Post on 03-Jun-2018
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Dec 2009
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The market Partici ants
Different ways of Chartering
Concluding a Fixture
Risk Management / Freight Derivatives
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u y
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Voyage Costs
Operating and Daily Running Costs
Capital Costs
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(Contracts/hedging/speed/fluctuations)
Port(Wharfage/Linesmen/Harbour dues/Light dues/Towage/Pilot)
Canal
(Suez/Panama/Kiel....) Other Voyage Costs
Commission
(Broker commission/Address commission)
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(All direct and indirect charges)
Stores and Miscellaneous
(Spare parts/Lubricants/Water/General Stores)
Insurance
(H&M and P&I...)
Repair and Maintenance
(Spares/Surveys/Dry Dock...)
Administration Costs(Chartering/Operation/Technical/Crewing/ Finance and
Accouning all shore based)
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apita osts
Size of Loan Repayment Period
Interest Rate
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e ar et art c pants
Owners
Charterers
Brokers
ChartererCharterparty Owner
broker
broker
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w r
The Owner is the vessel controller:
Head Owner
Disponent Owner/Operator
Commercial Manager (Cargo Owners)
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Categorized by size
ULCC > 315,000 MT VLCC 275,000 MT
Suezmax 130,000-160,000 MT
ramax apes ze , - , Panamax 50.000-84,000 MT
, - ,
GP/SR/Small Handy Size 20,000-30,000 MT
,
Barge 1,000 3,000 MT
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The Charterer is the cargo controller:
Producer/Receiver
Selling CIF
Buying FOB Traders
(Shipowners)
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Brokers
Exchange of information
market com etition fixtures
Exclusive/Semi
Exclusive Com titive
Network
(personal relationships...?)
Specialised
(Segments/commodity/ship
Intermediary(Negotiating/knowledge)
sizes) Range of Services
Paperwork
(Recaps/Charterparties)
(Reports,...)
Operations
(ETAs/times/demurrage...)
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Different Ways of Chartering
Voyage Charter
Time Charter
Bareboat Charter
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Voyage Charter
Transport cargo from A to B
Owners pays all voyage related costs
Single Voyage (all space/part space)
Contract of Affreightments (CoA)
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Time Charter
Hire a vessel Agreed period
Description of ship
Cargo and trading exclusions Hire per day/month or per dwt in Usd
(paid in advance)
Chartererer a s all vo a e related costs
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Hire an empty vessel
Long period(Purchase option)
Description of ship
Cargo and trading exclusions Hire per day or per dwt in Usd
(paid in advance)
Chartererer has commercial and technicalrespons y an pays a a y runn ng cos sas well as all voyage related costs
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Tanker Charterin
Single voyage (spot) charters
Low risk Voyage Charter
Low risk
Consecutive voyages
COA (Contract ofAffrei htment
Time Charter Medium risk Charterer hires vessel for an
Demise or Bare Boat Medium risk
variable costs includingbunkers, port costs, canal tolls
Charter High r isk Bare Boat Charter
Charterer hires empty vessel
for a (long) period. Has to g r s prov e an pay or a cos sincluding crew, insurance,drydocking and maintenance
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Employment Type
Bare Boat Time Charter Voyage CharterCosts
Daily Running Costs Charterer Owner Owner
Voyage Costs Charterer Charterer Owner
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arterparty orms
Dry (Amwelsh, Gencon,Polcoalvoy, Baltimore Berth
Grain Welcon Tanker (Asbatankvoy, Exxonvoy,BP Voy, Shellvoy,...)
Time Charter(NYPE 93, Shelltime,BP Time,..)
Bareboat Charter
arecon,..
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onc u ng a xture
Voyage Calculation
Negotiations
Indication
Firm offer
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Example Voyage Calculation
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Laycan: Nov 10-20
,
Freight: Usd 45,50 pmt
emurrage: s , p pr
Laytime: 350/350 mtph l/d shinc rev
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Firm Offer
1. Reply time
2. Subjects
3. Name of Charterer/Owner
. ,
5. Laycan (laydays/cancelling)
6. The car o full descri tion
7. Load port(s) berth(s)8. Discharge port(s) berth(s)
9. Freight
10. Payment of freight
.
12. Laytime
13. Commission
14. Charterparty Form/Terms
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Worldscale
Freight Market Volatility
FFAs
Options
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Risk Mana ement in Shi in
Operational Risk (Freight, Revenue, Cost and Expenses)
,
Traditional Hedging
Time Charter, Bareboat Charter, CoA
Introduction of Freight Derivatives
BIFFEX
FFAs
Options
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Standard Vessel
Average service speed
Bunker consum tion
Port time
Port costs - In USD converted from local currency rates
Bunker Price
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-
350
300
200
250
S$/t
150
50
100
04/01/2005
04/03/2005
04/05/2005
04/07/2005
04/09/2005
04/11/2005
04/01/2006
04/03/2006
04/05/2006
04/07/2006
04/09/2006
04/11/2006
04/01/2007
04/03/2007
04/05/2007
04/07/2007
04/09/2007
04/11/2007
04/01/2008
04/03/2008
04/05/2008
04/07/2008
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Growth in FFA trading:o ume o an er s xe
400
350
participants
250
onnes
owners
50% oil co/traders
30% financials
150
200
illion
t
100
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Data Source: FFABA
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at s a orwar re g t greement
An agreement today to buy or sell a freight rate at a.
To settle at a future dateat apricebased on freightassessments taken durin the settlement eriod .
Based on a defined voyage or time charter.
- -
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Why use FFAs?
HEDGE
mana e frei ht ex osure & SPECULATEcash flow High Volatility
ex y a y o reacswiftly to spot market volatility Clearing available
trade-out of contracts
prior to settlement
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FFAs need to be marked to market durintheir life time.
.
OTC positions need to be monitored for.
The Forward Freight Agreement Brokersssoc a on mem ers repor e r a y
assessments along the curve to the Baltic.
The Baltic publish the average prices daily.
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pt ons - e n t on
the obligation to take an underlying position.
.
You buy a Call Option (The right to buy)
PMax Av 4 TCCal 08 27000 CallCost $1000 per day.
If the market goes above 27000 a day in 08 you have all theprofit, once your cost of 1000 is covered.
If the Market Falls you only lose your 1000 a day.
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Put Option = Option To Sell
Premium = Price Paid For Option
Strike Price = Level O tion Set At
Breakeven = Level at which premium
Long = Buy
Short = Sell
Grantor = O tion Seller
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an you or e a en on