Lecture 5 Flashcards
Chapter 10 & 11
What are the 3 basic types of ocean carriers?
- Private fleets;
- Tramps (chartered or leased vessels);
- Liner carriers
What are the cargo types?
- Bulk Cargo
- Break-bulk
- Neo-bulk
- Project cargo
- Container Cargo
Describe the bulk cargo
“Cargo is said to be stowed in bulk when it is stowed loose instead of being first packed in containers.”
Bulk cargoes are those that can be air-blown, pumped, conveyored, belted, or generally handled in bulk rather than in discrete units. They include petroleum products, grain, sand, gravel, dry chemicals, and bulk liquids.
Describe the break-bulk
– Is the other type of cargo, also called general, or packaged, cargo.
– It has high value per unit of weight, is usually manufactured or processed
– It moves by number or count. This moves in smaller quantities than bulk cargo, and usually on liner vessels that travel on regularly scheduled routes between ports.
Break-bulk cargoes are generally cargoes that are conventionally stevedored and stowed as opposed to bulk, unitized and containerized cargoes. Examples are peas, beans, lentils, machinery, yachts and some wood products such as newsprint, pulp and linerboard.
Describe the neo-bulk
– Cargo has some characteristics of bulk and some characteristics of break-bulk cargo. It is usually worth more on a per-kilo basis and it often moves on specialized ocean vessels. The two best known examples are new automobiles and logs.
Neo-bulk cargoes, though historically classified as general cargoes, move in volume, usually on specialized or dedicated vessels. Examples include autos, steel, logs, and livestock.
Describe the project cargo
– Not a specific type of item but related cargo needed for a single, certain purpose. Hence, if a contractor were rebuilding a structure in Kuwait or a portion of a major pipeline, the various materials that were to be obtained from outside the local area would be scheduled, purchased, consolidated at various ports, and shipped as needed.
Describe the container cargo
– Use of standardised containers for intermodal shipment. Generally the preferred
method for import and export! Why?
What types of cargo are non containerized?
Non containerized cargo consists of bulk, neobulk, and break- bulk cargoes
What type of goods can be transported in break bulk?
Sacks, cartons, crates, drums, pallets, bags
What type of goods can be transported in Neo-bulk?
lumber, paper, steel, autos
What type of goods can be transported in containerized bulk?
containers, lift on/lift off (Lo/Lo), roll on/roll of (Ro/Ro)
What type of goods can be transported in liquid bulk (one of 2 bulk cargos)?
LNG, petroleum, molasses, chemicals, vegetable oil
What type of goods can be transported in dry bulk (2nd of 2 bulk cargos)?
grain, sand & gravel, scrap metal, coal/coke, clinker, fertilizer
In what measure is expressed vessels’ size?
Tonnage (eventually exterior dimensions, but less often)
What is Deadweight Tonnage (dwt)?
It is the most frequently used measure the size of a ship (this is the sum of the tons of cargo, stores, and fuel a vessel can carry)
What does ‘Gross Tonnage’ mean?
It means the measure of the overall size of a ship.
Previously is defined as the number of units of 100 cubic feet of permanently enclosed space in the ship, leaving out “exempted spaces” like double-bottom and peak tanks.
What does ‘Net Tonnage’ mean?
It means the measure of the useful capacity of a ship- it is a gross tonnage minus spaces that cannot earn revenue, such as the engine room. Gross tonnage applies to vessels, and is often used to compare the relative sizes of various nation’s fleets.
What does ‘Measurement Ton’ mean and to what type of cargo it is applied?
This term applies to liner cargo and is a role stating that cargo should also be measured to determine its cube, and every cubic meter should be counted as one ton, and if the vessel may collect more revenue using this rule, it will. This rule has considerable influence on product and packaging design.
What are the different vessel types?
Tankers
* LNG (Liquefied Natural Gas) Carriers
* Ore and Bulk Carriers
* Combination (Oil and Dry- Bulk) Carriers
* General Cargo Vessels
* Neo-bulk Carriers
* Combined Passenger/Cargo Ships
* Other Ocean Vessel Types
* Short Sea Shipping
* FastShips
* Barges
What percentage of the world fleet is ‘flagged out’ and what does it mean?
73%. It means that the nationality of the vessel’s owner was different from the flag under which the vessel was registered. In other words, for almost three out of every four dwt (deadweight tonnage), ship owners chose a flag different from their own nationality.
What about the rest of the percentage of the ships that weren’t ‘flagged out’?
27 per cent are kept under the national flag because either the owner considered the national flag competitive in terms of costs and services provided, or he may not have had a choice, as is often the case for government cargo and cabotage traffic
What are flags of convenience?
A flag of convenience ship is one that flies the flag of a country other than the country of ownership
What does it mean for workers if they work on the flags of convenience ship?
For workers onboard, this can mean:
– very low wages
– poor on-board conditions
– inadequate food and clean drinking water
– long periods of work without proper rest, leading to stress and fatigue
What benefits do ship owners get from ‘flagging out’ their ship?
By ‘flagging out’, ship owners can take advantage of:
– minimal regulation
– cheap registration fees
– low or no taxes
– freedom to employ cheap labour from the global labour market
How many countries are declared FOC (flag of convenience)?
35 countries:
Antigua and Barbuda *Bahamas
*Barbados *Belize *Bermuda (UK) *Bolivia *Cambodia *Cayman Islands *Comoros *Cyprus *Equatorial Guinea *Faroe Islands (FAS) *French International Ship Register (FIS) *German International Ship Register (GIS) *Georgia *Gibraltar (UK) *Honduras *Jamaica *Lebanon *Liberia *Malta *Madeira *Marshall Islands (USA) *Mauritius *Moldova *Mongolia *Myanmar *Netherlands Antilles *North Korea *Panama *Sao Tome and Príncipe *St Vincent *Sri Lanka *Tonga *Vanuatu
Which countries are the leaders of shipbuilding?
South Korea and Japan
Talk about shipbuilding (is it subsidized, where does supply for shipping come from?)
Shipbuilding is subsidized by some nations, and some nations even subsidize ship scrapping operations in order to reduce the supply of older vessels.
* The supply of shipping comes from many sources, but mainly private investors who project a positive income stream over the life of a vessel built for their own use or for use by others
What does ship scrapping mean?
It means ship breaking.
Is ship scrapping popular?
- Every year the number of ships for scrap increases. Each one broken to pieces on the beaches of developing Asian countries. Polluting the environment. Threatening the health and life of the workers.
- None were “beached” in 2019 under an EU flag, despite many vessels having been sold by a European shipping company.
How much tones can dry bulk freighter carry?
It may carry 65,000 tons compared with 50 to 80 tons in a common railcar.
What are the major bulk movements (what is being transported?)?
The major bulk movements are of petroleum, iron ore, coal and grain.
How much of the worlds shipping capacity is used to carry oil and oil products?
About half of the worlds shipping capacity
In what vessels is oil being moved?
Oil moves in tankers. Oil companies own only a small fraction and charter the remainder.
How the petroleum is being moved from the ship?
They moor off shore and lighter their cargo to and from smaller ships alongside, o to or from shore via a floating pipe connection that is tethered to the bottom of the sea.
Where the petroleum can be storaged and for how long?
In the petroleum markets, tankers are also used for storage. They can be moored for up to ten years and function as semipermanent storage tanks.
What is the major concern for shippers of petroleum?
Oil spills. All new tankers of 5,000 deadweight tonnes (dwt) or greater as well as tankers 600 tonnes dwt or greater carrying heavy grade oil as cargo internationally must be fitted with double hulls.
Which countries are the world’s two fastest-growing steel producers?
China and South Korea
Which raw materials transportation represents two substantial movements in the worlds waterborne commerce?
Iron ore and coal
How many types of coal are there?
There are two principal types of coal, but there are many blends.
Are coal piles shaped like cubes?
Coal piles are not shaped like cubes
From which countries does grain shipments move?
North America, South America, and Australia
What does grain consists of?
Wheat, maize, barley, oats, rye, sorghum, and soy beans.
In what type of environment does grain have to be transport in?
Dry environment
What does it mean that the grain is a commodity with a strong futures market?
It means that some buying and selling is done with delivery dates somewhere in the future.
Some bulk cargo requires very special handling. Give example
An example is kaolin, often used in the making of paper. It must be kept perfectly clean; otherwise, it will smudge the new paper
What products do other bulk cargoes transport?
Other bulk cargoes include plastics in granular form, sugar, sulphur, salt, sand, gravel, bauxite, lignite, slag, cement, lune, gypsum, potash, rice, bone chips, talc, borax, scrap iron and steel (handled by magnets), and fertilizers.
Older vessels are eventually scrapped. Why?
Because of the market value of
scrap metal
When do shortages of ships occur?
Only during wars, otherwise a large supply of ships exists in the world
What are the types of charter arrangements?
- Voyage charter or trip charter
- Time Charter
- Bareboat charter
- Multiple voyage charter
Characterize the voyage charter/trip charter
the specific move between the origin and destination, and within the time frame agreed to take possession of and deliver of the commodity.
Characterize the time charter
usually for a period of several months to a year. This would be used, for example, by a steel company that decided it needed to supplement its own fleet to the extent it could fully utilize another vessel for that specified period of time.
Characterize the bareboat charter
The term bareboat charter applies to a time charter in which the owner of the vessel supplies only the vessel and the user must provide the crew. This is also sometimes called a demise charter.
Characterize the multiple voyage charter
A contract of affreightment is a charter arrangement that commits the shipowner “to carry quantities of a specific cargo on a particular route or routes over a given period of time using ships of his choice…”
Through whom does the chartering happen?
Chartering is handled through brokers, with one set representing vessel owners and the other vessel users (charterers).
By what are the charter agreements standardized?
Charter agreements are somewhat standardized by type of cargo, geographic market, or the exchange where brokers handling the transaction are headquartered, such as New York, Piraeus, or Hong Kong.
Describe how do the charter agreements look like? What they include?
Agreements are usually three to five pages long, with about half that space devoted to boilerplate and the other half with details specific to the fixture in question.
How does liner shipping stand out in the world economy?
It stands out in being almost completely cartelized* as far as pricing is concerned.
*cartelized - controlled or regulated by forming a cartel
What are (ocean) liner conferences?
Liner conferences are organizations of vessel operators who serve similar markets. They form cartels to both regulate (some say, eliminate) competition among themselves and protect “their” market from outsiders.
They can be seen as “trade agreements”
Do participants of the liner conferences compete?
Participation in conferences does not mean that members do not compete. Intense competition exists between conference members as they seek cargo.
Where do conferences exist?
Conferences exist throughout the world (not Europe), although they are of varying strengths, and frequently reorganize or realign.
What does rationalization mean in terms applied to conference behavior?
Rationalization means reducing the capacity of an existing fleet to better fit a shrinking or level market.
Can liners be members of more than one Conference?
Some liners can be members of more than one Conference: eg USA-AUS- JAP-USA
What does a practice known as “skimming the cream” mean?
It means a situation (which is a traditional problem btw) in which some vessel operators, rather than serving a single market continuously, would follow the lucrative markets and be available only when there was great demand for service.
What does shippers’ contracts with conferences allow them to do?
Shippers’ contracts with conferences allow them to charter vessels at no penalty.
What is an alternative for conference shippers of large quantities?
An alternative for it is to charter a vessel.
What is the most common way for a conference, or carrier, to bind shippers?
The most common way for a conference, or carrier, to bind shippers is through use of a service contract.
How does the service contract work?
In some markets a system of deferred rebates (postponed discount) is used with the shipper always having money due him on deposit with the conference. The rebates are calculated on the basis of 10 to 15 percent of what the shipper had paid in cargo rates over a six-month period. This amount is calculated and the shipper told of its amount. The funds are kept by the conference for another six months and will be paid to the shipper at that time, assuming he has not violated his contract with the conference.
What are shippers associations? Give example.
Shippers Associations are groups of shippers who organize to negotiate with conferences as group.
E.g. the Australian wool growers, who had enough tonnage that they could charter their own ships, in case they felt that conference rates were unjustly high
What it the 40/40/20 rule?
It suggests that cargo should be divided 40% each to national vessels of the originating and destination country, and 20% to other vessels.
Carriers of mixed freight have developed a method for charging that is applied almost universally. It relies on three different factors, all of which influence and determine the shipment’s transportation charges. What are those factors?
- Classification, which looks at the handling characteristics of the freight. How easy or how difficult is it to handle?
- The cargo’s origin and destination. Usually the cost per mile drops over longer distances because the port costs (which are the same, irrespective of distance) can be spread over a greater number of sailing miles.
- The size of the shipment; the carrier will charge less per unit of weight for a large shipment than for a small one. That is because the administrative costs to the carrier of handling 15 one ton shipments are greater than handling one 15-ton shipment. In addition, containerized freight usually Pays lower rates than non-containerized freight because the carrier saves many handling costs.
What is a tariff?
A tariff is a book of rules and rates.
What are surcharges?
Surcharges are charges aside and apart from the base freight applicable to a commodity classification. Surcharges apply to all cargo, regardless of the classification.
What are the three types of surcharges?
- A bunker surcharge
- A congestion surcharge
- A currency surcharge
What is a bunker surcharge?
Abunkersurchargeisanadditionalchargearisingfromoilprice increases
What is a congestion surcharge?
A congestion surcharge is a charge applied on a port-by-port basis to compensate the carrier for inordinate time the ship must wait to unload due to congestion at a port.
What is a currency surcharge?
Acurrencysurchargeisassessedwherecurrencyfluctuationsresult in reduced net revenues. For example, it might take more U.S. dollars to purchase the foreign currency necessary to pay port charges in another country.
What is ‘slow steaming’?
Slowing down the rate at which ships move around the world
Why the European rail and intermodal sector in terms of environmental policy is important?
It’s more environmentally friendly
What does EC mean?
The European Commission
What is the most challenging about trying to increase the use of trains in transport?
The challenge: to ensure change to enable rail to compete effectively with road freight and take a significantly greater proportion of medium and long-distance freight.
Compare trucks with rails and ships based on how much tonnes of goods they can transport using one kilogram of fuel.
One kilogram of fuel is needed to transport
- 50 tonnes of goods with a truck
- 97 tonnes by rail
- 127 tonnes by ship
