Whilst negotiations involving the fixtures of tankers are very similar to those in the dry cargo market, negotiations do tend to be less protracted. The main elements of the fixture are still the same - rate, size, laydays, demurrage and loading/discharge areas. All the major charterers have their standard forms to fix on, such as Shellvoy/BPvoy/ Exxonmobilvoy, with the most common non-oil company charters being the ASBATANKVOY.
Most oil industry fixtures are concluded under the auspices of the New Worldwide Tanker Nominal Freight Scale, known as Worldscale. This publication is jointly sponsored and issued by the Worldscale Association (London) Limited and Worldscale Association (NYC) Inc. and it is virtually impossible to trade tankers without having access to this information.
The Worldscale organisations issue an annually revised Scale of Rates and Differentials on 1 January each year covering almost every possible tanker voyage. The figures published are based on a standard sized vessel described in the Schedule and market levels of freight are expressed in terms of a percentage of the nominal printed freight rate.
Thus, Worldscale 100 means the rate for the voyage in question as calculated and issued by the Associations whilst Worldscale 175 means 175 per cent of that rate and Worldscale 75 means 75 per cent of that rate.
Worldscale rates are modelled on a notional tanker of 75,000 metric tons with an average service speed of 14.5 knots on 55 metric tons of bunker consumption for steaming and a fixed port time of four days and aim to produce a universally comparable return for each round trip, with bunker prices based on the monthly average from the previous period of 1 October to 30 September. Port costs, canal transits and other direct costs are taken into account and continually monitored for each new publication, and amendments to flat rates can be made during the year if considered by the Associations to have considerable effect.
Worldscale also encompasses demurrage and various other costs. Ships of different size ranges have differing demurrage rates. These are increased or decreased in line with the negotiated Worldscale freight rate, but today owners and charterers are tending to trade on a daily lumpsum dollar demurrage rate. Demurrage commences on the expiry of 72 hours SHINC total laytime which is allowed for loading and discharging purposes, but despatch money is not paid in the tanker industry.
Laydays and cancelling are generally very narrow, being probably no more than two or three days, but many principals are now insisting on a ship arriving at load port with only a 24 hour spread due to the limited availability of stems. Where a full cargo is not available, charterers usually ask owners to guarantee a minimum quantity, having the option to lift to a full cargo. This extra cargo is classified as ‘overage’ and freight for that extra portion of oil tends to be paid at 50 per cent of the Charterparty rate. Freight on voyage charters is payable upon completion of discharge although charterers with an unproven track record would probably have to concede a freight remittance before breaking bulk or even arrange a bank guarantee, which is little different from dry cargo.
Timecharter for tankers is similar to dry cargo with either specific trips or for a period of time. Period charter can be used by oil companies/traders to hedge their long term contracts in what can sometimes be a very volatile market. As with voyage most of the major oil companies have their standard Charterparties such as Shelltime and Exxontime, and the hire is usually agreed at a daily rate expressed in US Dollars, the same as in dry cargo. Worldscale is not commonly used in timecharters but is sometimes utilised when the timecharter rate is directly linked to the market indices (TD3/TC2 etc.).