charter party case study

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Karim’s Ltd v Feeders Seafood Ltd [1995] FJHC 136; Hbc0555d.94s (10 August 1995)

Charterparties- Withdrawal of vessel for breach of contract by charterer- Injunction to prevent forfeiture not available to charterer because charter transfers no interest in the vessel to charterer but is merely a contract of service

The plaintiff chartered a vessel from the defendant. There was a disagreement on the contract and the defendant withdrew the vessel. The defendant sued for breach of contract. Among other complaints, the defendant claimed that the plaintiff had not insured the vessel and was behind in its monthly payments required by the charter party. The plaintiff counter sued for damages and losses resulting from the breach of contract and forfeiture of the vessel. The plaintiff (charterer) in this proceeding applied to the court for an injunction to restrain the defendant from selling, leasing or chartering the vessel, or for an Order for immediate return of the vessel to the plaintiff pending the hearing between the parties on the breach of contract action. DECISION: Application dismissed. HELD: The equitable injunctive relief against forfeiture is narrow in scope. In the case of a charter party the withdrawal of the vessel is not truly a forfeiture because the charter transfers no interest in the vessel to the charterer but is merely a contract of service. As such, the plaintiff has suffered only the loss of a contractual right and that alone is not enough to raise an equity in the plaintiff’s favour. To grant an injunction prohibiting withdrawal would be tantamount to an Order for specific performance which is generally refused in contract. The plaintiff had failed to insure the vessel as provided by the contract. That constituted a breach so serious that withdrawal of the vessel was the only way that the defendant could protect its position from substantial losses.

Karlander v Eriama Shipping Co. Ltd. [1965] PGSC 23; [1965-66] PNGLR 213 (17 April 1966)

Charterparties- Withdrawal of vessel for breach of contract by charterer-charterer’s default- damages are difference between lost hire less profits earned after withdrawal

The plaintiff vessel owner sought arrears under a charter party as well as damages for breach of the charter. The defendant charterer had failed to make advance payments for hire as agreed in the charter party. The plaintiff withdrew the vessel from the service of the defendant. It attempted, but failed to find alternate charters for the vessel but arranged voyages for the vessel until it was sold. The plaintiff claimed to be entitled to damages being the difference between the hire as provided in the charter party less the profits earned after its withdrawal up until the sale of the vessel. DECISION: Plaintiff entitled to claim HELD: The clause which entitles the ship owner to withdraw the ship on default by the charterer on the payment for hire cannot be treated as cutting down the right of the owner to treat the contract at an end, and to recover damages based on the charterer’s repudiation of the charter. The plaintiff had lost the benefit of the hire for the remaining period of the charter party and was therefore entitled to the difference between hire less the profits earned after the withdrawal.

National Trading Corporation Ltd v Huggett [1999] FJHC 6; Hba0011j.98s (19 February 1999)

Charterparties-implied warranty of seaworthiness at the commencement of the voyage- boat owner must indemnify charterer for repairs.

The first Defendant, the charterer was held to be liable to the Plaintiff for the repairs to the boat engine. The first Defendant was to be indemnified by the 2d Defendant, the owner of the vessel. The 2d Defendant appealed the findings. The vessel’s engine had broken down and had to be towed in while on the charter. HELD: Appeal dismissed DECISION: The ordinary rule is that there is an implied warranty that the ship is seaworthy at the commencement of the voyage. There was nothing in the Charter to exclude or limit this rule. The fault in the engine which caused the break-down existed when the vessel started and therefore the vessel was not seaworthy for the voyage.

Premier Makira/Ulawa Province v Universal Graphics & Designs Ltd [1996] SBHC 18; HC-CC 107 of 1996 (15 April 1996)

Charterparties- Withdrawal of vessel for breach of contract- non punctual payment of hire fees may be excused where the charterer has a counterclaim against the owner of the vessel- interlocutory withdrawal of vessel not granted until rights determined

The plaintiff had filed a writ of summons claiming that the defendant was in arrears of hire fees for the vessel for 2 ½ months accruing in a charterparty. The plaintiff sought the fees owing and return of the vessel. The defendant counter claimed for money owed by the plaintiff to the defendant for spare parts and mechanical work done at the beginning of an earlier charter. The sum claimed by the defendant exceeded the accrued arrears under the charterparty. Before the action was heard, the plaintiff sought interlocutory relief in the form of orders to prevent the defendant from removing the vessel from Honiara, and the return of the vessel. DECISION: interlocutory injunction refused HELD: The primary purpose of an interlocutory injunction is to preserve the status quo until rights have been determined in the case. The court must consider if monetary damages will be adequate compensation in the event that the plaintiff’s interlocutory relief is refused and the plaintiff succeeds in obtaining a final permanent injunction; or if the interlocutory relief is granted and the defendant succeeds at final determination. The court found that the charterer has leeway to pay off the default arrears before the owner withdraws the ship under the charterparty, and the defendant’s counterclaim may qualify for the ‘special circumstances’ where the non punctual payment of hire may be excused.

State v Hung Kuo Hui [2006] FJHC 113; HAC40.2004 (24 February 2006)

Charterparties- Charterer guilty of illegal fishing- vessel forfeited with no requirement to name owner as party

The defendant company was Fijian owned and operated. The defendant company and captain were found guilty of illegal fishing in Fijian territorial waters. The state sought forfeiture of the vessel as part the penalty. The vessel was chartered from a company in Taiwan. DECISION: order for forfeiture granted HELD: The court found that the illegal fishing was blatant and repeated in spite of warnings. The penalties were meant to be harsh. It was not necessary to add the owner of the vessel as a party. Owners and charterers should be aware of the law and the penalties.

Yap v MV Cecilia I [2005] FMSC 41; 13 FSM Intrm. 403 (Yap 2005) (19 September 2005)

Charterparties- Pollution offences alleged against charterer and owner of vessel- Court gains no personal jurisdiction over vessel owner on basis of bareboat charter

There were 5 causes of action all based on a central allegation that the vessel had on numerous occasions discharged petroleum based effluent. The vessel was under a bareboat charter between the defendant owner and the defendant charterer. The defendant owner served a motion to dismiss for lack of personal jurisdiction on the basis that he had no control over the vessel and he lacked the minimum contacts with the forum sufficient to subject to the court’s jurisdiction. DECISION: Motion granted HELD: Under a demise or bareboat charter the charterer takes complete control of the vessel, mans it with its own crew and is treated by law as its legal owner. The charterer is potentially liable for collision, personal injury to master, crew and third parties, pollution damages, and for the loss or damage to the chartered vessel. Vessel owners normally have no personal liability but the vessel may be liable in rem. As such, the existence of the bareboat charter did not bring the owner into the court’s jurisdiction either on the basis of ‘doing business’ provision of the long arm statute, or under the provision based on the operation of the vessel within territorial waters.

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A time charter chain in a rising market

A case study in common time charter issues including: calculating the redelivery date and final hire due, withdrawal of the vessel from charter and the effect of withdrawal down the charter chain. 

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This news publication was put together with the assistance of Lewis Moore from Hill Dickinson who was instructed by Members in the case.

A recent Defence case for one of West’s charterer Members in the middle of a time charter party chain highlights a number of “core” charter party issues, with some surprising results.

The charter party:

West’s member was the time charterer in the middle of the charter chain. Both the head and sub charters provided:

• Redelivery of the vessel was to be latest 16 May plus any offhire periods, as long as charterers (in each case) gave notice at least 30 days before the charter party’s original redelivery date.
• On redelivery, charterers (in each case) had the right to deduct the value of redelivery bunkers (the bunker prices were agreed in the charters) “ from the last sufficient hire payments” . The value of bunkers on delivery at the agreed charter party prices amounted to more than US$400,000 which was equivalent to more than two full hire instalments at the sub charter hire rate and just over three full hire instalments at the (lower) head charter hire rate.
• There was a right of withdrawal of the vessel from charter with a grace period of three clear banking days.

Events leading to the dispute:

Whilst owners and sub charterers continued to dispute the issue, on 13 March sub charterers sub-fixed the vessel “on subjects” to perform a final voyage to the Persian Gulf. The vessel was fixed “firm” on 15 March.

Owners withdraw the vessel from charter:

This dispute came to a head on 15 March when hire instalments were due under both charters but no payment was made by charterers nor sub charterers, each maintaining that they were entitled to deduct the value of the redelivery bunkers from hire due up to the anticipated 20 April redelivery date.

Owners served an anti-technicality notice on Members on 16 March for a stated amount of unpaid hire and Members served an anti-technicality notice on sub charterers (stating a different amount of unpaid hire) on the same day. This was followed by a notice of withdrawal on Sunday 25 March sent by owners to Members and sub charterers which Members also forwarded to sub charterers on 25 March. Members served their own notice of withdrawal on sub charterers on Tuesday 27 March.

The vessel, which was unloading at the time, completed discharge on 29 March. 

Questions arising:

Charterers’ last voyage orders and the expected redelivery date under both charter parties:.

Q: What test does the tribunal apply and what evidence does the tribunal look at when assessing whether charterers’ last order was legitimate in that it would have enabled the vessel to be redelivered in time? The tribunal held that the appropriate test is whether the estimated redelivery date was one which “ could reasonably be held by any intelligent charterer ” ( The Mihalios Xilas [1978] ).

Q: What if sub charterers fix the vessel for a last (Pacific Gulf) voyage that owners are refusing to allow because owners calculate that the voyage will overrun the maximum charter party period – are owners entitled to argue that charterers’ estimate of the redelivery date should be based on this refused Pacific Gulf voyage? The tribunal held that, because owners were refusing to allow the vessel to perform a PG voyage as sub charterers had requested, owners were not then entitled to argue that a realistic redelivery date had to be based on the PG voyage. This was the case even though sub charterers had, in fact, fixed the vessel for a PG voyage.

Anti-technicality notices and withdrawal:

Because the tribunal held that the 20 April redelivery date that was given up the charter chain by sub charterers and Members was given in good faith and on reasonable grounds and that the amount of hire due was correctly calculated (based on this 20 April redelivery date), the tribunal held that there was no hire due but unpaid when owners served their anti-technicality notice on 20 March. Therefore, owners were themselves in repudiatory breach of the head charter and Members were in repudiatory breach of the sub charter by wrongly exercising the right to withdraw the vessel from charter for alleged non-payment of hire. Accordingly, the tribunal did not need to decide whether owners and Members had each exercised their right of withdrawal correctly or not. However, the award contains some useful (obiter) comments in this regard.

Q: What information needs to be included within an anti-technicality notice? In accordance with The Li Hai [2005], an anti-technicality notice “… will be sufficient as long as it states unambiguously, one way or another, that payment has not been received and gives the charterer  [X days/hours, ie the relevant charter party grace period] ultimatum to pay or lose the ship.”

Q: What if there is an error in the anti-technicality notice as regards the stated US$ amount owing – does this invalidate the notice?  The tribunal confirmed that an anti-technicality notice does not need to specify the amount of hire that is due. Instead, basis The Lutetian [1982], owners can leave it to charterers to calculate and pay the hire due. Therefore, since an anti-technicality notice does not need to specify the amount of hire that is due, the tribunal found that an anti-technicality notice that states the wrong amount does not, of itself, invalidate the anti-technicality notice.

Q : What if, after the anti-technicality is served, the charterer pays some of what owners says is overdue - do owners need to serve a fresh anti-technicality notice? No. The tribunal stated that this approach “ could lead to a string of anti-technicality notices while a charterer kept paying part only of the outstanding hire and retained the vessel in its service.”

Q: What if the grounds stated in the anti-technicality notice are wrong – does this invalidate the anti-technicality notice? The tribunal held that owners’ and Members’ statement that sub charterers were only entitled to deduct hire from the last hire payment (singular) was wrong as this contradicted the charter party which expressly provided that, on redelivery, charterers (in each case) had the right to deduct the value of redelivery bunkers “ from the last sufficient hire payments” (in the plural) and that this incorrect statement created a “genuine ambiguity ” for sub charterers. The tribunal held that owners’ and Members’ anti-technicality notices were therefore invalid.

Q: After serving an anti-technicality notice, how quickly do owners then need to withdraw the vessel before they are deemed to have waived their right to withdraw?  The tribunal referred to The Laconia [1977] where it was held that, where owners withdraw the vessel from charter, they must do so within “a reasonable time” and that   “What is a reasonable time - essentially a matter for arbitrators to find - depends on the circumstances. In some, and indeed many cases, it will be a short time - vis. the shortest time reasonably necessary to enable the shipowner to hear of a default and issue instructions”. Further, t he tribunal held that, in order to determine whether owners have waived the right to withdraw the vessel, the tribunal looks at whether or not owners have delayed in withdrawing the vessel, not at whether or not charterers have relied on the length of time taken before owners withdraw the vessel. In this case, owners and Members each served their anti-technicality notice on 16 March and the 3 clear banking days under the anti-technicality notices expired on 21 March. Members withdrew the vessel on 27 March. The tribunal commented that for Members to wait until 27 March to withdraw the vessel was, in their opinion, “ far longer than “reasonably necessary” in the circumstances of the case ”. Owners, on the other hand, purported to withdraw the vessel 2 days earlier than Members, namely on Sunday 25 March. The tribunal commented: “ This does of course make [owners’] position somewhat stronger than that of [Members ]”, although also noting that owners’ “ continued performance of the Charterparty for in excess of a further 2 days (both of which were working days) after the assumed right to withdraw arose could be taken as evidencing their election not to withdraw the Vessel from the Head Charter ”. Whilst the tribunal did not need to come to a conclusion one way or the other on this point, it can be seen from this that owners should exercise their right of withdrawal very promptly – probably within a maximum of 3 days in most cases – or owners will run the risk of being held to have waived their right of withdrawal.

The middle charterer’s position in a charter chain:

Q: What is charterers’ position vis a vis sub charterers where owners have withdrawn the ship from charter but charterers have not, either because charterers are not entitled to withdraw under the terms of their sub charter or because charterers have delayed and waived their right to withdraw? Whilst owners served their notice of withdrawal on Members and sub charterers on 25 March and Members forwarded this notice on to sub charterers on the same day, Members did not ask sub charterers to treat owners’ message as having come from Members. Accordingly, the tribunal found that the withdrawal of the vessel from the sub charter – had the withdrawal been valid – would only have taken place when Members served their own withdrawal notice on sub charterers on 27 March, not on 25 March (and see above). However, since the attempted/purported withdrawal of the vessel was invalid, the tribunal commented that it amounted to (an automatic) repudiatory breach of the sub-charter by Members.

The calculation of damages:

Q. Where owners have withdrawn the vessel from charter wrongfully, can charterers claim damages from owners for the actual loss of profit that charterers have suffered or are charterers limited to claiming the difference between the charter and (higher) prevailing market rate? After fixing the vessel “on subjects”, on 15 March sub charterers fixed firm the vessel to sub sub charterers (with a laycan of 1-9 April) for an intended PG voyage. When Members subsequently served their withdrawal notice on sub charterers, sub charterers nominated a substitute vessel. Unfortunately, however, this substitute vessel’s schedule subsequently slipped, causing her to miss her laycan and the fixture fell through. Both owners’ and sub charterers’ expert agreed that there was an available market when the charter party was terminated. In these circumstances, and even though sub charterers here had sub-fixed at a rate that was higher than the prevailing market rate, the tribunal held that sub charterers were not entitled to this (larger) damages claim and that sub charterers could only claim the “normal”, market loss measure of damages, namely the difference between the charter and (higher) market rate.

Q: For what period can charterers claim these market loss damages for? The tribunal held that the period over which damages should be payable was from 25 March (Members’ purported withdrawal of the vessel from charter) not up to 20 April or any of the likely actual redelivery dates (for either the Egyptian or PG voyages) but to 18 May, namely the maximum charter party period permitted to sub charterers, including added offhire periods. This, the tribunal found, was the correct period because this was the (maximum) charter period which sub charterers had lost by reason of the wrongful withdrawal from charter. Of course, if sub charterers had given an estimated redelivery date of 18 May, additional hire would have been due.

In this case, therefore, sub charterers were held to be entitled to have their cake and eat it: they were entitled to pay hire less estimated bunkers only up to their 20 April estimated redelivery date and yet were awarded damages up to the 18 May maximum charter party period (albeit “only” at the charter versus market rate).

Costs issues:

The arbitration was expensive for all parties, particularly for owners.

• There were three days of concurrent hearings, two witnesses of fact, two expert witnesses and a lot of law, giving rise to two awards with 57 pages of reasons. The Tribunal’s fee for the two awards was £130,000. Head owners paid both;
• Sub charterers recovered from Members £265,000 costs, of which, £248,000 was paid by head owners. Members recovered a further £100,000 in costs from head owners;
• Sub charterers’ claim against Members was for slightly over US$386,000. Members claimed against sub charterers a balance of account and an indemnity for the costs of discharge the cargo on board at the time of termination, totalling approx. US$350,00. Against this, sub charterers’ net recovery in damages against Members was US$110,000, most of which was probably swallowed by sub charterers’ own unrecovered costs. Members’ net position overall was that they were out of pocket by approx. US$62,000.

There was no real winner, but one massive loser.

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Charter Parties

A charter party is a highly standardized written document that provides the contractual arrangements for one party (the charterer) to hire the carrying capacity of a vessel, either in whole or in part, owned by another party. Generally, charter parties are subject to the rules and requirements of contract law. Charter party forms are used worldwide, and many of them have been drafted to take into consideration the specific needs of particular trades. Other charter parties are more general in form and are not adapted to a specific trade.

There are three basic types of charter parties: a voyage charter, a time charter, and a demise charter.

Under a voyage charter, the owner of the vessel agrees to carry cargo from one port to another on a particular voyage or voyages. The vessel is manned and navigated by the owner�s crew. A voyage charter may be used as a contract of affreightment�that is, for the shipper�s purpose of sending its goods from the port of origin to a port of destination. To the extent that a voyage charterer obtains only the carrying capacity of a particular vessel, the charterer is not responsible for maintenance, repairs to the vessel, or injuries to third parties arising from the crew�s operational negligence. A voyage charterer usually is not liable for expenses such as bunkers (fuel).

A time charter is a contract for the use of the carrying capacity of a particular vessel for a specified period of time (months, years, or a period of time between specified dates). As with a voyage charter, the vessel owner under a time charter is responsible for the navigation and management of the vessel, subject to conditions set out in the charter party. The vessel�s carrying capacity is leased to the charterer for the time period fixed by the charter party, allowing for unlimited voyages within the charter period. Therefore, the vessel is under the

charterer�s orders as to ports of call, cargo carried, and other matters related to the charterer�s business. The master and crew remain employees of the owner and are subject to the owner�s orders with regard to the navigation and management of the vessel. Because a time charterer obtains only the carrying capacity of a particular vessel, the charterer is not responsible for maintenance, repairs to the vessel, or injuries to third parties arising from the crew�s operational negligence. Time charterers usually are responsible for expenses of operating the vessel.

In a demise charter, the charterer not only leases the carrying capacity of the vessel but, unlike a time or voyage charter, also obtains a degree of control over the management and navigation of the vessel. As such, the charterer becomes, in effect, the owner of the vessel pro hac vice for the duration of the charter. The test for whether a charter party is a demise charter is whether the owner has turned over to the charterer �the possession, command, and navigation� of the vessel during the period it is in effect. When a vessel with a preexisting master and crew is under a demise charter, the master and crew may remain on the vessel and operate the vessel for the charterer as a provision of such agreement. The master and crew are subject to the orders of the charterer and its agents, and they are considered its employees. Under a demise charter, an owner may also turn over the vessel to the charterer without a master and crew. A demise charter of this type is also referred to as a bareboat charter.

Under a demise charter, the legal relationship between the owner and the charterer is significantly different from that created by a time or voyage charter. Because a demise charter transfers the possession and control of the vessel to the charterer, one who takes a vessel on demise is responsible for maintenance, repairs, or damages caused to third parties by the crew�s negligent navigation of the vessel. Thus, the owner who has demised its vessel will generally not be liable in personam for the fault or negligence of the crew�the charterer will be

primarily liable. Demise charterers usually are responsible for the vessel�s operating expenses. In addition to these three types of charter parties, a number of variations have been created to accommodate containerisation and the changing nature of the shipping industry.

The Contract

Most charter party transactions use standardized printed forms. Some of the clauses contain blank spaces that require the parties to supply information. Typically the parties must specify the names of the owner and of the charterer and the amount of payment, referred to as �hire� or �charter hire.� Obviously, a voyage charter must specify the voyage to be undertaken, and a time charter must specify the length of time. In addition, a time charter requires information about the physical characteristics of the vessel and any restrictions on the use of

the vessel. The charter form also sets out standard terms and conditions that apply under the contract. Charter parties typically are negotiated contracts and, in contrast to transport pursuant to bills of lading, are often marked up�that is, provisions are added, deleted, or modified. These changes reflect the market and the relative financial strength of the owner and the charterer.

Typical Areas of Dispute

Freedom of contract is the touchstone to the resolution of charter party disputes between owner and charterer. The rules applicable to charter party disputes derive from the terms of the charter party itself and generally do not implicate public policy concerns. These are contracts between businesspersons, negotiated at arm�s length, often through intermediaries (i.e., brokers who are experts in the field). It is often assumed that the contracting parties are sophisticated and that considerations of consumer protection are absent. Confirmation of this view is the fact that key terms, such as rate of charter hire and length of charter term, are often subject to hard bargaining. This does not mean that the parties negotiate from equal positions of strength. Like other areas of commercial transactions, supply and demand may strengthen an owner�s hand when vessels are in short supply or may put charterers in a better position when there is a surplus of tonnage available in the charter market. The advantages that inhere in these circumstances are not the equivalent of overreaching.

Most terms used in standard charter parties are terms of art that have well-established and well-understood meaning within the industry. Old-fashioned as some may seem, the terms (including those described below) ought to be interpreted and applied in litigation as they are understood in the industry.

Misrepresentation

The term �misrepresentation� includes not only fraud or intentional misrepresentation but also any situation where a vessel does not conform to factual representations as stated by the owner in the charter party. Courts today take a pragmatic approach, and resolution of a dispute may hinge both on the materiality of the representation or undertaking and whether the charterer seeks damages or termination of the contract.

Size and Speed�A breach of an express warranty as to size and speed may entitle a charterer to recover damages.164 At the election of the charterer, the breach of such an express warranty may provide a basis for rescission. Rescission of the charter party is available only under circumstances where the breach is material or where it is discovered before the vessel has been accepted by the charterer.  

Seaworthiness�In general, a shipowner has a duty to ensure that his or her vessel is seaworthy and capable of transporting the cargo for which it has been chartered.166 A charter party that describes the vessel as �with hull, machinery, and equipment in a thoroughly efficient state� or �that on delivery the ship be tight, staunch, strong and in every way fitted for the service� gives rise to a warranty of seaworthiness. In the absence of an express and unambiguous stipulation or a controlling statute to the contrary, a warranty of seaworthiness will be implied by law.

The parties may stipulate that there is no warranty of seaworthiness, but such agreements are not favored168 and will be enforced only if they �clearly communicate that a particular risk falls on the [charterer].�

Breach of the warranty of seaworthiness does not by itself confer upon the charterer the right to repudiate. Repudiation by a charterer is permissible only where the breach of the owner�s undertaking of seaworthiness is so substantial as to defeat or frustrate the commercial purpose of the charter.170 This view is consistent with the modern approach that the undertaking of seaworthiness is to be treated like any other contractual undertaking. Thus, an insubstantial breach that does not defeat the object of the contract will not justify repudiation unless expressly made a condition precedent to a party�s performance of its obligations.

Likewise, the terms of the charter party must be examined carefully because the parties may have agreed to a lesser undertaking with respect to seaworthiness. For example, an owner may have expressly undertaken only to exercise �due diligence� to provide a seaworthy vessel.

Temporary Interference with Charterer�s Use of the Vessel

Charter parties commonly provide for contingencies, short of frustration, that result from the inability of the charterer to use the ship as intended. This may occur in the case of a mechanical malfunction or illness of the crew or some other factor that renders a vessel temporarily unusable. A common provision in charter parties is an �off hire� or �breakdown� clause. Under an off hire clause, a charterer�s duty to pay hire ceases in the event that it is deprived of the use of the vessel, either in whole or in part, as a result of some deficiency of the vessel, its equipment, or the crew. There are many variations in the wording of an off hire clause, and sometimes there are disputes as to the applicability of the particular clause in question.

Sometimes the inability to use a vessel is unrelated to the physical condition of the vessel itself or its crew, such as where a strike by longshoremen or government intervention prevents a vessel from sailing or from loading or discharging cargo. Other clauses in the charter party may determine who bears the risk of such events. Under a �mutual exceptions� clause, for example, if a party is prevented from fulfilling its obligations because of the occurrence of a circumstance enumerated in the mutual exceptions clause, such non-performance is not considered to be a breach of the charter party contract. �Restraint of princes� (an embargo) is usually one of the circumstances enumerated in a standard mutual exceptions clause. Thus, the action of a government that prevents an owner from fulfilling its obligation to the charterer�for example, by placing the vessel in quarantine�will excuse the non-performance of the owner. Other circumstances commonly excepted are acts of God or of public enemies.

Safe Port and Safe Berth Provisions

In time and voyage charters there are express or implied obligations that the charterer will not require the vessel to call at an unsafe port or enter an unsafe berth to load, discharge, or take on bunkers. Time and voyage charter parties usually contain a provision referred to as a �safe port/safe berth� clause that purports to place on the charterer the risks to the vessel posed by the particular ports at which the vessel will call and the berths where the vessel will lie. It is not clear whether this clause in a charter party obliges the charterer to �warrant�

the safety of ports and berths entered. A safe berth clause does not impose strict liability upon a voyage charterer, and the charterer is not liable for damages arising from an unsafe berth where the charterer has exercised due diligence in the selection of the berth. Where a time charter party includes a safe port/berth clause, the charterer warrants the safety of the berth it selects. In any event, under a safe port/berth clause the master of a vessel may refuse to proceed to an unsafe port/berth nominated by the charterer without placing the owner in breach of the charter.

Notwithstanding a safe port/berth provision, negligence on the part of the master may relieve a charterer of its liability to the extent that such negligence permits the fact finder to conclude either that the port was safe because the peril could have been avoided by prudent seamanship or that, in the case of an unsafe port, the master�s conduct was an intervening, superseding cause of the resulting damages. Obviously, not every risk taken by a master will be considered a superseding cause. If the casualty results from the combined negligence of the charterer and the vessel�s master or other agent of the owner, damages are to be apportioned according to the respective fault of the parties.

Demurrage and Detention

In a time charter, the charterer has the vessel�s carrying capacity at its disposal for a specified period of time. As such, it makes no difference to the owner whether the charterer makes efficient use of the time chartered vessel. By contrast, in voyage charters, the time during which the voyage charterer may use the vessel is measured by the length of time it takes to complete the voyage. Obviously, it is to the owner�s advantage to have the voyage completed as quickly as possible: The sooner an owner has the vessel at his disposal, the sooner he can use it for his own purposes or charter it to another person. Consequently, a frequent issue in voyage charter party disputes is the shipowner�s claim for �demurrage.�

Voyage charter parties provide a time frame for loading and unloading the vessel. Under such a provision, the charterer is allowed �laytime��a specified period (hours or days) during which it can perform its loading and unloading operations without incurring charges in excess of the agreed rate of charter hire. These clauses vary greatly. If a charterer takes longer to load or discharge cargo than is provided in the charter party (i.e., it exceeds its laytime), it will be charged an additional amount called �demurrage.� Thus, demurrage refers to the sum that a charterer agrees to pay for detaining the chartered vessel for that period of time that exceeds the laytime. It should be noted that where a charterer completes loading or unloading in a period of time less than that specified as laytime, the charterer has conferred a benefit on the owner and may be entitled to financial allowance referred to as �dispatch.�

A typical demurrage clause in a charter party specifies the amount of demurrage that must be paid and the maximum amount of time allowed for demurrage. In this respect, demurrage should be distinguished from detention. Whereas demurrage is a contractual charge imposed on the charterer for exceeding laytime, detention is a legal remedy, in the form of damages, available to the shipowner after the period during which demurrage has expired.180 Nonetheless, detention is recoverable only where the owner can demonstrate that it has sustained damages, such as an opportunity cost.

A charter party may include a clause permitting the owner to withdraw the vessel where hire payments are not made in accordance with the requirements set out in the written agreement. A shipowner may insist on strict compliance with these requirements; and where these requirements are not complied with, courts are likely to uphold the owner�s right to withdraw its vessel. Owners may not withdraw a vessel while cargo is on board.

Subcharters

The right of a charterer to sublet or subcharter a vessel depends on the wording of the charter party. Charter parties often expressly authorize a charterer to subcharter the vessel and usually specify that a subcharter arrangement does not relieve the principal charterer of its obligations to the owner under the head or primary charter party. The owner is not in privity of contract with subcharterers who may not rely on the terms either expressed or implied in the head charter

party. The head charter party may, in order to protect the owner�s right to hire, contain a provision giving the owner a lien on subfreights whereby the owner steps into the shoes of the charterer with respect to freight due the charterer from cargo interests.

Liability of the Owner for Damage or Loss of Goods

Charter parties, per se, are excluded from the terms of the Carriage of Goods by Sea Act (COGSA). Any disputes between the owner and charterer must be resolved according to the terms of the charter party.   Courts generally apply the rule of freedom of contract in the interpretation and enforcement of charter parties. This approach enables the parties to bargain freely and to include in the contract any stipulation allowed by law. As such, the parties are free to incorporate the terms of COGSA by reference into the charter party, and they frequently do. Thus, various provisions of COGSA often become terms of a charter party through contractual stipulation. The parties are, of course, free to modify, or even exclude, COGSA provisions in the contract. Such modifications are permissible as long as COGSA does not apply by operation of law.  

Even where a carrying vessel is under charter, however, there are circumstances in which COGSA is applicable as a matter of law. This occurs where the owner has issued a bill of lading to the charterer, who in turn has transferred the bill of lading to a third party, such as a consignee. These situations are discussed in the following section.

Arbitration Clauses

Most charter parties contain a clause whereby the parties agree to resolve by arbitration disputes that arise under the charter party. These provisions are enforceable and, under certain circumstances, may bind others, such as a consignee.

The Law of Carriage of Goods by Sea pp 373–399 Cite as

Charterparty: Introduction

• Arun Kasi 2  
• First Online: 02 September 2021

652 Accesses

This chapter introduces charterparties in general. It covers demise charter, time charter and voyage charter. It also notes other variants of charters like trip and slot charters. Having thus introduced, it visits a few matters that are common to charterparties, particularly time and voyage charters. They include some common terms found in charterparties, questions of title to bunkers when the charterer did not pay the bunkers supplier at the time of redelivery of the ship with the bunkers, sale of the ship in midst of the charter term. Then, a detailed treatment is given to cancelling date and the shipowner’s obligation as to the approach voyage. This is followed by a consideration of frustration. Finally, a visit is made to the dispute resolution mechanisms in charterparty cases. The section includes a brief discussion the popular arbitration clauses such as London Maritime Arbitrators Association (LMAA), Society of Maritime Arbitrators (SMA) and Singapore Chamber of Maritime Arbitration (SCMA) clauses. It also considers, briefly, appeals and applications arising from arbitration to the court under the UK Arbitration Act 1996 and the system in countries that have adopted the United Nations Commission on International Trade Law Model Law on International Commercial Arbitration (UNCITRAL Model Law), e.g. Singapore and Malaysia.

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See Chapter 2.2.10.

Because the charterparty will perform the function of the shipping contract between the shipowner and the charterer.

See Chapter 4.2.1.

Although there is nothing to prevent a charterparty being assigned and novated to a new charterer by agreement of all the parties (the shipowner, the current charterer and the new charterer), as will usually happen when the ship is sold in the midst of the charter term.

Freight Connect (S) Pte Ltd v Paragon Shipping Pte Ltd [2015] SGCA 37, [2015] 5 SLR 178 (SA CA).

The Rainbow Spring [2003] SGCA 31, [2003] 3 SLR 362 (SG CA).

Granit SA v Benship International Inc [1994] 1 Lloyd’s Rep 526 (EW HC); Transgrain Shipping BV v Global Transporte Oceanico SA (The Mexico 1) (HC) [1988] 2 Lloyd’s Rep 149 (EW HC); The Rainbow Spring [2003] SGCA 31, [2003] 3 SLR 362 (SG CA).

UK Senior Courts Act 1981, Section 21(4)(b)(i).

Putting her at the disposal of the charterer.

Putting her back at the disposal of the shipowner.

As it happened in Suisse Atlantique Société d'Armement Maritime SA v Rotterdamsche Kolen Centrale NV [1967] 1 AC 361 (UK HL).

In Singapore, there is a materially identical Act, namely, Frustrated Contracts Act. There is no such separate Act in Malaysia, like India, but the Contracts Act 1950 deals with frustration of contracts.

Ocean Tramp Tankers Corpn v V/O Sovfracht (The Eugenia) [1964] 2 QB 226, [1964] 1 All ER 161, [1964] 2 WLR 114, [1963] 2 Lloyd’s Rep 381 (EW CA).

Aries Tanker Corpn v Total Transport Ltd (The Aries) [1977] 1 WLR 185 (UK HL).

The NYPE forms are a joint work of Association of Shipbrokers and Agents (ASBA), BIMCO and the Singapore Maritime Foundation (SMF), copyrighted by ASBA. The latest version is NYPE 2015. The previous editions were 1946 and 1993 versions.

The latest version is BIMCO BALTIME 1939 (revised 2001).

Rodocanachi, Sons & Co v Milburn Bros (1886) 18 QBD 67 (EW CA); President of India v Metcalfe Shipping Co Ltd (The Dunelmia) [1970] 1 QB 289, [1969] 3 All ER 1549, [1969] 3 WLR 1120 (EW CA). See Chapter 2.2.10.8 for more detailed discussion of this.

Like sea waybills and ship’s delivery orders.

Nea Agrex SA v Baltic Shipping Co Ltd and Intershipping Charter Co (The Agios Lazaros) [1976] QB 933, [1976] 2 All ER 842, [1976] 2 WLR 925, [1976] 2 Lloyd’s Rep 47 (EW CA).

At that time, the UK Carriage of Goods by Sea Act 1971 did not come into force, which came into force only on 23 June 1977 by virtue of SI 1977 No 981. The Rules adopted by the UK at that time was the Hague Rules by virtue of the UK Carriage of Goods by Sea Act 1924.

Yemgas Fzco v Superior Pescadores SA Panama (The Superior Pescadores) [2016] EWCA Civ 101, [2016] 2 All ER (Comm) 104, [2016] 1 Lloyd’s Rep 561 (EW CA).

[1959] AC 133, [1958] 1 All ER 725, [1958] 2 WLR 688, [1958] 1 Lloyd’s Rep 73 (UK HL).

Another issue was as to meaning of ‘loss or damage’ in Section 4 of the Act, which is materially identical to Article IV of the Hague/Hague-Visby Rules. It was the charterer’s argument that the shipowner could not rely on the Section 4 defences because the claim was for economic loss consequent upon the ship broking down on her first ballast voyage to the loading port and the ‘loss or damage’ referred to in the section is loss or damage to the cargo. The House rejected this argument and afforded to the shipowners the benefit of the Section 4 defences.

Eg. Exercise Shipping Co Ltd v Bay Maritime Lines Ltd (The Fantasy) [1992] 1 Lloyd’s Rep 235 (EW CA).

Kuwait Maritime Transport Co v Rickmers Linie KG (The Danah) [1993] 1 Lloyd’s Rep 351 (EW HC).

See Chapter 7.2.3.

Transocean Liners Reederei GmbH v Euxine Shipping Co Ltd (The Imvros) [1999] 1 All ER (Comm) 724, [1999]1 Lloyd’s Rep 848 (EW HC).

The part is the same in both the 1993 and 2015 forms.

See Belships v Canadian Forest Products Ltd (1999) 45 Lloyd’s Alert Service (Canadian CA).

[2003] SGCA 47, 2004] 1 SLR 171 (SG CA).

Onego Shipping & Chartering BV v JSC Arcadia Shipping (The Socol 3) [2010] EWHC 777, [2010] 2 Lloyd’s Rep 221 (EW HC).

This is a matter for parties adopting the NYPE 2015 to consider if they wish to refer to the Vessel or the deck cargo in this context.

Largely similar to the same numbered clause in the NYPE 2015 form.

The court pointed out: “[88] … cl 13(b) only applies to loss, damage or liability which is effectively caused by the carriage of deck cargo and not to loss, damage or liability effectively caused by negligence or breach of the obligation of seaworthiness.”

Exercise Shipping Co Ltd v Bay Maritime Lines Ltd (The Fantasy) [1992] 1 Lloyd’s Rep 235 (EW CA).

The Visurgis [1999] 1 Lloyd’s Rep 218 (EW HC).

Actis Co Ltd v Sanko Steamship Co Ltd (The Aquacharm) (HC) [1980] 2 Lloyd’s Rep 237 (EW HC).

(Revised 2001).

Gesellschaft Burgerlichen Rechts and Others v Stockholms Rederiaktiebolag Svea [1967] 1 QB 588, [1966] 1 All ER 961, [1966] 2 WLR 909 (EW HC).

Riverstone Meat Co Pty Ltd v Lancashire Shipping Company Ltd (The Muncaster Castle) [1961] AC 807 (UK HL).

See Chapter 9.2.1.

Tor Line AB v Alltrans Group of Canada (The TFL Prosperity) [1984] 1 Lloyd’s Rep 123 (UK HL).

Ben Shipping Co (Pte) Ltd v An - Board Bainne (The C Joyce) [1986] 2 Lloyd’s Rep 285 (EW HC).

Triad Shipping Co v Stellar Chartering & Brokerage Inc (The Island Archon) [1995] 1 All ER 595, [1994] 2 Lloyd’s Rep 227 (EW CA).

[2019] EWCA Civ 1102, [2019] 4 All ER 1145, [2019] 2 All ER (Comm) 592, [2019] Bus LR 2854, [2020] 1 Lloyd’s Rep 178, [2019] 6 WLUK 422, [2019] 1 CLC 982, [2019] CLY 2229 (EW CA).

ICA is an agreement between the Protection and Indemnity (P&I) Clubs in the International Group (IG) as to apportionment of liability for cargo claims between shipowners and charterers. See Chapter 17 for more details of ICA.

D/S A/S Idaho v Peninsular and Oriental Steam Navigation Co (The Strathnewton) [1983] 1 Lloyd’s Rep 219 (EW CA).

In Singapore, it is in Section 21 of the Sale of Goods Act.

In Malaysia, it is in Section 27 of the Sale of Goods Act 1957.

In Singapore, Section 25 of the Sale of Goods Act; in Malaysia, Section 30(2) of the Sale of Goods Act 1957.

See Chapter 4.5 for a detailed discussion of this.

[2010] EWHC 619, [2011] 1 Lloyd’s Rep 61 (EW HC).

Materially identical to Section 25 of the Singapore Sale of Goods Act, and quite materially similar to Section 30(2) of the Malaysian Sale of Goods Act 1957.

[1979] Ch 548 (EW HC).

Cl. 3 also provides for the earliest date, before the cancelling date, that the ship may be delivered so that the charterer will not be liable for hire, if the ship is delivered before the earliest date, for the period until the earliest date.

NYPE 2015 form, cl. 2(d).

BIMCO Gencon 1994 form, cl. 6(3).

Compania de Naviera Nedelka SA of Panama v Tradax International SA of Panama City RP (The Tres Flores) [1974] QB 264, [1973] 3 All ER 967, [1973] 3 WLR 545 (EW CA).

See Koufos v C Czarnikow Ltd (The Heron II) [1969] 1 AC 350, [1967] 3 All ER 686, [1967] 3 WLR 1491 (UK HL).

Marbienes Compania Naviera SA v Ferrostaal AG (The Democritos) [1976] 2 Lloyd’s Rep 149 (EW CA).

Mansel Oil Ltd v Troon Storage Tankers SA (The Ailsa Craig) [2009] EWCA Civ 425, [2009] 2 Lloyd’s Rep 371 (EW CA).

Armement Adolf Deppe v John Robinson & Co Ltd [1917] 2 KB 204 (EW CA).

See Chapter 12.6.1.1.

Moel Tryvan Ship Co Ltd v Andrew Weir & Co [1910] 2 KB 844 (EW CA).

As in the case of any other contract.

Maredelanto Compania Naviera SA v Bergbau - Handel GmbH (The Mihalis Angelos) [1970] EWCA Civ 4, [1970] 3 WLR 601, [1971] 1 QB 164 (EW CA). See also Cheikh Boutros Selim El - Khoury and Others v Ceylon Shipping Lines Ltd (The Madeleine) [1967] 2 Lloyd’s Rep 224 (EW HC).

Fercometal SARL v Mediterranean Shipping Co SA (The Simona) [1989] AC 788 (UK HL).

[1919] AC 435, [1918-19] All ER Rep 504 (UK HL).

[1917] 2 KB 204 (EW CA).

[1908] 1 KB 499 (EW CA).

(1920) 4 Ll L Rep 183 at 184 (EW HC).

(1893) 9 TLR 210 (EW HC).

(1950) 84 Ll L Rep 354 (EW CA).

Gerani Compania Naviera SA v General Organisation for Supply Goods (The Demosthenes V) (No. 1) [1982] 1 Lloyd’s Rep 275 (EW HC).

(1926) 24 Ll L Rep 28 (EW HC).

(1855) 2 TLR 33 (EW CA).

MacAndrew v Chapple (1866) LR 1 CP 643 (EW Court of Common Pleas); Freeman v Taylor (1831) 8 Bing 124 (US District Court).

Monroe Brothers Ltd v Ryan [1935] 2 KB 28 (EW CA); Mitsui OSK. Lines Ltd v Garnac Grain Co Inc (The Myrtos) [1984] 2 Lloyd’s Rep 449 (EW HC).

CSSA Chartering and Shipping Services SA v Mitsui OSK Lines Ltd (The Pacific Voyager) [2018] All ER (D) 32 (Nov) (EW CA).

Universal Cargo Carriers Corp v Citati [1957] 2 QB 401 (EW HC).

Geogas SA v Trammo Gas Ltd (The Baleares) [1993] 1 Lloyd’s Rep 215 (EW CA).

In ASBATANKVOY form.

Which fact was noted in the charterparty entered into on 12 January 1987 as “now trading”.

Eg. Box 8 of the BIMCO Gencon 1994 form; box 13 of the BALTIME 1939 form (revised 2001).

Compania Naviera General SA v Kerametal Ltd (The Lorna I) [1983] 1 Lloyd’s Rep 373 (EW CA).

See Bank Line v Capel (Arthur) & Co [1919] AC 435, [1918-19] All ER Rep 504 (UK HL).

Malaysian Contracts Act 1950.

Sections 57(2) and 66, respectively, of the Malaysian Contracts Act 1950 identically provide.

[1935] AC 524, [1935] All ER Rep 86, 153 LT 425 (PC on appeal from Canada).

See J Lauritzen AS v Wijsmuller BV (The Super Servant Two) [1990] 1 Lloyd’s Rep 1 (EW CA) for a similar self-induced frustration that was held to be no frustration.

See Tsakiroglou & Co Ltd v Noblee Thorl GmbH [1962] AC 93, [1961] 2 All ER 179, [1961] 2 WLR 633, [1961] 1 Lloyd’s Rep 329 (UK HL) for a similar decision.

[1916] 2 AC 397 (UK HL).

[1939] 1 KB 132, [1938] 3 All ER 135 (EW HC).

Edwinton Commercial Corp v Tsavliris Russ (Worldwide Salvage and Towage) Ltd (The Sea Angel) [2007] EWCA Civ 547, [2007] 2 All ER (Comm) 634, [2007] 2 Lloyd’s Rep 517 (EW CA).

In Malaysia and Singapore, it is in Order 69 of the respective Rules of Court.

UK Arbitration Act 1996, Section 67

UK Arbitration Act 1996, Section 68

Arbitration Act 1996, Section 69.

‘United Nations Commission on International Trade Law’.

UNCITRAL Model Law on International Commercial Arbitration 1985, amended in 2006.

In Malaysia, Sections 37 and 39 of the Arbitration Act 2005, amended in 2006. In Singapore, the model law is included in the first schedule to the Singapore International Arbitration Act, and additionally Section 31 of the Act makes provision for challenge to an award at the enforcement stage.

[2020] UKSC 38 at [114] (UK SC).

[1996] 1 Lloyd’s Rep 380 (EW HC).

[2013] EWHC 4071 (Comm), [2014] 1 Lloyd’s Rep 479 at [102] (EW HC).

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Everything you need to know about Charter-party Contracts

The charter-party is a contract that is signed where the pact conditions are decided in those free markets, and the only law that applies to it is that law of demand and supply. The terms of the contract are generally dependent on the shipowner, charterer, and the market. The contracting parties can also customize the charter-party contract by laying down the contract terms as per their needs, which can remain free from any other legal interference. In practicality, most contracting parties follow the standard contract. 

Types of Charter-party contracts:

There are four types of Charter-party contracts:

• In a Demise, Dry (or bareboat) Charter , it is the charterer’s responsibility to take care of the hiring and maintenance of the ship during the time of the charter. He takes on the legal responsibilities of the owner.
• In a Time Charter , the hiring of vessels happens for a certain amount of time. While the ship/carrier’s management is still in the hands of the shipowner, the charterer gets to decide the employment and the sub-charterer.
• In a Voyage (WET) Charter , the charterer hires the vessel/ship/carrier for a particular voyage. Still, the vessel’s employment, for example, the master, the crew, bunkering, is provided by the shipowner.
• In Lumpsum Charter , a shipowner accepts the offer to ship a certain quantity of cargo or goods from one port to another port for a stated sum of money.

A charter party contract should contain clauses like: 

i. Bunker clause –

This clause states that the charterer, at the port of delivery, should pay for all fuel oil in the vessel’s bunkers, and conversely, the shipowner should pay for all fuel oil in the vessel’s bunkers at the port of re-delivery at the current price at the respective ports. 

ii. Ship Clause –

This clause states the ship is seaworthy at the commencement of the voyage in every respect; in other words, the ship is fit to travel to the country for which it is taken. The shipowner must undertake this clause. 

iii. Ice Clause –

An ice clause is included in the bill of Lading (a legal document that is issued by a carrier to a shipper that mentions in detail the type, quantity, and destination of the goods being carried.) or in a charter-party contract when a vessel is going towards for a port or ports which may be closed to shipping due to ice when the vessel arrives or after the vessel’s arrival. 

iv. Lighterage clause –

This clause states all the ports of discharge that are safe ports in a certain range, e.g., Havre/Hamburg range, where lighterage can be done. 

v. Negligence clause –

A negligence clause states that the shipowner is excluded from any liability in case of damage or loss resulting from an act, default, or neglect of the master, mariner, pilot, or the carrier’s servants in the manoeuvring of a ship. 

vi. Ready berth clause – 

This clause states that the lay count of the days will begin as soon as the vessel has arrived at the port of loading or discharge “whether in berth or not”. This protects the shipowner’s interests against delays that arise from ships having to wait for a berth. 

vii. Days for Loading and Unloading –

This clause lays down the number of days allowed for loading or unloading and determines who is to bear the expenses involved. It is interesting to note, that in the event of a dispute the charter party contract is generally subject to scrutiny and interpretation by the court of law or, in most cases, arbitration. 

Even though the UAE law recognizes the bill of Lading as the evidence of a contract of carriage where the parties are the shipper, the carrier, and the consignee, the UAE courts are reluctant to hold consignees bound by terms on the reverse of a bill of Lading, arguing that the consignee is a third party to the original contract had no opportunity to agree with or disagree with the terms of the same. However, an arbitration clause agreed in the charter party agreement will uphold that both parties sign a charter party agreement incorporating such a clause. In case there is some sort of discrepancy in the Bill of Lading and charter-party contracts, the charter-party contract will supersede the relationship between the shipowner and charterer. 

Liability of the charter party:

As per Article 275 of the Maritime Code, the carrier will be liable for loss or damage of the goods during the time he takes on the goods for delivery at the port of loading until he delivers the same to the person concerned. 

Moreover, the charterer will not be liable for the damage and destruction of the goods in the following cases: 

(i) Ship is unseaworthy of the ship, but on condition that the carrier proves that he discharged the obligations set out in Article 272; 

(ii) Fire, unless it  occurred through the act or default of the carrier; 

(iii) Sea and its unpredictability or other navigable waters, or dangers or accidents thereof; 

(iv) Act of God; 

(v) Perils of war; 

(vi) Acts of public enemies; 

(vii) Any detention by a power, state or people or judicial arrest; 

(viii) Quarantine restrictions; 

(ix) Any layoffs or any other obstacle such as to prevent a continuance of the work in whole or in part; 

(x) Civil unrest and commotion; 

(xi) Any act on the part of the shipper or owner of the goods or his agent or representative; 

(xii) A shortfall in bulk or weight or any other shortfall due to latent defect or because of the nature of the goods or any defect inherent therein; 

(xiii) Insufficiency of packaging; 

(xiv) Imperfections of distinguishing marks for the goods; 

(xv) Rescue or attempted rescue of persons or any property at sea; 

(xvi) Latent defects not discoverable by ordinary examination; 

(xvii) Any other cause that does not arise out of the carrier’s default or those who were working under him or his representative. 

The burden of proof shall be upon the person alleging such cause to show that no default of such persons was instrumental in causing the loss or damage. Interestingly, a maritime claim concerning the charter-party contract has a limitation period of one year from the date the goods were delivered at the destination port. Maritime time cases are generally heard in Civil Courts in UAE. And to know more regarding shipping charter-party contracts, you could contact our Maritime department at Fotis International Law firm.

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Managerial Law

ISSN : 0309-0558

Article publication date: 1 June 1997

In carriage of goods by sea the contract of carriage is embodied either in charter parties or in bills of lading. A charter party is a contract between the charterer and the ship owner. The co‐existence of two (charter party and bill of lading) contractual documents has given rise to many problems concerning matters such as who is the carrier, the shipper or which is the contract of carriage itself.

Zekos, G.I. (1997), "Bills of Lading Under Charter Parties and their Contractual Role Under Greek, United States and English Law", Managerial Law , Vol. 39 No. 6, pp. 5-22. https://doi.org/10.1108/eb022485

Copyright © 1997, MCB UP Limited

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• Original Article
• Open access
• Published: 19 December 2022

The digitalisation in chartering business: special reference to the role of e-bill of lading in the bulk and liner markets

• Evi Plomaritou   ORCID: orcid.org/0000-0002-8678-842X 1 &
• Sotiris Jeropoulos 1  

Journal of Shipping and Trade volume  7 , Article number:  28 ( 2022 ) Cite this article

3987 Accesses

4 Citations

Metrics details

Previous research offering a comprehensive overview of digitalisation in maritime transport is limited. In this paper, the authors use several cases to examine digitalisation’s role in the chartering business. The applications of innovative digitalisation to enhance efficiency in the shipping business are presented analytically. Special emphasis is given to the role of the e-bill of lading in the bulk and liner markets. The advantages, disadvantages and legal barriers of the e-bill of lading are examined thoroughly for both markets (bulk and liner markets). The research follows a qualitative case study approach. It shows that although digital technologies offer important advantages in the chartering business, many legal barriers still need to be overcome. The findings fill the gap in the literature and assist maritime professionals and shipping companies in understanding the necessity of digitalisation in chartering business.

Introduction

In recent years, firms in almost all industries and sectors have conducted several actions to explore new digital technologies and exploit their benefits. Digitalisation is the transition from an analogue to a digital format; it is a process-driven transition to introduce new digital technology (Matt et al. 2015 ). Digital transformation is a transformation of key business processes, operations and models to exploit the opportunities created by digital technologies, resulting in improved customer service and value additions to the business. It is an organisational and cultural shift (internally) that allows shipping companies to embrace the positive changes offered by digital solutions to entire processes, competencies and business models.

According to Dehning et al. ( 2003 ), digital transformation causes fundamental changes in traditional business practices by implementing and using digital technology. Matt et al. ( 2015 ) state that this transformation affects services, processes, organisational structures, management strategies and marketing policies. It causes changes in business processes and enables the creation of new types of organisations, bringing changes in organisational culture, business relationships, value creation, customer satisfaction, and market position (Lucas et al. 2013 ). Manaadiar ( 2020 ) argues that digitalisation refers to technology, whereas digital transformation refers to customers. Therefore, digitalisation deals with information and data and the processes and roles required for business operation, while digital transformation deals with the business and its strategy.

The new technological possibilities to process big data and connect it intelligently using algorithms are resulting in various digital innovations. The most important of these from an economic perspective are (Berenberg 2018 , p. 19):

Digital platforms,

Virtual and Augmented Reality,

Artificial Intelligence,

Internet of Things,

Blockchain,

3D Printing Methods.

Digitalisation portrays two sides like every coin due to its benefits and pitfalls. On the one hand, it refines connectivity possibilities, advances knowledge sharing, improves performance and meliorates corporate efficiency (Eißfeller 2020 ). Manaadiar ( 2020 ) states that creating digital standards related to the exchange of digital information across the value chain improves the potential for digital efficiency. The digital data collection related to safety, emissions, and operational efficiency opens up new possibilities to share data, increasing transparency and creating benchmarks around key performance indicators. Such benchmarks can be used internally by the companies to improve performance and externally by investors, lenders, insurers and customers, to prioritise companies with environmentally friendly or safer business practices, thereby driving productive industry change.

In addition, the spread of data collection technologies combined with the rapid expansion of computing power and artificial intelligence makes it possible to analyse very big data sets, improving operations and forecasting potential risks. Greater amounts of analysable data create better and more comprehensive analytical results. For example, digital data can be used for decision-making, enhanced monitoring, systematic control and quality assurance (Manaadiar 2020 ). Moreover, another potential benefit of digitalisation and data sharing is to reduce transaction costs by automating the exchange of information between different parts of the value chain. In addition, technologies such as blockchains offer a way of ensuring trust and transparency (Manaadiar 2020 ; Goldsby and Hanisch 2022 ). As digitalisation progresses more and more in all sectors of the economy, the maritime sector is also being revolutionised. Because trade, transport and logistics are derived variables, developments and changes outside shipping will most certainly play at least as important a role as the direct changes in processes and business models within the shipping industry.

Considering the tremendous advantages of digitalisation, this research attempts to present the main benefits and barriers (practical, economical and legal) of digitalisation in chartering business. For this purpose, the research follows a qualitative case study approach. It investigates how leading shipping companies in the bulk and liner markets handle the fundamental issue of the new technology. Particular reference is made to the electronic bill of lading role in the bulk and liner markets since the bill of lading plays an extremely important role in sea transportation.

The paper is structured into six sections. “ Introduction ” section  addresses the introduction; “ Shipping market and chartering business ” section presents the main elements of chartering business in bulk and liner markets; “ Literature review on digitalisation in shipping ” section  focuses on digitalisation in the maritime sector and introduces digitalisation in the chartering business (in bulk and liner markets); “ Research methodology ” section deals with the research methodology;  “ Findings ” section presents the findings and “ Conclusions and recommendations ” section displays the conclusions and recommendations.

Shipping market and chartering business

Companies and organisations engaged in shipping require adequate information and a great deal of flexibility. Apart from the daily fluctuations in freight rate levels and trading conditions, there is a constant development towards new techniques in shipbuilding and propulsion, cargo handling, terminal operations, etc. Furthermore, due to the ever-changing conditions in international commerce, overseas trading patterns change and new cargoes and loading–discharging locations emerge, sometimes quite drastically diminishing the importance of previously busy ports and critical cargo movements. Such changes will occur over a few years and probably several times during a vessels’ commercial lifespan (typically 20–25 years, although sometimes ships may trade up to 30 years or even more). Therefore, irrespective of whether the freight market is booming, flat or depressed, there are also seasonal changes in cargo volumes to be shipped (Stopford 2009 ).

Within the shipping business practice, ‘ chartering ’ may be simplistically defined as the act or procedure that deals with vessels’ commercial employment, cargoes’ international transport and often their appropriate matching. Chartering or similar sea transport engagements, including booking transportation of cargoes with liner ships, can be based on different methods and principles, as follows (Plomaritou and Papadopoulos 2018 , p. 220):

From a functional point of view , the most important distinction of charter types is made among a voyage charter, a time charter, a bareboat charter and some hybrid forms.

Chartering vessels in the open market on a charter party basis versus liner services provided on a booking note basis. In liner shipping, the liner operator generally acts as a common carrier, accepting all general cargo shipped between the ports covered by his service. Terms and conditions of the cargo transport (mostly containers) are agreed on the ‘booking note’, while the contract of carriage is usually the ‘bill of lading’. On the contrary, in non-regular, bulk/tramp shipping, the shipowners continuously seek the best employment for their vessel considering its type, present position, state and expected development of the freight market, etc. Terms and conditions of vessel employment are depicted on a ‘charter party’.

Fixed sum versus payment for time spent . Charter agreements may be divided into two wide groups. On the one hand, project-based agreements, where the owners are paid a fixed sum for doing a specified job, and on the other hand, time-based agreements, where the owners are paid based on the time spent by the charterers for the use of the vessel or part of it. Fixed sum is also called lumpsum. Project-based/fixed sum types of charter are voyage charters and liner services, while the time-based types of charter are time charters and bareboat charters. Contracts of affreightment are the most important of the hybrid charter forms, which cannot easily be sorted under any of the above-mentioned types of charter.

Use of the ship from a capacity point of view. An important basis for distinguishing different types of charter agreements is the use of the ship from a capacity point of view. The charterer may have chartered the whole vessel, that is, all the space of it. Then, the charter party spells out that the charterer shall deliver ‘a full and complete cargo’ to be loaded within the limits of the ship’s capacity. If the owner cannot find a charterer for the whole vessel, he may divide the vessel’s cargo space between several charterers who may each use, for example, certain portions of the vessel or certain cargo holds. This is known as space or slot charter. Space charter is not the same as when several charterers charter the vessel. In the open bulk market, the most common charter types are those concerning the chartering of the whole vessel. On the other hand, in the liner business, the owner (carrier) normally promises to carry a specified cargo (e.g., 10 boxes of machinery, 100 bags of coffee etc.), among many other cargoes carried simultaneously, typically in containers. This is known as the carriage of general cargo.

In such a dynamic commercial environment, shipowners, ship managers, fleet operators, charterers and shippers, shipbrokers, and agents must take advantage of new opportunities to survive and remain competitive. Therefore, digitalisation is an excellent tool for improving companies’ competitive position in the charter market.

Chartering business in bulk shipping

The chartering business in the bulk market is divided into three phases: the pre-fixture phase of the charter, the fixture phase of the charter and the post-fixture phase of the charter. Chartering is a part of the commercial management of ships, which, however, cannot exist by itself. The operative force in the background is always a sales contract of goods and the need for sea transport. So, first, there is a sale/purchase of merchandise; second, a need for sea transport; and third, a need for chartering/hiring a vessel. Therefore, the pre-fixture of a charter is constituted of three stages. The stage of the sale of goods, the stage of investigation and the stage of negotiation. The fixture includes the stages of the drawing up and the signing of the charter party. The post fixture of a charter includes the stages of carriage of goods by sea. More specifically, the post-fixture of a voyage charter is constituted of the stage of ballast (or preliminary) voyage, the stage of ship’s arrival at the port of loading, the stage of loading operation, the stage of issuance of bill of lading, the stage of laden (or carrying) voyage, the stage of ship’s arrival at the discharging port, the stage of unloading/discharging operation and the stage of delivery of cargo to the cargo owner (Plomaritou and Papadopoulos 2018 ).

Chartering business in liner shipping

In the liner market, concluding a transportation agreement involves the pre-booking, booking and post-booking phases and bears some similarities to the process of the bulk market. However, the essential difference between a pre-fixture and a pre-booking phase is that in the latter case, a booking procedure takes place instead of the negotiation procedure, leading to the issue of a quotation code and the booking note and not the signature of the charter party. Besides, this procedure occurs between the liner agent and the shipper or the freight forwarder instead of the shipowner, the charterer and their brokers. Additionally, the fundamental difference between a ‘bulk market’ post-fixture phase and a ‘liner market’ post-booking phase is that the latter is more likely to include logistics integration solutions and door-to-door services offered to the owner of the cargo. Promoting this vertical diversification, i.e., providing more door-to-door services instead of only port-to-port, is part of most lines “current strategy” (Bockmann 2022 ; Baker 2022 ; Concepcion 2022 ).

Digitalisation is not something new for container lines. With the introduction of global systems that each container line introduced in the early nineties, the container business changed dramatically, even if the change was not obvious to the cargo owners. Entities like the Digital Container Shipping Association (DCSA,) TradeLens, the Ship-planning Message Development Group (SMDG) and the TIC 4.0 were, at that time, still in the far future (Lind et al. 2021 ). One of the most important developments in the liner market is the rise in the digitalisation of freight enquiry, quotation and booking software. Digitalisation of sea freight booking through automation and cloud-based technologies is showing unprecedented growth in the digitalisation of maritime freight market (Hirata et al. 2022 ).

Advances in digital technology enabled data exchange and communications to progress far beyond sending bills of lading and manifests by courier services or facsimile transmissions from the port of loading to the port of discharge across the globe. By 1995, the loading port agent could enter all data relevant to their exports in the container line’s global system. This information became immediately accessible and useable by the discharging ports. It was no longer necessary to re-enter the same data for the other process steps. The quotation, booking, bill of lading, loading and discharge lists, cargo and freight manifests, export and import invoices and delivery orders have since become part of a single data chain (DCSA 2020 ).

The digitalisation of freight quotations, bookings, and other similar procedure steps may not have been extensively researched (Balci 2021 ) but are already widely used. Repetitive entry of the same data is by now completely obviated. Data includes that on the bill of lading and all invoicing amounts, freight-related and other. All this information is available for the accounting needs at every point of the container line network, including headquarters for control and reporting, through the global systems that each container line uses. Bearing in mind the global tendency for container lines to own their agency networks worldwide, the headcount necessary to carry out the necessary steps to serve international trade has significantly reduced. This technology is available to every container line in operation today. Conversations with the interviewees reconfirmed these already well-known liner shipping practices.

The role of e-bill of lading in the bulk and the liner markets

In bulk shipping, the charter party is the contract of carriage between the shipowner and the charterer. In the hands of the non-chartering shipper, the bill of lading has no contractual capacity at all as shown in Rodoconachi v Milburn (1886) 18 QBD 67, CA; President of India v Metcalf Shipping [1970] 1 QBD 289 (Voudouris and Plomaritou 2020 ). Charter party terms determine the rights and liabilities of the contracting parties (Plomaritou 2014 ); Bills of lading are issued upon shipment of the goods. Therefore, the bill of lading cannot vary or add to the terms of that charter party unless the charter party contains an express provision to that effect. However, the bill of lading contains the carriage terms and conditions if it is endorsed and transferred to a subsequent consignee (Anderson 2018 ). Once the bill of lading is endorsed (transferred) to a third party (consignee, endorsee, or transferee), it is conclusive evidence of the contract of carriage. Any oral or written agreement which the shipper and the shipowner (carrier) have and which is not expressed in the bill of lading will not affect the third party (Plomaritou and Voudouris 2019 ). The reason for this is that the third party does not notice any of the terms that the shipper and the carrier may have agreed to orally and that have not been expressed in the contract of carriage.

The liner operator acts as a common carrier in liner shipping, accepting the general cargo shipped between the ports covered by his service. A shipper, who wishes to use only a part of a vessel, contacts the agent of a particular line, who then confirms the booking of cargo space onboard the ship by issuing the so-called ‘booking note’, or ‘shipping note’, or else a ‘fixture note’. Unlike the charter party, in English law, this initial contract is not definitive of the contractual terms. These will be fleshed out by the terms of the carrier’s usual bill of lading (Voudouris and Plomaritou 2020 ). This may happen expressly, as in Armour & Co Ltd v. Walford (1921, 3 KB 473) ( www.i-law.com/ilaw/doc/view.htm?id=136901 ), or impliedly, as in Pyrene Co Ltd v. Scindia Navigation (1954, 2 QB 402) ( www.i-law.com/ilaw/doc/view.htm?id=145111 ). So, when the goods have been received for shipment or shipped on board the vessel, a bill of lading will be issued on behalf of the carrier. Consequently, the bill of lading evidences the contract of cargo carriage between the carrier and the shipper (or the endorsee).

Electronic bills of lading have been in use for several years. Bills of lading produced in electronic format are designed to replicate their paper’s purposes and processes (such as endorsements or reservations) equivalent to offering ‘functional equivalence’. If required by parties in the trading chain, electronic bills can be replaced by paper bills of lading at any point. In practical terms, while the electronic bill of lading systems do eliminate the problem of cargoes arriving at discharge ports before hard copies bills of lading, their use significantly reduces the number, associated risks and costs of all methods of delivering the cargo without an original bill of lading (Plomaritou and Nikolaides 2016 ). Among the various benefits of electronic bills of lading are an increase in speed and a reduction in the cost of transactions, together with the elimination of the problem of the late arrival of documents (Wilson 2010 ).

In 2010, the International Group of P&I Clubs (IG), comprising thirteen P&I Clubs, approved the Bolero and the essDOCS systems before joining the e-title system in 2015. The IG started covering liabilities arising in respect of the carriage of cargo under electronic paperless trading systems from 20 February 2010 onwards and approved four electronic paperless systems as below:

Bolero by Bolero International Ltd—Rulebook/Operating Procedures September 1999;

CargoDocs by Electronic Shipping Solutions;

e-titleTM by E-Title Authority Pte Ltd;

edoxOnline by Global Share S.A.

Consequently, if any liabilities occur on goods shipped under other electronic paperless trading systems (not approved by the Group), the members will not be covered for this.

BIMCO ( 2014 ) has for many years fully supported the concept of electronic bills of lading to provide a more efficient, systematic, organised and secure method of dealing with bills of lading and other transport documents like delivery orders (UNCTAD 2003 ). However, the increasing use of electronic documentation, particularly in the bulk market segment where many major charterers actively promote it, has resulted in a growing user requirement (from shipowners and charterers) for BIMCO to develop a specialist provision. In response to this demand, BIMCO brought together a group of charterers and shipowners to develop a new clause for charter parties that specifically addresses electronic bills of lading (paperless trading) systems. This electronic bill of lading clause needs to be incorporated into charter parties when the contracting parties (shipowner and charterer) know that an electronic bill of lading will be issued. More specifically, the BIMCO Electronic Bill of Lading Clause is the following (BIMCO 2014 ):

“(a) At the Charterers’ option, bills of lading, waybills and delivery orders referred to in this Charter Party shall be issued, signed and transmitted in electronic form with the same effect as their paper equivalent. (b) For the purpose of Sub-clause (a) the Owners shall subscribe to and use Electronic (Paperless)Trading Systems as directed by the Charterers, provided such systems are approved by the International Group of P&I Clubs. Any fees incurred in subscribing to or for using such systems shall be for the Charterers’ account. ©The Charterers agree to hold the Owners harmless in respect of any additional liability arising from the use of the systems referred to in Sub-clause (b), to the extent that such liability does not arise from Owners’ negligence. Under sub-clause (a) of the BIMCO clause, owners and charterers agree that the eBL issued will have the same effect as a paper BL.”

The advent of blockchain could prove a renaissance for the e-bill of lading. The Bolero electronic bill of lading was successfully used in a blockchain transaction, and in the near future, electronic bills of lading are expected to substitute the traditional bills of lading. Blockchain is expected to play a significant role in the digitalisation of the bill of lading in bulk and liner markets. Blockchain may be considered the next electronic data interchange level (EDI). It is a technology where the data and systems are not centralised on a single server. Instead, information is shared among multiple computers that compile a secure network requiring each to be individually hacked to access the whole system (Schleyerbach and Mulder 2021 ).

Recent success stories of trialling blockchain technology in bills of lading transactions include the Smart B/L from Cargo X, Wave and the Maersk-IBM partnership TradeLens (Forster and Davies 2019 ). The CargoX trial involved a shipment of garments from China to Slovenia. They report that a bill of lading was successfully processed in minutes at the cost of US$15 using a public blockchain network. The TradeLens system does not just limit itself to the bill of lading but the whole process of transactions and document control in the supply chain (Wass 2017 ). When studying the need to improve the process, Maersk claimed that a single shipment of avocados from Mombasa to Rotterdam involves 30 parties of over 100 people and 200 information exchanges. Their trials showed a time reduction of 40 per cent and a reduction of costs by thousands of dollars (Maersk 2021 ).

A blockchain-based bill of lading has advantages over previous e-bills (Cadwalader, Wickersham & Taft 2017 ; Shope 2021 ). The decentralisation provided by blockchain technology significantly diminishes human mistakes that the registry administrator might otherwise create (Prieto et al. 2020 ; ReedSmith 2019 ; Ζiakas 2018 ). The system is less vulnerable to hacking attacks, decreasing the risk of fraudulent transactions. Therefore, blockchain technology improves trust in the accuracy and integrity of transactions through automated payment processes. Moreover, the blockchain system diminishes delays in international trade through standardised practices and improves the process of cargo claims, which means lower expenses (Yang 2019 ).

However, launching a blockchain-based bill of lading presents several major obstacles. Thus, technical matters should be arranged, and legal problems should be overcome. Blockchain technology is a closed, member-only system based on a registry administered by a trusted intermediary. All parties must be registered members to make transactions on a closed platform (Takahashi 2016 ). When a non-registered member is involved, an electronic bill of lading must be replaced by a paper-based bill of lading. This membership requirement is considered a major obstacle to using electronic bills of lading. In addition, since blockchain technology is decentralised, and has no single controlling entity, liability would not be clear if the system was to fail.

A blockchain-based bill of lading, like any other electronic bill of lading, will not succeed without the approval and cooperation of the relevant legal structures. Currently, English law does not recognise an electronic bill of lading as a negotiable document of title. The electronic bills of lading have not been regulated under the enforced International Sea Conventions, namely the Hague-Visby Rules and the Hamburg Rules. The legal efficacies of digital bills of lading are not fully tested under the law of contract. Even though the present study examines the legal regime of the e-bill of lading under the International Sea Conventions, at this point, a special reference should be made to the jurisdiction of Malaysia and other places which recognise an electronic bill of lading as a negotiable document of title. Although a positive step, the acceptance of the use of e-bill of lading in specific parts of the world is insufficient in an industry as international as shipping.

Consequently, the holders of electronic bills of lading issued under COGSA 1992 will not be able to pursue claims against the issuing carrier unless there is an express contractual agreement covering this aspect (Plomaritou and Voudouris 2019 ). So, the legal framework protecting carriers who carry cargo under an original bill of lading is not suitable for electronic bills of lading. Furthermore, the lack of adequate support from the legal infrastructure causes many problems with electronic bill of lading schemes, resulting in banks’ refusal to consider electronic bills of lading as adequate collateral. A possible solution to these problems may be found in the Rotterdam Rules, where electronic bills of lading are called ‘ negotiable electronic transport records ’ (Tseng 2017 ). The Rotterdam Rules 2009 is the most recent attempt of the United Nations to bring legal harmonisation and legal certainty to the international carriage of goods by sea. However, since the Rules have not yet received a sufficient number of ratifications (due to various criticisms), the privately devised rules introduced by the BIMCO and the insurance cover provided by the International Group of P&I Clubs, the conditions in the shipping market vary significantly.

Literature review on digitalisation in shipping

Digitalisation in the maritime sector uses digital technologies—like blockchain, artificial intelligence, machine learning, automation, etc.—to convert the shipping business into a digital business. The digitalisation of the shipping industry is about separating access to data from ownership of the vessels. On the other hand, digitisation is the process of converting information from a physical format into a digital one. For example, scanning a bill of lading or converting a charter party to a PDF document. The data is not changed—it is encoded in a digital format. Digitization can reap efficiency benefits when the digitized data is used to automate processes and enable better accessibility—but digitization does not seek to optimize the processes or data. Considerable work has been made regarding the digital transformation of the shipping industry, but no extensive research has been carried out regarding the digitalisation of chartering business.

Following Sanchez-Gonzalez et al. ( 2019 ), digitalisation currently applies to eight digital domains: “ autonomous vessels, robotics, artificial intelligence, big data, virtual reality, internet of things; the cloud and edge computing, digital security, 3D printing and additive engineering ” . Tijan et al. ( 2021 ) consider that the shipping industry is moving towards digitalisation and digital transformation at different speeds in different domains and market segments. It is noted that the shipping sector has been slower to adapt to new technology and digitalisation than other industries (ABB 2019 ). Zaman et al. ( 2017 ) argue that the slow adoption of digital technologies is due to many reasons like the longer lifecycle of assets, the high costs of new digital solutions and the strict maritime regulations that prohibit incentives to invest. Vessels are long-lasting assets that have been in operation for up to 30 years with traditionally slow lifecycle investments (ABB 2019 ). In contrast, digitalisation is a fast-moving, disruptive trend with short innovation cycles.

Next, shipping companies are invited to incorporate something rapidly evolving into a more traditional and complex industry. Retrofitting a long-lasting asset repeatedly with constantly updated technology can certainly be costly and disruptive. Furthermore, shipping is a volatile, risky, unpredictable, cyclical industry for reasons like energy price fluctuations, freight fluctuations and regulations expected to become a lot stricter. In addition, another characteristic of the shipping industry is the highly competitive attitude, which makes the collaboration of companies with competitors difficult. Moreover, shipping industry leaders are conservative, still treading cautiously when it comes to investment in digitalisation (Clayton 2021 ). As a result, many shipping companies, chartering companies, shipbrokers, freight forwarders, ports, financial institutions and other private entities are working on various digitalisation of their business processes.

Therefore, the relatively slow adoption of digital technologies in the maritime sector cannot be attributed to a lack of benefits. On the contrary, several problems could be solved, and obstacles could be overcome by using digital technologies, thereby contributing towards making the maritime industry safer, cleaner, and more efficient. Digitalisation’s potential in terms of preserving the lifetime of assets, optimising the performance of assets, and increasing the safety, reliability and efficiency of operations means that (if executed correctly) it can enable shipping companies to flourish in this new business environment (ABB 2019 ). Furthermore, exploiting the power of technology to transform data into useful information can help the shipping company maximise its assets’ value. According to DNV ( 2021 ), another benefit of digital technologies to the maritime industry is the boost of decarbonisation for achieving minimum emissions from international shipping.

On the other hand, digitalisation involves risks and pitfalls for the shipping industry. More specifically, it raises new social and environmental problems that require solutions. These include data protection matters and issues involving the use of artificial intelligence. Eißfeller ( 2020 ) states that to avoid this pitfall, the engagement of shipping companies in corporate digital responsibility is necessary. The responsible and transparent collection and processing of data is an important aspect of digital ethics. Corporate digital responsibility goes beyond legal requirements since it requires the shipping company’s active involvement in forming a digital world based on ethical principles (Eißfeller 2020 ). It should be noted that most maritime leaders and decision-makers are not experts on digitalisation, so even though they desire to make the digitalisation, they will need to bring in new skills to do so effectively.

Also, increased digitalisation in the maritime industry means the industry will have to manage increased cyber risks. So, while digitalisation can be used to improve safety, it also creates susceptibility. Therefore, a careful evaluation of cyber risks and their prevention is necessary. Soegaard and Wheeler ( 2019 ) argue that despite the challenges that shipping companies must address to obtain the benefits of digitalisation fully, the industry is ready to overcome the obstacles and take the next steps towards digitalisation and cross-industry collaboration. This trend is also apparent in the content of Rotterdam Rules where the electronic bills of lading are called “ negotiable electronic transport records ”.

Conclusively, it could be said that the main motives of digitalisation in shipping are the reduction of costs, making it easier to comply with the multiple regulations in the maritime industry, the proper handling of a large quantity of data and the increase of business effectiveness. Conversely, the main barriers to digitalisation are the high implementation costs, the low quality of offshore internet connections, the lack of investment initiatives, the low level of modern digital technology diffusion through the supply chain and the risk prevention (Tijana et al. 2021 ).

Literature specific to digitalisation in chartering business is very scarce. Parallels can also be discerned with other relevant industries, notably banking. Liu et al. ( 2011 ) for example report resistance and unwillingness from the user’s side to keep up with digital advances; this tallies with findings presented below. Furthermore, according to recent research, the e-bill of lading is currently not acceptable as part of the Letters of Credit procedures in many parts of the world, notably Europe (Michael 2022 ). This paper tries to fill the gap in the literature dealing with digitalisation in chartering business (in bulk and liner markets).

The present study investigates if digital technologies may provide opportunities and benefits at every stage (pre-fixture, fixture and post-fixture) of chartering business in bulk shipping as well as at every stage (pre-booking, booking and post-booking) of chartering business in liner shipping. The research has shown that chartering business is becoming more efficient thanks to digital technologies (such as the “Signal Ocean Platform”, www.thesignalgroup.com ) which leverage big data, private shipping data and artificial intelligence (AI) to uncover industry trends and provide a unique market view to shipowners, charterers and ship brokers. As a result, the market players in chartering business are able to analyse critical shipping data and make optimal chartering decisions for their business. Shipowners, charterers, liner operators, shippers, shipbrokers, and forwarding agents may have access to shipping market information, check the commercial operation of a vessel, assess the vessels’ availability, view the vessels’ activities, inspect loading and discharging operations, get the right vessel at the right freight rate, collect information about ports and routes, check the network of lines, estimate profitability per voyage (TCE), maintain up-to-date databases of fixtures, facilitate relationships with their clients etc.

Research methodology

In order to fill the gap in the literature regarding digitalisation in chartering business (in bulk and liner markets) and get a clear picture of its advantages and disadvantages, qualitative research was conducted in March 2021 involving fifteen shipping companies. Specifically, the survey included seven cases of shipping companies operating in the bulk market and eight in the liner market. In addition, intensive individual interviews took place with a small number of respondents to explore their perspectives on the particular subject of digitalisation. However, the small number of participants in this research does not cause problems with findings’ validity and reliability since the research is a multi-case study which makes a benchmarking in shipping business.

More specifically, the selected enterprises are leading shipping companies globally that apply segmental concentration and offer sea transport services in bulk and liner markets. The companies are well known for business and technological excellence and are listed at the ‘Top 100 shipowners of Lloyds List’. Since they are considered leaders in their operations, they may be used as benchmarks against other shipping companies or other sectors of the shipping business. The criterion of the companies’ selection was that the selected companies constitute standards of organization/ management in the international shipping industry. Benchmarking aims to identify areas, systems, or processes for improvement in the chartering business. This multi-case study of shipping enterprises with proven digitalisation activities was conducted to thoroughly examine the benefits and problems of digitalisation in the shipping business (in bulk and liner markets). Based on research ethics and for confidentiality reasons, the anonymity of the interviewees was preserved.

The in-depth interviews were done with key interviewees from the chartering departments of the bulk shipping companies and the operational departments of the liner shipping companies. The interviews were based on open-ended questions (free-form survey questions) that allowed respondents to answer in open-text format. In this way, the responses were not limited to a set of options, providing valuable information about the subject at hand. The responses to the questions offered detailed and descriptive information on digitalisation in chartering business. The questions set to the shipping companies of the bulk market were similar to those set to the shipping companies of the liner market, except for some minor differences due to the different character of the businesses in those markets. For example, the questions made to the bulk shipping companies were oriented to the stages of pre-fixture, fixture and post-fixture of chartering business, while the questions made to the liner shipping companies were oriented to the stages of pre-booking, booking and post-booking stages. Since there is no rule regarding a compulsory number of questions that must be set for the interviewees, the researchers decided that a minimum number of 10 questions should be set for the interviews.

The interview was constituted of two parts. The first part concerned digitalisation technologies in development or use. This part included eight questions, which means one question for every stage of pre-fixture (or pre-booking), fixture (or booking) and post-fixture (or post-booking) of a charter. The second part concerned the benefits and pitfalls of the technologies mentioned above. This part included two questions, one for the benefits and one for the pitfalls of digitalisation. More analytically, the interviewees were asked to present how their companies applied some digitalisation technologies. Special also reference was made to the electronic bill of lading. In addition, the interviewees were asked to explain and comment on any possible benefits and/or pitfalls created by implementing digitalisation in the chartering department. The selected interviewees were expected to provide reliable information regarding shipping digitalisation, as they are experts and well-known in chartering business and information technology. All interviews took place face-to-face, at the companies’ premises. Furthermore, secondary data was collected and analysed, such as companies’ brochures and additional material provided by interviewees.

Digitalisation in the chartering business of the bulk market

The following sections present the research findings regarding the implementation of digitalisation in the bulk market chartering business. More specifically, the findings are presented for every stage of a charter’s pre-fixture, fixture, and post-fixture. Furthermore, reference also is made to the electronic bill of lading.

Digitalisation in pre-fixture and fixture stages

At the question of which digitalisation technologies are in development for the pre-fixture and fixture stages, the interviewees answered that over the years, there were featured various web-based platforms offering e-chartering services (e.g., Signal Ocean Platform, Soft Ship, Gat Ship, Safe Sea Net, National Maritime Single Window /NMSW, AXS Marine, ShipNext, CPVault, Magellan Chartering Solutions, ShipFix, Veson Nautical, EdoxOnline etc.). These e-chartering platforms offer a range of applications such as maritime news, market forecast, fixture reports, ports’ information, voyage estimations, laytime calculations and other pre- and post-fixture applications. In this way, a software platform that has been developed side-by-side with shipbrokers, charterers and shipowners leverages artificial intelligence to turn complex data into meaningful market insights for brokers and other market participants ( www.thesignalgroup.com/newsroom/digital-transformation-shipping-data ). Especially a shipbroker—who acts as a middleman between the shipowner and the charterer during the chartering negotiation—to be successful, needs to quickly and efficiently consolidate and analyse critical shipping data provided by the digital platforms (Signal Group 2020a , b ).

Regarding the benefits offered by digitalisation at the stages of pre-fixture and fixture of a charter, the interviewees mentioned that many of these platforms meet the market’s expectations. These platforms aim to reduce the number of emails sent and received among shipping market practitioners, saving up time and facilitating a smooth negotiation process. Instead of sending out emails, users can set up various groups and give permission to see open cargoes and positions. In this way, the other users do not need to read many emails, but they have the information available and can find what they need. Chartering negotiations may be saved in a secure file with an automated recapitulation of all agreed terms. Electronic negotiations conclude fixtures.

However, despite the benefits of chartering platforms, the interviewees suggested that a global e-chartering platform must be created and managed by a credible independent organisation to ensure that no company has an advantage over other competitors. After completing each voyage, the global platform should allow charterers and owners to give a rating, evaluating the counterpart’s performance. After many such fixtures, the average rating would become quite representative. An online global environment may help the shipping industry become more transparent and competitive. In this way, shipping will also become less personal and more standardised.

Furthermore, some interviewees use online solutions that digitally capture charter party documentation and information for contract management. These online tools initially digitise paper-based charter documentation and then store it in an online repository. The data is hosted at an International Organization for Standardization (ISO) certified and Statement on Standards for Attestation Engagements (SSAE) audited facility within the European Union and is accessible from anywhere. A dashboard provides an overview of charter documentation, and users are provided with version control and history, as well as drop-down menus and email notifications.

Digitalisation in post-fixture stages

After the charter fixture, the carriage of goods by sea stages follows. Again, digitalisation offers many benefits at the stages of post-fixture as well.

At the questions of which digitalisation technologies are in use at the post-fixture stage and the offered benefits, the interviewees mentioned that they use integrated software solutions, ranging from vessel requisitions to company financial statements and prompt, reliable and cost-effective ship-shore communication systems. Five companies overcome technical problems in ship-to-shore connectivity by deploying digital systems, like Inmarsat Fleet Xpress, throughout their fleets to provide fast and reliable connectivity between ships and management offices. These systems allow them to use office applications onboard the vessels.

Five interviewees stated that they have digital systems allowing detailed performance monitoring. More specifically, the companies use high-technology ship management applications that automatically input data from ship to shore, logistics monitoring, continuous training, safety control, the ships’ maintenance and the fleet’s performance and management.

Three interviewees declared they implemented enterprise resource planning (ERP) and fast Ka-band satellite communications. A fully integrated ERP at offices and vessels covers tasks related to trading, chartering, voyage planning, voyage estimation, projection, operation, vessel performance, port calls, electronic invoicing, accounting, insurance, payments and banking, crew management, technical management, planned maintenance, risk management, audits and vettings.

The above systems collect real-time data from sensors onboard the ships or from the main engine and other machinery. Then, these data are used to produce real-time reports or alerts. Furthermore, these data are used to predict serious failures. In addition, an intelligence platform is used for the information in the ERP system to be further analysed, and more sophisticated reports to be used by management as decision support tools. Other benefits these systems offer include profitable bunker management (accurate calculation of bulkers and consequent reduction of bunker consumption), engine performance optimisation, profitable voyage planning (based on actual weather conditions), etc. Furthermore, timely damage prevention will save the company from drydocking expenses, towing operations, off-hire claims and other unpredicted expenses.

All interviewees admitted that any investment in digitalisation and associated technologies deliver competitive advantages and cost benefits for shipowners and managers. They consider that digital technologies like blockchain, the internet of things (IoT), artificial intelligence, machine learning etc., in combination with modern connectivity methods, may provide prevention of system failures, reduction of maintenance costs, a decrease of off-hire claims, the accuracy of the information, compliance with maritime regulations, control of security and availability of data. Further adoption of IoT, artificial intelligence (AI), and machine learning in the shipping industry could facilitate these benefits for all stakeholders. In other words, digitalisation may bring a real revolution to shipping in the near future.

Digitalisation and bills of lading

When asked about the use of e-bills of lading, the interviewees answered negatively to the question related to the use of electronic bills of lading. This is due to the cyber risk, the ability of electronic bill of lading to function as a document of title, the transferability problems, the ambiguity of the legal status of e-bills of lading in jurisdictions, the high investment cost, the long hours of training etc.

Digitalisation in the chartering business of the liner market

As mentioned above, in preparation for this study interviews were taken from eight leading container lines, jointly representing more than 67 percent of the international market share.

Digitalisation in the pre-fixture (pre-booking) and fixture (booking) stages

In the container lines market, these stages involve a) either the acceptance by the cargo owner of the container lines tariff or the negotiation of an acceptable freight rate, giving rise to a unique quotation code, and b) a booking note and or shipping instructions sent by the cargo owner (or their forwarder) to the container line using the said code. Technology has been in use for at least 2 decades, and this procedure can be done online using the container lines’ systems. This process utilises data entered by the cargo owner ab initio, and obviates double data entry by any party at any stage of the very long documentation chain until cargo is delivered to the final receiver. Interviewees unsurprisingly reported some shippers’ resistance to taking part in this process, insisting on sending bookings/shipping instructions by fax or email, thus obliging the loading agent to enter the data in the container line’s system.

A defence in attitude among container lines is notable even at this early stage. Some container lines simply no longer acceptable to cooperate with shippers unless the shipper is willing and able to liaise with the container line solely through the container line’s digital channel. As a result, the container line will either refuse their business altogether or encourage this shipper to use the container line’s service via a forwarder who fully uses the container lines’ systems. It is even possible that this service, the ‘digital’ aspect of liner documentation, is offered as part of added logistics services by the forwarder to the cargo owner.

Digitalisation in post-fixture (post-booking) stages

In the liner market, once the freight rate has been agreed upon, a booking made, and shipping instructions sent by the shipper, the bill of lading is issued. Then, the information entered by the shipper (or forwarder) is checked and verified by the loading agent, and the Bill of Lading is ready to be issued.

Interviewees reported that the facility allowing selected and pre-approved shippers to print the original bills of lading at their premises did not prove widely successful. Interested exporters were given access to parts of the Maersk system, which enabled them to print the original bill of lading at the exporters’ premises. This removed the necessity of sending hard copies of the most important document in the procedure from the Line’s premises to the shipper. However, this step was met with insufficient acceptance and was mostly abandoned, before the recent cyber-attacks. Most exporters preferred to deal with the bills of lading in the traditional, analogue, hard copy way. Notably, most payments continued to take place physically by the customs broker issuing a cheque at the container line’s agency premises.

Avoiding printing the bills of lading at their premises was not the only way that the customers of container lines, exporters, and importers showed their reluctance to adopt the digital channels of the necessary process. This resistance to digitalisation appears to be more pronounced in less developed, smaller markets and by smaller clients. All interviewees reported that customers with smaller volumes seem to be finding it easier and prefer to liaise with freight forwarders in a more analogue mode rather than deal with the digital profile of container lines. This is covertly encouraged by some container lines. The forwarder then undertakes the electronic exchange of data with the different systems of each container line, thus utilising and offering to the smaller cargo owners’ economies of scope. During the interviews that took place in preparation for this research, every major container line reported that the main reason digitalisation and the paperless procedures have not progressed faster is the resistance on the part of the cargo owners, either because of trust and confidence issues on the paperless processes or because of insufficient information technology (IT) skills on their part. This is also supported by literature (Liu et al. 2011 , Schleyerbach and Mulder 2021 ) reporting unwillingness from the user’s side to keep up with the digital advances.

The correct handling of the bill of lading is key to any successful migration to a completely paperless procedure for containerised exports and imports. Container lines and their customers have found ways to implement paperless procedures without waiting for the resolution of all legal and other impediments (Richardson et al. 2021 ) to the electronic bill of lading roll-out. These ways are more easily applicable when the specific trade does not involve a letter of credit, and a bank is not part of the process (Marxen 2020 ; Wass 2019 ).

Every interviewee mentioned the so-called ‘telex release’ method as a means very frequently used today to release cargo to consignees without presenting an original bill of lading. The term refers to the outdated use of the telex machine as a means of communication, now replaced with other electronic means of communication like email. For most carriages, bills of lading are issued without involving a bank, without a bank being named as shipper or consignee, and without necessitating endorsement for the transfer of cargo ownership from the mentioned consignee to another. In most carriages, the bill of lading and the consignment are not held as collateral nor become part of a Letter of Credit procedure. In these cases, the ‘telex release’ is a shortcut to the procedure, which is very frequently used by all the container lines in this study.

As also outlined in the literature (MOL, Mitsui OSK Lines 2021 ), the process can be briefly described as follows: the exporter provides the information necessary to the loading agent to issue the bill of lading. This information is entered into the container line system, and the bill of lading is either not printed at all or printed but not handed over to the exporter, it is kept at the issuing agent’s premises. Either way, the physical cargo transport proceeds normally. When the exporter receives payment for the transported goods and is ready to release the goods to the receiver, after settling any outstanding amounts between them and the agent, instructs the latter to release the cargo to the receiver. The agent can then proceed in different ways: he can change the character of the bill of lading in the container line’s systems to show that the bill of lading is not negotiable but a sea waybill instead. The cargo receiver is not obliged to surrender an original document to the delivery agent. Alternatively, the load port agent can instruct the delivery agent to release the cargo to the receiver, indicating that the bill of lading is ‘accomplished’ and in their possession. In support of such instructions, container lines usually ask that these be accompanied by a scan of the original bill of lading and the shipper’s written instructions.

These are procedural shortcuts that offer solutions in cases of payment or other delays in the documentation chain and can help the timely release of cargo at the destination, even in the frequent cases of very short transit time. The exporter needs to be comfortable using this solution in terms of trust and confidence in this paperless process and the chosen container line. This method does not require a high level of IT competence from the side of the exporter; it is, therefore, more widely available than other digital solutions and applications. It is also more widely accepted by shippers who remain hesitant to go further with digitalisation.

Digitalisation in the wider liner business

Exchanging information is not limited to the container line internal network. All interviewees took time to talk about how electronic ‘bridges’ are put in place today by using EDI files to facilitate communication with other entities external to the container operator. The exchange of these files connects the container lines’ systems with those of the terminals, port and customs authorities. The output of one system, if in the appropriate format, the output of one system can be the input in another. Delivery orders for empty and full containers are communicated electronically in real-time by the container line to all appropriate parties. The container line equally well receives information entered by terminals and, increasingly, customs authorities. Increasing digitalisation of entities such as customs authorities and container terminals facilitates and accelerates the container lines’ digitalisation process. The benefits in efficiency and speed are here without any downside, every stakeholder reaping only gains.

In greater detail, discharging and loading plans are exchanged between the container line and the terminal to plan port operations. This is done electronically today, when, until very recently, manually prepared plans, highlighted in various colours and manually crossed out with pen and pencil, were given in hard copies to every party involved. Dangerous or awkward cargo information is sent by the container line to the terminal well in advance electronically. The terminal plans its position according to the nature of the cargo and the cargo already stored in the terminal. Thus, control by the competent authority of dangerous cargo regulations adherence is made simple because of the electronic means available today. However, there is no uniformity to these electronic ‘bridges’ used so widely today among terminals, container line, customs authorities, and agencies. Purpose-built solutions are reportedly in use very frequently worldwide, although significant efforts are being made for uniformity and standardisation ( https://dcsa.org , https://smdg.org/ ).

All interviewees reported that the pandemic provided an excellent opportunity to persuade cargo owners to use electronic means to cooperate with the container lines when the latter had to prohibit physical visits to their premises. Payments were only allowed by bank transfer; delivery orders were given electronically; containers were released using the EDI links discussed above. This demonstrated to the reluctant cargo owners that digitalisation works and is trustworthy. Visible improvements in efficiency and speed also became evident to all stakeholders. However, it remains to be seen if the digital means to manage transport activity continue to be preferred after the pandemic. Container lines may continue to insist on these means in the future to maintain improved efficiency and lower costs supported by the paperless processes.

Attitudes differ among container lines about digitalisation. Some container lines voiced concern claiming that the electronic means of conducting business obviate personal contact, weaken customer relations and reduce customer loyalty. Although it is commonly accepted that digitalisation is here to stay and will eventually be the only way to accomplish all container transport steps, container lines disagree on the degree of persuasion or coercion to be applied to the customer. In bigger, more advanced markets, a gap is becoming apparent where freight forwarders are allowed, even encouraged to move in and provide assistance to customers with smaller volumes who do not wish to learn how to deal with the digital system of each container line. Not only are small customers unwilling to learn to use digital systems, but most frequently, each container line uses a different system. As a rule, forwarders are assumed to be quite competent in using all container lines’ digital platforms and can add this service to the product they sell to the cargo owner who does not wish to deal with the container line’ digitalisation.

The container bill of lading: Electronic or paper?

What transpired by interviews carried out with professionals from major container lines, a leading roro car carrier, and letter of credit specialists in banks is that the advent of the electronic bill of lading (e-bill of lading) will mainly improve processes where the bill of lading functions as a negotiable instrument transferring cargo ownership where banks are involved, and the cargo serves as collateral, namely a means of financing trade (Michael 2022 ). The obvious momentum currently in existence (Tan and Starr 2020 ) will most likely provide results, and the e-bill of lading will become more widely available and acceptable. The leading container lines have already implemented eBL applications supported by blockchain technology, TradeLens (tradelens.com) and WAVE ( www.wavebl.com ). These systems are slowly being implemented on major trade routes and will doubtless be spreading everywhere, even though Maersk and IBM announced their decision to withdraw the TradeLens offerings and discontinue the platform. The willing support of exporters and importers, who have been seen to resist similar advancements in the past, remains in doubt. What remains to be seen is whether the container lines will allow a choice in the matter.

Conclusions and recommendations

This qualitative case study approach showed that although digitalisation offers important advantages in the shipping business, many barriers should be overcome.

All interviewees admitted that any investment in digitalisation and associated technologies deliver competitive advantages and cost benefits for shipowners and managers. They consider that digital technologies (like blockchain, IoT, artificial intelligence, machine learning etc.), in combination with modern connectivity methods, may provide prevention of system failures, reduction of maintenance costs, a decrease of off-hire claims, the accuracy of the information, compliance with maritime regulations, control of security and availability of data. Further adoption of IoT, AI and machine learning in the shipping industry could facilitate these benefits for all stakeholders. In other words, digitalisation may bring a real revolution to shipping and chartering business in the near future.

Furthermore, many advantages can be derived from using an e-bill of lading. Among these are an increase in the speed and a reduction in the cost of transactions together with the elimination of the problem of late arrival of documents. However, the research revealed a lack of confidence in using e-bills of lading because existing systems are not secure and the underlying legal framework is inadequate. Traditional bills of lading are acceptable because users are satisfied that they give merchants the protection they need.

The main barriers to digitalisation are the high implementation costs, the low quality of offshore internet connections, the lack of investment initiatives, the low level of modern digital technology diffusion through the supply chain, the risk prevention and the legal barriers to e-bill of lading. So, even though digitalisation has already had a positive impact, there are real issues to overcome. However, despite the existing barriers, there is no doubt that cross-industry data sharing through digital means will create a more efficient chartering business environment in the bulk and liner markets.

Therefore, further evolution of digitalisation and digital transformation in shipping business generally and chartering business specifically, is considered a necessity for profitability and sustainability. The digitalisation transformation of the shipping industry does not necessarily mean a sea of change for every company in every part of the industry at the same time. Different business models will be affected in different ways, although all players in all market segments are expected to be impacted by digitalisation at some point.

Consequently, further research should be taken regarding the digitalisation in various sectors of shipping business in order the ensued advantages and disadvantages and the possible problems and barriers to be overcome.

Availability of data and materials

This is a qualitative research conducted in March 2021, involving fifteen shipping companies. More specifically, the survey included seven cases of shipping companies operating in the bulk market and eight companies operating in the liner market. Intensive individual interviews took place with a small number of respondents to explore their perspectives on the particular subject of digitalisation. Based on research ethics and for confidentiality reasons, the anonymity of the interviewees was kept. The data that support the findings of this study are available from the authors but restrictions apply to the availability of these data, which were used under license for the current study, and so are not publicly available.

Abbreviations

Artificial Intelligence

Electronic Bill of Lading

Electronic Data Interchange

Enterprise Resource Planning

Internet of Things

Information Technology

International Organization for Standardization

Statement on Standards for Attestation Engagements

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Acknowledgements

This work would not have been possible without the shipping companies that participated in the research. Many thanks to the interviewees who offered guidance and support.

There wasn’t any funding body in the design of the study and collection, analysis, and interpretation of data and in writing this manuscript.

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Both authors prepared the literature review. EP performed, analysed and presented the research regarding the implementation of digitalisation in chartering business of the bulk market while SJ performed, analysed and described the research regarding the implementation of digitalisation in chartering business of the liner market. Both authors read and approved the final manuscript.

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Evi Plomaritou is an Asst. Professor (in Chartering & Shipping Marketing) of Frederick University (Cyprus) and since February 2011 she has been working as Shipping Consultant at Lloyd's Maritime Academy (UK). She undertakes the planning of chartering policies and marketing strategies of shipping companies worldwide (Greece, UK, France, Switzerland, Denmark, Abu Dhabi, Cape Town etc.). Her teaching experience has been spread to: Frederick University (Cyprus), European University (Switzerland), Middlesex University (UK), University of Piraeus (Greece), Danish Shipping Academy (Denmark) etc. From 2001 to 2008, she worked for the Institute of Chartered Shipbrokers (ICS) providing consulting and training services to shipping professionals, while she was actively involved with the foundation of the ICS Greek Branch and the establishment of the relevant annual professional programme adopted. She has 9-month practical experience onboard bulk carriers. Her writing experience includes 5 books and 15 e-books. Among them, the most prominent one is the 8th edition of “Shipbroking and Chartering Practice”, published by Informa Law from Routledge. Another remarkable book of hers is titled “Marketing of Shipping Companies as a Tool for Improvement of Chartering Policy”, which is recommended by the Institute of Chartered Shipbrokers. She holds the “PhD with honors in Chartering Policy and Marketing Strategy of Shipping Companies” (University of Piraeus), the “MSc in International Transport” (University of Cardiff, Wales), the “Advanced Diploma in Transport & Logistics” (Chartered Institute of Logistics and Transport, UK), the “Prof. Diploma in Dry Cargo Chartering with Merit Pass” (Cambridge Academy of Transport, UK) and the “BSc. with honors in Maritime Business” (University of Piraeus).

Sotiris Jeropoulos has extensive expertise in international cargo transportation, specialising in Liner operations, Logistics, and Port operations. Since 1990 he is professionally involved in companies active in Port Agency, Liner Agency, Forwarding and Logistics. Other than running his families’ Agencies and other companies, he was the first CEO of Maersk Cyprus LTD. In addition to his academic credentials from institutions such as the Imperial College London University and the International Centre for Shipping Trade and Finance at the City University Business School, he has also acquired extensive experience in HR matters, mentoring and Executive Coaching. His research interests mainly focus on the future of Liner operations and the changing environment internationally, as well as the evolution of Logistics activities in niche markets. He acted as the Head of Department of Maritime Studies at the School of Economic Sciences and Administration, Frederick University, from 2007 to 2016, he was part of the management team for the first 2 years of operations at Eurogate Container Terminal Limassol and is currently the Co-Ordinator of the BSc in Maritime Studies, Department of Maritime Transport and Commerce, at Frederick University.

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Plomaritou, E., Jeropoulos, S. The digitalisation in chartering business: special reference to the role of e-bill of lading in the bulk and liner markets. J. shipp. trd. 7 , 28 (2022). https://doi.org/10.1186/s41072-022-00129-2

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Received : 16 May 2022

Revised : 06 December 2022

Accepted : 07 December 2022

Published : 19 December 2022

DOI : https://doi.org/10.1186/s41072-022-00129-2

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• Chartering business
• Digitalisation
• E-bill of lading
• Charter party
• Chartering negotiation
• Pre-fixture
• Post-fixture

A Layman’s Guide to Laytime, Charter party Agreement and Voyage Charter

The word “Charterer” is probably as old as the word “Ship” itself.

Do you keep hearing this word so regularly?

Well, who doesn’t?

From seafarer’s point of view, it is so much important to understand these terms.

From commercial point of view, it is the moral responsibility of the seafarers to ensure that the ship owner profits from the ship operation.

And for this reason, we must understand when and where our loyalties lies.

But sometimes it becomes difficult to get a hang of all of it.

Not anymore.

In this blog, we will discuss about the terms charterer and charter party agreement.

Concept of Charter party agreement

It is all business.

And like in all kind of business, there are at least two parties involved, one of which provide a service or product to the other for a price.

With respect to carrying the cargo onboard the ships, these two parties are,

1) Ship owner who has the ship and provide the space on the ship to carry the cargo.

2) Shipper who has the cargo and wants a ship to transport the cargo

Then where does the term charterer fits into this?

Charterer is the party that has chartered (think of simple word “hired”) the ship.

If the shipper has chartered the entire ship then shipper will also be the charterer.

In most of the cases, charterer is a kind of middle man between shipper(s) and shipowners

This is particularly the case if there are more than one shipper.

For example, if the vessel is to load 50000 tons of cargo, there could be 10 shipper, say each of them with 5000 tons of cargo.

Alone none of the shippers would want to hire the entire vessel of 50000 tons capacity for their 5000 tons of cargo.

So they contact a charterer for transporting their cargo.

The charterer’s job is to find a vessel for the cargoes they have from different shippers and maximazing the space on ship they plan to hire.

Charterers may not be the only person involved in filling the gap between shipowner and shipper.

Sometime there are some other companies or persons who help shipper, charterer and shipowner to connect with each other for a fees.

They are called “Brokers”.

So the shipper’s broker is the person or company that help shipper find a charterer for a fees called brokerage.

And charterer’s broker is the person that help charterer find a ship to hire.

The charterer may even have brokers for different purpose. For example charterer may have a broker to find a cargo for the ship they want to hire and they may have another broker to find a ship for the cargo they have in hand.

Broker or no broker, the charterer and shipowner would agree on the terms and conditions which would form “ Charter party agreement “.

Charter party agreement is a detailed document which, apart from various clauses, has informations such as

• When and where the vessel is required to be
• the freight agreed
• If the broker was used, who need to pay the brokerage fee and how much

Even though shipowners is primarily dealing with the charterer, it does not mean that the shipowner would have no relation with the shipper.

Shipper and shipowner are connected by the “carriage of cargo at sea act”, also called COGSA .

And one of the main point of it is that shipowner is required to issue bill of lading to the shipper for the cargo loaded onboard.

And with that each of the shipper have entered into an agreement with the ship owner which is called “Contract of  carriage”.

While the “charter party agreement” is a formal agreement, the contract of carriage is governed by various laws and regulations such as Hague-Visby rule .

Charter party agreement supplement the contract of carriage.

Usually you would find a mention of the charter party agreement in the bill of lading. The wording in the bill of lading could be something like this.

This shipment is carried pursuant to charter party agreement between “ Charterer’s name ” and “ Carrier’s name ” and all the terms, clauses, conditions, liberties and exceptions whatsoever contained therein are incorporated into this bill of lading.

But do the shipowners and charterers do this exercise of negotiating the format of the charter party agreement each time they do the business together.

Absolutely not. Hell, it would take a lot of time.

Instead they use pre-defined forms. These forms are developed by Independent International stakeholders such as BIMCO and INTERTANKO and are widely used in the shipping business.

There are different forms for different trades.

For example there is form  SHELLVOY 6 for use in tanker trade and then there is form AMWELSH 93 for coal dry cargo chartering.

Also if a charterer and ship owner have done the business before, they use the same charter party agreement for the future shipments too.

For this reason, many a times even for a voyage in 2019, you may find the mention of charter party dated in 2016 or even before. In the bill of lading issued even in 2019 , it may read something like,

The shipment is carried pursuant to charter party agreement between “ Charterer’s name ” and “ Carrier’s name ” dated 01 January 2016…..

Now that we understand the concept of chartering, let us understand the different ways in which the ships can be chartered.

Voyage Charter, Time charter, Demise charter

There are different ways in which a charterer can charter (Hire) the vessel.

Charterer can charter the vessel for one voyage (Voyage charter), for a particular time period (time charter) or they can hire and run the vessel as if they are the owner of the vessel (Demise or bareboat charter).

In each type of charter, charterers and shipowners have different area of responsibilities.

Each type of charter is a subject in itself. So in this blog we will explore the voyage charter.

Voyage Charter

It should be clear from the name.

Under the voyage charter, the ship is hired from the ship owner for one voyage.

One voyage could consists of multiple load ports and multiple discharge port.

The best analogy to the term voyage charter is that with hiring an Uber for a ride from one place to the other, sometimes with multiple stops in between.

So when we hire an Uber, we hire just the cab. The cab driver is still under the instructions of Uber.

Similarly, under the voyage charter, the charterer has hired the ship’s cargo space. But the Master and crew still remains under the disposal and instructions of ship owner and  ship managers.

When we hire a cab for a ride, we just pay the hire (pre-agreed or by the meter). We do not pay for or are not concerned about the fuel costs or the amount of fuel consumed.

Similarly, under the voyage charter, charterer is not concerned about the fuel consumption. The fuel costs are for the ship owners.

And when we hire an Uber, we do not pay for maintenance of the cab.

Similarly, under the voyage charter it is the ship owner who pays for the maintenance of the ship.

Whenever we have any doubt about anything under voyage charter, just think of this analogy of hiring the cab.

Most likely you will get the answer.

Laytime, Demurrage and despatch

Lord Diplock during one of the leading cases on Laytime described the voyage charter party comprising of four stages .

• Stage 1 is the loading voyage: The voyage from wherever the ship is to the loading port specified in the voyage charter party
• Stage 2 is the Loading operation: The loading of the cargo at the port of loading
• Stage 3 is the carrying voyage: The voyage from load port to the discharge port specified in the voyage charter party.
• Stage 4 is the discharging operation: The discharging of the cargo from the ship to the port of discharging as specified in the voyage charter party.

In the first and third stage, it is only the ship owner that need to perform. For example. ship owner is required to adjust the speed of the ship to arrive at the loading port within the agreed dates (Laycan).

And in the third stage, the ship owner is required to instruct the vessel to maintain the charter party speed.

However it is the second and fourth stage where most of the disputes take place.

Because in these two stages it is mutual reponsibility of the two parties to ensure that cargo loading and discharging is done without any delays.

In case of delays, each one can accuse the other for delays.

It is definately not commercially profiting for the shipowner if the voyage is extended beyond their expectations.

For example, what if the loading of the cargo took 15 days in comparison to just 2 days that shipowner had expected?

Or what if the ship could not berth at load port or discharge port for many days because of other ships ahead in line up?

Too many uncertainties.

But ship owner’s freight (and profits) cannot depend upon so many uncertainties.

So the shipowner and charterers agree on the factors like allowed number of days for loading and discharging.

In chartering terms this is called “Laydays” or “Laytime”.

The laydays is mentioned in the voyage charter party agreement between ship owner and charterer.

It could be mentioned as number of days and hours or as tons per hours or per day.

If the charterer uses more time for loading and discharging than the allowed laydays as per charter party agreement, then charterer is supposed to pay for extra time used.

The chartering term for this additional payment is “Demurrage”.

So we can say that if charterer uses more time for loading/discharging than laydays, they need to pay demurrage to the ship owner.

But if the charterer uses less time than laydays then ship owner need to pay the charterer for the time saved.

The chartering term for this is “despatch”.

Usually the agreed amount of despatch is about half of the agreed amount for demurrage.

Finally at the end of the voyage, a statement is made to shows the time saved and/or extra time taken at different ports.

Below is the simplified version of the laytime summary calculated at the end of the voyage.

This statement would also show the final amount due and to whom it is due. Means if the final amount is demurrage or despatch and how much.

Notice of readiness and statement of facts

For calculation of laytime, it is important to know when the laytime counting and calculation would start.

This information is also provided in the charter party agreement.

In most of the cases, the laytime would commence to start when the vessel has arrived at the port. In chartering term, this is called “ Arrived Ship “.

Legally, a ship is considered as an ‘Arrived Ship” only when

• Ship has arrived at the port of loading or discharging (port voyage charter) or at the designated berth (Berth Voyage charter).
• Ship is ready in all respects to commence loading (or discharging) or the cargo, and
• Master has sent the notice of readiness to the all parties concerned

The charter party agreement contains the information if the voyage charter is a port voyage charter or a berth voyage charter.

Irrespective if it is port or berth voyage charter, from the ship’s point of view it is important that the master of the vessel send the notice of readiness.

Notice of readiness need to  state that the vessel has arrived and she is ready in all respect to commence loading (or discharging ) of the cargo.

The laytime would start to commence at this time or sometimes few hours later if specifically mentioned in the charter party agreement.

Since one of the condition for the laytime to start is for the master to send the notice of readiness, it makes it so much of an important aspect.

Statement of Facts

The vessel and the master of the ship are the owner’s representative at the action site (loading port or discharging port).

Ship Owner would know only know the information that we provide them. They would use this information for calculation of any demurrage due to the charterers.

But for the correct demurrage calculation, the information we provide must be correct and we must not miss any important information such as any delays.

That make the statement of facts (commonly called SOF) an important document.

At the least, statement of facts must include

• any delays from shore side or from ship’s side and reason of delay
• any delays because of weather conditions
• Timings for the movement of the ship (such as times for anchoring, anchor aweigh, pilot onboard, NOR Tendered etc)
• Timings related to cargo operations (Commenced cargo operation and completed cargo operation

Master’s actions during voyage charter

Master and ship staff may not see the actual charter party agreement between the charterer and the ship owner.

And it is for their own benefit too.

Because there would be so many things in that which we seafarers are not concerned about.

But when the  ship is fixed for the voyage charter, master will receive “Voyage instructions” from the charterer through the ship owner’s commercial team.

The voyage instructions contains the information from the charter party agreement that requires master’s attenstion and subsequent actions.

Master must not miss the points in the voyage orders that requires his actions.

One of the way to do it is to highlight the text of the voyage instructions that require his attention for easy follow up.

Once Master reads the voyage instructions, he may come across insufficient information that need more information or clarification.

Like this one in one of the voyage orders.

Clarification must be sought from the ship operator for any of such information in the voyage orders.

After all it just takes a simple email to get everything in place.

And once everything is clear and in place, it is just about following that.

There are may be only a handful of shipowners that do not rely on the charterer to find the cargo for their vessel.

Having the vessel on charter is so common.

And vessel can be chartered in different ways. Vessel can be on a voyage charter, time charter or demise/bareboat charter.

With respect to voyage charter, master and ship staff must understand few thing

First, when is the laycan for the vessel. This is period in which vessel must arrive at the load port.

If master thinks that vessel may not be able to make it to the loadport in laycan period, the commercial operator must be informed who can then try to extend the laycan.

Second, when the notice of readiness need to be tendered.

If the voyage charter is a port charter, NOR can only be tendered when vessel is at least within the port limits. Usually in this case NOR is tendered when pilot boards the vessel.

If the voyage charter is berth charter, the NOR can only be tendered when the vessel is alongside the designated berth.

Wrong tendering of NOR can make the Notice of readiness null and void and shipowner may loose tons of money.

Lastly, the ship staff need to be make sure that a correct record of statement of facts is kept. This is the document that is used for laytime calculations .

If the charterer uses more time than agreed for loading or discharging the cargo, the ship owner is supposed to get a pre-agreed compensation called demurrage.

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About Capt Rajeev Jassal

Capt. Rajeev Jassal has sailed for over 24 years mainly on crude oil, product and chemical tankers. He holds MBA in shipping & Logistics degree from London. He has done extensive research on quantitatively measuring Safety culture onboard and safety climate ashore which he believes is the most important element for safer shipping.

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70 comments.

How i wish that our exam books were written so precisely yet so easy to understand .Thanx for all the pain you take .No amount of words would do justice to match the level of you efforts.

Thanks Alok...The readers liking it make all the hardwork worthwhile...

its amazing how you describe anything sir

what if the vessel is about to tender NOR and shipper cancels the order. what would be the penalty

Great article to understand the business with ease as an ASM candidate

Many thanks for writing such articles with such an ease of understanding sir...

Glad you liked it Sukhchain...

Another good read. Thank you for taking time to write articles. All Seafarers must understand the commercial aspects of ships. All the best and I cant wait to read the next one.

Glad you liked it Marlon...

what if the ship could not berth at load port or discharge port for many days because of other ships ahead in line up?Too many uncertainties.But ship owner’s freight (and profits) cannot depend upon so many uncertainties.So the shipowner and charterers agree on the factors like allowed number of days for loading and discharging.In chartering terms this is called “Laydays” or “Laytime” ??? Laydays refer to the time when a ship must present itself to the charter.If the vessel arrives after the laydays ,than contract can be cancelled. -Laycan. Laytime is the amount of time allowed (in hours and days)in a voyage charter for the loading and unloading of cargo.

Thanks for your input Zibi...

Laydays or "Laycan "I think is the correct term not Laytime. :)

Thanks for such simplified explanations. Sir could you please tell the few famous ship brokers names in india and worldwide.

Interocean is one of them...

Thank Captain for simple & detailed explanation. Information is really worthy .

Glad you found it useful Sajjad...

Thanks Capt. Rajeev for this good information in simple way.

Glad you liked it Dharmdeep...

Very well written capt., pls continue the good work

Thanks Capt Pereira...

This is a scholarly article Great job Captain!

Glad you liked it Tunde...

Good job, Capt. Jassal! These mandatory intricacies of ship's business & chartering are excellently presented. Organized and laid out as you have, this blog subject does a great service to anyone who longs to learn more about it & be more familiar with the clauses, details & positions (which is probably everyone, right?) -- including this marine cargo surveyor!

Glad you liked it Capt Edward...

Many thanks

Thanks Rafik...

sir plz explain magnetic compass

I will do that in a different blog...

Once again thank you very much.

Thanks Raju...

Informative Awaiting next one regarding time charterers

Will write on Time chartering too...

many thanks for this jobs cap

How easy way for explain this matter ,really very good job captain I appreciate your good effort waiting more and more

Thanks Ahmed...

sir waiting for your blog on purging and gas freeing cargo tanks

Very nicely explained and written good effort

Very nice explanation capt,

Generally the CP agreement is never sent to ship..and hence for tendering NOR what criteria(LOCATION) shall be followed as Master will not be aware if the C/P is voyage or Port C/P .These days Master tender NOR on arrival and then they keep re tendering every 24 hrs or at important events like POB, or All Fast.What is the logic behind following this and how we can ensure the NOR tendering doesn't becomes null and void. really APPRECIATE YOUR GREAT EFFORTS

if the vessel arrived at the agreed laycan and gave a valid NOR tendered and waited for almost 5 days before berthing, then while berthing the vessel had an accident and the owner requsted a new laycan, the question here is, does cancelling the old laycan result in canceling the demurrage fees caused by it?

When a vessel suffers breakdown typically NOR becomes invalid as the vessel was not in all respects ready to load her cargo.

U don't see such priceless articles often.. Good work cap. Let's make the world a better place to sail????????

To the writer of this blog- what made you write this? IT IS FANTASTIC. Well done. Also your MBA, was it the distant learning one from Middlesex?

On the Laytime Summary calculation, wouldn't it be correct to say that on the loading it was lost 0d-12h-24 min instead of 1d-00-24m?

Captain sahab, if I ever get a chance, I'll surely shake hand and say thank you, for all your efforts in simplifying the topics

can you advise for the following : in case a vessel is on Voyage Charter, and during loading or discharging alongside berth, there is a rainy period, so the daytime for this period should be NOT TO COUNT, correct??? cause there is the terms "weather permitting".

Great article sir......waiting for more.....

Hi. How does the shipbroker locate a suitable ship to transport the cargo?

Good day! You have mentioned different stages of voyage charter. May I ask what are the different stages of Time Charter and Bareboat Charter? Thank you in advance.

Nice blog...pleasure to read

I love your write up. Please, keep exposing our mind to the rudiments of shipping business.

Sir, in voyage charter party at what time and place charter party agreement will start? After ship arriving on laycan days or after giving notice of readiness? And notice readiness when we can give? Is there any specific time only we can give NOR?

I have a question, How to calculate the freight for a Multiport voyage. for example, there is a Cargo loaded from the country (C) and need to discharge its half portion in other countries multiple ports (A) & (B). For single port discharge, the cost is 8$ in port A and in Port B 11$, but the agent says he could fulfill this in 10$ for both ports. Now my question is how is he calculating the freight 10$ for Multiple port ?

Thank you sir for this great effort helping a lot for phase2 law preparation

Hi Sir! I am so pleased to have found your blog, it is absolutely helpful. if it is not too much to ask, do you have a quote sample for time and voyage charter? and the stardard terms and conditions? sorry if I am asking too much. thank you

Excellent blog about chartering service. This blog cleared my doubt about chartering service for ship

could you please advise that how long a shipowner should wait cargo to load on board (if cargo not ready) and no any specific clause written on voyage cp

Hi, Capt Jassal, I find every write up on any marine subject is excellent and easy to understand for students. I highly appreciate the contents of your blog. Regards Capt MK Srivastava , Ex-DPA, The SCI Ltd.

Wonderfully explained

While the blockchains themselves are secure, the applications running on the blockchain may not be. These applications interact with the blockchain through smart contracts, but just like any other software, bugs in the code can lead to security vulnerabilities. For this, we need to involve the auditors who conduct security audits on the smart contract. Smart Contract Audit helps you find hidden exploits and eventually reduce the risk and provide you an extra layer of security. Bug-free code is nice to have in other types of software, in blockchain applications, it is essential.

Dear Capt Rajeev Jassal, with interest i have seen your blog however the title struck me a bit - A Layman's Guide to Laytime - this sounds very familiar, if not accurate, with the dissertation i wrote for the ICS, Institute of Charterers Shipbrokers London, who hold copyright on this. Kindly amend the title of your blog to avoid confusion in the industry as to whom the readers take their information from. With best regards, Erwin de Zwarte, FICS

sir will you pls write on paramount clause , new jasson clause , cesser clause and both to blame collision clause

Such a great explanation! Thank you so much!

This article is a big help for those individuals that are trying to expound their knowledge in shipping. I much appreciated because at present i am taking my master's degree in ship management. Thank you...

Wow, so clearly written that I didn't have to read it twice to understand! Why don't our text books/ Oral notes be like this?! Thank you so much Capt. Jassal.

It’s a great and useful piece of info. I’m happy that you just shared this useful info with us. Please stay informed like this. Thank you for sharing. Here’s another informative content on Common Law Separation Agreement , may find more details here.

thanks alot of info keren bgt

Sir u r the best , undoubtedly . The confidence which i gain every time when ever I read your blog is just unspeakable and it sharpens my knowledge every single time. A teacher like you is what this shipping industry needs and I am glad to find the perfect one . Every time when ever I am in doubt I refer to your blogs and it works miracle .....thanks a ton to you sir .....simply great.

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Charter Party Agreements and TCE – Why Data Matters

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AIS data and weather data are changing the way charter party agreements and TCE rates are determined. Predictive modeling, routing tools, and reliable weather forecast data are leading the way.

Charter party agreements analyze fuel costs, port fees, canal costs, and other factors to determine Time Charter Equivalent (TCE) rates. These variables are dependent on changes in weather, routing , ship speed, and fuel quality. The charter industry has relied on time-consuming manual processes to calculate TCE and finalize charter party agreements for decades. These outdated methods lack accuracy and the information being used for analysis is constantly fluctuating, leaving room for error in estimates and vessel selection.

Optimizing TCE rates based on data simplifies the process, creates more accurate outcomes, and maximizes profitability. Estimating port arrival times is only one of many variables in a charter agreement that can be impacted by the use of data. Port arrival time estimating is heavily dependent on weather , routing , and fuel quality which can all be analyzed and calculated using data. Strategic and cost effective strategies can also be proven and developed using data. Charter parties still rely on third-party logistic data to track cargo, creating a delay between a ship becoming available and booking a charter. Brokers parse through thousands of emails a day to find market insights . These insights are largely based on outdated data that does not accurately convey what is available in the market.

Each vessel and voyage are different

Every vessel is unique and the age, wear, routing , and maintenance of individual vessels can vastly alter performance over time. As a result, the performance of vessels varies in a given year. Understanding the unique capabilities of each vessel in your fleet requires more than manual data inputs. Combining AIS data, weather forecast data, and physical factors of a vessel can help predict how that vessel will perform in weather or draft conditions. These estimates are accurate and dependable because they are based on real-time data and historical performance .

Studying ship availability with AIS data

AIS data is a go-to technology for ship tracking and location, and it is also useful for charterers. The maritime industry is moving away from manual processes making way for technology to streamline and optimize these tasks. Using big ocean data, maritime companies are finding technology can speed up their processes and predictive analytics are allowing executives to make data driven decisions that optimize fuel economy, accurately time their port arrivals, and select best-fit vessels for charter party agreements.

Ship scarcity fuels higher rates, makes ship selection critical

Containership charters closed 2020 with the highest rates since 2011. The rate build-up was driven by capacity carriers needing to service future cargo demand, indicating a bustling container shipping market. Tonnage to charter continues to be scarce, which keeps rates very high.

Next-Generation voyage TCE optimization systems

VesselBot is a leading technology company with shipping expertise that provides digital solutions to the maritime industry. VesselBot’s Voyage Time Charter Equivalent (TCE) Optimization Support System helps vessel owners, managers and operators optimize their TCE per voyage. VesselBot’s system identifies the optimal sea route, estimates the optimal speed to travel for fuel economy, and takes commercial terms into consideration to optimize TCE.

VesselBot’s system ingests Spire’s satellite AIS and weather data , historical data related to market conditions, bunker prices, vessel particulars, hire rates, and a number of other factors. Combining this data with advanced artificial intelligence and machine learning models allows users to propose actions to increase voyage profitability and sustainably.

With greenhouse gas regulations and IMO targets to reduce emissions, VesselBot’s system gained popularity as it utilized technology to reduce emissions and improve TCE for its charter customers. Analyzing billions of data points, including satellite and terrestrial AIS, weather data, a variety of databases, and advanced technologies and modeling, VesselBot correlated and linked data to enable vessel optimization. VesselBot achieved a 10-15% increase in TCE and a reduction of GHG emissions of 30%

Many charter enterprises are examining the relationship between speed traveled and fuel consumption in an effort to better predict consumption and improve vessel performance for any given voyage.

Download our free e-book to learn about cost savings that can be achieved through data.

Dispute resolution often comes down to wording.

Charter agreement disputes range from laytime/demurrage to non-payment of hire, freights, and liens to off-hire claims. Many of these disputes are related to factors that can delay loading and discharging of cargo. Weather forecast data can help charterers time their arrivals to ports when the weather is satisfactory for offloading goods. Certain cargo, like grain for example, requires dry weather for off-loading. Accurate weather data is essential for planning efficient port arrivals and defining the “good weather” clause in a charter party agreement can protect both parties and prevent a dispute. Disputes also often involve speed and fuel consumption . AIS tracking data alongside accurate weather forecast data can help determine optimal ship speed and routing based on wind and wave currents and vessel traffic.

As Chartering grows more complex, data is a solution

As goods shipped at sea continue to grow, chartering companies are tapping data for timing port arrivals, identifying more efficient routes, ship availability and earning greater fuel economy. With ever-tightening profit margins, there isn’t room for delays in travel time, port arrivals or pile-ups and charter party disagreements. The current maritime ecosystem is requiring highly efficient planning and decision-making with little room for error in order to turn a profit and data is quickly becoming a go-to solution.

Spire Maritime and Spire Maritime Weather offer maritime and weather data that is easy to access, completely customized for each customer, and comes with sales engineering support. We know that if your data is challenging to use, you won’t see the real benefits it can offer. Many maritime products provide a template of information that isn’t tailored to the special needs of the maritime industry. Contact us and we can create a mix of data points to help you achieve your business goals.

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Get access to a number of advanced data-analytics, choose the package that suits your needs, and integrate it into your workflow in no time thanks to our easy-to-use APIs and hands-on support team.

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In late June of 2022, Cassidy Hutchinson, a former Trump-administration aide, provided testimony to the congressional committee investigating the January 6 attack on the Capitol. This testimony was unnerving , even compared with previous revelations concerning Donald Trump’s malignant behavior that day. Hutchinson testified that the president, when told that some of his supporters were carrying weapons, said, “I don’t fucking care that they have weapons. They’re not here to hurt me. Take the fucking mags away.” He was referring to the metal detectors meant to screen protesters joining his rally on the Ellipse, near the White House.

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Hutchinson also testified that Trump became so frantic in his desire to join the march to the Capitol that at one point he tried to grab the steering wheel of his SUV. This assertion has subsequently been disputed by Secret Service agents , but what has not been disputed is an exchange, reported by Hutchinson, between White House Counsel Pat Cipollone and Mark Meadows, the president’s chief of staff. In this conversation, which took place as Trump supporters were breaching the Capitol, Cipollone told Meadows, “We need to do something more—they’re literally calling for [Vice President Mike Pence] to be fucking hung.” Hutchinson reported that Meadows answered: “You heard [Trump], Pat. He thinks Mike deserves it. He doesn’t think they’re doing anything wrong.”

David A. Graham: The most damning January 6 testimony yet

Hutchinson seemed like a credible witness, and she was obviously quite brave for testifying. This very young person—she was 25 at the time of her testimony—went against the interests of her political tribe, and her own career advancement, to make a stand for truth and for the norms of democratic behavior. Washington is not overpopulated with such people, and so the discovery of a new one is always reassuring.

As it happened, I watched the hearing while waiting to interview then-Senator Rob Portman, a grandee of the pre-Trump Republican establishment , before an audience of 2,000 or so at the Aspen Ideas Festival. The session would also feature Mitch Landrieu, the former mayor of New Orleans, who was serving at the time as President Joe Biden’s infrastructure coordinator. Portman’s appearance was considered to be a coup for the festival (for which The Atlantic was once, but was by this time no longer, a sponsor).

Republican elected officials in the age of Trump don’t often show up at these sorts of events, and I found out later that the leaders of the Aspen Institute, the convener of this festival, hoped that I would give Portman, a two-term senator from Ohio, a stress-free ride. The declared subject of our discussion was national infrastructure spending, so the chance of comity-disturbing outbursts was low. But I did believe it to be my professional responsibility to ask Portman about Hutchinson’s testimony, and, more broadly, about his current views of Donald Trump. In 2016, during Trump’s first campaign for president, Portman withdrew his support for him after the release of the Access Hollywood tape, in which Trump bragged about sexually assaulting women. But Portman endorsed Trump in 2020 and voted to acquit him in the second impeachment trial, and I wanted to ask him if Hutchinson’s testimony, or anything else he had heard in the 18 months since the violent attack on the Capitol, had made him regret his decision.

Portman was one of 43 Republican senators who voted against conviction . Sixty-seven votes were required to convict. If 10 additional Republican senators had joined the 50 Democrats and seven Republicans who voted for conviction, Trump would not today be the party’s presumptive nominee for president, and the country would not be one election away from a constitutional crisis and a possibly irreversible slide into authoritarianism . (Technically, a second vote after conviction would have been required to ban Trump from holding public office, but presumably this second vote would have followed naturally from the first.)

Adam Serwer: Don’t forget that 43 Senate Republicans let Trump get away with it

It would be unfair to blame Portman disproportionately for the devastating reality that Donald Trump, who is currently free on bail but could be a convicted felon by November, is once again a candidate for president. The Republican leader in the Senate, Mitch McConnell, denounced Trump for his actions on January 6, and yet still voted to acquit him. Trump’s continued political viability is as much McConnell’s fault as anyone’s.

But I was interested in pressing Portman because, unlike some of his dimmer colleagues, he clearly understood the threat Trump posed to constitutional order, and he was clearly, by virtue of his sterling reputation, in a position to influence his colleagues. Some senators in the group of 43 are true believers, men like Ron Johnson of Wisconsin, who, in the words of Mitt Romney ( as reported by the Atlantic staff writer McKay Coppins ), never met a conspiracy theory he didn’t believe. But Portman wasn’t a know-nothing. He was one of the most accomplished and respected members of the Senate. He had been a high-ranking official in the White House of George H. W. Bush, then a hardworking member of the House of Representatives. In George W. Bush’s administration, he served as the U.S. trade representative and later as the director of the Office of Management and Budget. He was well known for his cerebral qualities and his mastery of the federal budget. He was also known to loathe Donald Trump. In other words, Portman knew better.

From the November 2023 issue: McKay Coppins on what Mitt Romney saw in the Senate

“I do want to ask you directly,” I said, when we sat onstage, “given what you know now about what happened on January 6, do you regret your vote to acquit in impeachment?”

Portman immediately expressed his unhappiness with what he took to be an outré question. “You have just surprised me,” he said, complaining that I hadn’t told him beforehand that I would ask him about Trump. (American journalists generally do not warn government officials of their questions ahead of time.) He went on to say, “You know that I spoke out in the strongest possible terms on January 6.”

Indeed he had. This is what Portman said on the Senate floor once the Capitol had been secured: “I want the American people, particularly my constituents in Ohio, to see that we will not be intimidated, that we will not be disrupted from our work, that here in the citadel of democracy, we will continue to do the work of the people. Mob rule is not going to prevail here.”

Onstage, Portman reminded me of his comments. “On the night it happened, I took to the Senate floor and gave an impassioned speech about democracy and the need to protect it. So that’s who I am.”

But this is incorrect. This is not who he is. Portman showed the people of Ohio who he is five weeks later, on February 13, when he voted to acquit Trump, the man he knew to have fomented a violent, antidemocratic insurrection meant to overturn the results of a fair election.

His argument during impeachment, and later, onstage with me, was that voting to convict an ex-president would have violated constitutional norms, and would have further politicized the impeachment process. “Do you think it would be a good idea for President Obama to be impeached by the new Republican Congress?” he asked. He went on, “Well, he’s a former president, and I think he should be out of reach. And Donald Trump was a former president. If you start that precedent, trust me, Republicans will do the same thing. They will.”

It was an interesting, and also pathetic, point to make: Portman was arguing that his Republican colleagues are so corrupt that they would impeach a president who had committed no impeachable offenses simply out of spite.

I eventually pivoted the discussion to the topic of bridges in Ohio, but Portman remained upset, rushing offstage at the end of the conversation to confront the leaders of the festival, who tried to placate him.

Initially, I found his defensive behavior odd. A senator should not be so flustered by a straightforward question about one of his most consequential and historic votes. But I surmised, from subsequent conversations with members of the Republican Senate caucus, that he, like others, felt a certain degree of shame about his continued excuse-making for the authoritarian hijacker of his beloved party.

The Atlantic ’s Anne Applebaum, one of the world’s leading experts on authoritarianism, wrote in 2020 that complicity , rather than dissent, is the norm for humans, and especially for status-and-relevance-seeking politicians. There are many explanations for complicity, Applebaum argued. A potent one is fear. Many Republican elected officials, she wrote, “don’t know that similar waves of fear have helped transform other democracies into dictatorships.”

From the July/August 2020 issue: Anne Applebaum on why Republican leaders continue to enable Trump

None of the 43 senators who allowed Donald Trump to escape conviction made fear their argument, of course. Not publicly anyway. The excuses ranged widely. Here are the stirring and angry words of Dan Sullivan, the junior senator from Alaska, explaining his vote to acquit: “Make no mistake: I condemn the horrific violence that engulfed the Capitol on January 6. I also condemn former President Trump’s poor judgment in calling a rally on that day , and his actions and inactions when it turned into a riot. His blatant disregard for his own vice president, Mike Pence, who was fulfilling his constitutional duty at the Capitol, infuriates me.”

Sullivan voted to acquit, he said, because he didn’t think it right to impeach a former president. Kevin Cramer, of North Dakota, argued that “the January 6 attacks on the Capitol were appalling, and President Trump’s remarks were reckless.” But Cramer went on to say that, “based on the evidence presented in the trial, he did not commit an impeachable offense.” Chuck Grassley of Iowa said, in explaining his vote, “Undoubtedly, then-President Trump displayed poor leadership in his words and actions. I do not defend those actions, and my vote should not be read as a defense of those actions.” He continued, “Just because President Trump did not meet the definition of inciting insurrection does not mean that I think he behaved well.”

From the January/February 2024 issue: If Trump wins

Now contrast this run of greasy and sad excuse-making with Mitt Romney’s explanation for his vote to convict: “The president’s conduct represented an unprecedented violation of his oath of office and of the public trust. There is a thin line that separates our democratic republic from an autocracy: It is a free and fair election and the peaceful transfer of power that follows it. President Trump attempted to breach that line, again. What he attempted is what was most feared by the Founders. It is the reason they invested Congress with the power to impeach. Accordingly, I voted to convict President Trump.”

On February 13, 2021, Romney was joined by six other Republicans—North Carolina’s Richard Burr, Louisiana’s Bill Cassidy, Alaska’s Lisa Murkowski, Maine’s Susan Collins, Nebraska’s Ben Sasse, and Pennsylvania’s Pat Toomey—in voting to convict. If the United States and its Constitution survive the coming challenge from Trump and Trumpism, statues will one day be raised to these seven. As for Rob Portman and his colleagues, they should hope that they will merely be forgotten.

*Lead image sources: (left to right from top) Douglas Christian / ZUMA Press / Alamy; MediaPunch / Alamy; Tasos Katopodis / Getty; Hum Images / Alamy; Danita Delimont / Alamy; Anna Moneymaker / Getty; Samuel Corum / Getty; Anna Moneymaker / Getty; Al Drago / Bloomberg / Getty; Samuel Corum / Getty; Anna Moneymaker / Getty

This article appears in the May 2024 print edition with the headline “A Study in Senate Cowardice.”

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