Chartering Manual

Nomenclature

Term	Definition
BDM	Business Development Manager
BIMCO	The Baltic and International Maritime Council
CoA	Contract of Affreightment
CP	Charter Party
ETC	Estimated Time of Completion
ISPS	International Ship and Port Facility Security (Code)
PM	Project Manager
RFI	Request for Indication
RFQ	Request for Quotation
VGM	Verified Gross Mass
WMS	Westlink Management System

Purpose

This manual sets out the process, responsibilities and guidelines for chartering one or more vessels to carry a client’s cargo by ocean freight. It is the consolidated chartering reference for the Westlink Management System (WMS) and the single source for how Westlink Logistics requests, evaluates, negotiates, fixes and administers ocean-freight charters.

Scope

This manual applies to all Westlink personnel, employees and contractors working within the process of chartering vessels to transport client cargo by ocean freight. The chartering process and guidelines in this manual include, but are not limited to:

• charter types — time charter, voyage charter, liner charter and contract of affreightment (CoA);

• vessels — multipurpose vessels, bulk carriers and heavy-lift vessels;

• charter parties — HEAVYLIFTVOY and CONLINE 2016;

• part-to-full charters — part cargo, sole charter and last-in-first-out; and

• chartering definitions, terms and their implications.

This manual does not cover chartering for:

• tug and barge transport, and the charter parties typically associated with that marine transportation;

• specialist vessels such as offshore vessels, and the charter parties typically associated with that marine transportation; or

• bareboat chartering and other non-standard chartering uncommonly used in project-cargo shipping.

Responsibilities

The Chartering Manager is responsible for chartering vessels from vessel operators. Reaching a sound fixture also depends on the Operations, Technical and Business Development teams: together they ensure a suitable ship is chartered from a reliable carrier, that laycans and arrivals match the project schedule, that cargo operations can be performed safely, and that the cost is acceptable to budget.

Chartering

The primary objective of chartering is to secure, for every fixture, a suitable ship in the desired position at the right time, at competitive freight, on favourable terms and with minimised risk. Chartering is the primary interface between carriers and Westlink for negotiating and reaching a fixture. Its responsibilities include, but are not limited to:

• managing relationships with carriers;

• requesting ocean-freight / charter indications;

• requesting firm ocean-freight / charter quotations;

• negotiating firm quotations to fixtures;

• advising the Westlink team on chartering matters;

• preparing charter-party documentation — client / Westlink (where applicable) and Westlink / carrier;

• supporting post-fixture activities — ocean-freight, demurrage and other invoice reviews, bill-of-lading review, operations support where required, and general carrier communication;

• managing disputes and claims with carriers;

• managing the insurance policies applicable to chartering; and

• providing feedback to carriers, both successful and unsuccessful.

Operations and Technical

Operations and Technical assess the capability and performance of a carrier’s fleet, before and after fixture, in relation to cargo, lifts, stow, lashing, equipment, and port and cargo operations. The Project Manager is responsible for ensuring all terms, details and commercials in indications, final offers, fixtures and charter parties meet the project’s requirements and what has been agreed with the client. This operational, technical and commercial assurance involves:

• reviewing indications, final offers, fixtures and charter parties for terms, cost and schedule (Project Manager);

• reviewing lift, lashing and stow plans that accompany carrier submissions;

• supporting ocean freight with lashing, agency and port costs as required;

• post-fixture commercial activities — ocean-freight, demurrage and other invoice reviews (Project Manager); and

• post-fixture operations activities — interfacing with carrier operations for position, arrival and departure, speed, berthing and general updates.

Business Development

Business Development communicates with chartering to achieve the client’s budget, schedule and operational requirements when chartering vessels. The objective is to attain collaboratively the best solution to win the client’s business, while also:

• maximising profitability for Westlink;

• reducing risk and gaps between client contracts and carrier charter parties;

• ensuring high levels of performance for the client; and

• providing feedback to chartering to discuss with the relevant carriers.

Chartering Process

The chartering process runs in three phases — Budgetary Enquiry, Submission of Bid, and Fixture After Award. The phases align with the swim-lanes of the chartering process overview: Business Development originates the requirement and owns the client interface, the Chartering Manager owns the carrier interface and the fixture, and the Project Manager (with Operations and Technical) owns operational, technical and commercial assurance. The qualitative detail of each stage follows.

Phase 1 — Budgetary Enquiry

In the budgetary-enquiry phase, Westlink establishes indicative ocean-freight cost and vessel workability to support a client submission, before cargo is firm.

Request for Indication to Carriers

On receipt of an ocean-freight request from Business Development and/or Operations, chartering sends a Request for Indication (RFI) to carriers. The format in Appendix A may be used as a template. Given the nature of Westlink’s business, an indication is usually sought for:

• part charter — liner-in / free-in, liner-out / free-out; or

• full charter — liner-in / free-in, liner-out / free-out.

Time charters are seldom required, although Westlink has executed them. Other key requests in an RFI include the submission deadline (sometimes at the mercy of carrier priorities) and the estimated time of completion (ETC).

Evaluation of Indication

Indications received are evaluated against two criteria.

Operations / Technical — an operational evaluation assesses the workability of the vessel or vessel type, and may consider crane capacity, hook height and outreach limits; pre-stow plans; tween-deck heights and stowage; available lifting gear; and transit time and proposed route. Carriers may not have nominated vessels at this stage; further detail may be sought where Operations / Technical considers it essential.

Commercial — once vessel workability is established, a commercial evaluation is made, and may consider ocean-freight cost; detention and demurrage cost and application; inclusions and exclusions; bunker clause and application; and exchange-rate risk where applicable. On this basis, the indications to be used in the client submission are shortlisted.

Phase 2 — Submission of Bid

Where cargo is firm with Westlink, the shortlisted carriers are asked for a comprehensive formal quote and the performing carrier is selected, in support of Westlink’s firm bid to the client.

Request for Quotation for Firm Cargo

If the cargo is firm, the shortlisted carriers are requested to submit a comprehensive formal quote — a Request for Quotation (RFQ).

Evaluation of Quotation

The quote is again evaluated on operational and commercial criteria, as at the RFI stage but in more detail. Operations / Technical detail may include proposed vessel particulars and certificates; estimated laycan arrival; a revised pre-stow plan; the proposed port captain; and other cargoes to be collected before or after. Commercial detail again covers ocean-freight cost; detention and demurrage; inclusions and exclusions; bunker clause; and exchange-rate risk where applicable.

Decision on the Performing Carrier

Based on the evaluation, the carrier best suited to perform the voyage is selected. Final criteria may also include the number of vessels proposed and capable redundancy; recent track record; and previous ports and cargoes. The other carriers are informed only after a clean fixture is concluded.

Phase 3 — Fixture After Award

After award, chartering negotiates and fixes the selected carrier, puts the back-to-back arrangement in place with the client, and manages the fixture through to post-voyage feedback.

Negotiation with the Selected Carrier

Once the performing carrier is determined, negotiation on the terms of the fixture commences. A counter-offer is made to the carrier, usually on an accept / except basis, setting out the terms Westlink wants amended, any additional clauses not in the carrier’s initial proposal, and any subjects Westlink wishes to include. Appendix B provides worked examples of offers, counters and acceptance, and Appendix C lists the negotiation subjects commonly used.

The carrier may respond with its own counter-offer; several exchanges may occur before the parties agree main terms and subjects. Lifting the subjects is the next stage and may require further diligence or documentation from either side. Once the subjects are lifted, the vessel is clean fixed and a booking note or charter party is prepared. The charter parties generally used are:

• BIMCO GENCON;

• BIMCO HEAVYLIFTVOY;

• BIMCO CONLINE 2000 / 2016; and

• the carrier’s booking note.

Blank samples of the standard charter parties and bills of lading are referenced in Appendix G.

Back-to-Back Booking Note / Charter Party with Client

Ideally a back-to-back booking note is presented to the client, mirroring the terms agreed with the carrier. Care is needed where the fixture with the client is on liner terms while the fixture with the carrier is on free terms; the booking-note or charter-party clauses are amended accordingly. Where a client insists on Westlink accepting client standard terms and conditions, or a project-specific contract, and this cannot be avoided, an appropriate level of mitigation for deadfreight and other charter-party risk can be attained through a laycan-nomination form (Appendix E).

Vessel Performance Feedback

After the voyage is completed, the chartering documentation and performance feedback are uploaded to SharePoint, to inform future carrier selection and to close the fixture record.

Applicable Standards and Legislation

Chartering is performed as part of Westlink’s controlled operations under the management system. The following standards and legislation apply to the chartering process and to the carriers and fixtures it engages. Obligations specific to a particular cargo, voyage or route are identified for that fixture.

• ISO 9001:2015 Quality Management Systems — Requirements — cl. 8.1 (operational planning and control) and cl. 8.4 (control of externally provided processes, products and services — carriers and vessel operators are external providers).

• Navigation Act 2012 (Cth) and Marine Order 42 (Cargo, stowage and securing) 2016 — cargo stowage and securing for sea carriage.

• SOLAS Chapter XI-2 and the ISPS Code, and the SOLAS Verified Gross Mass (VGM) requirements — maritime security and container gross-mass verification; reflected in charter parties via the BIMCO ISPS and related clauses.

• Customs Act 1901 (Cth), the Autonomous Sanctions Act 2011 (Cth) and Regulations, and the Charter of the United Nations Act 1945 (Cth) — export, customs and sanctions screening of carriers, vessels, counterparties and routes.