GENERAL STRUCTURE OF SHIPPING. WORLD SEA-BORNE TRADE It has been calculated that more than 90% of...
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Transcript of GENERAL STRUCTURE OF SHIPPING. WORLD SEA-BORNE TRADE It has been calculated that more than 90% of...
WORLD SEA-BORNE TRADE
It has been calculated that more than 90% of world trade, in tonnage terms, goes by ship.
Despite the technical innovations that have transformed transport in the last two centuries, ships remain the most economical means of moving large quantities of goods from one place to another.
They are cheaper to build and run than other forms of transport, such as road and railways, and they can carry huge amounts of cargo – some modern oil tankers can carry more than half a million tons of oil at a time.
In tonnage terms, most seaborne trade consists of goods carried in bulk.
World Seaborne Trade Volume
Development 1996-2006 (in million tonnes) - Growth rate in 2006
Source: Indicators issued from various sources such as ISL Bremen for World fleet and trading figures and Clarkson Research Studies for shipbuilding and scrapped vessels.
estimates
+ 2 %
+ 7 %
+ 6 %
+ 5 %
900
1,400
1,900
2,400
2,900
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 (*)
Major trades
4,000
5,000
6,000
7,000
Total World Trade
Crude oil and oil products
The 4 main Dry Bulk Cargoes (Iron Ore, Coal, Grain, Bauxite/Alumina)
Other Cargoes
Total World Trade
(*)
LINER SHIPPING
Merchandise is carried by regular shipping lines. Shipping services are provided regularly at
specified ports irrespective of quantity of cargo available.
Ships usually carry general cargo ie. An accumulation of small loads belonging to many shippers.
Such services are useful for small exporters. Such shipping lines are not committed to any
discipline in terms of service schedule and the freight rates.
TRAMP SHIPPING
Ships used for transportation of homogeneous cargo which is moved in bulk quantities eg. Grain, coal, wheat etc.
Such ships work on inducement basis and ply indiscriminately between the ports of the world depending upon the laws of demand and supply in the market which also determine the rates.
The shipping lines operating as tramps can operate on any route for which the freight cargo is available.
LINER FREIGHTING
The liner shipping companies provide commitment of regular service on specified sea routes at specified freight rates.
Costs fairly fixed in nature, low variable costs Ships designed for a specific trade route Price according to value of service to maximize
profitability Charges based on a “weight or measure” (W/M)
basis Different commodities would have different W/M
charges
CHARTERING
Chartering is an activity within the shipping industry.
Chartering in short refers to hiring of ships.Ships can be hired on Time basis or Voyage basis
CHARTERING – THE TRADITIONAL METHOD
Trade enquiry Shipping dept to give feedback on freight
rates, feasibility, etc When trading deal is finalized, shipping dept
asked to charter ship. Shipping dept controls voyage At the end of the voyage –laytime
calculations & voyage accounting
Trade Enquiry given to charterer
Charterer asked to fix ship
Trader negotiatesFinalises deal
Charterer checks Ports condition,
Feasibility, tonnageavailability
Pre-Fixing
Feedback to
trader
Charterer enters market
Evaluates available ships
Negotiates and Finalises best
tonnage
Commencment of voyage
Fixture Negotiations
Nominates vessel to shipper/ Receiver
Gets approval
Instructions of master
Completion of voyage
Control of documentation
Appointment of agents, arranging
bunkers etc.
Voyage Management
Regular monitoring
of voyage
Charterer prepares laytime
calculations
Prepares final voyage accounts
Prepares final voyage accounts
Follow up with
shipper/receiver
Post-Fixture
End of process
TYPES OF CHARTERING
In some cases a charterer may own cargo and employs a shipbroker to find a ship to deliver the cargo for a certain freight rate. Freight rates may be on a per-ton basis over a certain route (e.g. for iron ore between Brazil and China) or alternatively may be expressed in terms of a total sum - normally in U.S. dollars - per day for the agreed duration of the charter.
A charterer may also be a party without their own cargoes who takes a vessel on charter for a specified period from the owner and then trades the ship to carry cargoes at a profit to the hire rate, or even makes a profit in a rising market by re-letting the ship out to other charterers.
PARTY AGREEMENT
Depending on the type of ship and the type of charter, normally a standard contract form called a charter agreement is used to record the exact rate, duration and terms agreed between the shipowner and the charterer.
UNITIZATION
The art of packaging cargo into unit loads. A unit is a certain quantity or volume chosen as a
standard. Several units can be combined to one larger unit (e.g. pallet) or divided into smaller sub-units (e.g. consumer packages).
A unit load combines packages or items into a single "unit" of a few thousand kilograms that can be moved easily with simple equipment. A unit load packs tightly into warehouse racks, containers, trucks, and railcars, yet can be easily broken apart at a distribution point, usually a distribution center, wholesaler, retail store, etc.
CONTAINERISATION- MEANING
A method of distribution of goods using containers. The use of containers has facilitated as well as
revolutionized the carriage of goods. The containers are carried by train or road to the sea ports
where they are loaded on the ships for onward transportation to their destination.
CONTAINERISATION- PROCEDURE
The exporters do not need to carry the cargo to the seaports and can directly approach the container freight station or the inland container depot to book the cargo there for transportation to the destination.
The custom clearance of cargo is provided at the inland container depots, and in the process, the exporters are able to save a lot of time.
The packing of cargo in a container is either done at the depot or in the factory of exporter.
TYPES OF CONTAINERS
General purpose containers Refrigerated containers Fruit containers Bulk containers Ventilated containers Open top containers Open sided containers Hanger containers Bin containers
Stuffing of cargo in the container
Different types of packages should be packed separately. Container should be lined with paper or foil in case of
specially sensitive goods. Packing in the boxes should be carefully checked. Exporter should not pack together:
– Wet goods with dry goods– Goods with sharp edges or corners with goods in soft packaging– Dusty goods with dust sensitive goods– Placing heavy packets on light packets– Odour emitting goods with odour sensitive goods
Precautions for Packing the Containers
The container should be thoroughly checked to ensure that:
There are no holes or cracks in walls or roofs. The doors can be easily operated. Locking doors and handles function properly. There are no labels pasted of the previous cargo. Container is water proof. Container is absolutely dry from inside. Container is clean and free of dust. Container is odourless.
Advantages of using Containers
Risk of damage is reduced substantially. Delivery of goods is done in a good condition. Packing costs are reduced substantially. No mishandling of cargo.
INTER-MODAL TRANSPORT
Intermodal freight transport involves the transportation of freight in a container or vehicle, using multiple modes of transportation (rail, ship, and truck), without any handling of the freight itself when changing modes.
Mostly associated with “piggyback” or container shipments.
BENEFITS OF INTER-MODAL TRANSPORT
Allow freight to be transported faster. Reduced cost Combines advantages (and disadvantages) of each mode
used Reduces risk of theft and loss Shortens customer order cycle time Promotes “seamless” product movement Eliminates unnecessary handling
MULTI-MODAL TRANSPORT
Multimodal Transport is commonly known as referring to a transport operation that is carried out using different modes of transport and organised by a single operator.
Multimodal Transport is also a legal concept strictly defined in the United Nations Convention on the International Transport of Goods and other international instruments, where the specified liability regime of the operator differs from those applicable in modal
operations.
Benefits of Multi-Modal Transport
Multimodal Transport is generally considered as the most efficient way of handling an international door to door transport operation.
Multimodal Transport allows to combine in one voyage the specific advantages of each mode, such as the flexibility of road haulage, the larger capacity of railways and the lower costs of water transport in the best possible fashion.
Multimodal Transport also offers the shipper the possibility to rely on a single counterpart, the multimodal transport operator (MTO) who is the architect of the entire journey and only responsible party from pickup to delivery, rather than having to deal with each and every modal specialist of the transport chain.
Benefits of Multi-Modal Transport
The burden of documentation and other formalities connected with segmented transport is reduced.
Loss of time and risk of loss, pilferage and damage to the conventional segmented transport are eliminated.
The through rates offered by MTO make it easier for the exporter to negotiate sales contracts with foreign buyers on the basis of delivered prices.
The resultant cost savings tend to reduce the through freight rates and the cost of cargo insurance.
Multi-Modal Transport Document
Mentions the place of acceptance and place of delivery. May be issued by an operator who does not necessarily
owns the ships used to carry out any sea transport involved.
Confirms that the goods have been “taken in charge”. Involves transshipment. MTD constitutes the title to the goods and is transferable
by endorsement.
Multi-Modal Transport- The Challenge
Multimodal Transport requires a thorough control over all the steps involved in international transport, including multiple storage and handling stages.
This means extensive use of information technologies and carriers networks and regulatory frameworks that can provide freedom to plan and operate to carriers and reliable liablity regimes to customers.
Multimodal transport needs to be competitive in markets where unimodal operations not only have been there for a long time but also are simpler to handle and, most of time, more cost effective.
CFS- Container Freight Stations
CFS is a place where containers are stuffed, de-stuffed and aggregation/ segregation of export/import cargo takes place.
With the growing volume of international trade, the need for expeditious clearance of goods at the port within the minimum possible time has been gaining importance. This is more so when the ports are facing congestion at their premises.
Further, for optimal utilization of existing infrastructure, space, equipment, goods that are landed at ports need to be evacuated straightaway without any loss of time.
Accordingly the concept of Container Freight Stations(CFS) has grown in importance along with the development and growth of ports.
CFS
A CFS is an extended arm of Port/ ICD/Air cargo Complex, where import/ export goods are kept till completion of their examination and clearance.
The imported goods can be immediately shifted from the port to CFS which also helps in the reduction of port congestion.
All the activities related to clearance of goods for home consumption, warehousing, temporary admissions, re-export, temporary storage for onward transit and outright export and transshipments take place from such stations.
Therefore, clearance of goods from CFS is an important point of consideration for trade in respect of export/ import Cargo as it is the final Customs contact point.
Main function of CFS
Receipt,dispatch and clearance of Containerized Cargo, up-to-date inventory control and tracking system to locate containers/cargo.
CFS in case of imports
In respect of import consignment, the Steamer Agents/liners/Importers desiring to take the consignment to CFS, file Import General Manifests in the port.After obtaining the permission,the Container moves to CFS under Customs escort or under bond and bank guarantee. The CFS allow de-stuffing of the goods. The importer files the Bill of Entry at Customs House and then Customs formalities of assessment, examination and payment of duty are completed. Thereafter, Customs gives“Out of Charge” and the Custodian releases the goods from CFS by issuing a Gate-Pass.
CFS in case of exports
In respect of exports, the goods are brought directly to CFS under a Shipping Bill. The export cargo in Less than Container Load(LCL)/ Full container Load (FCL) is received by the Custodian of CFS for safe custody.After stuffing of the goods, Container/ Customs Bonded Truck (CBT) is sealed by the Custom Officer and the same is removed from CFS for export through the desired Port.
ICD
The Inland Container Depot (ICD) is a common user facility with Public Authority status.
It is equipped with fixed installations and offering services for handling and temporary storage of import/export laden and empty containers carried under Customs control and with Customs and other agencies competent to clear goods for home use, warehousing, temporary admissions, re-export, temporary storage for onward transit and outright export.
It has all the loading and non- loading equipments needed to handle container cargo.
Objectives of ICD
Bring shipping services to the doorstep of shippers across the nation.
Assist in decongesting the seaports and make them more user-friendly.
Help revive and modernize the railway as a primary mode for the long distance haulage of cargo.
Assist in the reduction of overall cost of cargo. Transit cargo to Landlocked neighbouring countries Integration of surface transportation of containers; Cargo consolation point and custom clearance establishment
close to areas of production and consumption; A comprehensive cargo sorting centre and a temporary cargo
facility.
Benefits of ICD
1. Establishment of customs clearance facility close to production and consumption centers,
2. Improved container usage and reduction in the movement of empty containers;
3. Improved turn around time of ships thereby reducing demurrage and avoiding pilferage;
4. Issuance of “Through Bill of Lading” by Shipping lines and thereby assuming liability from dispatch to destination ports;
5. Lower freight to increase trade flows; 6. Optimal use of surface transport and the decongestion of
the sea ports;
Benefits of ICD
7. Reduction in marine pollution activities around the seaport.
8. Easy and safe access to international shipping facilities in the hinterland giving a boost to inland trading;
9. Revitalization of export agriculture leading to multi- product economy and the avoidance of employment opportunities stemming urban-rural drift and increase in revenue to the government
10. Rehabilitation of the surface transport system and enhanced usage of containers.
11. Reducing the pressure on the roads and avoiding the carriage on the road.
INDIAN SHIPPING – INDIAN SHIPPING –
GROWTH, POLICY AND PROBLEMS
eEnterprises LabOverview of the Indian container
shipping industry• India is a peninsular country and there are
dozens of large and several smaller ports along its coastline.– Chennai (Madras), Vizag, Tuticorin, Cochin, Kolkatta
(Calcutta), on the east coast– Goa, Mangalore, Mumbai (Bombay) on the west coast
• The typical volume of containers handled by a medium sized port is in the range of 250,000 – 300,000.
• Most of the business transactions among partners, are currently being done manually.
eEnterprises Lab
Types of companies
Local, small and medium sizedcompanies
– Access to larger clientele because of their international presence
– Sophisticated systems at their foreign operations, but not yet deployed in India
–Lower volumes–Very minimal information systems capabilities
–Elaborate infrastructure for operation–Reasonably good enterprise information systems but almost non-existent business integration
Multinational companies (examples:OCS-NYK line, etc)
Domestic Large (e.g., Container Corporation
of India, St. Johns Freight systems)
eEnterprises Lab
Challenges
• Infrastructure– Power, computing
facilities and connectivity
• Systems/software costs– Varies widely and
is significant
• Processes– By and large well
documented
Remarks: The underlying
infrastructure has become affordable for most companies
The move from manual processes is not only a technological one, but cultural as well.
Port
A port is a facility for receiving ships and transferring cargo.
They are usually situated at the edge of an ocean, sea, river, or lake. Ports often have cargo-handling equipment such as cranes and forklifts for use in loading/unloading of ships, which may be provided by private interests or public bodies.
Harbour pilots , barges and tugboats are often used to safely maneuver large ships in tight quarters as they approach and leave the docks.
Ports which handle international traffic will have customs facilities.
Types of Ports
Some ports on a lake, river, or canal have access to a sea or ocean; they are sometimes called "inland ports".
A "fishing port" is a type of port or harbor facility particularly suitable for landing and distributing fish.
A "dry port" is a term sometimes used to describe a yard used to place containers or conventional bulk cargo, usually connected to a seaport by rail or road.
A "port of call" is an intermediate stop, where a ship picks up supplies, fuel, etc.
Port trust
An association or body consisting of chairman and other trustees for governing and regulating the operations of the port.
There are more than 2,000 ports around the world, from single berth locations handling a few hundreds tons a year to multipurpose facilities handling up to 300 million tons a year
More than 80 percent of trade with origins or destinations in developing countries, in tonnage, is waterborne
World port traffic is made for 45% of liquid bulks (mainly oil, petroleum products, and chemicals), for 23% of dry bulks (coal, iron ore, grain, and phosphate), and for 32% of general cargo.
Containerization of general cargo traffic has progressed steadily over the last 20 years
PORTS SECTOR – GLOBAL OVERVIEW
Source : World Bank / UNCTAD
PORTS SECTOR – GLOBAL OVERVIEW
Transport usually accounts for a quarter of total logistics costs in OECD countries, storage for a fifth, and inventories for a sixth.
As a consequence of both liberalization of maritime transport and corporate restructure in the shipping industry, international freight rates have significantly decreased in real terms over the last 10 years, often by more than 40%
Maritime freight costs, as a percentage of import values, have decreased from 6.64% on average for the whole world in 1980 to 5.24% in 1997. For the developing world, the corresponding figures were 10.4% in 1980, 8.60% in 1990 and 8.04% in 1997, and still 11.53%for Africa.
Total logistics costs (packaging, storage, transport, inventories, administration and management) are estimated to reach up to 20% of total production costs in OECD countries, while freight costs alone (transport and insurance) can make up to 40% of values of exports for several African landlocked countries.
Source : World Bank / UNCTAD
The role of ports have changed from “patronizer” to “facilitator and service provider”
From a mere landing station for ships to load and unload cargo, seaports have emerged as a critical part of the Global value Chain
The past decade has witnessed relocation of industrial manufacturing resulting in shifts in global trade flow
Falling barriers to international trade have allowed businesses to locate different parts of their production processes across the globe
This is done to take advantage of the fine differences in cost, resources, logistics and markets, in their search for competitive advantage
EMERGING ROLE OF PORTS IN WORLD TRADE
The trends in global shipping has tended to increasingly favour deployment of large sized vessels (ULCCs,VLCCs, Cape size, Super cape size, 6000, 10,000 TEU’s) requiring deeper draught ports
Efficient modes of cargo discharge are required to minimize detention time and thus costs
Deep draught berths and efficient modern container handling equipment have become essential to attract mainline vessels
EMERGING ROLE OF PORTS IN WORLD TRADE
INDIAN PORTS SECTOR
The 6000 Km coastline of India is dotted with 12 major ports and around 180 minor and intermediate ports
History of organized major ports in India dates back to the 19th Century, with the commissioning of the Kolkota port in the year 1870 followed by Mumbai Port in 1875 and Chennai Port in 1881
Ennore Port is the youngest and the first corporate port, commissioned in June 2001
Over 95% of the overseas cargo volumes are routed through these ports
The rise of competition, the globalization of exchanges and the resulting international restructuring have forced businesses, now subject to growing competitive pressures, to seek greater competitiveness and differentiation
Subsequently logistics has become an important strategic procedure in the improvement of competitiveness
A structured and powerful logistic service represents a guarantee of efficiency and reliability, the supplier having to deliver the right product, in the right quantity at the right time
Logistics interfaces between producers and distributors, has become critical in establishing competitiveness of products
PORTS AND THE COMPETITIVE EDGE
The concentration of the production units and their relocation far from their destination market implies an increasing recourse to logistic services, which becomes the essential link in this competitiveness approach
PORTS AND THE COMPETITIVE EDGE
WHAT AILS THE INDIAN PORT SECTOR
Evolved as state monopolies, the Indian ports may not exactly be ready to meet the challenges of free trade and economic globalization
In fact Indian ports remain a bottleneck in the supply distribution chain
Monopoly and inadequate investments in technology have resulted in inefficient operations and high cost of services
Bottlenecks in the form of poor Road and rail Connectivity to hinterland have substantially impeded the growth of ports
Labor unions impeded and obstructed the reduction of the labor force and up gradation of skills which is possible only through modernization of port-handling equipment.
Centralized government control slowed down the pace of planning,and the command structures, limited responsiveness to market demand.
Public investment in port infrastructure was insufficient or inadequate, because it relied heavily on state budget.
WHAT AILS THE INDIAN PORT SECTOR
THE ROAD TO REFORM
Globally, Privatization of port facilities has proved to improve efficiency of port operations as well as bring about cost efficiency
Private sector has also proved its ability to bear the financial burden of port expansion and modernization
Private sector is better at planning, financial management and risk management
They are subject to less political interference