Review Of The Shipping Conditions For Sales Of US Coal Basis FOBT Hampton Roads

Laycan Fixation and Vessel Nomination Notice
The buyers shall give to sellers 30 days` notice of the 10 days` laycan spread within which the buyers propose to present the vessel for loading the coal cargo. If the sellers will accept the laycan, then not later than 10 days prior to the first day of the laycan, the buyers shall have to nominate the vessel and declare the quantity of cargo required to be loaded with the 5% contractual tolerance.

Vessel Requirements
The vessel nomination is subject to acceptance by Norfolk Southern and hence, subject to their requirements.
The nominated vessel must be gearless or geared single deck, self-trimming bulk carrier.
The vessel must be classed Lloyd`s 100A1 or equivalent and be described as "Bulk Carrier" in the Class Certificate.
The nominated vessel must have all the IMO required certificates valid, including a Certificate of Fitness for the Carriage of Solid Bulk Cargoes listing coal as a permitted cargo, a Certificate of Fitness for the Carriage of Dangerous Goods, the Bulk Carrier Booklet endorsed by the Flag State Administration, the International Ship Security Certificate, Maritime Labour Certificate, Safety Management Certificate and the Document of Compliance with the ISM Code.
The vessel must be less than 20 years old.
The nominated vessel must have sufficient de-ballasting capacity to enable the loading terminal operator to achieve the maximum loading rate applicable to that size of the vessel without the interruption of loading, i.e. the ballast water must be discharged at a rate which prevents the interruption of loading.

ETA Notice
If the vessel nomination is accepted by Norfolk Southern, the buyers will charter the vessel and then give the ETA Notice at least 14 days prior to the vessel`s ETA at the Port of Hampton Roads.

ETA Updates
The buyers must ensure that the vessel`s Master will give through the port agents the ETA notices at 7/5/3 days, 48 and 24 hours before the vessel`s ETA at the pilot station. In the event that the Master fails to give any of the above-mentioned notices, the sellers will be allowed to add 24 hours extra to the laytime.

Conditions For The Vessel Substitution
The buyers may substitute the originally nominated vessel not later than 10 days before the ETA of the originally nominated vessel provided that:
- the substitute vessel complies with the contract requirements in respect of type, size and de-ballasting capacity to be able to load the cargo quantity ordered by the buyers within the contractual time allowed for loading;
- the substitute vessel will not arrive earlier than the ETA of the originally nominated vessel;
- the vessel`s demurrage rate is not higher than that of the originally nominated vessel.

The Submission Of The Vessel`s Loading Plan
At least 10 days prior to the vessel`s ETA at the Lynnhaven Anchorage, the vessel`s Master must provide through the vessel`s agents the following information:
- the vessel`s loading plan and hatch loading sequence;
- the estimated time needed for de-ballasting after berthing;
- the final quantity of cargo to be loaded based on the vessel`s loading plan.

Conditions For The Vessel Presentation For Loading
The vessels arriving to load coal in bulk at the Lamberts Point Coal Terminal must comply with the United States Coast Guard regulations and Norfolk Southern loading conditions.
The vessel must present for loading with the cargo holds clean, dry, empty, free of waste material and remnants of previous cargo.
The vessel must pass the holds` inspection prior to berthing. The inspection of holds shall be made by the National Cargo Bureau surveyor who shall certify the cleanliness of holds by issuing the Certificate of Readiness to Load.
If the vessel has previously carried potential contaminants such as phosphates, sulphur, cement, salt, potash or iron ore, the National Cargo Bureau surveyor inspecting the holds must certify that the holds are not only clean but also free of contaminants.
If the vessel is an OBO (Ore/Bulk/Oil) Combination Carrier which has previously carried petroleum products, the Master must advise the loading terminal operator of this fact at least 24 hours before the vessel`s ETA at Lynnhaven Anchorage. In such case the vessel will be called to berth only after the cargo holds had been declared clean and gas-free by a local marine chemist. All expenses and time incurred for making the holds gas-free and obtaining the Gas Free Certificate will be for the buyers` account.

NOR
The vessel`s Master shall tender NOR upon the vessel`s arrival at Lynnhaven Anchorage or off Cape Charles, at any time, day or night, including Saturdays, Sundays and Holidays, provided that the vessel has obtained the ISPS clearance and is in all respects ready to load coal in bulk.
The vessel shall be considered ready in all respects for loading if:
- she has obtained the ISPS clearance prior to the NOR tendering;
- she is not subject to an arrest order;
- she presents for loading in a seaworthy condition;
- she passes the holds` inspection prior to berthing.
If the Master tenders NOR before obtaining the ISPS clearance, the NOR shall be invalid and the Master will have to tender a new NOR upon receiving the ISPS clearance.
If the vessel is arrested or attached at berth by a U.S. Marshal prior to the commencement of loading, the sellers` loading obligation will be suspended until the U.S. Marshal will release the vessel from arrest. In such case, the Master will have to tender a new NOR after the vessel is released from arrest.
If, after berthing, the vessel is found by the port authorities not ready in all respects to load the coal cargo, the vessel`s NOR shall be invalid and the Master will have to tender a new NOR after the vessel is in fact ready all respects for loading.
If the National Cargo Bureau surveyor rejects the holds, the Master may tender a new NOR only after he obtains the Certificate of Readiness to Load from the National Cargo Bureau surveyor.

Commencement Of Laytime
Norfolk Southern schedules the coal shipments at Lamberts Point Coal Terminal in function of the vessel`s ETA. The sellers must have the coal cargo ready for loading on the vessel`s expected readiness date, not sooner. Therefore, the commencement of laytime will depend amongst other things upon whether the buyers` vessel tenders valid NOR before or after the expiry of the ETA pre-advice period.
If the vessel arrives at Hampton Roads and tenders valid NOR between 00:00 hours and 23:59 hours on the expected readiness date, the laytime will commence to run at 24 hours after the time of sellers` agents acceptance of NOR, unless the sellers or rather the terminal operators acting on their behalf start loading sooner in which case the laytime will commence to run from the time of commencement of loading.
If the vessel arrives at Hampton Roads and tenders valid NOR before the expected readiness date, the terminal operators acting on their behalf shall not be obliged to commence loading and the NOR shall not become effective before the expiry of the pre-advice period, that is, at 00:00 hours on the vessel`s expected readiness date. In such case the 24 hours` Notice time shall commence to run from 00:01 hours on the vessel`s expected readiness date.
If the sellers fail to have the coal cargo ready for loading on the vessel`s expected readiness date, the sellers shall be responsible for the time spent on demurrage by the vessel due to the late arrival of rail cars with coal.
If the vessel fails to arrive by 23:59 hours on the expected readiness date due to unexpected delays on the approach voyage to the loading port, including but not limited to delays caused by bad weather, or fails to present ready in all respects for loading by 23:59 hours on the expected readiness date, the terminal operators shall assign a new loading date, in which case the laytime will commence to run from the time of commencement of loading. The buyers shall reimburse to sellers the rail cars` demurrage charges incurred due to delays caused by the vessel`s late arrival or failure to present ready in all respects for loading on the expected readiness date. But the buyers shall only be liable for demurrage charges for rail cars used to carry and store the final quantity of coal stated in the vessel`s loading plan. If by the time the Master communicates to the port agents the final quantity of cargo to be loaded based on the loading plan, the rail cars with coal have already been dispatched to Lambert`s Point based on the maximum quantity stated in the vessel`s nomination notice, the buyers shall have no liability for demurrage charges for the rail cars used to carry and store the surplus coal quantity in excess of the coal quantity stated in the vessel`s loading plan. 
The laytime shall cease to count at the time when the loading, trimming and final draft survey have been completed or when the cargo documents required to effect the Customs clearance are on board, whichever is the later.

Loading Conditions
The coal cargo shall be delivered free on board the vessel spout trimmed. Any extra trimming (beyond spout trimming) necessary due to the vessel`s construction shall be for the buyers` account and any time lost thereby shall not count.

Cargo Weight Determination
The weight of cargo shall be determined based on the net weights of each individual rail car weighed while rolling over the rail electronic scales when directed for loading. The weight figure based on the rail scale results shall then be used for invoicing and issuance of Bills of Lading.
The Clause 22 of "AMWELSH 93" Charter Party has been specifically drafted to address this matter:

"The bills of lading shall be prepared in accordance with the dock or railway weight and shall be endorsed by the Master, agent or Owners, weight unknown, freight and all conditions as per this Charter, such bills of lading to be signed at the Charterers` or shippers` office within twenty four hours after the Vessel is loaded. The Master shall sign a certificate stating that the weight of the cargo loaded is in accordance with railway weight certificate. The Charterers are to hold the Owners harmless should any shortage occur."

The certificate required to be signed by the Master is the Mate`s Receipt. The Master inserts a weight disclaimer on the Mate`s Receipt and Bills of Lading to avoid prima facie evidence for the weight figure stated therein.

by Vlad Cioarec, International Trade Consultant

This article has been published in Commoditylaw`s Coal Trade Review Edition No. 1.