Subject “RADO” Group Members

Sea Transport

MMM : 3rd YR – V SEM

Prashant Mahamulkar – Roll no 19

Rajendra Sagare – Roll no 30

Avinash Ansurakar – Roll no 04

Transport of goods & commodities by ship.

Goods is measured in tons but transport is measured by tons / miles (the weight carried X the length of the voyages)

Sea transport ?

Sea transports is slow – ships carrying raw material (tramp) move at around 13-14 knots & container ships speed 18-25 knots

Sea transports is cheap – because it can take advantage of economies of scale, large ships can reduce the cost per unit carried

Sea transports connect land which separated by water

Suitable for transporting low value–high volumes commodities

Characteristics

Ship

Main parts of ship. 1:Smokestack or funnel; 2: Stern; 3: Propeller & Rudder; 4: Portside (the right side is known as starboad); 5:Anchor; 6: Bulbous bow; 7: Bow; 8: Deck; 9: Superstructure

Below chart will explain share of sea transport in world trade

Share of sea transport

SHARES in 2008 SHARES in 2009 SHARES in 2010 SHARES in 2011 SHARES in 2012

-- Sea trans-port

0.443074788932536 0.412749153068823 0.425640812245876 0.410941363183272 0.572976382396889

-- Air transport 0.316087679787435 0.343726005347383 0.34651852666296 0.354978840235483 0.331260420607257

-- Other trans-port

0.218439099178277 0.22405545766769 0.209979115636996 0.215951506282824 0.0795585291956013

-- Rail trans-port

0.0223984321017529

0.0194693839161051

0.0178615454541679

0.0181282902984215

0.0162046678002544

5%

15%

25%

35%

45%

55%

65%

Sources: ITC calculations based on Eurostat, United Nations Statistics Division, World Trade Organisation, International Monetary Fund and national sources statistics.

Types of Ship Bulk carriers

Container ships

Gas carriers

Chemical carriers

Roll-on / Roll-off ships

Passenger ships

Bulk carrier A bulk carrier is a cargo vessel designed to transport solid

bulk cargo (grain, coal, iron ore, bauxite, phosphates and nitrates.)

Bulk carriers are vessels of simple construction, equipped with several holds and watertight closings (hatch covers). They have only one deck. - very specialized (ore carriers adapted for transporting heavy minerals)- multi-purpose (bulk carriers, bulk ore carriers)

Types of bulk carrier Bulk carriers are commonly divided into four size

categories:

- Handysize: from 10,000 to 35,000 tons

- Handymax: from 35,000 to 50,000 tons

- Panamax: from 50,000 to 80,000 tons

- Capesize: more than 120,000 tons

Container ships Is a cargo vessel designed to transport containers.

The capacity of a container ship is indicated in TEU (twenty-foot equivalent unit).

Container ships can be loaded in open-air holds (open top) or in holds with hatch covers in which other containers are stacked.

The largest container ships now reach the height of 400 meters able to transport up to 15,000 containers.

Many container ships do not have handling equipment as most major terminals are equipped with stern gantries. Ships equipped with cranes they serve that ports where handling materials are not provided

Below deck, containers are stacked one over the other in slots made with sliding rails

On deck, the number of container floors (or ship container shelves) is limited for reasons of stability and visibility

Container ships

Generation of ships

Gas carriers Gas carriers are tankers equipped with sophisticated

materials for transporting gas (LPG or LNG).

LPG: Liquefied Petroleum GasLNG: Liquefied Natural Gas

- Natural gas is transported in its liquid state at a low temperature (-162 ° C) to reduce its volume and thus increase transport capacity.

Chemical tankers - Oil tankers / Chemical tankers

They carry both refined oil and chemical products in different tanks.

- Multipurpose chemical tankers or parcel tankersThey transport many different products at atmospheric pressure. Each tank is equipped with its submersible pump and its own piping system.

- Specialized chemical tankersThese vessels carry only one type of product with specific properties for which they are especially designed.

Roll on/Roll off ships Ro-ro ships are vessels designed to transport vehicles and

other wheeled vehicles.

Ro-ro ships are equipped with fixed lashing equipment on decks (sockets, rings), bulkheads (rings) and on ceilings.

Passenger ships A passenger ship is a vessel designed to carry passengers,

who either wish to cross an ocean, river or to join a cruise. 

This type of ship typically sails at night to allow passengers to enjoy stopovers during the day for sightseeing.

The size of cruise ships range from ten to several thousand passengers.

These ships have the characteristics of ro-ro ships which have the capability to board passengers.

A cruise ship is a vessel whose purpose is to provide sea tourist travel

Passenger ships

World seaborne trade in cargo (things to be moved) are divided in 03 markets

The liner market

The tramp market (dry cargo)

The tanker market

Shipping markets

It deals with general cargo which usually relatively expensive compared with bulks

A liner will have a regular run and operate to a schedule. They are generally higher powered than tramp ships with better sea keeping qualities, thus they are significantly more expensive to build.

Liner market

A tramp has no fixed run but will go wherever a suitable cargo takes it.

Ship and crew may be chartered from the ship owner to fetch a cargo of grain from Canada to Latvia, the ship may then be required to carry a cargo of coal from Britain to Melanesia.

Bulk carriers and cruise ships are examples of ships built to operate in this manner.

Tramp market

There are three types of charters-voyage -time and -demise

The tramp ship is a contract carrier

Tramp market

Tankers are designed to carry liquid cargoes (not just oil),

Oil tankers come in two basic flavors', - the crude carrier, which carries crude oil, and - the clean products tanker, which carries the refined products, such as petrol, gasoline, aviation fuel, kerosene and paraffin.

Tanker market

Liner v/s Tramp service

Liner Tramp

Is a service that operates within a schedule and has a fixed port rotation with published dates of calls at the advertised ports.

It generally fulfills the schedule unless in cases where a call at one of the ports has been unduly delayed due to natural or man-mad causes.

They are significantly more expensive to build.

Liners are typically built for passenger and container operation

Example : The UK/NWC continent service of MSC which has a fixed weekly schedule calling the South African ports of Durban, Cape Town and Port Elizabeth and carrying cargo to the UK/NWC ports of Felixstowe, Antwerp, Hamburg, Le Havre and Rotterdam.

A Tramp Service or tramper on the other hand is a ship that has no fixed routing or schedule and is available at short notice (or fixture) to load any cargo from any port to any port.

The tramp ship is a contract carrier. Unlike a liner, often called a common carrier, which has a fixed schedule and a published tariff, the ideal tramp can carry anything to anywhere, and freight rates are influenced by supply and demand.

Example : A ship that arrives at Durban from Korea to discharge cargo might carry some other cargo from Durban to the Oakland in the West Coast of USA which in an entirely different direction.. From Oakland say for example it could carry some cargo and go to Bremerhaven.

A tramp has no fixed run but will go wherever a suitable cargo takes it.

The tramp ship is a contract carrier. Unlike a liner, often called a common carrier, which has a fixed schedule and a published tariff, the ideal tramp can carry anything to anywhere, and freight rates are influenced by supply and demand

There are three types of charters, -voyage, -time and -demise.

Tramp market (Tramp shipping)

The voyage charter is the most common charter in tramp shipping,

Voyage charterparty is a contract whereby :- the ship – owner places all or part of the carrying capacity

of ship at the disposal of the charter (the voyage chartered) - For the transport of goods agreed upon, on one or more

voyages, for a consideration called “freight” based on the quantity of cargo carried & usually payable at the end of the voyage.

“BIMCO” – Baltic & International Maritime Council” Most commonly used form

Voyage charter

In time charter the owner provides a vessel that is fully manned and equipped.

The owner provides the crew, but the crew takes orders from the charterer.

Owner is also responsible for insuring the vessel, repairs that vessel may need, engine parts, & food for ships personnel.

The charterer is responsible for everything else.

The main advantage of the time charter is that it diverts the costs of running a ship to the charterer.

Time charter

The demise charter is the least used in the tramp trade because it heavily favors the owner.

The ship owner only provides a ship devoid of any crew, stores, or fuel.

It is the Charterer's responsibility to provide everything the ship will need.

Demise charter

The ship owner must provide a seaworthy vessel, but once the charterer accepts the vessel, the responsibility of seaworthiness is the charterer's.

The charterer crews the vessel, but the owner can make recommendations.

There are no standardized forms in a demise charter, contracts can vary greatly, and are written up to meet the needs of the charterer.

Demise charter

Tankers are designed to carry liquid cargoes (not just oil),

Oil tankers come in two basic flavors, -the crude carrier, which carries crude oil, and -the clean products tanker, which carries the refined

products, such as petrol, gasoline, aviation fuel, kerosene and paraffin.

Tankers range in all sizes, from the small bunkering tanker (used for re-fuelling larger vessels) of 1000 DWT tons to the real giants:

- the VLCC (Very Large Crude Carrier) of between 2-300,000 DWT and

- the ULCC (Ultra Large Crude Carrier) of over 300,000 DWT

Tanker market

Types of tanker* Handysize tanker: 20,000 to 30,000dwt

* Handymax tanker: approx 45,000 dwt

* Panamax tanker: 79,000 dwt

* Aframax tanker: 79,000 to 120000 dwt

* Suezmax tanker: 120000 to 180000 dwt

* V.L.C.C tanker: 200000- 300000 dwt

* U.L.C.C tanker : over 300000 dwt

It should be remembered that over 60% of the world's oil is transported by these tankers, and over 99% of that arrives safely without causing pollution. Indeed most oil pollution seen on beaches comes from the engine rooms of vessels (of all types) and not from the cargo tanks of tankers.

Share of tanker

Transportation by sea in the early days was done by sailing ships, which depended on wind and weather. Reliability came in as steam engines started to propel ships and scheduled services started by early 18th century

In the sixtieth, the conventional general cargo ship was increasingly replaced by the container ship, then containerization has had effect & it will continue to have on shipping industry

Container ships have a larger, Faster & a quicker turn around than the ships

Containers are introduced to reduce the cargo handling cost & to increase productivity (general cargo ships vs container ships)

Liner market

Conferences are organization of shipping lines operating on a particular route

i.e. the transpacific west bound freight agreement operates on the route from US to Far east route & the indian sub- continent

Shipping conferences

Conferences can be either open or closed to accept new members

The conferences are formal agreement between shipping lines on route, setting prices & managing capacity, a locating route etc

Conference issue a freight tariff

The principal activity of shipping conferences is to meet frequently in order to fix freight rates (or passenger fares in the case of passenger shipping conferences).

Freight rates are typically set by commodity, with the highest value commodities charged higher rates than lower value commodities.

Characteristics

Conference set prices, often based on loyalty arrangement, the purpose of loyalty arrangement is

a) to ensure that all liner cargoes in the sphere of operation of the conference, b) members wish to reserve the carriage of cargoes for themselves c) & to eliminate competition,

Basically they use 03 kind of loyalty arrangements : i) the differ rebate system ii) the dual rate system iii) immediate rebate system, last 2 are known as contract rate system, while differ rebate system traditionally does not use contracts

Characteristics

The purpose is to eliminate competition

The rebate systems in operation are Deferred rebate: The rebate is calculated on the freight cost

during a designated period called the shipment period of usually 3 to 6 months, but is paid after the same period of time (deferred period) keeping in mind that shipper will continue to use the conference line for all his shipments during the shipment period and deferred period

Dual rate system: If the shippers sign a contract with conference for exclusive patronage, they get the benefit of rates which are lower than the rates applicable to non-contract shippers.

Immediate rebate system: Under this system the contract shippers are given immediate rebate on the freight on shipment of their cargoes. So shippers get their money rebate without any deferment

Liner freight rebate system

Irrespective of the type of shipment whether it is a break bulk or in containers, the rates charged have to reflect the law of supply and demand.

The major factor in shipping industry today is the competition.

Shipping conferences were introduced to stabilize freight rates, and to reduce the possibility of under-cutting of rates by an oversupply of operators

The charges are based either on the weight carried, for heavy (dense) cargo, or on the volume taken up for light cargo

Liner freight rates

The value of the commodity & Nature of the cargo

The Distance & Canal dues

Equipment repositioning cost

Vessel frequencies and speed of the vessel and transit time

Two most important parameters of cargo are weight and measurement. Break bulk or LCL cargo freight rates are quoted in revenue ton basis i.e. weight ton or measurement ton whichever is higher. FCL rates are quoted based on the size and type of the container

Factors considered while fixing freight rate

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