Tanker Chartering: What Information Is Needed Before Requesting Freight

Tanker enquiries fail more often on missing information than on price. A dry bulk parcel can be quoted from four lines; a tanker parcel quoted from four lines produces a number that will not survive the first serious question, because the cost of the voyage depends on things that were never stated — how long the tanks take to clean, whether the ship will be accepted at the berth, and how many hours she will spend alongside.

This article sets out what to send, how tanker freight is expressed, and how long the steps between enquiry and fixture actually take.

What to send with the enquiry

The cargo

• exact product name and grade — the trade name is not enough where a specification exists;
• quantity and tolerance, and in whose option;
• whether the parcel travels alone or shares the vessel;
• loading temperature, temperature to be maintained at sea, and temperature required on discharge;
• any cargo that must not appear in the vessel's recent history;
• the tank coatings the cargo is compatible with, or the specification from which that follows;
• whether a wall wash or other pre-loading test will be applied, and to what standard.

The voyage

• loading and discharging ports or terminals — the specific berth where it is known;
• laycan;
• loading and discharging rates the terminals will accept, and any minimum rate;
• laytime and demurrage basis;
• who pays port dues, and any local taxes;
• whether the cargo moves under a buyer or seller with a formal vessel approval process.

The vessel

• preferred size range;
• maximum draft and length at each berth;
• number of fully segregated systems required;
• heating capability required;
• IMO ship type where the cargo calls for one;
• any age limit imposed by the terminal or receiver.

The vessel side of that list is not a wish list — it is a filter. Why each line eliminates candidates, and in what order, is set out in Tanker Chartering: Vessel Selection for CPP, DPP and Liquid Chemical Cargoes.

How tanker freight is quoted

Three bases are in common use, and knowing which one an offer is on is the difference between comparing offers and comparing numbers.

• Worldscale — the standard reference for crude and petroleum product voyages. A schedule of nominal rates for a very large number of port-to-port combinations is published annually; the market then quotes a percentage of that nominal rate. A quotation is therefore expressed in points, and the same number of points means different money on different routes and in different years;
• Lumpsum — one figure for the whole voyage, common for smaller chemical and specialised parcels. It puts the risk of a shortfall in quantity on the charterer and is simple to compare;
• Per tonne — used for many chemical and vegetable oil parcels, and the easiest basis on which to compare against other transport options.

Whatever the basis, the freight is only part of the cost. Demurrage, any additional cleaning agreed, cargo heating, port costs falling to the charterer and the time taken to obtain approvals all belong in the comparison.

Laytime and demurrage

Tanker voyage charters customarily allow a fixed total of laytime for both operations together — seventy-two hours is the usual starting point for a single-port-each-end voyage, with a turn time after notice of readiness before it begins to run. Demurrage is then a stated daily figure.

Two things make this different from dry cargo. The allowance is tight, so a delay of half a day matters; and much of what causes delay is outside the ship — waiting for a berth, waiting for the terminal's inspector, waiting for an approval. Where the cargo is going to a congested terminal, the demurrage rate is worth negotiating with the same attention as the freight.

Vetting: the step that sets the clock

A nominated vessel normally has to be approved by the receiver, the terminal, or both, on the basis of inspection reports under the industry schemes, the operator's record and the ship's certificates and condition. This is not a formality and it is not quick.

Practical consequences worth planning around:

• approval can take several days and can be refused without a reason being given;
• an approval is specific — to that vessel, that charterer, and often that terminal and date;
• a fixture made subject to approval is conditional until it is granted;
• where the laycan is tight, the sensible sequence is to identify pre-approved tonnage first and negotiate second.

Cleaning between cargoes

The condition in which a ship arrives is a cost someone carries. Where the previous cargo makes cleaning long or difficult, an owner will either decline or price the time — and where a wall wash is to be applied at the loading port, a failure means recleaning alongside.

It is therefore normal, and reasonable, for an enquiry to be answered with questions about the standard required, who bears the cost of a second cleaning, and what happens if the tanks fail inspection. Settling those points in the negotiation is far cheaper than settling them at the berth.

Timeline

The variable that dominates is approval. A laycan set without allowing for it is a laycan that will be extended.

Indication or firm offer

As in any trade, an early enquiry is answered with an indication — a level, not a commitment — and a developed shipment is taken to the market for firm offers against a named vessel. The distinction matters more in tankers than elsewhere, because an indication given before the coating and previous-cargo requirements are known is an estimate of a voyage that may not exist. The difference between the two is set out in Freight Indication vs Firm Freight Offer.

Kiev Shipping Ltd works with cargo owners, traders, shipowners and operators on tanker enquiries for selected clean and dirty petroleum products and liquid chemical cargoes, evaluating tonnage against the cargo specification and the terminal limits before freight is discussed.

Service overview: Tanker Chartering and Brokerage.

See also: How to submit a chartering enquiry · more in Tanker Chartering.