unless a letter of credit (L/C) permits or calls for a charter party bill of lading, the bank will reject such transport document in the L/C negotiation.

Match the definitions on the left with their explanations on the right:

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Answer the following questions:

1.What are the major components of the shipping industry?

2.What is a chartered ship?

3.What is a charterer’s agent?

4.What is an owner’s broker?

5.What is a tanker?

6.What is a liner?

7.What is the difference between Ro/Ro vessel and LASH – carrier?

8.What is a Charter Party?

9.What is a conference?

10.What is a bulk carrier?

11.What is a tramp?

12.What is the Baltic Exchange?

13.What are freight rates?

14.What is the voyage charter?

15.What is the time charter?

16.What is the bareboat charter?

BUSINESS TALKS

Act as an interpreter:

A:0 ' / / «,# &» -

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B:At the beginning of 2005 FESCO was operating 79 vessels with a 1 million-ton carrying capacity. FESCO consciously leaves the market of low capacity fleet, specializing in single freight carriage to closely-spaced ports of adjacent locations. This market segment remains strong for small shipping firms. At the same time, the weight-power ratio and importance of the large-sized ocean container vessels, dry bulk carriers and multi-purpose vessels grows.

A:% - ?

B:FESCO’s fleet structure is comprised of six groups. The first is a group of 23, 000 – 37, 000 DWT bulk carriers which operate in the world freight market. The effective output from these vessels, and the prospects in the bulk carriage market have pushed FESCO to enlarge the bulk fleet. Another group of vessels are socalled “short-sea” ships.

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A:,, 1 ' , () (

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B:Yes, you are absolutely right! A third group of vessels is the reinforced ice vessels. The Icebreaker group also plays a great role. The next group is the refrigerator fleet which consists of 10 vessels. The final and sixth group is a principal one comprised of container carriers.

A: ". / '

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B: This principle group of vessels is the focus of close attention of corporate governance.

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