Lecture 7: Tramp Shipping & Bulk Cargo Flashcards
Name three examples of major dry bulk cargo
Iron ore, coal, and grain.
What are some examples of liquid bulk and liquefied gas cargo?
Liquid Bulk: Crude oil, oil products, chemicals.
Liquefied Gas: Liquefied Petroleum Gas (LPG), Liquefied Natural Gas (LNG).
What are the major factors affecting freight rates in tramp shipping? (DSPCB)
- Commodity demand.
- Vessel fleet supply.
- Port congestion or disruptions.
- Bunker fuel prices (linked to crude oil prices).
What document serves as the contract in tramp shipping?
A charterparty.
Compare dry bulk and liquid bulk markets in terms of characteristics and trade indices.
- Dry Bulk: Uses the Baltic Dry Index (BDI) to track charter rates across vessel sizes (e.g., Handysize to Capesize). Trade involves raw materials like coal and grains, with market trends reflecting global economic growth.
- Liquid Bulk: No daily index; uses the Worldscale Index (WS) for tanker freight rates. Trades include crude oil and LNG, with chartering risks higher in spot markets. Typical trade routes depend on tanker size (e.g., VLCC for long-haul).
Compare and contrast the types of bulk cargo and their handling requirements.
- Dry Bulk: Includes major (iron ore, coal) and minor (sugar, fertilizer) cargoes, handled with automated equipment like loaders and conveyors.
- Liquid Bulk (LB): Comprises crude oil and refined products, transported in tanks and handled via pumps and pipes.
- Liquefied Gas (LG): Includes LPG and LNG, requiring specialized storage and transfer systems.
The handling requirements differ based on cargo composition, storage needs, and terminal infrastructure.
Describe the characteristics of tramp shipping
Tramp shipping characteristics:
1. Negotiable freight rates between shippers and consignees
2. No fixed routes or schedules.
3. Carries one commodity in bulk form from one shipper
4. Contracts via charter party agreements
5. Market structure is a near-perfect competition
Describe the characteristics of tramp shipping market structure.
Near Perfect Competition.
1. Market Depends on DD & SS: Performance depends on how many shipping services are needed (demand) and how many ships are available (supply).
- Many Firms Compete: Many companies own bulk vessels and provide tramp services. The market forces set the size of their fleets and the freight rates.
- High Investment, But Financing Available: While buying vessels requires a lot of money, new investors can get financial help from shipping banks.
- Easy Access to Market Info & Customers: New entrants can quickly get information about freight rates (e.g., from Baltic Indexes) and connect with customers (e.g., via shipbrokers).
- No regulatory or economic barriers to entering or leaving the tramp shipping market.
- No Need for Product Promotion and Development
How does the Baltic Dry Index (BDI) function as an economic indicator
Assessment of the price of moving raw materials and a good indicator of future economic growth.
Directly measures demand and supply of shipping capacity of dry bulk carriers, indirectly measures global supply and demand for commodities e.g building materials, coal, iron ores, and grains.
What are the characteristics of bulk cargo?
In terms of its nature and cost
- Dry, liquid, or liquefied gas.
- Not packaged, no uniform size/weight.
- Granular or free-flowing, easy handling.
- Low value (raw materials), can be stockpiled.
- High shipment volumes reduce unit costs.
What are the factors influencing freight rates in tramp shipping?
Factors:
1. Commodity demand.
2. Vessel supply (fleet availability and utilization).
3. Disruptions (e.g., port congestion, choke points).
4. Bunker fuel prices (direct link to crude oil prices, 6:1 ratio).
What are the principles of the bulk transport system (BTS), and how do they align with cost efficiency?
6 principles
Principles:
1. Efficient handling to exploit economies of scale (EOS).
2. Use larger ships for cost savings.
3. Minimize cargo handling (e.g., relocate plants near ports).
4. Integrate transport modes.
5. Standardize cargo (e.g., palletizing).
6. Optimize inventory levels to balance costs.
