The break bulk industry brings along various shipping terms. These shipping terms are also common in charter agreements and highlight the responsibilities between shippers, consignees, port operators and ship owners. One of the more common terms is FIOT.
FIOT stands for Free In/Out and Trimmed and is a shipping term that is generally used for break bulk. This shipping term indicates that the shipper is responsible for the loading, and trimming of the cargo and the consignee for the unloading, whereas the vessel owner is responsible for the transportation only.
As each of these shipping terms show different responsibilities, here is a list for FIOT that is important to take note of:
- Loading (shipper’s responsibility)
- Trimming (shipper’s responsibility)
- Transport (ship owner’s responsibility)
- Unloading (consignee’s responsibility)
In this article, we’ll be taking a closer look at the FIOT shipping term and who is responsible for each individual activity.
What Does the FIOT Shipping Term Cover?
With the FIOT shipping term, the responsibilities of scope are clearly separated between shippers, consignees and ship owners. It’s important to acknowledge that the Free In/Out and Trimmed term is to be viewed in the perspective of the ship owner, not the shipper.
- Loading – The shipper is responsible to arrange and pay for the loading of the bulk cargo into the vessel. They will pay for the services and equipment of the terminal operator at the port of loading.
- Trimming – To ensure that the ship is stable and easy to unload upon arrival at the port of discharge, vessel trimming is necessary. Activities like shoveling and spreading the commodity ensures safety during sailing. Bulk cargo examples are fertilizer, grains, sugar, cement, and ore. The payment of this service is usually in the charter party agreement and the shipper is responsible for trimming with the FIOT shipping term.
- Unloading – The consignee is responsible for the unloading of the bulk cargo from the vessel. It will pay for the services and equipment of the terminal operator at the port of discharge. In some agreements the shipper may engage the port operator at the destination directly, depending on the charter agreement.
- Transportation – The FIOT term stipulates that the ship owner’s obligation is only to ensure transportation of the goods from the specified port of loading to the port of discharge. Ship dues, such as pilotage fees, channel lighting, berth use, and gross registered tonnage are also paid by the ship owner.
How Vessel Demurrage Works With the FIOT Shipping Term
For shipment pertaining to break bulk cargo, a voyage charter party agreement is drawn up by the shipowner and the chartering party. A demurrage clause is activated once the agreed ship laytime has come to an end. The daily rate is established and fees are payable by the shipper.
Under the FIOT shipping term, the charterer must pay all delay charges to the port operator and demurrage to the shipowner. However, if the loading of cargo is finished within the agreed laytime (allotted free time), a despatch payment will be issued from the vessel owner to the shipper. However, this needs to be specified and agreed upon by all parties in the charterparty.