Shipping Terminology Explained - Part 1

Alright audience, here are some of the terminology used in the shipping business that I've learned over the years and would like to share with any interested beginners:

Shipowner: The Person or Company that owns the ship.

Charterer: The Person or Company that charters the ship (books the charter). A Charter is like a lease in much the same way as a car is leased, a ship is chartered.

Broker: A Broker or Shipbroker is a Person or Company that is a middleman between the charterer and the shipowner. A broker's job is to negotiate terms of the charter booking. A chartering agent is a shipbroker that negotiates the terms on behalf of the charterer. An owner's broker is the shipbroker on behalf of the shipowner.

There are also sale and purchase brokers that broker the deal of selling and buying of ships.

Brokers earn by taking a commission from the shipowners for every deal they successfully close. The commission is usually a percentage of the freight rate or hire and demurrage (more on this later) costs.

relationship between a shipowner, shipbroker and a charterer

Laycan: The number of days between which shipowners must give a Notice of Readiness (NOR) to the charterer. Usually includes the term SHINC. Between these dates e.g. Laycan 1 Aug/3 Aug, the charterer must load the ship. If the ship arrives at port before the laycan dates, the charterer does not have to load it, and if the ship arrives after the stated laycan dates, the charterer can cancel the charter booking.

SHINC: acronym for Sundays and Holidays INCluded. Normally sundays and holidays are included in the laycan time period. its opposite is SHEX.

SHEX: Sundays and Holidays Excluded. Meaning that sundays and public holidays will not be counted in the laycan time period.

Charter Party: CP is a document containing terms and conditions between a shipowner and a charterer when a charter is booked.

Fixture: When a charter is booked and the vessel is 'fixed' ie it is booked between two dates for the charter.
A sample fixture is given below:

Sample Fixture of a vessel

NOR: Notice of Readiness. In an NOR, the shipowner notifies the charterer that the ship is at the port of loading and ready to be loaded with cargo.

Demurrage: If the loading or discharging of the cargo takes longer than a specified period of time as allowed by the Charter Party agreement, demurrage become due by the charterer to the shipowner. Rate of demurrage is calculated per day and on pro rata basis. The reverse of demurrage is despatch, where the shipowner pays the charterer for use of the vessel before the laytime is over.
Usually 48 hours are given for loading of the cargo on the vessel, and 24 hours for discharging. If loading or discharging is stopped due to rain or vessel being shifted, it is not counted as part of the given 48 or 24 hours respectively. In all other conditions, if the 48 hours for loading or 24 hours for discharging are up, demurrage starts being due.

Sample Demurrage