Sea Freight – an overview

S.L.Ganapathi

Sea Borne Trade

Barring urgent and valuable freight most of international trade is carried by sea. Even landlocked countries have seaports of neighbours as gateways

Global Seaborne trade is around 7.5 billion tonnes India’s seaborne international trade is 600 million tonnes India ‘s international air cargo traffic is 2.19 million

tonnes

Types of Ships- Dry Cargo Ships-- General Cargo break bulk ships

--- Container ships

--- Combi ships

--- Ro- Ro ships ( Roll on Roll off )

--- Pure Car Carriers ( PCC)

--- Heavy Lift ships

--- Special Vessels like Chip Carrier/Refrigerated Goods carriers etc

--- Bulk Carriers

Fuelling Ships (Bunkers)

Table of fuel oils Name Alias Alias Type Chain Length No. 1 fuel oil No. 1 distillate No. 1 diesel fuel Distillate 9-16 No. 2 fuel oil No. 2 distillate No. 2 diesel fuel Distillate 10-20 No. 3 fuel oil No. 3 distillate No. 3 diesel fuel Distillate No. 4 fuel oil No. 4 distillate No. 4 residual fuel oil

Distillate/Residual12-70 No. 5 fuel oil No. 5 residual fuel oil Heavy fuel oil Residual12-

70 No. 6 fuel oil No. 6 residual fuel oil Heavy fuel oil Residual20-

70

PLIMSOLL LINE

Tonnages and Capacity

Gross Register Tonnage(GRT) represents the total internal volume of a vessel, where a register ton is equal to a volume of 100 cubic feet (2.83168 m3), which volume, if filled with fresh water, would weigh around 2,800 kg or 2.8 tonnes

Net register tonnage (NRT) is the volume of cargo the vessel can carry; i.e., the gross register tonnage less the volume of spaces that will not hold cargo (e.g., engine compartment, helm station, crew spaces, etc., again with differences depending on which port or country is doing the calculations). It represents the volume of the ship available for transporting freight or passengers

Dead Weight Tonnage(often abbreviated as DWT for deadweight tonnes) is the displacement at any loaded condition minus the lightship weight. It includes the crew, passengers, cargo, fuel, water, and stores. Like Displacement, it is often expressed in long tons or in metric tons.

Capacity in Volume

Bale Cube (or Bale Capacity)- The space available for cargo measured in cubic feet to the inside of the cargo battens, on the frames, and to the underside of the beams. It is a measurement of capacity for cargo in bales, on pallets, etc., where the cargo does not conform to the shape of the ship.

Grain Cube (or Grain Capacity)- The maximum space available for cargo measured in cubic feet, the measurement being taken to the inside of the shell plating of the ship or to the outside of the frames and to the top of the beam or underside of the deck plating. It is a measurement of capacity for cargo like grain, where the cargo flows to conform to the shape of the ship.

Terms associated with Bulk Carriers Handymax - a bulk carrier, typically between 35,000 and 60,000

DWT. A Handymax is typically 150-200 meters (492-656 feet) in length, though certain bulk terminal restrictions such as those in Japan mean that many handymax ships are just under 190 meters in overall length (LOA). Modern handymax designs are typically 52-58,000 dwt in size, have 5 cargo holds and 4 cranes of 30 mt lifting capacity.

Panamax is determined principally by the dimensions of the canal's lock chambers, each of which is 33.53 metres (110 ft) wide by 320.0 metres (1050 ft) long, and 25.9 metres (85 ft) deep. The usable length of each lock chamber is 304.8 metres (1000 ft). The available water depth in the lock chambers varies, but the least depth is at the south sill of the Pedro Miguel Locks, and is 12.55 metres (41.2 ft) at a Miraflores Lake level of 16.61 metres (54 feet 6 in). The height of the Bridge of the Americas at Balboa is the limiting factor on a vessel's overall height.

Contd… Suezmax is a term for the largest ships capable of

fitting through the Suez Canal fully loaded, and is almost exclusively used in reference to tankers. Since the canal has no locks, the only serious limiting factor is draft (maximum depth below waterline). The current channel on the canal allows for 16 m (53 ft) of draft, meaning many supertankers are of too deep a draft to fit through.

The term Seawaymax refers to vessels which are the maximum size that can fit through the canal locks of the St Lawrence Seaway. Seawaymax vessels are 740 feet in length, 78 feet wide, (maximum 226 m length, 24 m beam) and have a draft of 26 feet (7.92 m).

Contd…

Capesize ships are cargo ships too large to traverse either the Suez Canal or Panama Canal (i.e., larger than both panamax and suezmax vessels). To travel between oceans, such vessels must round the Cape of Good Hope and Cape Horn. Capesize vessels are typically above 150,000 deadweight tons, and ships in this class include VLCC and ULCC supertankers and bulk carriers transporting coal, ore, and other commodity raw materials. The term is most commonly used to describe bulk carriers rather than tankers, however. A standard capesize bulker is around 175,000 tons deadweight, although larger ships (normally dedicated to ore transportation) have been built, up to 400,000 dwt. The massive dimensions (and generally very deep drafts) of such large vessels mean that only the largest deep water terminals can handle them.

SummaryTerm Definition              

 

Handymax Dry cargo vessel of about 45,000 d.w.t.   

Handysize Dry cargo vessel of about 25,000 d.w.t.

Panamax A vessel that is designed to transit the Panama Canal.

  Suezmax Tanker of about 120,000 to 200,000 d.w.t.

  Supramax Dry Cargo Vessel of about 52,000 d.w.t.

  ULCC

Ultra Large Crude CarrierTanker larger than 300,000 d.w.t.

  VLCC

Very Large Crude CarriersTankers between 200,000 and 300,000 d.w.t.

 

Aframax An oil tanker smaller than 120,000 dwt and with a breadth above 32.31 m – usually above 80,000 dwt

Liquid Carriers

Oil Bulk Ore Carriers Tankers --- Crude Tankers of variuous

sizes– Handy Max to Ultra Large Crude carriers

Product Tankers Chemical /Vegetable Oil Tankers

Gas Carriers

Liquid Natural Gas Carriers Liquid Petroleum Gas Carriers Other Gas carriers

Types of shipping

Tramp Shipping

Liner Shipping

Contracts of Affreightment

Hybrids

B rek

Break Bulk Ship

Bulk Carrier

Geared Container Ship

Gearless containership

Heavy Lift Ship

Crude Oil Tanker

Gas Carrier

Product Tanker

Ro-Ro Ferry

Car Carrier

Definitions Tramp Shipping Ships which chase cargoes –they go where the cargoes are available Generally for bulk movement of grains/fertilizers/ores/coal etc which needs to be

moved in millions of tonnes A) to meet the supply chain demand B) to ensure unit cost of transport becomes low in proportion to low value of such

goods Such ships are large sized to ensure optimal unit cost of transportation The Freighting system for these movements are Chartering i.e. Voyage Charter and/or Time Charter/Contract of affreightment The document covering contracts is called Charter Party Charter Party Bill of lading to cover each specific movement

Charters Voyage Charter Contract for movement of one specific parcel from one or two load ports to one or two discharge

ports Freight rate USD per tonne Time Charter Wet Charter Bare Boat Charter- crew will be of that of charterer. Trip time charter The ship is chartered on a per diem rate for a period USD per day Contract of affreightment it is a contract for carrying an amount of cargoes between two places over a period There is some latitude for ship-owners a number of ships of a certain types with a flexible time

period to carry out the contract Draft & Ullage Draft is the depth of water under the ship’s water line- measuring of draft also is a way of quantity

loaded on the ship. This method is called draft survey

Ullage is the empty space above the liquid level in tanks of Tankers. Measuring ullage along with temperature and pressure and calculating the quantity loaded is more accurate way of survey

Characteristics of Voyage Charter

Lay days- The window in which ship should report for loading Notice of Readiness FI/FO (Free in/Free Out) Load & Discharge rates Ship to specify the holds/hatches available for loading Demurrage/dispatch charges Dead Freight Draft and speed Statement of Facts/Lay days statement and dispatch/demurrage

calculation

REFER GENCON CHARTER PARTY ATTACHED WHICH IS THE CONTRACT BETWEEN MERCHANT AND SHIPOWNER

Factors to be kept in mind while chartering vessels Draft Restrictions – Load/ Discharge Ports Port handling facilities Load/ Discharge Ports Sea lane restrictions (e.g. Panama size) Lightening possibilities and costs International market conditions Vetting and empanelment of brokers Lead from port to Inland point Inland Transport Options

Liner shipping

Ships which operate on specific routes and scheduled dates

Generally for smaller parcels of value goods which can sustain a higher freight

Break Bulk ships in which goods were loaded in sea worthy packing now mostly replaced by container vessels and container mode of transport

Movement covered by Liner Bill of Lading or Multimodal Transport document-(this will be discussed in detail in documentation section of the course)

Liner Shipping Liner shipping: Ideal for those who have small volumes or high value products,

which do not justify chartering of ships. If high value cargo is shipped on chartered vessels in large quantity the cost of inventory goes up drastically. Liner ships offer regular reliable shipping service to the trade with fixed schedule.

Liner ships Ply on a regular scheduled services between groups of ports. Offer cargo space irrespective of volume, to all shippers who require them. Sail on scheduled dates, irrespective of whether they are full or not. Carry general cargo and unitized cargo in containers Liner shipping is the common arrangement for general cargo and containers,

whereas all other trades are usually accommodated through tramp shipping. However, this divide is not strict, as liner operators may charter tramp ships to complement their fleets in times of peak demand, and tramp operators may occasionally engage in regular liner services for limited periods.

Today in view of many advantages of containers 95 per cent of Liner ships are container ships-containers have been designed to carry all shapes and weights of cargoes

Liner Versus Tramp Item Liner Tramp

Commodity General Cargo Bulk Materials

Ships Container ships/Break bulk ships

Bulk carriers/Tankers/Gas Carriers/OBO’s

Contract Liner Charter party

Bill of Lading Liner Charter party

Loading /Discharging costs Part of Freight/responsibility of ship

Separate- the responsibility is that of shipper/receiver

Shippers/ Receivers A large number One or small numbers

Size of ships Barring large container vessels of sizes are not that big

Can go up to 600,000 tonnes in case of ULCC

Freight Indices The Baltic Handymax Index (BHMI), is calculated from the

weighted, average rates on major timecharter routes, with two trial voyage routes, as assessed by a panel of brokers.

The Baltic Panamax Index (BPI), is calculated from the weighted, average rates on major routes, both voyage and timecharter, as assessed by a panel of brokers.

The Baltic Capesize Index (BCI), is calculated from the weighted, average rates on major routes, both voyage and timecharter, as assessed by a panel of brokers.

The Baltic Dry Index (BDI), is the average of the Baltic Handymax Index (BHMI), the Baltic Panamax Index (BPI) and the Baltic Capesize Index (BCI). The BDI provides a good general indicator of movement in the dry bulk market, and continues the established time series of the Baltic Freight Index (BFI) which was introduced in 1985.

The Baltic Dry Index (BDI) as at 2006 Oct 25

Source: http://www.rubbernet.com.sg/annual_patterns.htm

CARGO ORDERACCT; PRESIDENT OF INDIA25,000 TONNES + 5PCT MOLOO, UREA IN BULK 1 S.P., 1 S.B. JUBAIL – 1 S.P, 1S.B. WCILAYCAN; 5-10 DECEMBERLOAD 5000/DISCH 2500 SHEX EIU BENDS SDBC, MAX 20yrs Min. 4X25T CRANESRATNA USHA FERTICON C/P DATED 05-08-2006 WITH LOGICAL AMENDMENTS3.75 PCT TTL HERE INCL. 2.5 ADDCOMOFFERS TO BE SUBMITTED BY 1000 HRS I.S.T. TMRW PLEASED TO HEAR BROKER DETAILS

R

. YOUR CARGO ORDER, WE ARE PLEASED TO OFFER “FIRM” AS FOLLOWS FOR YOUR REPLY BY 1300 HRS. I.S.T. TDY:- •ACCT. PRESEDENT OF INDIA •25,000 + 5 PCT CHOPT UREA IN BULK •I S.P. I S.B. JUBAIL – I S.P, I S.B. WCI•LAYCAN : 5-10 NOV. LIKELY E.T.A. 071200GMT•M.V. STARDUST- BLT MAY, 2002 DESCRIBUED AS BELOW:- SDBC ,4X2\5 T CRANES, 5HO/HA,F.O. 28T/DAY, D.O. 2.5T/DAY ……………………•FRT USD 18.50 PMT BSS 1/1. USD I.O PMT EXTRA ON ENTIRE QUANTITY IF 2ND DISPORT USED•DEMM. USD 13500 PDPR/HALF DESPATCH •3.75 PCT TTL INCL. 2.5 PCT. ADDCOMM•OWISE TRANSCHART C/P “STARDUST” 14.05.06 WITH LOGIOCAL AMENDMENTS.

Shipping Agency

Shipping has traditional agency functions however over a period of time has turned into deeply outsourced business

Owners Agency Charterers Agency Port Agency Commercial/ Marketing Agency Ship/Crew Managment

Liner shipping

Ships which operate on specific routes and scheduled dates

Generally for smaller parcels of value goods which can sustain a higher freight

Break Bulk ships in which goods were loaded in sea worthy packing now mostly replaced by container vessels and container mode of transport

Movement covered by Liner Bill of Lading or Multimodal Transport document-(this will be discussed in detail in documentation section of the course)

Liner Shipping Liner shipping: Ideal for those who have small volumes or high value products,

which do not justify chartering of ships. If high value cargo is shipped on chartered vessels in large quantity the cost of inventory goes up drastically. Liner ships offer regular reliable shipping service to the trade with fixed schedule.

Liner ships Ply on a regular scheduled services between groups of ports. Offer cargo space irrespective of volume, to all shippers who require them. Sail on scheduled dates, irrespective of whether they are full or not. Carry general cargo and unitized cargo in containers Liner shipping is the common arrangement for general cargo and containers,

whereas all other trades are usually accommodated through tramp shipping. However, this divide is not strict, as liner operators may charter tramp ships to complement their fleets in times of peak demand, and tramp operators may occasionally engage in regular liner services for limited periods.

Today in view of many advantages of containers 95 per cent of Liner ships are container ships-containers have been designed to carry all shapes and weights of cargoes

Liner Versus Tramp Item Liner Tramp

Commodity General Cargo Bulk Materials

Ships Container ships/Break bulk ships

Bulk carriers/Tankers/Gas Carriers/OBO’s

Contract Liner Charter party

Bill of Lading Liner Charter party

Loading /Discharging costs Part of Freight/responsibility of ship

Separate- the responsibility is that of shipper/receiver

Shippers/ Receivers A large number One or small numbers

Size of ships Barring large container vessels of sizes are not that big

Can go up to 600,000 tonnes in case of ULCC

Containerization:With the introduction of containers the entire transport industry underwent drastic

change.Design of ships changed. Ship owners acquired Gearless Cellular Ships.

Size of ships increased dramatically. With lower operating cost, shipping lines could compete with other carriers.

Turn around time of ships improved.Ports underwent major change by building deep-water berths and container terminals.Traditional cargo handling equipments in the port were replaced with most modern Rail

Mounted Quay Cranes, Rubber Mounted Gantry Cranes, Reach Stackers and Large Size Fork lifts.

Road transport vehicles were split in to two parts i.e. Tractor or Prime Mover or Horse and trailer.

Rail companies also took advantage of containerization by introducing services like Trailer on Flat Car (TOFC) and Container on Flat Car (COFC). This change assisted Rail

Companies to regain their business from road transporters.Shipping lines and rail companies promoted Inland Container Depots or Container

Bases or Dry Ports at landlocked industrial towns. This resulted in Multi Modal Operations and Door-to-Door service.

Feeder/Voy ETA ETD ETA Connects   ETD ETD ETD ETA ETA

  Nhava Nhava Singapore   SVC Singapore Hong Kong KAOSHIUNG San Pedro Seattle

                     

  dd-mmm dd-mmm dd-mmm     dd-mmm dd-mmm   dd-mmm dd-mmm

                     

OOCL SAN FRANCISCO - 085 23rd November 24th November 02nd December APL SEOUL - 050 KCS 04th December   08th December    

        APL LATVIA - 008 SAX 04th December     24th December 27th December

        BASLE EXPRESS - 005 LP4 07th December        

                     

SINGAPORE - 006 30th November 01st December 09th December APL RIYADH - 047 KCS 18th December   22nd December    

        APL NINGBO - 025 SAX 12th December     31st December  

        APL NEW JERSEY - 026 CMX 15th December       17th January

        BASLE EXPRESS - 005 LP4 12th December        

                     

APL GERMANY - 172 07th December 08th December 16th December APL DOHA - 045 KCS 25th December   29th December    

        APL SAVANNAH - 004 SAX 18th December     07th January  

        APL OREGON - 026 CMX 22nd December       17th January

                     

APL IRIS - 179 14th December 15th December 23rd December APL SEOUL - 051 KCS 01st January   05th January    

        APL NEW YORK - 006 SAX 25th December     14th January 17th January

        OOCL CHICAGO - 008 CMX 29th December        

                     

APL IOLITE - 177 21st December 22nd December 30th December APL BAHRAIN - 043 KCS 8th January   12th January    

        APL PHOENIX - 005 SAX 1st January     21st January 24th January

        APL AUSTRIA - 033 CMX 5th January        

                     

EMIRATES PEARL - 349 28th December 29th December 06th January APL RIYADH - 048 KCS 15th January   19th January    

        APL TURKEY - 034 SAX 08th January     28th January 31st January

Container Lines- Hub and spoke operations Container ships are growing by size to keep pace with

competition and with constant endeavor to reduce unit cost

These ships cannot call at many ports because of costs and time- yet they have to be near full

Hence feedering of containers is done to hub ports In the Far-East Europe trade Singapore and Colombo

are hub ports for Indian cargoes Recently Maersk Line has introduced a direct service

from Chennai to USA – and Chennai port is being used as hub for containers from Chittagong and Kolkata

MULTI-MODAL TRANSPORTWhat is multi modal transport?Inter-modal or multi-modal transport became integral part of shipping industry and undoubtedly goes hand in hand with containerization.As per U. S. Department of Transportation, "Intermodal used to denote movements by cargo containers interchangeably between transport modes, i.e. motor, water and air carriers, and where the equipment is compatible within the multiple system".Business EnvironmentIn competitive Business environment, liner-shipping companies are striving to achieve a competitive edge over- their rivals in the markets.Liner companies are becoming more and more marketing / customer oriented. The multi-modal transport operator issues one Bills of Lading covering entire journey and shoulders the responsibility for the whole transport operation in all its stages. Future of shipping companies depends to a great extent, on their ability to fulfill the customers' needs.International Multi-modal transport systemThe International multi-modal transport system, one company offers combined, or multi-modal transport services.The transport operation utilizes at least two modes of transport.The transport operation is from the exporter's stores to the consumer's stores.Due to the pressing necessity to provide an International system for multi-modal transport, UN UNCTAD submitted a proposal for- the International Multi-modal Transport Convention, which was adopted during its session, held in Geneva in 1980. This convention stipulates that a contract should be concluded between the shipper and the multi-modal transport operator, by which the latter undertakes to carry out an International transport operation, whether he himself carries out the operation, or whether- it is carried out through other parties.