1.1.1 Chartering is nothing but an engagement of a fleet for transportation of goods or passenger traffic. In ancient days, ship's Master/ Captain used to assume the responsibility of an owner like locating of cargoes, parcel size, voyages, freight rates etc. Way back in the 17th century, ship's captains met merchants in coffee houses/pubs of those days bargaining and haggling for cargoes. London being the hub of all shipping activities including chartering, those coffee clubs or hotels served as shipping markets. Over the years, keeping pace with the changing times and needs of the merchants / ship owners, the activities of the shipping held in clubs and hotels were developed into the famous shipping exchange, what is now well known as 'THE BALTIC EXCHANGE".

1.1.2 Chartering, in actual practice, is bringing together an owner of a vessel, which he seeks to let on hire or for which he seeks an employment, on one part, and an owner of goods, a merchant-shipper or a charterer who needs a ship for carriage of goods by sea, on the other, into a contractual relation and commitment, setting forth their respective duties and obligations as terms and conditions under which they remain legally bound with legal consequences. The instrument or document of the contract is called a "Charter-Party" and a "Charter party" is defined as a CONTRACT OF AFFREIGHTMENT. Thus, there must be a contract and there must also be an affreightment.

1.1.3 Affreightment is same as freighting, that is sending, forwarding, carrying, conveying or transporting goods from one place to another for a monetary consideration called "Freight" or hire. It is fixing price and value of hire for carrying a specified cargo on a specified distance by a conveyance or vehicle. Thus, ocean "freight" represents revenue earnings of a vessel/ship for sea-transportation. This is done in the form of a contract known as charter party agreement.

1.2 CHARTERING MODE

1.2.1 There are there type of modes in ocean transportation which are known as Voyage Charter, Time Charter and Bareboat Charter. A shipowner requiring to fix a vessel will consider prospects for her on being put on in any one of the these modes to obtain best returns. Thus, he has following options:

1.2.2 VOYAGE CHARTER: In a voyage charter a ship owner places his vessel at the disposal of the charterer for loading a full/part cargo as agreed from a port or two for discharge at one or two ports, as named or nominated in the Charter Party. It can be for one single voyage or a series of voyages - consecutive voyages. When the vessel is on a voyage charter, the owner gets freight per weight tonne of cargo actually loaded on board the vessel. The freight is earned and accrued on completion of the contracted voyage or the voyage has been substantially performed. Generally freight is paid on "right & true delivery".

1.2.3 TIME CHARTER: Where a charterer hires a vessel for a period, say, 3 months or one year, the vessel is said to be on time-charter. The owner gets an agreed "Hire" per day or per dead weight tonne (DWT) per month on her summer loadline. This hire is payable in advance. The vessel will be required to be delivered and redelivered at agreed places. Subject to satisfactory "On hire" survey, a delivery certificate will be signed in token of the vessel having been placed at the disposal of the time-charterer. The charter hire will commence to count thereafter. On expiry of the time-charter period, the vessel will be again subject to "Off Hire" survey and a "Re-delivery" certificate will have to be signed by the parties whereby the vessel will revert to her original owners. "On hire" and "Off-hire" surveys help establish that the condition of the vessel at the time of delivery and re-delivery is practically unchanged and remains the same barring ordinary wear and tear.

1.2.4 On time chartered vessel, the charterer will have to bear the cost of bunkers, port disbursements including agency commission and brokerage, stevedoring-loading-discharging, dunnage, cleaning holds or in lieu of payable to owners as agreed. For the owner's account will be officer's/crew wages, stores and provisions, ship maintenance depreciation etc. The charterers become deponent owners of the vessel and take full responsibility of cargo including all claims till the expiry of time charter agreement.

1.2.5 There will be an agreed arrangements to share the cost of water, bunkers remaining on board at the time of delivery and re-delivery, on-hire/off-hire survey fee and time consumed during such surveys and generally the bunker is priced at the ruling rate at the time of delivery and re-delivery, as the case may and to be borne accordingly by the charterer and the owner respectively.

1.2.6 BAREBOAT CHARTER: Bareboat charter, as also known as demits charter or charter by demise, is self-speaking, in that the very word "Bareboat" is quite suggestive of the vessel being offered just "Bare" and charterer must take the vessel in full control, to properly manner, fuel and ply to suit his requirement. The charterer virtually becomes the defacto owner and manages and controls the vessel. As in case of time-charter, here also the vessel will be surveyed on delivery and re-delivery. The owner collects from the charterer a certain rate per DWT ton on summer loadline capacity per calendar month, which is payable in advance. The charterer has to meet all the costs and charges. Owner has practically nil expenses and is not the carrier.

1.3. SHIPPING TRADE

1.3.1 Shipping trade is divided into two categories as (a) Liner Trade and (b) Tramp Trade.

" LINER TRADE:
Vessels employed in liner trade are known as liner vessels or liners. In liner trade or liner shipping vessels sail/arrive on notified dates; ply on predetermined trade-routes and prefixed programme and itineraries, well advertised schedule of services and frequencies of sailing and lift a variety of cargoes from one or more ports of loading for delivery/unloading at one ore more ports of discharge or destination. The ship owner charge freight based on the conference rates.

" TRAMP TRADE
Vessels employed in tramp trades are called tramp vessels or trampers .In tramp trade or tramp shipping, the sailings is itinerant. Mostly, vessels under tramp trade carry homogeneous bulk cargoes loose or bagged, in full shiploads, if possible. A ship picks up the cargo from one or two ports, unload it as undertaken and on vessel after completion of discharge again seeks employment or cargo from any port to any port subject to economy and viability of voyages.

1.4. CHARTER PARTY

1.4.1 Charter Party agreement which fulfils the requirements of law of contracts involves and holds bound together legally, at least two parties, namely, a ship owner, on the one hand and a charterer/merchant shipper, on the other. Chartering involves a ship, a ship owner, goods, goods owner and/or a charterer/an operator.

1.4.2 The charter party will stipulate a reporting date and a canceling date, which is known as laydays - within which the vessel must arrive at the port of loading. In both cases, where a vessel arrives before the reporting date or after the canceling date, the charterer is not obliged to accept her. However, on mutual consultation laydays can be revised.

1.4.3 The master of the vessel will have to tender a "Notice of Readiness" to the charterer/shipper/receiver as the case may be, both at the load-port for loading and discharge port for unloading.

1.5 VESSEL DETAILS

1.5.1 It is essential that particulars of the performing ship and description are included in the charter party agreement. This includes name of the vessel, type of vessel , Gross Registered Tonnage (GRT), Net Registered Tonnage(NRT), Dead Weight Tonnage ( DWT), Length Over All (LOA), Breath of the Ship(Beam), draft (immersion of the vessel in the water) and call sign (Registered Code of the ship). GRT/NRT of a vessel is relevant for port disbursement calculations and dead weight for indicating the carrying capacity. The "Call Sign" is required for contacting the ship for sending messages/instructions to Master. In case of COA contracts where more than one parcel is involved, the Charter Party may provide for a series of voyages where the performance may not necessarily be limited to a single ship. In such an event the owners have to indicate the type and size of the ships only at the time of actual nomination in for each voyage.

1.5.2 The ship owner has to state about the condition of the vessel, which mainly pertains to cargo worthiness, and seaworthiness of the ship engaged. The position is generally stated that the ship is tight, staunch and in every way fitted to perform the voyage or some familiar phraseology. It may be mentioned that according to the "Hague Rules" there is no absolute undertaking by the carrier about seaworthiness but ship owner is bound, before and at the beginning of the voyage to exercise due diligence to make the ship seaworthy. For any claim arising due to unseaworthiness of the ship, the burden of proof is on the ship owner that he has exercised due diligence to make the ship seaworthy before and at the beginning of the voyage.

1.6 TYPE OF VESSELS

1.6.I Different types of vessels are being used in the shipping trade. They are:

•  Passenger vessels
  
•  Bulk Carriers
  
•  Tankers
•  Car Carriers
•  Container vessels
•  LPG/Gas Carriers
  
•  Sailing vessels
  
•  Oceanographic Research vessels
  
•  Naval vessels
  
•  Sub Marine

1.6.2 It is essential that before engaging a vessel particulars of the performing ship and description are included in the charter party agreement. This includes name of the vessel, type of vessel, Gross Registered Tonnage (GRT), Net Registered Tonnage(NRT), Dead Weight Tonnage(DWT), Length Over All (LOA), Breath of the Ship (Beam), draft (immersion of the vessel in the water) and call sign (Registered Code of the ship). GRT/NRT of a vessel is relevant for port disbursement calculations and dead weight for indicating the carrying capacity. The "Call Sign" is required for contacting the ship for sending messages/instructions to Master. In case of COA contracts where more than one parcel is involved, the Charter Party may provide for a series of voyages where the performance may not necessarily be limited to a single ship. In such an event the owners have to indicate the type and size of the ships only at the time of actual nomination for each voyage.

1.6.3 For transporting the commodities importers/exporters prefer panamax vessels as the freight payable for engaging such vessels are normally 20 to 25% lesser than the handimax vessels. The panamax vessels are without gears and can carry more than 50,000 tonnes. These type of vessels can be handled only at along side berths where mechanical unloader or shore cranes are available. Most of the panamax vessels has deep draughts which can be docked only at the earmarked berths where she can be safely laid for discharge of cargo. On the other hand, the handimax vessels which are generally bulk carriers and can carry cargo of nearly 25 to 40,000 tonnes could be handled both at along side and anchorages by using their own gears. Besides, some of the handimax-old generation vessels have tween deck/deep tank/wing tanks. The discharge from these vessels are slow due to the above design and moreover the hatches are also smaller as compared to bulk carriers. For coastal shipping mostly sailing vessels are used with the carrying capacity of less than 10,000 MT for a short voyage. However, in India the coastal shipping has not picked up momentum on account of involvement of multifarious problems.

1.7 CHARTERING AGENTS/ BROKERS

1.7.1 Chartering agents are exclusive ship brokers appointed by and acting on behalf and account of large scale importers/exporters requiring tonnage or shipping space/ships from time to time for their shipments. The inquiries are routed through and handled by these chartering agents only who then initiate, negotiate, finalise fixtures and issue fixture notes. For representing the owners they are paid brokerage commission as stipulated in the Charter Party.

1.8 FIXTURE NOTE

1.8.1 On successful conclusion of negotiations resulting in fixing of the tonnage, main features/important conditions of the charter party are drawn up and incorporated in the form of a NOTE called Fixture Note . Usually it is the Charterer's agents/brokers who prepare and issue the Fixture and this confirmation is acceptable to both ship-charterers and ship-owners pending formal signing of the charter party agreement.

1.9 FREIGHT

1.9.1 The Charter Party inter-alia has to include provisions regarding freight. This includes the rate per tone at which freight is to be paid and the quantity on which freight is payable, i.e. whether the Bill of Lading figure or out-turn weight, also whether on net weight or gross weight. The currency of payment is also specified. The time and place of payment and particulars of the freight beneficiary are also spelt out. The time of payment depends on the agreement between the two parties, i.e., it may be on completion of loading or within a few days after the sailing of the ship or even after arrival of the ship and the cargo at the discharging port. It is a practice for charterers to initially make a part payment only. Generally about 90 per cent of the freight is paid initially and the balance is retained for settlement later alongwith the settlement of demurrage and despatch. Documentation needed for payment of freight is also provided and the ship owner has to fulfil these requirements. The ship owner attach a great deal of importance to timely payment of freight, which in shipping parlance, has been called "the mother of all wages" and without which it may become difficult for the ship owner to complete the voyage and other obligations. Any delays in settlement of freight would entitle the ship owner to arrest the cargo apart from claims of interest.

1.9.2 Charter Party also includes a provision concerning risk factor relating to freight. The ship owners prefer, and many Charter Parties to include that freight is non-returnable in any event. Some charterers on the other hand go for a provision stating that irrespective of the time of payment, the freight would be deemed to have been earned upon safe arrival of the vessel. In the later event, the ship owner are required to return the freight in case a situation arises where the ship and the cargo do not arrive at the discharge port. Also in the Charter Parties where the freight is at risk, the freight also contributes in general average/salvage thereby reducing the burden on the other contributing interest, namely, the ship and the cargo.

1.9.3 Dead freight is the freight that would have been due and paid if the cargo was actually shipped but for not shipped. It could be for full cargo or part cargo actually not shipped.

1.10 PARTICULARS OF CARGO

1.10.1 Charterers have to specify in the Charter Party the name of the commodity, which has been contracted to be carried by the ship. The nature of the commodity weather in bulk or bags has also to be stated. At times some ship owner also insist on declaration of stowage factor of the cargo. This facilitates the ship owner to calculate the exact quantity to be loaded. The charterers generally avoid giving such commitments of stowage. However, rough stowage factors of principal commodities being traded are generally known. The quantity of cargo has also to be specified by the charterer in the Charter Party including tolerance limit (+/-) over the stipulated figure. If it is a fixed quantity then the practice is to state the quantity 'minimum'/ 'maximum'. It is the responsibility of the charterer to provide for this contracted quantity; otherwise the charterer may have to pay the deed freight for any shortage for lack of cargo. It is equally incumbent on the ship owner to load and carry the contracted quantity within stipulated tolerance, if any. As otherwise the ship owner may be burdened with a claim for shutout of cargo.

1.11 DEVIATIONS

1.11.1 A ship owner after loading is expected to proceed to the discharging port nominated by the charterer with convenient speed and follow the route customarily used by the trade. Any departure could bring forth claims from charterers for unjustified deviation resulting to delay in delivery of cargo. But by an agreement in the Charter Party owners obtain liberties for making deviations for some essential purposes, as for taking bunkers and other supplies for saving life and to assist vessels in distress.

1.12 LOADING AND DISCHARGING PORTS

1.12.1 The charterer is normally to specify in the Charter Party the loading and discharging ports. Alternatively, depending on the agreement between the two parties, at times only loading and discharging areas are stated in the Charter Party with further stipulation that exact loading and discharging port(s) would be declared later on, some time before loading and for discharge some time before arrival at the discharging port. The period for exercising such options has to be sufficient to enable the ship to proceed to the declared ports without loss of time and without any deviation. However, the details of loading and discharging ports should be intimated before the vessel reaches the deviation point. Otherwise the charterer becomes liable for delay and deviation costs

1.12.2 If charterer require use of more than one berth or more than one port, then this has to be stated in the Charter Party. The charterers are required to keep within their option in the matter of use of stipulated number of berths and ports and it is also essential that such options be declared in time. Any breach in this regard would entitle the ship owner to claims for extra shifting and steaming.

1.12.3 It is also customary to stipulate in the Charter Parties that the loading and discharging will be from safe berth / ports or safe anchorage. Even if not stipulated, such a warranty is implied, particularly, in case where named ports or berths are not given in the Charter Party but only loading and discharging areas are given. The question of a safe berth or a safe port is a question of fact. The situation could differ depending on the weather, the type of the ship or any other impediments. Generally speaking 'a safe berth or a safe port would be a place where a ship can reach it, use it and return from it without being exposed to danger which cannot be avoided by good navigation and seamanship'.

1.13 LAYDAYS COMMENCEMENT AND CANCELLING

1.13.1 Laydays are calculated by dividing the total quantity loaded or discharged by the rate of loading or discharging as stated in the Charter Party agreement. Laydays represent free period allowed to commence and complete loading or discharge by a vessel. A day is a day of 24 consecutive hours.

1.13.2 Depending upon the readiness position of charterer's cargo, a commencement date and a canceling date is provided in the Charter party and the ship is required to report at the loading port within these dates. The span of time provided varies but generally it is about 7/10 days period. At times a much longer span is also agreed but in such cases there is an added stipulation that this period is to be borrowed by a specified date. If a ship arrives at the loading port before the date of commencement, then the charterers are not obliged to accept her notice of readiness and a ship may have to wait. Sometimes the two parties reach an agreement, unless already agreed and provided for in the Charter Party, that may time spent ahead of the commencement date may be counted or any not are counted at all or only a portion of the time may be counted.

1.13.3 If a ship does not report at the loading port by the canceling date, then charterers have the option of canceling the Charter Party. But there is no compulsion on the part of the charterer to exercise his option of cancellation unless and until the ship has arrived at the loading port. If a ship cannot reach by the canceling date, the ship owner cannot compel the charterer to cancel the charter and the ship is under an obligation to proceed to the loading port. On the other hand, a charterer is not entitled to cancel before the canceling date even though he may know that the ship cannot physically reach the port in time. The cancellation does not debar a claim for damages by the charterers. It is open to ship owners and charterers to expressly agree and to enjoin upon charterers to elect to cancel on reaching the canceling date although the ship may not have arrived. Some Charter Parties to actually contain such provision.

1.14 LAYTIME PROVISIONS

1.14.1 Laytime is the time allowed to the charterer by the ship owner for loading and discharging cargo at the loading and discharging ports. For any extra time taken by the charterers, demurrage has to be paid to the ship owner. On the other hand, if these operations are completed before the expiry of the time allowed then the ship owner pay despatch to the charterers. The provisions made and agreed in the Charter Party for calculation of laytime are with respect to the daily rate of loading and discharging, the periods which are to be counted, the periods which are to be excluded and provision as to when a counting of time is to commence.

1.14.2 Regarding commencement of time, generally a turn time of 24 hours is provided. In some trades this period is even less. The ship owner is required to tender a formal notice of readiness both at the loading and discharging ports. The loading and discharging rates differ from cargo to cargo and could also differ from port to port depending on the facilities that are available. The ship can tender the notice of readiness as soon as the ship has arrived within the commercial limits of the port and is ready in all respects to load or discharge the cargo as the case may be. The periods which are excluded from the computation of laytime are generally holidays (SHEX), bad weather periods and periods of strikes or lockouts. It is also the practice in several trades to count holidays (SHINC) also in the computation of laytime. A via-media is also used sometimes by counting the holiday periods to the extent that these are actually used. There is also an accepted principle for computation of demurrage - once on demurrage always on demurrage. In other words, once a vessel is on demurrage then all periods thereafter are counted other than the stoppages attributable to the ship.

1.15 NOTICE OF READINESS

1.15.1 Master's advice to the effect that his vessel has arrived at the port limits at such time and date and is ready in all respects to commence loading or discharging is known as "Notice of Readiness". Master must serve Notice of Readiness on the Charterers/ Agents/Receivers, subject to the following pre requisites:-

•  Vessel must have arrived within the port limits.
  
•  Vessel must have been entered through the Customs.
  
•  Vessel must be in free Pratique .
  
•  Vessel must be actually ready in all respects to commence loading/or discharge.
  
•  Notice of Readiness can be tendered during official working hours only.

1.15.2 The Charter Party has to provide for the responsibilities for loading and discharging the cargo, i.e., a provision as to which party is to arrange and pay for loading and discharging. Majority of the dry cargo voyage charters are on FIO basis which means loading and discharging is to be free of risk and expense to the ship owner and a standard clause generally accepted for inclusion is that the cargo 'shall be loaded, stowed, trimmed and discharged by the charterers free of expense and risk to the vessel, but under the supervision of the Master'. A provision is likewise included about the use of vessel's gear, lights etc.

1.16 STATEMENT OF FACTS

1.16.1 Statement of Facts is nothing but a completing of (1) Time and date arrival at the roads/in the port (2) Time and date the vessel was granted "Radio Free Pratique" (3) Time and date notice of Readiness tendered (4) Time and date Notice of Readiness accepted (5) Time and date of Pilot boarding (6) Time and date the vessel arrived at berth and all fast (7) Time and date Loading/Discharge commenced (8) Time and date of cargo Loaded/Discharge completed and (9) Total quantity of cargo loaded/discharged (10) Charter Party holidays (11) Legal holidays (12) Sundays (13) Port workings/interval hours and (14) stoppages & delays and other relevant for preparation of laytime statement.

1.17 DEMURRAGE

1.17.1 When the vessel exceeds the laydays allowed and consumes more time to load or discharge the cargo, the vessel is said to be on demurrage.

1.18 DESPATCH

1.18.1 When the vessel saves time by completing loading or discharge using lesser number of days than the permitted laydays, the vessel is said to be on despatch.

1.19 CALCULATION OF DEMURRAGE/DESPATCH

1.19.1 Demurrage/despatch can be worked out by preparing a timesheet from the details recorded in the Statements of Facts, which are drawn up for both load and discharge ports. In case the vessel is detained longer than the time allowed for loading and/or discharging, a stipulation is to make payment of demurrage per day (and pro-rata) at the agreed rates to the ship owners by the charterers. Likewise, a stipulation is included for payment of despatch money by the ship owners to the charterers, if the ship is freed earlier than the laytime allowed. The rate of despatch is generally half the rate of demurrage. It is also necessary to make clear whether the time for loading and discharging are reversible or non-reversible. If laytime for the two ends is non-reversible, then separate calculations and settlements are necessary for the loading and discharging one. Another stipulation included is whether the despatch will be calculated on 'Working Time Saved' basis or on 'All Time Saved' basis.

1.20 EXCEPTIONS AND PROTECTIVE CLAUSES

1.20.1 Just as all contracts are subject to force majeure situations, it is also customary to include exceptions and protective clauses in the Charter Parties absolving ship owners or chartereres from liabilities in certain situations. The clauses that are included in this respect of strike war risk, collusion etc.

1.21 BILLS OF LADING

1.21.1 The Charter Parties require the Master or his agent to sign the Bills of Lading. It is not necessary nor customary in tramp shipments that the Bills of Lading should include all the terms and conditions for the carriage which have been already agreed in the Charter Party. The practice in fact is to use abbreviated forms of Bills of Lading containing main particulars about the shipper, the consignee, details of cargo and stipulations such as 'freight payable as per Charter Party' and 'all terms and conditions of the relevant Charter Party are deemed to have been incorporated therein'.

1.22 ARBITRATION

1.22.1 . The charter party also includes a provision how to settle the disputes, if any, between the charterer and ship owner. Normally, such disputes are settled through arbitration, which is considered to be fast tack method for settling the disputes.

2.1 PORT OPERATION

2.1.1 The Port Trusts in India are statutory authorities created under the Major Port Trusts Act, 1963. These are function under the administrative control of the Ministry of Shipping. Some of the ports like Mumbai, Chennai and Kolkata are over a Century old and have virtually became City Ports, serving the minimum potential needs and requirements of essential items. The ports are according berthing to the vessels within the frame-work of port Rules and Regulations. The allocation of a berth in most of the ports is rationalized by a grouping system. Even though there are eleven major ports in West and East Coasts of India, all the ports do not have mechanical handling facilities. Only the ports like JNPT, Cochin, Vizag and Paradip have the mechanical facilities to handle fertiliser cargo.

2.1 PORT CAPACITY

2.1.1 The country has 11 major ports having an estimated capacity of nearly 65 lakh metric tonne for handling finished fertilizers. At major ports, general cargo berths are being used for handling fertilizer cargo. However, the fertilizer companies situated near the port area are availing the mechanical facilities created by them at Paradeep, Cochin and Vizag for unloading their captive cargo. The throughput projected through the captive capacities available at these ports has not been considered as the capacity available for handling fertilizers. In addition, there are nearly 139 minor and intermediate ports are available in the country, our of which only 20 ports with the capacity of 40 lakh MT could be effectively utilised for handling fertilisers. In some of the major/minor ports, the capacities of nearly 15 lakh MT could not be fully utilised due to logistic and other constraints such as closure of ports on account of monsoon, tide problem, lack of railway wagons/ berths/boats, godown facility etc. If these capacities are excluded from the total capacity of 106 LMT, only 81 lakh MT is available for handling finished fertilizers. However, on a conservative working, for all practical purpose, only 80% of 81 lakh MT ie 64.80 LMT could be effectively used which also depends on the pattern of annual imports.

2.1.2 To undertake various activities at the load/discharge ports, the charterers/ receivers appoint their Stevedoring / C&F agents. The stevedores are appointed for load/ discharge of cargo to/ from a dock/ ship. The Clearing and Forwarding agents bring the material to the transit sheds/port for onward despatch to the destinations . Some of the ports have the advantage of mechanical handling facility, automatic or semi-automatic installation etc. Due to these facilities, the operation at the ports is simpler. In case of minor ports the cargo discharged at mid-stream is brought with the help of barges to the shore. At East Coast of India, bulk fertilizers are bagged in the ship-holds and discharged on the boats, which are towed by using tugs to the shore for standardization, and material is unloaded at the wharf. Bagging and standardization are either undertaken at the dock or in the transit sheds or private godowns, from where they are transported by rail/road to the destinations. In case of minor ports at the West Coast of India, the cargo is discharged as bulk into the barges at high seas, which are towed, to the wharf by means of mechanized self-propelled barges. Though the minor port operations involve multiple handling, cost wise it is economical as compared to the major ports.

2.1.3 Fertilizers are the fourth largest commodity to be handled at the Indian ports. Of the finished fertilisers; nearly 60-70% are handled at major ports and 30-40% at the minor/intermediates ports. The minor ports which otherwise handle more than 10% of the total traffic of which finished fertilizer accounts for sizeable share. The minor/intermediate ports of Jamnagar (Rozy) in West Coast and Kakinada in East Coast are notable for handling break bulk cargo. This is largely due to the fact that movement from these ports to States having deficit is operationally convenient with lesser leads, thus resulting in savings in cost. On commissioning of Mundra Port in Gujarat State, some of the panamax traffic is being diverted from JNPT to Mundra.

2.1.4 The yardsticks to judge the port's efficiency is surely the rate of ships turn around. The ships turn around is governed by the rate at which the cargo moves out of the transit sheds / yards in the port. The ship owners always strive to earn certain degree of profit on freight, which is dependent on ship's turn around. In this context, it is necessary to bear in mind that as the "Sea-days" of ships can not be easily reduced, the shipping interest always look forward in curtailing the period of vessels stay in the port. The turn around of ships depends on prompt documentation and expeditious clearance and evacuation of cargo.

2.2. PORT INFRASTURE FOR HANDLING FERTILISERS

2 .2.1 The adequacy or otherwise of port capacity and infrastructure for handling imported fertilizers will depend chiefly upon the demand -supply gap to be met by imports. This would mean that the gap between demand and availability of three major fertilizers i.e. urea. DAP and MOP is to be met from imports.

2.2.2 Urea is a controlled cargo, which is mainly imported on Government account and handled at the most statagic ports for movement to its hinterland to keep the handling as low as possible and at the same time make available urea to the consumption centares at the least time possible. DAP is a decontrolled and decanalized fertilizer whose imports are determined by the market forces. This fertilizer is mainly used as basal dose and its consumption is compounded between July- December and 80-90% of its imports take place during this period every year. However, marginal quantity of DAP is received between April - June. Therefore the port capacity available between April- June could not be maximized due to low level of imports. During 1999-2000, nearly 32.68 lakh MT of DAP was received and the importers preferred the ports of Kandla, JNPT, Tuticorin, Chennai, Vizag and Rozy for logistic reasons. However, the handling at Vizag, Kandla, JNPT and Chennai had suffered on account of multifarious problems like non-availability of appropriate berth, wagon, warehouse, road transport etc. During 2000-2001 and 2000-2002, there was significantly low imports of DAP due to adverse weather conditions in some parts of the country and increased production on account of commissioning of new DAP plants at Paradeep and Dehaj.

2.2.3 MOP is also a decontrolled and decanalised fertiliser and the entire requirement of the country is dependent on imports. MOP is imported through out the year as there are no known viable source in the country. Majority of the quantity is handled at the Southern Ports where potash is deficient in the soil. MOP is mainly handled at the ports of Vizag, Kakinada, Chennai, Tuticorin, Cochin, New Mangalore, JNPT and Kandla.

2.3 DISCHARGE OPERATIONS

2.3.1 The imported fertilizers are received in loose bulk. Ships berth alongside the wharves at the major ports. In the minor ports they have to anchor in the outer sea road at safe bearing points with reference to the marine features of the port. Major ports have the advantage of mechanical equipment, automatic or semi-automatic mechanical installations, transit sheds and organized labour. Owing to these facilities the handling at major ports is simpler though expensive. At minor ports handling methods vary. On the East Coast bulk fertilizers are bagged in the ship-holds and then unloaded into alongside boats. The laden boats are towed by using self-propelled launch or tug and material is unloaded at the wharf. Standardization is either undertaken at the wharf or in the transit sheds. In the case of minor ports on the West coast, the cargo is discharged in bulk into the alongside barges which are towed to the wharf by means of self-propelled tugs. At other ports, bags have to be necessarily filled manually, stitched by using hand held machines and stacked for loading in wagons or road vehicles.

2.3.2 The low turnaround of the vessel could be attributed to :

•  Pre-berthing detention.
•  Low discharge rates.
•  Storage and evacuation problems.
•  The exiting infrastructure at the ports is to be viewed in the context of handling of fertilizers and the low level performance generally leads to:
  
  •  Incidence of demurrage.
  •  Increase in the freight rates.
  •  Non availability of adequate fertilizers timely at the consumption centers.
  
  For instance ports in China, Hong Kong, Singapore, Australia etc. are World leaders in respect of efficiency in port sector and are in an advantageous position to get less freight rates as compared to India.

  2.3.3 For handling the vessels the Port Authorities provide various services like water front, equipment, pilotage, transit sheds, railway facilities etc., for which they have notified the tariff. The following tariff is being charged from the users:-

•  Port Dues - This is charged based on Net Registered Tonnage (NRT) of the vessel.
•  Berth hire charges - This include the use of berth, shore crane and night/holiday charges which is claimed on the basis Gross Registered Tonnage (GRT).

  2.3.4 Besides , the port also charges for other incidental operations such as shifting of the vessel between the berths, mobile cranes, pay loader etc., which vary from port to port. In case the clearance of cargo from the port area is delayed beyond the specified period, wharfage is charged.

2.3.5 Although overall operations at the major ports have shown improvement in terms of the ship turn around time and output per ship "Berth - Day," these have however showing signs of stagnation in respect of many ports. Therefore, the port have been shifting their activities as " Landlord Port" rather involving in creation of facilities. They have, thus introduced private participations in the development of port infrastructure. The recent notable examples of creation of own jetty by M/s. Reliance Petro Chemicals at Dehej, M/s. G. Premjee at Kandla, M/s. South India Corporation Limited at Chennai, Tamil Nadu Electricity Board at Ennore, Cocanada Port Company, Kakinada etc.

3.1. INLAND WATERWAYS AND COASTAL SHIPPING

3.1.1 Now the thrust is focused on the need for development of Inland Waterways and Coastal Shipping for movement of fertilizers. This is being used only on a very small scale by the fertilizer industry. For a country with appreciable growth in industrial and agricultural sector in the recent years, the ships of the coastal merchant fleet are not adequate to meet the demands. Gross registered tonnage of coastal ships is around 2.5 lakh tones and more than half of it is over aged. Moreover, carrying domestic cargo in the coastal ships due to lack of priority berthing, high cost of bunkers, spares and stores, high handling costs etc. make the operations unviable. For movement of fertilizers through inland waterways there is no adequate safe waterfront or night navigation facility or loading/ unloading terminals available along the water front. Fertilizer industries can consider using the Inland Waterways /Coastal Shipping provided conducive environment is created for its long-term growth.

INTRODUCTION

Trade in the liberalized regime has become multi locational and an importer/exporter has to make selective and optimum use of various locations in order to have cost efficient operations. India has vast coastline spread over 4000 nautical miles comprised of 12 major ports and nearly 140 intermediate and minor ports to cater the need of port user. The Ocean Transport has always been claimed to be an advantageous mode, in that, large volume or quantity of cargo moves over a long distance at comparatively low cost. To achieve an economy in handling of cargo one must integrate the chartering activities with the capability of the ports to maximize its output so as to reach the production at right place and time.

Though shipping is an extremely complex subject and in each case much depends upon the inter-relationship and dominance of charter party clauses. Therefore, this paper should be considered mearly what it is set out to be, a plain and simple guide what can be difficult subject to understand. Nevertheless, occasions will inevitably arise where ship owners and charterers cannot agree upon the interpretation of a particular clause. In the majority of such cases, the issues are amicably settled by negotiations particularly they are minor in nature. Keeping in this view, this paper provides information on the details of ports, vessels and chartering mode as an integral source of information relating to port activities and contacting details for chartering a vessel for carriage of sea bound cargo. For the convenience of the reader paper is divided into two parts. The first part provides a reference to the individual subject matter relating to chartering such as different type of charter, type of vessels, freight, cargo, demurrage/despatch, laydays, statement of facts, Bill of Lading, Arbitration etc. The second part provides information relating to port capacity, port infrastructure, port operations etc.