Lecture 2: Introduction to Freight Markets Flashcards
What is a freight market?
A platform where shipping services are bought and sold, connecting cargo supply with vessel demand.
What happens in a charterer’s market?
More ships available → Lower freight rates → Charterers have bargaining power.
What happens in an owner’s market?
More cargo, fewer ships → Higher freight rates → Shipowners have bargaining power.
What does the Baltic Dry Index (BDI) track?
It tracks bulk freight rate trends (excludes tankers).
Name the vessel types in the dry bulk market.
Handysize, Supramax, Panamax, Capesize.
Which dry bulk vessel type does not have an index?
Handysize.
What are the key trade routes for the dry bulk market?
Australia-China (iron ore), US-Europe (grain).
What are the key factors influencing dry bulk freight rates?
Global events, commodity demand, port congestion, seasonal variations.
What is transported in the wet market?
Liquid cargoes like crude oil, petroleum products, and chemicals.
Name the vessel types for crude oil transport in increasing size.
Aframax, Suezmax, VLCC, ULCC.
What are the main vessel types for transporting refined oil products?
MR, LR1, LR2 (varies by voyage distance).
What index sets freight costs for oil tankers?
Worldscale Index.
What are the vessel types in the specialized market?
LNG/LPG carriers, Ro-Ro ships, heavy-lift/project cargo vessels.
What factors influence freight rates in the specialized market?
Port infrastructure, demand for niche cargo types, fleet availability.
Name three market players in freight markets.
Shipowners, Charterers, Brokers, and Operators.
What does the Baltic Exchange Capesize Index (BCI) track?
Freight rates for Capesize vessels (130,000–210,000 DWT).
What does the Baltic Exchange Supramax Index (BSI) track?
Freight rates for Supramax vessels (52,000–60,000 DWT).
How many holds does a Supramax vessel have?
Five holds.
How many holds does a Panamax vessel have?
Seven holds.
How many holds does a Capesize vessel have?
Nine holds.
What is the purpose of the Worldscale Index?
To standardize tanker freight rates for various oil routes.
Name three main types of chartering.
Voyage charter, time charter, bareboat charter.
What are the key steps in the chartering process?
Analyze cargo/vessel needs → Engage brokers → Negotiate terms → Sign Charter Party contract → Execute voyage → Settle post-voyage.
What is a major geopolitical event that impacted freight markets in 2022?
Russia-Ukraine War.
What global conflict disrupts oil and LNG trade through the Strait of Hormuz?
US-Iran tensions.
How did the US-China Trade War impact bulk shipping?
China diversified its sourcing for bulk commodities, turning to suppliers like Brazil.
What financial event caused a sharp decline in global trade volumes in 2008?
Global Financial Crisis.
How did the COVID-19 pandemic affect freight rates?
Port disruptions led to container shortages and skyrocketing freight rates.
What 2023 climate event restricted vessel sizes and caused transit delays?
Drought in the Panama Canal.
What is the IMO 2020 Sulfur Cap?
A regulation limiting sulfur content in marine fuels, increasing operational costs.
How did the Suez Canal blockage in 2021 affect global trade?
It disrupted trade flows, causing delays and freight rate spikes.
Why has LNG carrier demand increased in recent years?
The global shift to LNG, especially after Russia cut gas supplies to Europe.
How does the EU Emissions Trading System (ETS) impact shipping?
It increases operational and chartering costs for voyages to Europe.
What technology is streamlining chartering negotiations?
Decentralized freight platforms using blockchain.
