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Diploma in Shipping Commercial Management

Essential Shipping Commercial Management distance learning course

Starts: 17th May 2017

During the course you will study the following modules:

1

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Introduction to Vessel Ownership and Ship Finance

Learning Outcomes:

  • Describe the main characteristics of the shipping cycle, and  how it affects the decision to buy or sell vessels
  • Identify the main types of vessels, and how they are adapted for or suitable for the particular trades and geographical trade routes in which they are deployed
  • Evaluate the factors which determine the general economic life of a ship
  • Explain the impact of seasonality and meteorological factors upon a vessel’s ability to trade efficiently and at a profit
  • General introduction to the shipping cycle as a driver of:
    • Ownership and disposal decisions
    • Raising of ship finance
  • Shipping as a derived demand
  • Implications of the lagging effect between the economy and demand for shipping.
  • Introduction to the industry
  • Types of vessels
  • Main trade routes in shipping
  • Cyclicality of trade on particular routes
  • Meteorological issues as they affect ability to trade
  • General overview of legal frameworks as they affect the purchase decision
  • Economic life of ships
  • Issues of depreciation
    • Factors leading to depreciation
    • Maintenance of class
    • Decision to lay up or scrap
    • General overview of scrapping centres
  • Degree of commitment

2

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Buying and Financing a Ship

Learning Outcomes:

  • Critically evaluate the different ways in which ships may be owned
  • Analyse the different ways in which debt and equity may be used, either solely or in combination, to finance ship purchases, including shipyard credits
  • Describe how the shipping cycle impacts upon the ongoing (as opposed to static) relative merits of debt and equity as methods for the raising of finance
  • Evaluate the main methods by which costs can be controlled or reduced, and their burden on the ability to finance debt at different phases of the shipping cycle ameliorated
  • Purchase options, including leasing
  • Sources of finance
    • Your money – equity
      • Types of shares
      • Public versus private placement
      • Main financing institutions
      • Factors taken into account when a bank decides whether or not to lend
      • Making the ‘pitch’ for a ship finance loan
      • Prospectus rules on leading exchanges
    • Someone else’s money – debt
      • Types of debt
      • Types of loan, including back-front ended,moratorium, plain vanilla
  • General introduction to Islamic finance in the ship purchase market
  • Borrowing methods, structures, rights issues
  • Working capital and what it’s needed for
  • Credit management and costs control
    • Flagging out
    • Using crews from developing countries (pros and
      cons)

3

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Purchasing Newbuild Vessels

Learning Outcomes:

  • Explain the terms and conditions in a typical new build contract, and those applicable in a state-subsidised or supported agreement
  • Critically evaluate the options available to the buyer of a newbuild in respect of late delivery or other significant default by the contracted yard
  • Critically evaluate the practical implications of the difference between guarantees and warranties and other types of terms in a typical ship building contract
  • Describe the main advantages arising from taking disputes between buyer and contractor to independent arbitration instead of through formal court processes
  • Ship design and construction
  • Shipyards and their role in the process
  • Newbuild contracts from a buyer’s perspective
    • Memorandums of Agreement
  • Specifications in newbuildings
  • Negotiation
  • Guarantees and warrantees
  • Dispute resolution: arbitration, and where this takes place
  • State subsidies for ship building

4

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Purchasing Second-hand vessels

Learning Outcomes:

  • Identify the basic features of a ship purchase contract, including standard terms and conditions of the Norwegian Sales Form
  • Describe the nature of the legal duties and responsibilities, including causes of legal action, between the parties to a ship purchase agreement
  • Describe the importance of inspections and surveys, and costs associated with each
  • Identify when a ship is able to earn revenue, and the general nature of the freight market (including ‘dead freight’)
  • When to buy and the shipping cycle
  • Contracts from a buyer’s perspective
  • Standard ship purchase agreement and its main provisions
  • Legal issues arising out of the purchase decision, for example regarding terms (conditions, warranties, innominate terms), misrepresentation
  • Importance of the jurisdiction clause
  • Inspections and surveys
    • Bank requirements in this context
    • Where will these be carried out if the ship is not yet available?
  • Being ready to earn revenue
  • What is an ‘arrived ship’?
  • Commencement of laytime
  • Geographical obstacles

5

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Earning Revenue from Ships

Learning Outcomes:

  • Analyse the different types of charterparty, including voyage, time, bareboat, and the implications of each for the owner and charterer in terms of legal duties and responsibilities
  • Describe the main features of laytime and demurrage, and how these are calculated
  • Evaluate the relative merits of the different types of corporate structures available to shipowners, including one ship companies, groups, KG structures
  • Identify the basic risks in ship owning, and how some of these may be reduced or hedged against on recognised exchanges
  • Chartering and types of charter
    • Time, voyage, bareboat
    • Legal duties arising in each context
  • Freight and day rate income
    • Dead freight
    • Laytime and demurrage
  • Owner-operator structures
    • Main geographical locations for incorporation of
      shipping companies
    • One-ship companies and rationale
    • Forms of ownership
      • Private versus public
      • Quoted on a leading stock exchange
      • KG structure
  • Charges and other income
  • Income generating asset to be traded, oran asset to be speculated - what drives the decision?
  • General introduction to hedging and FFAs
  • Hedging of fuel costs on NYMEX

6

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Operating Costs for Ships

Learning Outcomes:

  • Explain the difference between fixed costs and operating costs for shipowners, and how these may be managed
  • Anlayse the costs which may be raised against shipowners by third parties, including port costs, agent fees
  • Describe the main characteristics of marine insurance, and the structure of the market and its main providers
  • Bunker costs
    • Bunker cost fluctuations and volatility
    • Who pays for bunker costs?
    • Slow-steaming
      • Reducing fuel costs (power management/hull
        condition/performance monitoring)
  • Manning and associated costs
    • Main labour markets for seafarers
    • Crewing rules and costs
    • Role of third party ship management
    • Outsourcing of crewing
  • Victualing
  • Maintenance and dry docking
  • Port costs
  • Insurance, including main markets where it can be
    purchased
    • Introduction to Lloyd’s and standard forms
    • General overview of legal framework re insurance
    • Marine Insurance Act 1906
  • Agency fees

7

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Captial Costs of Shipowning

Learning Outcomes:

  • Describe the main components of capital costs for
    shipowners
  • Evaluate the methods for managing capital costs, and
    basic accounting principles
  • Explain how vessel depreciation and declining economic
    efficiency and life, are addressed by shipowners
  • Capital cost of purchasing and carrying out major modifications of ships
  • Depreciation
  • Bareboat chartering
  • Overheads in shipping
  • National subsidies
  • Taxation benefits
  • Extending working life of vessel
  • Lenders and mortgagors

8

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Accounting for Shipowners

Learning Outcomes:

  • Explain the main components of a ship owner’s balance sheet
  • Analyse how factors such as vessel depreciation are reflected in the balance sheet and the use of this information by third parties such as lenders
  • Describe how cashflow is presented and managed in the balance sheet, and its relevance to stakeholders
  • Cash flow in shipping
  • Depreciation and budgeting
  • Planning for events/surveys
  • Financial reporting of profit and loss, cash flow and balance sheet
  • Obligations to shareholders

9

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Running the Ship

Learning Outcomes:

  • Describe the legal duties and liabilities arising out of operating a ship
  • Identify the risks to which a shipowner is subject and the impact of these upon the cost of trading in particular waters
  • Critically evaluate the key aspects of ship management, and the importance of governance, control and accountability structures
  • Evaluate the owner’s responsibility in selecting the flag state and the classification society under which the vessel will operate
  • Legal / Regulation Issues
    • Registration
      • Standard registration forms
      • Registration of mortgages
    • Class
    • Flag - the choice of where to flag
    • Inspections
      • Surveys
      • Port State Control, including legal issues
  • Agents
  • Legal rights and duties vis a vis principal
    • Chartering
  • Ship management
  • Risks
    • Default/ loss of hire
    • Arrest
    • Costs of manning, bunkers, insurance etc
    • Piracy
    • Geographical areas of concern/insurance implications/war risk insurance
  • Bribery, corruption

10

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Selling the Ship

Learning Outcomes:

  • Describe the impact of changes in the shipping cycle on the decision when and where to sell a ship
  • Critically evaluate the options to lay up, sell or scrap a vessel, and factors which drive these options
  • Describe ongoing obligations attached to a vessel following its sale, for example in terms of liens for unpaid moneys
  • Identify and explain the rights of mortgagees following sale of a vessel in respect of unpaid moneys, including arrest and the power to trade or sell it, and typical terms and conditions contained in a typical mortgage deed
  • When to sell
    • Cyclical issues
    • Forced sales
    • Distressed companies and the lender’s decision to ‘work out’ or sell
  • Options
    • Sale for trade
    • Sale for disposal
  • Contracts from a seller’s perspective
  • Liens, for example, crew, mortgages
    • Importance of registration to gain priority
    • Court choice vis a vis enforcement of a lien
    • Difference between a legal and equitable lien

11

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Case Study - Creating a shipping company in today’s market place

The case study employs learning from throughout the programme to guide participants through the process of setting up their own business

I found the course very useful and the materials loaded with detailed information. The entire literature is very good for daily consultation in my work

Student,

 2013