There are various types of liner terms when it comes to break bulk cargo. Each of these terms clearly outlines the responsibilities of the shipper, consignee and shipowner. The liner term that we will be looking at in this article is FILO.
FILO stands for Free In Liner Out and is a shipping term for break bulk cargo, whereby the shipper is responsible for the loading of bulk cargo into the vessel and the shipowner is responsible for the transport and unloading of cargo at the port of discharge.
Here’s a quick overview showing the responsibilities of each party for the FILO liner term.
- Loading (shipper’s responsibility)
- Unloading (shipowner’s responsibility)
- Transport (shipowner’s responsibility)
This article will be going into more detail on the responsibilities of each party with regards to the FILO shipping term and how vessel demurrage is commonly settled.
What Does the FILO Shipping Term Cover?
Here’s a more detailed list of the activities that the shipper and the shipowner are responsible for when it comes to the FILO term.
- Loading – Under the FILO term, the shipper is responsible to arrange and pay for the loading of the bulk cargo into the vessel. Typically, the shipper will engage the terminal operator or a third party to undertake the loading activity. If the shipper is loading from a self-owned berth or loading location, they would use their own loading equipment and personnel.
- Transportation – The shipowner’s obligation is to ensure that the cargo is transported from the port of loading to the port of discharge on the nominated vessel. Additional ship dues that are mostly channel lighting, piloting, berthing and other related fees are also paid by the vessel owner.
- Unloading – The shipowner is also responsible for the unloading of the cargo from the vessel at the port of discharge. It will either pay for the services and equipment to the terminal operator or use bulker cranes on the vessel.
How Vessel Demurrage Works With the FILO Shipping Term
For shipments under the FILO shipping term, a charter party agreement is usually established between the shipowner and the chartering party (commonly the shipper). A vessel demurrage clause is usually built into the agreement as vessel berthing is paid for by the shipowner and is charged from to port operator on a ‘per hour’ basis.
Under FILO shipping terms, the charterer must pay all delay charges to the port operator and vessel demurrage to the shipowner. If specified and agreed upon by all parties, if the shipper has completed the loading of cargo before the stipulated laytime, a despatch fee can be collected from the shipowner.
This is a form of compensation from the shipowner to the shipper for loading within the agreed time, so that the shipowners have to outlay and pay less berthing fees to the port operators that initially booked.
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About the Author
Gerrit is a certified international supply chain management professional with 16 years of industry experience, having worked for one of the largest global freight forwarders.
As the co-founder of freightcourse, he’s committed to his passion for serving as a source of education and information on various supply chain topics.