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8)VLCC stands for … and ULCC stands for … .

9)Product tankers carry … .

10)Apart from transporting crude and refined oil, tankers deliver … .

11)In addition to the transport of perishables, reefers carry … .

12)Many passenger ships have holds for … .

LANGUAGE STUDY

1. Match the words on the left with their Russian equivalents on the right.

2. Match the words on the left with their definitions on the right.

Text 5.5. Read the text and explain how to charter a vessel.

Charter Parties and Other Shipping Contracts

Chartered Vessels

Chartered vessels do not follow fixed routes but go wherever they are needed. One of the factors which has led to a certain specialisation in modern shipping is that ownership, manning and commercial employment of the vessel may be in different hands. A company wanting to charter a ship will apply to one of the world markets for shipping such as the Baltic Exchange in London. In the Baltic a broker who acts as the charterer’s agent works for the company looking for a ship. His job is to find the right kind of ship at the lowest price possible.

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

The shipowners’ brokers and charterers’ agents (who are also brokers) negotiate the price and the terms of the charter. The final price and terms depend on the market. If there are a lot of ships and few charterers, the price will be low. If there is a big demand for ships and not many ships available, the price will be higher. The contract is called a charter party. If booking of general cargoes is concerned, the written agreement is called a booking note (B/N). To be more exact, the parties involved in a charter deal may be, on the one hand, someone who owns or operates a ship (owner or disponent owner) and, on the other hand, someone who requires sea transportion to be carried out (charterer).

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

Classifications of Charter Parties

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

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

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

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

The bareboat charter (demise charter) means that the vessel is put at the disposal of the charterer for a certain period of time, but here the charterer takes over virtually the entire responsibility for the operation of the vessel and all the expenses except the capital expenses. This contract amounts to a lease of the ship from the owner to the charterer.

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LANGUAGE STUDY

1. Study the terms on the left and match them with their Russian equivalents on the right.

2.Find appropriate words in Text 5.5 for the following definitions.

1)Saffing; providing with sufficient people for operation, defence, etc.

2)The act of using; also, the state of being used.

3)To put in an application or request.

4)The ability or power to contain, absorb, or hold; the amount that can be contained; volume.

5)Retain; keep in existence and in proper or good condition.

6)Following one another without interruption; successive.

7)The power of choosing, thinking, and acting for oneself; freedom from control or restriction.

8)To put into the care or protection of someone.

3.Use the words in 1 and 2 in your own sentences to illustrate them in the context of chartering

ships.

4. Read the text and supply one suitable word for each space.

The Baltic Exchange is where merchants _____ships. The merchants’ representatives are called______ agents. The shipowners’ representatives are ______brokers. The Exchange is where the

_______for freight services is met by _____ of various ship which can be ______to go anywhere for any length of time. Agents working for traders and ______ working for shipowners negotiate charter

______. These lay down the price, name of vessel, routes to be covered or ______ of hire. Prices depend on supply and demand. Freight rates are not fixed ______ rates. These are determined by

_____ which liner companies belong to. Some _____ do not use liners or tramp _____ because the quantities of products they _____ are so big they need to own ships. For instance, oil companies _____

their own tankers. Ships are also _____ and run by governments in countries where there is a shortage of private _____ or state ownership of ships. Most _____ ships are either tankers or other _____

carries.

READING

EXPORT DOCUMENTATION

Key concepts and terms

Match up the words and word combinations on the left with the definitions on the right.

Text 5.7. Read the text and explain the main purpose of the dispatch documents.

Documents of Dispatch

There are many documents of dispatch and they are used within the seller’s country to carry the goods to the port of shipment.

The Standard Shipping Note (SSN) is used by the receiving authorities of ports and container bases to control and organise cargo arriving from exporters. It is not used for the documenting of dangerous goods. Several copies of the SSN are completed and lodged with the port authority. The form gives full details of the consignment. These details must be agreed by the port authorities before the goods are dispatched to the docks. This is necessary since the port officials have to organise and control the flow of goods to shipping.

The Shipping Instructions Form (SIF) is provided by freight forwarders and shipping agents for exporters to give all the details of the consignments they send. After the exporters have booked freight, they complete the SIF and lodge it with the shipping company, freight forwarder or shipping agents. The latter then know how to handle goods when they arrive at the docks. This form is sometimes called a consignment note and there are various kinds of it, but the main function – telling the agents how to ship the goods – is the same for all of them.

As a rule, the content of a SIF is the same as that of a SSN. But a shipping instruction for a container transport company has much more details on it. This is because agents for container shipping companies generally offer more different services than other agents and all these have to be detailed on the form.

Groupage service (which is the same as cargo consolidation) is when the agent or transport company packs the exporters’ consignment together with another exporter’s consignment. This saves freight space especially if the goods can be put into one container.

The Container Shipping Instruction Form is used for different types of containers and includes the place of acceptance, value of the goods, freight and charges, etc. It should be remembered that this form contains LCL (Less than Container Load) or FCL (Full Container Load) boxes. If an LCL is to be packed, then the shipping company can consolidate the consignment with the goods of another exporter. Otherwise, the shipper would have to pay the freight cost of one container, even though it is not full. An FCL would normally be packed by the exporters and unpacked by the consignees.

Some goods can't be stowed like ordinary cargo because they may be dangerous, or they may be extremely valuable, or they may be live animals. Some foods and chemicals have to be refrigerated. So for special stowage the exporter must complete an Application for Special Stowage Order Form. This form gives full details of the goods and is sent to the shipping company. The agreement of the shipping company to carry the goods must be obtained first. When the shipping company agrees, they sign the bottom of the form and return it to the exporters who can then forward their consignment to the docks.

Text 5.8. Read the following text and say why the Bill of Lading is central in sea export.

Bill of Lading (B/L)

Functions

Among various shipping documents such as a waybill, certificate of inspection, export licence, commercial invoice, packing list and others, a bill of lading (B/L) is the central document of sea export transaction. It is a receipt for goods signed by the shipping company and given to the shippers (exporters) or, in other words, it is evidence that the shipping line has received the goods. It is evidence of a contract of carriage between the shipping company and shippers; it documents the shipping line’s promise to hand over the goods to the holder of the B/L at the port of destination. In addition, it is a document of title – evidence of ownership of the goods – because the legal owner of the bill of lading is the owner of the goods.

For the last reason the B/L can be used to transfer the goods from one owner to another. When the exporters complete it, they can write the buyers’ name in the space ‘consignee’. This means the consignee is the legal owner of the goods, as named on the B/L. Otherwise, the exporters can write ‘to order’ in the consignee space. Underneath ‘to order’ they write the name and address of the agent.

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We have already seen that a bill of lading can be clean (when the goods appear to be in good order when loaded onto the ship) or dirty (when some of the goods are damaged or missing). If the B/L is dirty, the consignee can refuse to take delivery of the goods. Furthermore, if the B/L is an essential part of the terms of payment, e.g. by the letter of credit, the bank may refuse it.

However, there are also various other types of B/L.

•The received B/L. This kind of B/L is issued when the goods have been inspected but haven’t yet been loaded onto the ship. Such a B/L may, for example, be necessary when the ship has been delayed and hasn’t yet reached the port where the goods are waiting.

•The on-board B/L. This is issued for goods which have already been loaded onto a ship. Banks may insist on the on-board B/L as being safer than the received version.

•The straight B/L. This kind of B/L can’t be negotiated. Only the consignee stated on the B/L can take delivery of the goods.

•The order B/L. This B/L can be negotiated by endorsement. Banks usually accept order Bills of Lading.

•The through B/L. This kind of B/L is used when the goods are to be transported by more than one carrier. The B/L is valid for the whole journey and prevents each individual carrier having to issue its own transport document.

•The container B/L. This is used for the transportation of containerised goods (Goods are packed in standard-sized containers which are then sealed and not opened until they reach their destination. These containers do not have to be inspected by the customs authorities when crossing borders). Such a B/L also covers the road and rail transport necessary to get the goods to and from the ports of shipment and destination.

•The groupage B/L. This B/L is used for grouped consignments. It lists the forwarding agent who arranged the grouped consignment as the shipper, and the forwarder in the importing country as the consignee. The forwarding agent then issues а house B/L to each of the exporters whose goods are included in the grouped consignment. The house B/L then serves as the collection document for the importer.

Text 5.9. Read the text and clarify the place of the invoice in export documentation.

Types of Invoices and Certificate of Origin

Types of Invoices

Commercial Invoice

This document contains complete details of the order on the B/L. But it also shows the terms of shipment and payment, the value of the order and details of insurance. Sometimes the invoice price is broken down into such things as the cost of materials, the cost of processing and manufacture and the cost of packing and transport.

The amount of details on an invoice depends on the rules of the importing country. Some countries require a more detailed breakdown of the price than others because they have different ways of calculating tax. However, various rules can be found in numerous reference books which are brought up to date each year by supplements.

This type of invoice is the sellers’ formal request for payment. Along with the transport documents, it is probably the most important paper needed in an export transaction, as it is also an essential component of certain terms of payment.

It is a record of the export transaction for buyers, sellers and customs authorities. Copies of the invoice are used by the exporters, their bank, the paying bank, the receiving agents at the port of discharge, the Customs in the exporting country, and the Customs in the importing country and the importers. The banks need it together with the B/L and the Insurance Certificate to effect payment. The Customs need it to calculate duties, if any. The exporters and importers need it to keep their accounts. It is used to confirm the value of the goods for insurance purposes. It is the basis on which the customs authorities assess how much duty or tax is to be paid.

Pro-forma Invoice

It is not a request for payment. It is a ‘sample’ invoice, which may be issued when the buyer has requested a quotation; when the seller sends the buyer goods on approval; or if the goods are to be sold by an agent, in which case the agent will need a pro-forma invoice in order to be able to fix their own prices.

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