What is the LIFO Shipping Term?
There are standardized liner terms when it comes to transporting bulk cargo across the ocean. These shipping terms clearly indicate the responsibilities of the shipper, consignee and shipowner. The liner term we’ll be exploring in this article is LIFO.
LIFO stands for Liner In Free Out and stipulates that the shipowner is responsible for the loading, stowing, trimming, and transportation of the bulk cargo, whereas the consignee is responsible for the unloading activities.
Here’s a quick summary of the responsibilities between all parties for LIFO terms.
- Readiness (shipper’s responsibility)
- Loading (shipowner’s responsibility)
- Stowage (shipowner’s responsibility)
- Trimming (shipowner’s responsibility)
- Transport (shipowner’s responsibility)
- Unloading (consignee’s responsibility)
In this article, we’ll be taking a closer look at the LIFO shipping term and who is responsible for each individual activity.
What Does the LIFO Shipping Term Cover?
The cargo owner and the shipowner enter a charter party, which is a contract that clearly outlines the responsibilities between all involved parties. Unless otherwise indicated in the contract, the responsibilities under the LIFO terms are as follows.
- Cargo Readiness – The shipper must ensure that the break bulk cargo is ready and available at the time and location of loading. It needs to be made available in a way that the shipowner is able to conduct the loading activities.
- Loading – With the LIFO shipping term, the shipowner’s responsibility starts with arranging loading of the break bulk cargo into the vessel. They may use bulker cranes located on the vessel or external equipment from the quay.
- Stowage – Safe stowing is another activity of ensuring that the cargo is properly packed or stored within a ship’s hold. Stowage types include drums, bags, or even cases. The actual method of stowing depends on the type of bulk cargo that is being shipped.
- Trimming – To ensure an even load, the shipowner must also ensure that the bulk cargo is appropriately trimmed. This is to ensure that the ship is stable during voyage and easy to unload upon arrival. Activities like shoveling or spout trimming are common ways to even out the cargo on a bulk carrier.
- Transport – Under the FILO liner timer, the shipowner is also obligated to transport the bulk cargo from the port of loading to the port of discharge. Accessorial charges such as pilotage fees, channel lighting and berthing are also accounted for by the owner of the vessel.
- Unloading – The consignee is responsible for the unloading of bulk cargo from the vessel at the discharge port. They may use their own equipment or use a third party service provider for this activity.
How Vessel Demurrage Works With the LIFO Shipping Term
Under the LIFO shipping term, the shipowner is responsible for loading the bulk cargo onto the vessel. Therefore, they will not be able to charge any party in the charter agreement with vessel demurrage, as they are responsible for the time taken to complete the loading activities.
In the event where additional berthing time is required at the port of loading, the shipowner must settle this with the port operator. The only vessel demurrage that may apply is at the destination during the unloading process.
Co-Founder & Writer
About the Author
Gerrit is a certified international supply chain management professional with 15 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.