1

CHARTERINGDinesh N. Kutty

2

Peculiarities in tanker trade.• Tanker trades are generally unidirectional.

• Tankers : DPP, CPP & Chemical Gas Carriers : LPG and LNG.

• Quality of tonnage is critical : Oil Major Approvals.

• STS operations are rampant.

• Chartering negotiations are brisk and fast.

• Freights are calculated on Worldscale.

CONCEPT OF WORLDSCALE

4

WORLDSCALE - INTRODUCTION

• THE FULL FORM IS “NEW WORLDWIDE TANKER NOMINAL FREIGHTSCALE”

• SCHEDULE OF FREIGHT RATES.

• WORLDSCALE IS AVAILABLE ONLY ON A SUBSCRIPTION BASIS,PUBLISHED ANNUALLY ON 1ST JANUARY EACH YEAR.

• WORLDSCALE RATES ARE CONSOLIDATED & FINALIZED BY TWONON-PROFIT MAKING ORGANISATIONS KNOWN AS WORLDSCALEASSOCIATION (LONDON) LIMITED AND WORLDSCALE ASSOCIATION(NYC) INC.

• ABBREVIATED AS “WS” IN WRITTEN COMMUNICATION , FOR EG:- WS50, WS 100.

5

HOW IS THE RATE EXPRESSED?

• THE RATE IS EXPRESSED IN $ / METRIC TONNE USING A “STANDARDVESSEL”

• RATE GIVEN IN THE WORLDSCALE BOOK IS REFERRED AS “FLATRATE” OR “WS 100”

• WS 300 WOULD MEAN 300% OF PUBLISHED RATES AND WS 50WOULD MEAN 50% OF PUBLISHED RATES.

• FOR EXAMPLE:VOYAGE : RASTANURA TO MUMBAIWS 100 (PUBLISHED RATE): USD 7.13 PMT

- IF THE FIXUTURE IS CONCLUDED AT WS 120, THEN APPLICABLEFREIGHT RATE WOULD BE : 7.13 X 120% I.E. USD. 8.556 PMT- IF THE FIXUTURE IS CONCLUDED AT WS 70, THEN APPLICABLEFREIGHT RATE WOULD BE : 7.13 X 70% I.E. USD. 4.991 PMT

6

BASIS OF CALCULATION.

1. STANDARD VESSEL: 75,000 MT

2. AVERAGE SERVI CE SPEED: 14.5 KNOTS

3. BUNKER CONSUMPTION :

STEAMING 55 TONNES PER DAYPURPOSES OTHER THAN STEAMING 100 TONNES PER ROUND VOYAGE.IN PORT 5 TONNES FOR EACH PORTGRADE OF FUEL 380 CST

4. PORT TIME 4 DAYS (1 LOADING & 1 DISCHARGE)(12 HOURS ADDITIONAL FOR EVERYPORT)

5. FIXED HIRE ELEMENT: USD. 12,000 PER DAY

7

BASIS OF CALCULATION.

6. BUNKER PRICE: USD. 328.75 PER TONNE

7. PORT COSTS: DEPENDING ON PORTS

8. CANAL TRANSIT TIME: 24 HRS FOR PANAMA CANAL30 HRS FOR SUEZ CANAL

8

ADVANTAGES OF THE SCHEDULE

• SIMPLIFICATION OF NEGOTIATIONS.

• WORLDSCALE PUBLISHES TRANSHIPMENT AREAS.

• WSHTC (Worldscale Hours, Terms & Conditions) TO APPLY.

• SAVINGS OF TIME AS WORLDSCALE COVERS FREIGHT DYNAMICSFOR WIDER LOADPORT RANGE AND WIDER DISPORT RANGE.

• UNDERSTANDING “MARKET FIGURES” BETTER.

9

EXAMPLES OF CALCULATIONS

ILLUSTRATION 1 : CALCULATE TOTAL FREIGHT?

LOADPORT: RASTANURADISPORT: MUMBAIQUANTITY: 80,000 MTFREIGHT: WS 65

WS 100 (FLAT RATE) : USD. 7.13 PMT

ANSWER:QUANTITY X FREIGHT RATE PMTFREIGHT FIXED = WS 65RATE AT WS 65 = $7.13 X 65 / 100 = $4.6345 PMT SO, WS 65 = $ 4.6345 PMTTOTAL FREIGHT : 80,000 MT X $4.6345 = USD. 370,760

10

EXAMPLES OF CALCULATIONS

ILLUSTRATION 2 : CALCULATE TOTAL FREIGHT?

LOADPORT: MINA AL AHMADIDISPORT: SINGAPOREQUANTITY: 90,000 MTFREIGHT: WS 90

WS 100 (FLAT RATE) : USD. 11.16 PMT

11

EXAMPLES OF CALCULATIONS

ANSWER:

FREIGHT FIXED : WS 90

FLAT RATE (WS 100): USD. 11.16 PMT

RATE AT WS 90: $11.16 X 90/100

RATE AT WS 90: $10.044 PMT

TOTAL FREIGHT : 90,000 MT X $10.044 = USD. 903,960

12

CONCEPT OF DIFFERENTIALS.

FIXED RATE DIFFERENTIALS

Differentials to be included as part of the freight payment as a fixed amountin respect of costs incurred by owners. Such differentials are not subject toany percentage variation which the contracting parties have agreed to applyto Worldscale rates.

For example :

Panama Canal transit – USD. 3.57 per ton of net tonnage for Ballast transit

Jebel Ali – USD. 0.68 per tone of cargo loaded or discharged at Jebel Ali

13

CONCEPT OF DIFFERENTIALS.

VARIABLE RATE DIFFERENTIALSDifferentials to be added to or deducted from, the applicable rate of freight.Such variable rate differentials are subject to the percentage variation whichthe contracting parties have agreed to apply to worldscale rates.

For example :Barbers Point (USA) – When cargo is loaded or discharged at the TesoroSPM an addition of USD. 0.19 must be made to the Barbers Point rateapplicable to the voyage in question.

When the cargo is discharged at the Durban SBM crude oil terminal, adeduction of USD. 0.28 must be made to the Durban rate applicable to thevoyage in question.

14

EXAMPLE OF FIXED RATE DIFFERENTIAL

ILLUSTRATION #3 :

LOADPORT: YANBU

DISPORT: SINGAPORE

QUANTITY: 80,000 MT

FREIGHT: WS 90

WS 100 (FLAT RATE) : USD. 16.85 PMT

WS STATES “USD. 0.27 PER TONNE TO BE ADDED AS FIXED RATEDIFFERENTIAL ON CARGO LOADED OR DISCHARGED AT YANBU”

15

EXAMPLE OF FIXED RATE DIFFERENTIAL

ANSWER TO ILLUSTRATION #3 :

FREIGHT FIXED : WS 90

FLAT RATE (WS 100): USD. 16.85 PMT ( VOY. FROM YANBU TO SINGAPORE)

RATE AT WS 90: $16.85 X 90 / 100= $ 15.165 PMT

TOTAL FREIGHT :80,000 MT X $ 15.165 PMT = $ 1213200-00PLUS : $ 0.27 X 80,000 MT = $ 21600-00

$ 1234800-00

16

EXAMPLE OF VARIABLE RATE DIFFERENTIAL

ILLUSTRATION #4 :

LOADPORT: RAS GHARIB

DISPORT: JAMNAGAR (SPM)

QUANTITY: 80,000 MT

FREIGHT: WS 110

WS 100 (FLAT RATE) : USD. 11.36 PMT

WS STATES “when cargo is loaded or discharged at the Jamnagar SPMTerminal, a variable rate differential of $ 0.49 to added to WS published rate.”

17

EXAMPLE OF VARIABLE DIFFERENTIAL RATE

ANSWER TO ILLUSTRATION # 4 :

FREIGHT FIXED : WS 110

FLAT RATE (WS 100): USD. 11.36 PMT ( VOY. FROM RAS GHARIB TO JAMNAGAR )(+) V.R.D: USD. 0.49

USD. 11.85

RATE AT WS 110: $11.85 X 110 / 100

= $ 13.035 PMT

TOTAL FREIGHT : 80,000 MT X $ 13.035 PMT= $ 104,2800-00

18

EXAMPLES OF FREIGHT CALCULATIONSILLUSTRATION # 5:

VESSEL: M.T. CINTA TRADER (DWT: 118263 MT)

LOADPORT: JEBELDHANA

DISPORT: MOMBASSA

MIN. QUANTITY: 100,000 MT

FREIGHT: WS 70 O/A 50%

B/L QUANTITY: 105,100 MT

WS 100 (FLAT RATE) : USD. 10.94 PMT

PLEASE CALCULATE FREIGHT FOR THE TOTAL LOADED QUANTITY?

19

EXAMPLES OF CALCULATIONS

ANSWER TO ILLUSTRATION # 5 :

FREIGHT FIXED : WS 70

FLAT RATE (WS 100): USD. 10.94 PMT (FOR VOY FROM JEBELDHANA TO MOMBASSA)

RATE AT WS 70: $10.94 X 70 / 100

= $ 7.658 PMT

TOTAL FREIGHT : A) 100,000 MT X $ 7.658 = $ 765800-00B) 5,100 MT X $ 7.658 X 50% = $ 19527-90

TOTAL FREIGHT = $ 785327-90

20

EXAMPLES OF FREIGHT CALCULATIONSILLUSTRATION # 6:

VESSEL: M.T. SEA QUEEN (DWT: 2,91,850 MT)LOADPORT: KHARG ISLAND (IRAN)DISPORT: ULSAN (SBM NO.1)MIN. QUANTITY: 200,000 MTFREIGHT: WS 50 O/A 50% UPTO 2,40,000 MT

O/A 25% FOR QUANTITY ABOVE 2,40,000 MTB/L QUANTITY: 261,400 MT FLAT RATE : USD. 23.66 PMT

FOR LOADING AT ANY PORT IN IRAN, FIXED RATE DIFFERENTIAL OF USD. 0.22PMT ON LOADED QUANTITY TO BE ADDED.

FOR CARGO OPERATION AT ULSAN SBM NO.1 A VARIABLE RATE DIFFERENTIALOF USD. 0.22 TO BE DEDUCTED FROM WS PUBLISHED RATE.

PLEASE CALCULATE FREIGHT FOR THE TOTAL LOADED QUANTITY?

21

EXAMPLES OF CALCULATIONS ANSWER TO ILLUSTRATION # 6 :FREIGHT FIXED : WS 50

FLAT RATE (WS 100): USD. 23.66 PMT (FOR VOY FROM KHARG TO ULSAN)Less : V.R.D 0.22 PMT

USD. 23.44 PMT

RATE AT WS 50: $ 23.44 X 50 / 100 = $ 11.72

RATE AT WS 70: $ 11.72 PMT

TOTAL FREIGHT : A) 200,000 MT X $ 11.72 = $ 2344000-00B) 40,000 MT X $ 11.72 X 50% = $ 234400-00 C) 21,400 MT X $ 11.72 X 25% = $ 62702-00

DIFFERENTIAL (FRD of $ 0.22 on Quantuty loaded)D) 261,400 MT X $ 0.22 = $ 57508-00

TOTAL FREIGHT = $ 2698610-00