PHILIPPINE MERCHANT MARINE ACADEMY Graduate School MSM/MMET SYLLABUS: CHARTERING MANAGEMENT & OPERATIONS I Ship 1.

Ship design and construction 2. Dry bulk cargo, general purpose ship, liners and tankers, Oil/Ore and Ore/Bulk/Oil carriers 3. Tanker categories crude oil, petroleum products, chemicals, liquid gases, vegetable oils, etc. 4. Size ranges of bulk carriers Capesize, Panamax, Handy-size 5. Basic design and construction features decks, holds, hatches, derricks, winches, cranes and other cargo handling gear. 6. Ballasting and ballast systems 7. Terminology of measuring ships displacement and tonnage in ship sales for demolition 8. Basic characteristics of a ship propulsion machinery, other machinery 9. Trends in ship development international convention (double skinned tankers) II Geography 1. 2. 3. III Location of main areas of ship building Location of major Buyers of tonnage for demolition Cargoes, trade routes and meteorological phenomena that may influence types and sizes of ships to be employed

Registration 1. 2. 3. 4. Need for the ship to be registered Difference between Owners own country (flag state) and in another country (offshore registration) Advantages and disadvantages both real and hoped-for arising out of the introduction of tonnage tax. S&P Brokers role and involvement in changing a ships registration

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Classification 1. 2. 3. 4. Need for a ship to be classed Role and function of classification societies, what IACS membership entails Real and quasi-classification societies which do not qualify with IACS membership S&P Brokers role and involvement in changing ships classification

The Parties Involved 1. Different types of Ship owners the Buyers and the Sellers entrepreneurial Owners; limited companies large and small; divisions in conglomerates; investment groups; shipping pools. 2. Role and function of other major players in the S&P market including other brokers; ship breakers; Charterers, bankers and financiers. 3. Role and function of those involved at the time of completion of a sale including lawyers; notaries; consuls; registrars; classification society representatives. 4. Structure of a typical S&P Brokers office and importance of record keeping.

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Markets 1. 2. Difference and interrelationships between markets for new buildings, second hand tonnage and demolition Factors that influence the state (firmness or weakness) of the S&P market in general and in particular Factors influencing the chartering market, how this directly impinge on the second hand market and indirectly on the demolition market and how current views on the future of world economy affect the new building market Influence of natural catastrophes; political crises; environmental disasters; aid programmes on markets

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4. VII 1. 2. 3. 4. 5. 6. 7. 8. 9.

Contracts and Documentation

Review and negotiation of MOA terms Suitable jurisdictions for vessel registration, taking into account fees, administrative requirements, applicable law, political situation and lender acceptability Preparation of corporate documents, including articles of incorporation, by-laws, corporate resolutions, minutes of shareholder meetings, secretarial certificates, and powers of attorney Negotiating and drafting of financing documents, including loan agreements, ship mortgages, assignments, pledges, guarantees and miscellaneous undertakings Preparation of Bills of Sale Preparation of opinion letters Attending ship sale closings Handling post-sale disputes NSA Sale form 1987; 1993 as adopted by BIMCO, Nippon sale 1965; 1978; 99 VIII Negotiation 1. 2. 3. 4. 5. 6. IX Basics of firm offer and counter offer in the negotiating process Importance of time limits in offers How to draft an opening offer How the negotiating process leads to a conclusion, recapitulation with a completion agenda, subjects particularly subject inspection which have to be lifted before the sale is finally complete Ships particular as usually compiled when placing a ship on market for sale Etiquette and ethics customary among S&P Brokers commitment to clients on information

Finance and Insurance 1. 2. 3. 4. 5. 6. 7. Different ways a Buyer may opt to finance the purchase Sources of funds Ways to purchase a ship hire purchase; loan purchase; deferred payment; immediate payment Role and function of a mortgage as security for a loan to finance the purchase Procedures of leasing and bareboat chartering as methods of acquiring tonnage Effect of interest rates, foreign currency and currency fluctuation on the raising of finance and servicing of loan Sellers and Buyers insurable risk changes during negotiation progress, importance of ensuring cover, insurance and role of P&I Club

Valuations 1. Duties of a valuer in ship sale and purchase

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Legal liabilities upon and protection of valuers How a valuation is presented with particular attention to appropriate caveats Information upon which valuation is based and methods of assessing a value

Legal Aspects of Sale and Purchase 1. 2. 3. 4. 5. 6. 7. Legal position of the Broker in S&P and the relationship with the Principal Principle of the Broker acting under the specific authority of the Principal, liability likely to arise if authority is not acted upon meticulously What is involved in breach of warranty of authority both with and without negligence What is implied with the words free of all encumbrances and maritime liens Importance of a Notice of Readiness and of the ship arriving within her cancelling date Principle areas of dispute misrepresentation in the description of the vessel, condition of the vessel on delivery, quantity of bunkers on delivery, alleged absence of items of equipment on delivery Brokers right to a commission and the manner of ensuring this right is protected

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Ship Broking and Chartering 1. 2. 3. 4. 5. Definition of ship broking Description of the ship broking market Types of chartering The Process of chartering Role of ship brokers-past and present The changing role of a ship broker a. Communication systems b. Chartering methodology c. The changing market

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Suggested References: The National Sea Training Centre Specialist Module A Chartering & Ship Broking Business Logistics Management Theory and Practice Via Internet on selected topics