Cargo Orders
A Charterparty has to be prepared by the Shipbroker as soon as the Chartering Negotiations are successfully concluded. The chartering process begins when the Shipowner and Charterer enter the market to identify suitable counterparties for doing business.
The Charterer in need of a ship enters the shipping market with a Cargo Order, and the shipowner seeking cargo enters the market with a position. The negotiations end after a firm offer is accepted, and the charter party is then agreed.
The content of the Charterparty will by and large be a reflection of what has been agreed during negotiations. The parties will be engaged in the process through the use of chartering-specific notation, and the fixture will be reported in the press.
A Charterer enters the shipping market with a Cargo Order. Cargo Order is a specialized Request for Quote (RFQ) in shipping.
Cargo Order Example
The Cargo Order is either a Firm Order or an Indication and will typically contain the following information:
1- The Charterer’s Name and Domicile
2- Type of Cargo
3- Volume of cargo and Stowage Factor (SF)
4- Loading Port and Discharging Port
5- Laycan: the dates when the vessel is expected to be ready for loading
6- Loading Rate and Discharging Rate and Terms
7- Freight Indication
8- Charterparty form to be used
9- Commission payable by owner
10- Other information
The order may contain certain phrases that will qualify it in accordance to the predisposition of the charterer such as prospective order, or order not yet definite.
The Shipbroker can add his or her comment, if the Shipbroker knows the charterers, with words like First Class charterers (FCC).
In placing the order, a Charterer has to have a good indication of how much cargo he would like to carry, the type of cargo, and the deadweight (DWT) of the ship.
Shipbrokers should be careful that the deadweight (DWT) of the ship does not determine the carrying capacity of the ship (DWCC). The so-called summer deadweight of the ship indicates the maximum tonnage a ship can carry provided that the cargo to be loaded does not fill up the holds of the ship.
The maximum weight that can be loaded is determined by the ship’s deadweight (DWT) or summer deadweight (SDWT). Summer deadweight is determined by the load-line (Plimsoll
Line) on the side of the ship’s hull. When the ship is full, the level of water must not exceed the respective load-line.
In some Low Stowage Factor cargoes, the deadweight (DWT) is reached and there is still space in the ship.However, it is not always the case that the ship can load its full deadweight (DWT).
In some High Stowage Factor cargoes, there is not enough space. Based on the cargo’s Stowage Factor (SF), the Shipbroker checks that there will be enough space in the holds.
Each cargo needs to be assessed so that the weight does not exceed deadweight (DWT) and that there is enough space in the holds. Ideally a ship would want to carry cargo with weight equal to deadweight.