Service and facilities charge

As owners of vessels calling at Stockton, California, and other grain terminals on the West Coast will know, the elevator tariffs usually make an allowance for a so-called service and facilities charge (S and F charge) which, according to the regulations, is claimed to be payable by "the vessels, their owners, agents or operators which load or discharge cargo".

However, BIMCO has always maintained that, as far as the relationship between owners and charterers is concerned, it is the terms of the freight contract which determine which party shall ultimately be responsible for payment of this charge.

In this connection it is appropriate to draw attention to an arbitration award rendered in New York on 6 January, 1978, following a dispute which had arisen between owners and charterers of a vessel which in September/ October, 1974, loaded a cargo of wheat at elevators in Longview, Washington, and at Vancouver, Washington, in accordance with a charter party containing the following provisions: 

"Cargo to be loaded by charterers' stevedores free of risk and expense to the vessel ....."

 "Taxes on cargo, if any, at loading port to be for shippers account ....."

 "The freight rate shall be ..... per ton of 2,240 lbs, FIOS ....."

The arbitration panel appointed to consider the dispute consisted of three members and it is gratifying to report that an award was rendered in owners' favour, finding the charterers liable for payment of the service and facilities charge, as assessed by both grain elevators. The following are extracts of the award: 

"It would be a mistake to disregard the very nature and intentions of such a FIO charter and assume that a charge imposed in the first instance by grain elevator terminals based on quantity of cargo loaded on the vessel should be the responsibility of the vessel. If it was the intention of the charterer to make an exception under the General Terms and meaning of FIO and have owners absorb the S and F charges, they should have expressly so provided in the charter; in the absence of such expressed or even implied provisions, the true meaning of FIO must prevail."

 "..... The S and F charge is only assessed on the tonnage of cargo loaded on the vessel at the rate which varies with the type of vessel, therefore, the panel concludes that the S and F charge in FIO terms charters is definitely cargo associated and consequently is charterers' responsibility "


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