Chartering ships

We saw earlier that the Baltic Exchange was the market for chartering ships and that the vessels were hired through shipbrokers. Once a broker is contacted he will find a ship owner who is prepared to hire his vessel on either a Voyage charter' or 'time charter' basis.

Voyage charter charges, i.e. taking freight from port A to B, are calculated on the tonnage value of the cargo. For example, if an exporter ships 500 tons of coal at £1.20 per ton, he will pay £600.00 for the charter.

Time charter charges are calculated on the tonnage of the ship (i.e. the weight of the ship) plus running costs of the vessel, excluding wages. So the larger the ship, the more the charterer pays, regardless of whether he ships 500 tons or 5,000 tons.

There are also mixed charters combining both time and voyage charters. The contract signed by both parties is known as a charter party.

Ships listed on the Baltic Exchange do not run on scheduled routes, and freight rates vary from company to company depending on supply and demand. Correspondence between hirers and brokers, and brokers and owners is done by phone, telex, fax, or cable, with letters confirming the transaction.

11.7

Specimen letters

11.7.1

Enquiry to a container company

Universal Steel Ltd. wants to ship a consignment of steel by container to Hamburg.

UNIVERSAL STEEL Ltl.

Chairman: b. Eltham Directors: d.E.R. Machin. O.M. Crewit Furnace House, Granville Road, Sheffield s2 2rl

Reg No: 6217970 Telephone: 0742 760271

Vat No: 31 4287160 Telex: 813297 unestg

Fax: 0742 610318

International Containers Ltd. 15 March 20—

Buxton House

Mableton Place

London WC1H9BH

Dear Sirs,

We are a large steel company and wish to export a consignment of steel tubing, approximate weight 16 tonnes, and lengths varying from 2 to 5 metres.

The consignment is destined for Dortner Industries, Hamburg. Could you pick up the load, transport it to London from Sheffield, and then deliver it to its destination in Germany by the end of April?

Please let us have details of your sailings and freight charges, and we can promise you regular shipments if you quote a competitive rate.

Yours faithfully,

Thomas Pike

Export Department

International Containers Ltd. Chairman r.L Nathan acwa Directors t.N. Frost, l.S. Newcombe Buxton House, Mableton Place, London wc1h 9bh

Reg No: London 3661515 Telephone: 071 3876815

VAT No 621431792 0713882713

Telex: 4431 79 INCONTG

Fax: 071 387665516

Mr T, Pike 17 March 20—

Export Department

Universal Steel Ltd.

Furnace House

Granville Road

Sheffield S2 2RL

Dear Mr Pike,

Thank you for your enquiry of March 15 which we received today. Enclosed you will find details of our rates, shipping schedules, and documents required for transportation.

The most suitable container for your consignment would be a half-height container which is 20' x 8' x 4' or, in metres, 6.1 x 2.4 x 1.2. This can carry a payload of 18,300 kg. It has a solid removable top, and will protect the metal against all elements.

I would suggest that as the consignment is going to be loaded from lorry to ship, then transferred again, you should use our Combined Transport Bill which will cover the goods from point of acceptance to point of delivery. And if the transaction is on a letter of credit basis, you should advise your bank that this document will be acceptable instead oftheB/L.

Would you fill out the enclosed Export Cargo Shipping Instructions, and the Export Cargo Packing Instructions and hand them to our driver when he calls? .Although we accept door-to-door responsibility, we would advise you to take an all risk insurance policy, and send a copy of this and three copies of the commercial invoice to us.

Your packing should be adequate, and the cargo marked on at least two sides with a shipping mark which includes the destination port, and these marks should correspond with those on your shipping documents.

The SS Europe sails from Tilbury on March 26 and will arrive in Hamburg March 28, which appears to suit your schedule for delivery. Please note, however, that the vessel closes for cargo on March 24.

You will see from our list of tariffs that charges are calculated by cubic metre or cubic kilogram and that we offer substantial rebates for regular shipments.

If you want us to reserve a space on the SS Europe, please complete the enclosed forms and return them to us as soon as possible.

Yours sincerely,

D. Muner

International Containers Ltd.

Enc. (3)

11.7.2

Container company's reply

Questions

1. Which container does Mr Muner recommend?

2. Why is a combined transport bill suggested rather than a bill of lading?

3. Does the exporter need to insure the cargo?

4. When does the SS Europe close for cargo?

5. How are the freight charges estimated?

6. Is there any advantage in the exporter making regular shipments?

7. What sort of liability will the shipping company accept?

8. Which words used in the letter correspond to the following: charges; weather, deal; complete; give; timetable; worked out?

11.7.4