Commercial and Operational Shipping

Commercial shipping, chartering, economics and finance glossary

How shipping is priced, financed, and traded as a cyclical asset business: Stopford’s four markets, the shipping cycle and asset play, sector dynamics in dry bulk, tankers, container, and gas, and chartering across voyage, time, bareboat, and COA forms. Covers Worldscale and the Baltic indices, forward freight agreements, time charter equivalent and OPEX, ship finance and the Poseidon Principles, the Norwegian Saleform, and tonnage tax.

305 defined terms.

Showing 250 on this page (page 1 of 2).

A

Ad valorem freight: Freight calculated as a percentage of cargo value rather than weight or measure.
Address commission: Commission deducted from gross freight or hire payable to the charterer.
Advance freight: Freight paid before cargo delivery, typically on shipment.
AFRA: Average Freight Rate Assessment, scale published by the London Tanker Brokers' Panel.
Aframax: Tanker segment of roughly 80,000 to 120,000 dwt named after the AFRA scale.
Always accessible: Berth warranty that the vessel can reach the berth at any time.
Always afloat: Charter requirement that the vessel must remain afloat at all states of the tide.
Amwelsh 93: Americanised Welsh Coal Charter 1993, dry bulk voyage charter form.
Annual Survey: Survey required at intervals not exceeding three months either side of each anniversary date of a certificate.
Arbitrage trade: Movement of cargo to exploit price differentials between regions.
Arrest of Ship: Detention by court order to secure a maritime claim, codified in the 1952 and 1999 Arrest Conventions.
Asbagencies: Standard liner agency agreement of the Association of Ship Brokers and Agents.
Asbatankvoy: Standard tanker voyage charter party of the Association of Ship Brokers and Agents.
Assignment of earnings: Security taken by ship finance lenders over freight, hire, and insurance proceeds.
At and from: Marine insurance clause covering the vessel both in port and on voyage.

B

Backhaul: Return leg of a voyage, usually at lower freight rates than the headhaul.
Bagged cargo: Dry bulk commodities carried in bags rather than loose.
Bailment: Possessory transfer of goods, applied to carrier liability analysis.
Balance of contract: Remaining unperformed period of a time charter or contract of affreightment.
Ballast bonus: Lump sum payable to owners to compensate for an unprofitable ballast leg before delivery.
Ballast leg: Voyage segment performed without revenue cargo.
Baltic Capesize Index: BCI, sub-index of the Baltic Dry Index for Capesize tonnage.
Baltic Clean Tanker Index: BCTI, freight assessment for clean petroleum products.
Baltic Dirty Tanker Index: BDTI, freight assessment for crude oil tankers.
Baltic Dry Index: BDI, composite dry bulk freight index of the Baltic Exchange.
Baltic Exchange: London-based provider of freight market information and assessments.
Baltic Handysize Index: BHSI, sub-index for Handysize dry bulk tonnage.
Baltic LNG Index: BLNG, spot freight assessment for LNG carriers.
Baltic LPG Index: BLPG, spot freight assessment for VLGCs.
Baltic Panamax Index: BPI, sub-index for Panamax dry bulk tonnage.
Baltic Supramax Index: BSI, sub-index for Supramax dry bulk tonnage.
Bareboat Charter: Demise charter under which the charterer becomes disponent owner.
BARECON 2017: BIMCO standard bareboat charter party.
BDI: Baltic Dry Index.
Bend of cargo: Final installment of cargo loaded under a voyage charter.
Berth charter: Voyage charter where laytime starts when the vessel is at berth.
BIFFEX: Baltic International Freight Futures Exchange, predecessor of modern FFA trading.
Bill of Lading: Receipt, document of title, and evidence of the contract of carriage.
BIMCO: Baltic and International Maritime Council, drafter of standard maritime contracts.
Block stowage: Carrying cargo of one shipper or destination in a contiguous block.
Booking Note: Preliminary contract for cargo space, often replaced by a bill of lading.
Both ends: Laytime allowance applicable at both loading and discharging ports.
Bottomry bond: Historic security where a ship was pledged for a voyage loan.
Bunker adjustment factor: BAF, surcharge to reflect fuel cost changes in liner tariffs.
Bunker hedge: Derivative used to lock in future bunker fuel costs.

C

Calling forward: Process by which a charterer nominates a vessel under a contract of affreightment.
Cancelling date: Latest date by which the vessel must tender notice of readiness, often referred to as cancelling.
Capesize: Bulker >150,000 DWT too large for Suez/Panama traditionally.
Cargo retention clause: Tanker clause allowing charterers to deduct freight for unpumpable residues.
Carrying capacity: Maximum cargo a vessel can carry, in deadweight or volume.
Cash against documents: Payment term where documents are released on payment.
CBFC 2004: Chinese Bareboat Charter form.
CDC: Charterers' default clause.
Cesser Clause: Charterparty term ending charterer's liability after cargo loaded, against owner's lien.
Charter party: Contract for the hire of a ship or carriage of cargo.
Chartering broker: Intermediary who arranges charters for owners or charterers.
Class certificate: Document confirming the vessel's classification status.
Clean fixture: Concluded charter free of subjects.
CoA: Contract of affreightment.
Coaster trade: Domestic short-sea liner or tramp shipping.
Comite Maritime International: CMI, body that promotes uniform maritime law.
Commission: Brokerage payable to chartering or sale and purchase brokers.
Common Carrier: Carrier offering services to the public, with strict liability at common law.
Compensation for delay: Damages payable for failure to deliver or load on time.
Conference: Group of liner operators that fixes rates and conditions on a trade lane.
Consortia agreement: Joint service arrangement between liner operators short of full alliance.
Container freight rate: Rate per TEU, FEU, or per slot.
Container indices: Assessments such as SCFI, CCFI, WCI, FBX, Xeneta XSI.
Contract of affreightment: COA, agreement to carry a stated quantity of cargo over a period.
Convertible loan: Ship finance loan convertible into equity.
Cost insurance and freight: CIF, Incoterm where seller covers cost, insurance, and freight.
CP date: Date the charter party is signed.
CQD: Customary quick despatch, no fixed laytime.
Cross trade: Carriage between two countries other than the flag state of the operator.
Crude tanker: Tanker carrying crude oil.

D

Daily running cost: Vessel OPEX per day, excluding voyage and capital costs.
Days off hire: Period during which hire is not payable under a time charter.
Deadfreight: Compensation payable for cargo short-shipped under a charterparty.
Deadweight all told: DWAT, total deadweight including bunkers, stores, and cargo.
Deadweight cargo capacity: DWCC, deadweight available for cargo after bunkers and stores.
Deadweight tonnage: DWT, total weight a vessel can carry.
Deferred rebate: Rebate paid to loyal liner shippers after a qualifying period.
Delivery clause: Charter clause governing the place and condition of delivery.
Demise charter: Bareboat charter.
Demurrage: Liquidated damages for detention of ship beyond laytime.
Deposit: Down payment under a memorandum of agreement, typically 10 percent.
Despatch money: Sum payable by owners to charterers for laytime saved.
Detention damages: Damages for delay beyond laytime where no demurrage rate is fixed.
Devaluation clause: Charter clause adjusting hire for currency depreciation.
Disponent Owner: Charterer who treats the vessel as if owner for sub-letting.
Dry bulk carrier: Vessel carrying unpackaged dry bulk cargoes.
Dry docking allowance: Charter clause allowing owners off-hire for dry docking.

E

Earnings per day: Voyage revenue net of voyage costs, divided by total voyage days.
ECA finance: Loans backed by Export Credit Agencies for shipbuilding.
Economic life: Period over which a ship is economically operable.
Effective demand: Demand expressed in tonne-miles for sea transport.
Empty pool: Surplus stock of empty containers in a region.
Encumbrance: Mortgage or lien affecting title to a ship.
Engaged tonnage: Tonnage fixed against future cargo.
Engine and machinery survey: Class survey of propulsion plant.
Environmental claim: Liability for pollution or environmental damage.
Equity bridge loan: Pre-delivery finance secured by sponsor equity commitments.
Escalation clause: Provision adjusting hire or freight for cost changes.
European Maritime Safety Agency: EMSA, EU body supporting maritime safety regulation.
Exchange rate clause: Clause adjusting payments for foreign exchange movements.
Excluded ports: Ports excluded from the trading limits of a charter.
Exercise of option: Notice exercising an extension, purchase, or redelivery option.

F

Fairplay value: Estimated vessel value published by IHS Markit Fairplay.
FFA: Forward Freight Agreement, OTC freight derivative settled on Baltic indices.
FIO: Free in and out, charterer pays loading and discharging.
FIOST: Free in, out, stowed, and trimmed.
First demand guarantee: Bank guarantee payable on first written demand.
Fixture report: Market report describing a concluded charter.
Flag of convenience: Flag of a state with open registration policy.
Floor charter rate: Minimum charter rate in a freight derivative.
Force majeure clause: Clause excusing performance on specified excepted events.
Forfaiting: Sale of medium-term receivables on a without-recourse basis.
Forward freight agreement: FFA.
Free in liner out: FILO, charterer pays loading, owner pays discharging.
Free out: Owner pays loading, charterer pays discharging.
Free pratique: Permission to use a port after sanitary clearance.
Freight rate: Price for carrying cargo.
Frustration of charter: Discharge of contract due to supervening events.
Full cargo: Cargo filling the ship's deadweight or cubic capacity.
Full pay clause: Clause requiring hire to be paid in full without deduction.

G

Gas carrier: Vessel for liquefied gases such as LNG, LPG, ethane, or ethylene.
GENCON 2022: Updated BIMCO General Charter Party 2022.
GENCON 94: BIMCO Uniform General Charter Party 1994.
GENTIME: BIMCO general time charter party.
Geographic rotation: Sequence of load and discharge ports following a logical geography.
Grain capacity: Cubic capacity available for grain cargo.
Gross daily rate: Time charter hire before commissions.
Gross terms: Voyage charter on which owner bears loading and discharging costs.
Guaranteed freight: Freight payable on shipment, regardless of cargo arrival.

H

Hague Rules: 1924 international convention on carrier liability under bills of lading.
Hague-Visby Rules: 1968 Visby Protocol and 1979 SDR Protocol to the Hague Rules.
Hamburg Rules: 1978 UN Convention on Carriage of Goods by Sea.
Handymax: Dry bulk segment of about 40,000 to 50,000 dwt.
Handysize: Dry bulk segment of about 10,000 to 40,000 dwt.
Hatch survey: Survey to check hatch covers before loading.
Heads of agreement: Pre-contract document setting out main commercial terms.
Heavy lift: Cargo above the lifting capacity of standard ship gear.
Hire statement: Account of time charter hire and off-hire periods.
Holed beneath the waterline: Indemnity terminology for capsize-equivalent casualty.

I

IFRS 16: International accounting standard requiring charterers to capitalise leases.
Implied warranty of seaworthiness: Common law obligation of owner to provide a seaworthy ship.
In transit cargo: Cargo carried under through bills of lading.
Indemnity letter: Letter undertaking liability in lieu of original document production.
Index linked: Charter hire linked to a published freight index.
Inland freight: Freight for movement of cargo from inland origin to port.
Inter-club agreement: ICA, allocation of cargo claims between owner and charterer P&I clubs.
Intermodal rate: Through rate from inland point to inland point.
Internal rate of return: IRR, discount rate at which net present value equals zero.
International Chamber of Shipping: ICS, global trade association of national shipowner associations.
International Group of P&I Clubs: Association of 12 mutual P&I insurers.
Inventories of bunkers: Stocktake of bunkers on board at delivery and redelivery.

J

Japanese operating lease: JOL, leveraged lease structure used in ship finance.
Japanese operating lease with call option: JOLCO, JOL with lessee purchase option.
Jettison: Throwing cargo overboard to lighten the ship, may give rise to general average.
Joint venture: Pooled ownership of vessels by two or more parties.

K

Kamsarmax: 80,000-85,000 DWT bulker.
KG financing: German limited partnership ship finance model.
Knock-for-Knock: Reciprocal indemnity arrangement in offshore and towage contracts.

L

Laden voyage: Voyage performed with revenue cargo.
Lashing charges: Charges for securing cargo on deck or in holds.
Laycan: Layday and cancelling window of a voyage or time charter.
Laytime: Time allowed for loading or discharging under a voyage charter.
Laytime statement: Accounting of laytime used and demurrage or despatch due.
LEMINS: Letter excluding marine insurance subjects.
Letter of credit: Bank instrument guaranteeing payment under specified document conditions.
Letter of indemnity: LOI, undertaking to indemnify carrier for actions taken without bills of lading.
Liability cap: Contractual or statutory limit of owner liability.
Liability convention: Convention such as LLMC 1976/1996 limiting maritime claims.
Lien clause: Clause allowing owner to retain cargo for freight, demurrage, or hire.
Liner conference: Group of liner carriers fixing rates and capacity.
Liner in free out: LIFO, owner pays loading, charterer pays discharging.
Liner terms: Owner pays loading and discharging as part of freight.
Liquefied natural gas carrier: LNG carrier, vessel transporting LNG at minus 162 degrees Celsius.
Liquefied petroleum gas carrier: LPG carrier such as VLGC or MGC.
Loadicator: Approved onboard cargo planning and stress calculation software.
LOI: Letter of indemnity.
London Maritime Arbitrators Association: LMAA, specialised maritime arbitration body.

M

Marine money: Industry publication on ship finance.
Maritime Lien: Privileged claim attaching to the ship and surviving change of ownership.
Master's protest: Sworn statement noting events potentially giving rise to claims.
Memorandum of agreement: MOA, sale and purchase contract for ships.
MEPC 80 finance metric: Carbon intensity considerations affecting Poseidon-aligned lending.
Merchant haulage: Container haulage arranged by the shipper, not the carrier.
Mid-range tanker: MR tanker, product carrier of about 40,000 to 55,000 dwt.
Mixed cargo charter: Charter allowing carriage of mixed commodities.
Multi-purpose vessel: MPV, ship designed for general, project, and bulk cargo.

N

Naked charter: Bareboat charter.
New Jason Clause: Charter clause preserving general average rights in jurisdictions like the United States.
NEWBUILDCON: BIMCO standard shipbuilding contract.
NIPPONSALE 1999: Sale and purchase form of the Japan Shipping Exchange.
Nor: Notice of readiness to load or discharge.
Nordic bond: Senior secured bond issued under Nordic high yield market practice.
Norwegian Saleform: NSF, SP form by the Norwegian Shipbrokers' Association.
Notice of readiness: NOR, formal notice that the vessel is ready to load or discharge.
NSF 2012: Norwegian Saleform 2012, market standard ship sale form.
NYPE 2015: New York Produce Exchange standard time charter form.

O

Off-Hire: Period under a time charter during which hire ceases due to specified events.
Offshore support vessel: OSV, vessel serving offshore oil, gas, or wind operations.
OPA 90: Oil Pollution Act 1990, US oil pollution liability statute.
Open registry: Flag state with open access to foreign owners.
Operating expenses: OPEX, daily costs of running the ship excluding voyage and capital costs.
Option to purchase: Right of charterer or third party to buy the vessel.
Order book: Total tonnage on order at shipyards.
Original bills of lading: Negotiable bills issued in a set of three originals.
Overage: Cargo carried in excess of bill of lading quantity.
Owner's account: Items payable by the owner.

P

Pacific Basin index: Freight assessment for Pacific market segments.
Panaman lock fit: Vessel that can transit the original Panama Canal.
Panamax: Dry bulk or container vessel sized for the original Panama Canal locks.
Paper trade: Trading FFAs or other freight derivatives.
Parcel tanker: Chemical tanker with many segregated tanks.
Pay or play clause: COA clause requiring nomination of vessels or payment of deadfreight.
Performance claim: Claim arising from breach of speed or consumption warranties.
Period charter: Time charter for an extended period.
Pier to pier: Carriage terms from one port pier to another.
Plimsoll mark: Load line marking on ship side.
Pooling agreement: Arrangement to pool earnings of similar tonnage.
Port disbursements: Costs incurred during a port call.
Poseidon Principles: Framework for integrating climate considerations into ship finance.
Position list: List of vessels available for fixture.
Post-Panamax: Vessel too large for the original Panama Canal.
Pre-fixture survey: Inspection of vessel before fixture.
Pricing curve: Forward freight curve published by brokers.
PRO FORMA disbursement account: Estimated port costs prepared by the agent.
Product tanker: Tanker for refined petroleum products.
Profit-sharing clause: Clause sharing voyage profits between owner and charterer.
Prompt position: Vessel available for immediate fixture.

Q

Quay rent: Charges for use of quay space.
Quayside delivery: Delivery of cargo over the ship's rail or onto the quay.
Quiet enjoyment letter: QEL, undertaking by a financier to allow charterers to use the vessel undisturbed.
Quotation: Indication of freight or hire offered.

R

Re-delivery notice: Notice of expected redelivery under time charter.
Reefer freight: Freight for refrigerated cargo or containers.
Refund guarantee: Bank guarantee securing buyer's pre-delivery instalments.
Reportable event: Event triggering owner notification under a financing agreement.
Repositioning voyage: Ballast voyage to position the vessel for a fixture.
Restraint of princes: Excepted peril for state intervention.
Revenue tonne mile: RTM, freight transport demand measure.
Revolving credit facility: Ship finance facility allowing repeated drawdowns.
Right of withdrawal: Owner's right to withdraw the vessel on charterer default.
Risk premium: Excess return required by ship finance lenders or investors.

S

Sale and leaseback: SLB, sale of vessel to a financier with concurrent lease back.
Sale and purchase broker: SP broker, intermediary in ship transactions.
SCFI: Shanghai Containerized Freight Index.
Scrap value: Demolition value of a ship.

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