Unit 2 ; Marine Cargo Management

INTERNATIONAL MARINE CARGO MANAGEMENT
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TOPIC 1: INFLUENCE OF GLOBALIZATION ON SHIPPING TRENDS
Unit Aim
The unit aims to introduce learners to international marine cargo management. It covers the
globalization of shipping trends and the container market, the principle commodities carried in ships
and the construction and features of dry bulk carriers and tankers.
Unit Overview
This unit is for those considering careers in shipping and logistics, and who wish to gain an
understanding of the different elements of international marine cargo management. Learners will
study various aspects of globalization of shipping markets and the management of marine cargo and
its application to the overall framework of shipping and international trade.
Learning objectives. By the end of this topic learners should be able to describe;
a. Liner trades
b. Dry bulk and liquid bulk trades
c. Liner container trades and their routes
d. System and structure of the container freight indices
e. Liner conferences and their abolition
f. Groupings and alliances
a. LINER TRADES
Introduction
Liner shipping is the service of transporting goods by means of high-capacity, ocean-going ships
that transit regular routes on fixed schedules. There are approximately 400 liner services in
operation today, most providing weekly departures from all the ports that each service calls
Liner shipping is the backbone of world trade. The majority of the world’s exports of finished goods
are borne by liner shipping companies. Their fixed day schedules of rigid regularity allow
manufacturers to rely on a service which enables their ‘just in time’ philosophy to work.

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Liner trades are complicated, demanding and interesting. They are complicated because of the vast
array of port pairs fitted into a fixed schedule of loading and discharging, often with six ports at each
end of the voyage with concurrent load and discharge, demanding accurate stowage planning.
An added complication is the imbalance of cargo flows requiring empty box movements to allow
demand to be met in the right place and the right time.
A container vessel of 8,000teu will have a large number of shippers’ and importers’ goods on board.
All these will require their own bills of lading with accurate cargo details. These will form the basis
for the cargo manifest. Also their declared weights and types are essential for efficient storage, and
for the safe of the ship. Accurate manifesting is the key to smooth customs clearance as well as port
and canal requirements.
BENEFITS OF LINER SHIPPING
International liner shipping is a sophisticated network of regularly scheduled services that transports
goods from anywhere in the world to anywhere in the world at low cost and with greater energy
efficiency than any other form of international transportation.
Efficiency
Liner shipping is the most efficient mode of transport for goods. In one year, a single large
containership might carry over 200,000 container loads of cargo. While individual ships vary in size
and carrying capacity, many container ships can transport as many as 10,000 containers of goods and
products on a single voyage. Similarly, on a single voyage, some car carrier ships can handle 7,600
cars. It would require hundreds of freight aircraft, many miles of rail cars, and fleets of trucks to
carry the goods that can fit on one large liner ship.
Global economic engine
Recently, two independent sources looked at the economic contribution of the liner shipping
industry and concluded that it is indeed a global economic engine for two reasons: the significant
amount the industry contributes directly to the global economy, and the role of the industry as a
facilitator of economic growth for other industries.
Low environmental impact

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Ocean shipping is the most carbon-efficient mode of transportation and produces fewer grams of
exhaust gas emissions for each ton of cargo transported than air, rail, or road transport. In addition,
new International Maritime Organization regulations establish strict standards for vessels' NOx,
SOx, and particulate matter emissions. Also, the millions of containers that are used around the
world are now 98 percent recyclable
Difference between a Liner and Tramp service
Liner Service – is a service that operates within a schedule and has a fixed port rotation with
published dates of calls at the advertised ports. A liner service generally fulfils the schedule unless in
cases where a call at one of the ports has been unduly delayed due to natural or man-mad causes.
Example : The UK/NWC continent container service of MSC which has a fixed weekly schedule
calling the South African ports of Durban, Cape Town and Port Elizabeth and carrying cargo to the
UK/NWC ports of Felixstowe, Antwerp, Hamburg, Le Havre and Rotterdam..
Liner shipping relates not just to containers, but also to other types of cargoes which have a regular
and fixed routing/service like RoRo services, Bulk cargo services on a COA or long-term charter.
A Tramp Service or tramper, on the other hand, is a ship that
has no fixed routing or itinerary or schedule and is available at short notice (or fixture) to load any
cargo from any port to any port.
Example: A ship that arrives at Durban from Korea to discharge cargo might carry some other
cargo from Durban to the Oakland in the West Coast of USA which is in an entirely different
direction.. From Oakland, it could carry some cargo to Bremerhaven..
One of the main differences between Liner and Tramp would be in the type of contract of carriage
and Bill of Lading used.

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In the case of a Liner, generally the shipping line operating the liner service will have their own pre-
printed bill of lading or use a BIMCO ConLineBill, whereas in the case of a Tramp service (which
may be covered by a Charter Party), a bill of lading like the BIMCO ConGenBill will be used
depending on the cargo, charter party etc..
Advantages of Liner Shipping
Capacity: Liner ships can carry a lot of goods. This is one of their key advantages over air shipping.
Also, the shape of what you need to transport doesn't matter. You can pick the ship to match your
cargo. Heavy machinery, cars, and plastic bottles for recycling can all be carried on a liner ship.
Cost: Shipping is simply the cheapest way to transport goods, which is why its a method used by
many companies. If time isn't important, a ship is the way to go. Also, if you don't have an entire
shipload, you can share space and cost on a cargo ship with other businesses.
Disadvantages of Liner Shipping
Speed: It's not the fastest way to get cargo from one place to another. That's the major downside of
liner shipping. An air shipment may take one or two days, while a liner shipment could take a month
or more.
Reliability: Ships are unreliable in terms of time of arrival. They run on a weekly schedule and
delays can be common. They are reliable in terms of maintaining the quality of the goods they are
shipping, but if customers are waiting on the other end, it could hurt your business if you rely only
on ships.
Ship technology continues to improve, and shipments made by ocean will likely be faster one day.
Today they remain a cheap source of transport for a huge amount of cargo, but if you want
something delivered quickly, ship it by air.
Liner container trades and their routes
Liner trade routes
Until about 50 years ago the important liner trade routes were predominantly those that connected
the major European countries with their colonial empires and the USA with its spheres of inﬂuence.
The geographical routes were mainly in the north–south orientation:

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Europe to Africa, Australasia, India and South America; USA to Central and South America and the
Paciﬁc. Raw materials were carried north and manufactured goods to the south. After the Second
World War a number of important political and economic changes occurred that eventually altered
this trading pattern completely.
The collapse of empire
The most important of all these was the independence of nearly all the countries that had previously
been part of one of the empires of European countries. In particular, this enabled the newly
independent countries to establish much wider trading relationships than had previously been
possible. The countries could look for other markets for their raw materials and agricultural
products which had previously been closed to them, particularly trading opportunities with the Far
East and America. Many of the newly independent countries also formed national shipping
companies to carry a share of their own cargo in the liner trades.
The European Economic Community
In this same period the European Economic Community (EEC – subsequently the European Union
– EU) was formed and this also had a major impact on traditional cargo ﬂows. For example, the UK
had imported much of its butter from New Zealand. The EU produced huge surpluses of butter and
this had to replace externally imported butter. New Zealand looked to Japan and the emergent Asian
countries for its replacement market.
While the EU had a negative influence on some traditional trades, at the same time, new trades
within Europe were developing, utilising a combination of road, rail and shortsea services, so
providing significant growth in the liner business within Europe.
Industrialisation
In the period after the Second World War, there was an increase in standards of living, and hence
wage costs in the developed countries, while certain Asian countries were starting to develop a
manufacturing base – initially in Japan and Hong Kong – supplying consumer goods at a lower price
in competition with European and US manufacturers.
While importers therefore turned their attention to Asian suppliers for cheaper goods, European
and US manufacturers saw there was no alternative but to change their business model. One

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approach was to manufacture components in low-cost countries and then shipping the parts to
Europe or the USA for assembly. This was an approach adopted by some car manufacturers.
As skills and technology improved in the developing countries, it became possible for the whole
manufacturing process to be carried out there. These changes resulted in massive growth in the main
East–West trades – Asia–USA and Asia–Europe – while the North–South trades of the colonial era
grew at a much slower rate.
Globalisation
In the past 20 years, the term ‘globalisation’ has entered the economic vocabulary. Globalisation of
the supply of goods means that the source of raw materials (the assembler/ manufacturer) and the
point of consumption can be in completely different places. For this to work, there need to be
highly efficient and cost-effective transport and distribution services linking all parts of the chain.
The evolution of container shipping services has played a vital part in the development of
globalisation – and indeed it is probable that without the container revolution, the global economy
would never have developed as far or as fast as it has done.
The effect of globalisation on both liner trade routes and volumes has been significant. The trades
from Asia are now predominantly finished manufactured/consumer goods. With the decline in the
manufacturing bases of Europe and the USA, less trade moves from these regions and these routes
are heavily imbalanced in favour of the trade from Asia. Major commodities that move from Europe
to Asia include paper, scrap steel and plastic.
With this globalisation of trade it is not just the East–West trades that have grown. Asia is now also
a major supplier of consumer goods to the Southern Hemisphere and the trades between South
America/Africa/Australasia and Asia are now larger than the equivalent trades to and from Europe.
The intra-Asia trade
While it is difficult to obtain accurate figures on its size, the intra-Asia trade is now in aggregate one
of the largest container trades. As Asian countries increase in prosperity they are trading raw
materials and consumer goods with their neighbours, rather than just trading with the so-called
developed world.

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In Europe, the trade between countries moves overland by rail or road as well as by sea. This is
because most European countries are part of a single land mass and because the land transport
infrastructure is well developed.
In Asia, this is not the case. Several of the key economies are island nations (for example, Japan,
Taiwan and Indonesia) and overland connections on the Asian mainland are poor. The main road
and rail networks are designed to connect a country’s hinterland to its main ports rather than to
provide overland connections to its neighbours. The result is that intra-Asia trade is carried
predominantly by lift-on/lift-off container services, with a whole network of services linking the
main Asian countries.
Liner routes today
Liner routes can be categorised as East–West trades. These are the trades connecting Europe, the
Middle East, Asia and North America.
The most important of these are:
 Far East–North Europe;
 Far East–Mediterranean;
 Trans-Pacific trade (Asia–North America – West and East Coast);
 Trans-Atlantic trade (North Europe–North America Atlantic coast);
 Far East–South Asia plus Middle East.
North–South trades
These are the trades linking the main northern land masses with those largely south of the Equator,
that is, trades between: Asia, Europe, North America; and Africa (East, West and South), Latin
America and Oceania
The North–South trades therefore comprise a number of smaller trades linking these areas Intra-
regional trades. As already mentioned, the most significant intra-regional liner trade is within Asia.
There is a smaller intra-Europe liner trade. Within North America, and within Latin America, intra-
regional liner trade is much smaller – in North America in particular most of it is moved overland
rather than by sea.

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The table below shows the volume of container trafﬁc moving through the main regions, comparing
volumes in 2000 with those of the past five years (2010 to 2014).
Source; ICS Liner Trades 2015
Dry bulk and liquid bulk trades
Bulk carriers
Bulk carriers have distinctive features. They are single deck vessels. Those engaged in deep-sea
markets and up to 50,000 tonnes deadweight size are normally equipped with cranes. The majority
of bulk carriers over this size are gearless, having no cargo-handling equipment themselves and are
reliant on shore facilities to be loaded and discharged. This can also apply to some small coasting
vessels, of which some are also gearless.
Bulk carriers range in size from coastal craft of a few hundred tonnes up to vessels of over 400,000
tonnes deadweight and, as their name implies, are intended primarily for the transportation of bulk
dry cargo commodities. In addition, they can be adapted for the carriage of other goods; cargoes
such as lumber, steel products, containers, paper and steel scrap.
Types of dry bulkers
Panamax Bulkers
Larger bulk carriers of between about 60,000 and 80,000 tonnes deadweight are usually constructed
with a beam and draught suitable for limitations imposed on the market by the dimensions of the
Panama Canal, an important waterway for this type of vessel, giving rise to the term panamax.
Typical dimensions of a panamax bulk carrier would be:
 LOA (length overall): 224 metres (735 ft)
 Beam (width): 32.2 metres (104.5 ft)
 Draught: 13.35 metres (43.8 ft)
 Summer Deadweight: 75,500 tonnes
 Cubic Capacity of cargo holds: 73,625 cubic metres or 2,600,000 cubic ft
 Holds: Seven
 Hatchways: Seven each about 14m long by 13.5m wide

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Capesize vessels
Vessels too wide to transit the Panama Canal are termed Capesize and usually this term is taken to
mean vessels in excess of 100,000 tonnes deadweight, there being few bulk carriers between 80,000
and 100,000 tonnes deadweight size, although the emergence of Port Kamsar in West Africa has
encouraged a Kamsarmax vessel.
Bulk carriers of between, say, 20,000 and 39,000 tonnes deadweight are loosely termed handysize.
Large bulk carriers up to about 49,000-dwt are called handymax whereas tonnage up to 56,000-
57,000 dwt are described as Supramax. There is also a specific class of bulk carrier around 20,000-
30,000 tonnes deadweight designed with measurements enabling transit of the St Lawrence Seaway,
and access to the Great Lakes system of North America, these maximum dimensions being:
Length; 730 feet
Beam; 75ft 6 inc
Draught: 26 ft fresh water
Height above water level not to exceed 117ft
Capesize
Supramax bulk carrier
They are often fitted with cranes and grabs

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Source; ICS Dry Cargo Chartering
Handysize Bulker
Vessels transiting the Panama and Suez Canals and those trading to the Great Lakes require special
fittings in addition to being dimensionally suitable.
They have cranes, derricks or conveyors that allow them to load or discharge cargo in ports without
shore-based equipment. This gives geared bulk carriers flexibility in the cargoes they can carry and
the routes they can travel

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Combined carriers
Are designed to transport both liquid and dry bulk cargoes. If both are carried simultaneously, they
are segregated in separate holds and tanks. Combined carriers require special design and are
expensive. They were prevalent in the 1970s, but their numbers have dwindled since 1990
Gearless carriers
Are bulk carriers without cranes or conveyors. These ships depend on shore-based equipment at
their ports of call for loading and discharging. They range across all sizes, the larger bulk carriers
(VLOCs) can only dock at the largest ports, some of these are designed with a single port-to-port
trade in mind. The use of gearless bulk carriers avoids the costs of installing, operating, and
maintaining cranes
(Photo:Berge Athen, a 225,000 ton gearless bulk
carrier.)
Self-dischargers
Are bulk carriers with conveyor belts, or with the use of an excavator that is fitted on a traverse
running over the vessel's entire hatch, and that is able to move sideways as well. This allows them to
discharge their cargo quickly and efficiently.

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(Photo: John B. Aird a self-discharging lake
freighter.)
BIBO or "Bulk In, Bags Out"
Bulk carriers are equipped to bag cargo as it is unloaded. CHL Innovator, shown in the photo, is a
BIBO bulk carrier. In one hour, this ship can unload 300 tons of bulk sugar and package it into
50 kg sacks

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Lakers
Are the bulk carriers prominent on the Great Lakes, often identifiable by having a
forward house that helps in transiting locks. Operating in fresh water, these ships suffer much
less corrosion damage and have a much longer lifespan than saltwater ships. As of 2005, there were
98 Lakers of 10,000 DWT or over.
(Photo: Edward L. Ryerson, a Great Lakes
bulk carrier.)
Source; wikipedia.org/wiki/Bulk_carrier
Vessel tonnage and capacity measurement
There are several different types of measurement used for different purposes.
Tonnages
These are the actual weights of the ship and its cargo.
Light displacement tonnage

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This is the actual weight of the vessel as constructed and afloat excluding fuel, stores, crew, and so
on. It is of little commercial significance except when a vessel is finally being sold for scrapping,
when it represents the weight of metal that the shipbreaker is acquiring.
Total displacement tonnage
This is the light displacement tonnage plus the weight of all fuel, stores, lubricants, crew’s effects
and everything else that makes the ship ready to go to sea. It is used for describing the size of
military vessels.
Deadweight cargo capacity (DWCC)
The weight of cargo that can be carried by the ship when fully loaded to the summer loadline.
Deadweight tonnage (DWT)
The weight of cargo, water, bunkers and constant weights that may be carried when a vessel is down
to its loadline marks. Since the loadline varies, depending on whether the ship is in a winter, summer
or tropical zone, it is important to specify to which condition the figure applies, although it is normal
practice to utilise summer deadweight when describing deadweight tonnage.
Space tonnages
Although these two measurements are called tonnages they are actually cubic measurements based
on an international formula (International Tonnage Convention) for comparing the overall size of
ships. These tonnages are frequently used by ports and statutory bodies as the basis of levying dues
or taxes on vessels.
Gross tonnage
The internal cubic measurement of all the enclosed spaces within the ship’s hull and superstructure.
Calculated to a formula one GT is a little less than 3m3. It is a convenient way of measuring the total
bulk of the vessel and is often used to describe passenger ships and ferries.

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Net tonnage
The gross tonnage less those spaces, such as engine room and crew accommodation, that cannot be
used for commercial revenue-earning purposes.
Measurements
These are the important dimensions of the vessel that must be known to determine whether the
vessel can safely enter restricted spaces such as locks, canals and docks.
Length over all (LOA)
The length of the ship from the foremost point on the bow to the farthest aft point on the stern.
Beam
The overall width of the ship.
Moulded depth
The height of the ship from the bottom of the keel to the top of the main deck.
Draught
The distance from the waterline to the bottom of the keel. This determines the minimum depth of
water the ship needs to be aﬂoat.
Air draught
The distance from the water line to the highest point on the ship’s superstructure, usually the top of
the mast. This is important when making passage under bridges or power cables

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Cargo measurements and capacities
Grain cubic capacity
The measurement, in cubic metres or cubic feet, of the internal capacity of all cargo spaces when
they are ﬁlled with a free-ﬂowing material such as bulk grain. This measurement includes such
spaces as the recess between the frames of the ship’s hull.
Bale cubic capacity
The measurement, in cubic metres or cubic feet, of the internal capacity of all accessible cargo
spaces if the holds are full of baled cargo. The smaller spaces and recesses are excluded.
Lane metres
Roll-on/roll-off (ro-ro) ships have their cargo spaces divided into lanes in which vehicles are stowed
one behind the other. The total length of all the lanes in metres is used to describe the cargo capacity
of the ship.
Square metres
This is the area of the deck space available and is also used when larger wheeled items that use more
than one normal lane width are regularly carried.
Source; ICS Liner Trades 2015

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D. System and Structure of the Container Freight Indices
Freight rates and maritime transport costs
Developing countries, especially in Africa and Oceania, pay 40 to 70 per cent more on average for
the international transport of their imports than developed countries. The main reasons for this
situation are to be found in these regions’ trade imbalances, pending port and trade facilitation
reforms, as well as lower trade volumes and shipping connectivity.
Determinants of maritime transport costs
Policymakers and shippers have an interest in understanding the determinants of international
maritime transport costs. Maritime transport handles over 80 per cent of the volume of global trade
(and about 90 per cent of developing countries’ volume of international trade is seaborne) and
knowing the reasons for differences in what a trader pays for the international transport of
merchandise goods can help identify possible areas for intervention by policymakers.
The key determinants includes;-
i. Trade and transport facilitation
ii. Ship operating costs
iii. Distance and a country’s position within shipping networks
iv. Competition and market regulation
v. Value, volume and type of shipped product
vi. Port characteristics and infrastructure
vii. Trade flows and imbalances
i. Trade and transport facilitation
Reducing waiting times in seaports for ships and their cargo has a direct bearing on trade costs. First,
from the shippers’ perspective, it implies lower costs associated with the holding of inventory
enroute to the final destination.
Second, waiting times also imply costs to the carrier, which will ultimately have to be passed on to
the client through higher freight charges. Wilmsmeier et al. (2006) estimated that a 10 per cent

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reduction of the time it takes to clear customs implies a reduction of the maritime freight of about
0.5 per cent.
ii. Ship operating costs
Technological advances have led to a continuous reduction in vessel operating costs over the
decades. Improved fuel efficiency, economies of scale, and automation in port operations all help to
reduce environmental and financial costs.
However, the drive to invest in lower operating costs may have some negative repercussion on
freight rates. For example, as carriers invest in larger and more energy efficient vessels in the current
market situation – to achieve economies of scale or to improve fuel efficiency – they inadvertently
also contribute to a further oversupply of capacity.
While the individual carrier may benefit from cost savings from deploying bigger vessels, all carriers
bear the burden of the resulting oversupply and lower freight levels – to the benefit of importers and
exporters.
Oversupply of shipping capacity combined with a weak global economy has been a main factor
affecting freight rates in recent years.
iii. Distance and a country’s position within shipping networks
Shipping goods over a longer distance requires more time (capital costs) and fuel (operating costs).
Thus, trading partners that are further away from main markets might expect to be also confronted
with higher bilateral freight costs.
As regards the impact of distance, the traditional gravity model would suggest that countries that are
further away from each other will trade less. However geographical maritime distance only has a
small statistical correlation with freight costs.
iv. Competition and market regulation
Price-setting in transport and logistics markets significantly depends on the level of effective
competition. Competition in the transport markets depends on the size of the market and effective

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market regulation. Any impediment to free competition and the potential existence of collusive
behaviour, atomization and monopolies will have impacts on price structures.
Policymakers need to carefully observe concentration processes in the maritime industry and be
aware of possible negative effects on the trade and competitiveness of a country’s exports,
predominantly in network peripheral countries and regions.
v. Value, volume and type of shipped product
The influence of the unitary value of the product on ocean freight rates has to be interpreted in the
context of the history and structure of shipping markets. The value of the product also determines
the elasticity of demand, that is, the willingness of the shipper to pay higher or even premium rates.
Despite the fact that there is no obvious reason for the connection between the freight rate and
value of a product, a wide range of works describe the relationship between a product’s unit value
and the freight charged.
The reason is that operators assume that unit value is inversely related to the elasticity of demand for
transport. Besides insurance costs, feedering in hub-and-spoke networks, modal switching and the
like, can also have an influence.
Each product has a certain risk sensibility during transport. Risk in this context can refer to timely
delivery, the probability of theft and/or high sensitivity to changes in the environment (temperature
and the like)
Economies of scale occur at two different levels. First, system internal economies of scale, which
reflect the decrease in transport costs per ton, as the size of the individual shipment increases.
Second, system external economies of scale, which reflect the decrease in transport costs as the
volume of trade between two countries increases. The latter is also linked to other determinants of
transport costs, such as levels of competition, vessel operation costs and port infrastructure.
vi. Port characteristics and infrastructure
Port performance is essential for the efficiency and effectiveness of the maritime network. Port
infrastructure endowment can be described by variables such as number of cranes, maximum
draught and storage area at origin and destination ports. The interaction of these variables is
decisive.

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Installing ship-to-shore gantries, for example, may well lead to higher port charges for the shipping
line. The line may still achieve an overall saving, because its ships spend less time in the port, or
because it can change from geared to gearless vessels. This, in turn, will also lead to lower freight
rates.
Factors influencing productivity are physical, institutional and organizational. Physical limiting
factors include the area, shape and layout of the terminal, the amount and type of equipment
available, and the type and characteristics of the vessels using the terminal.
Lack of cranes, insufficient land, oddly shaped container yards, inadequate berthage, inadequate gate
facilities, and difficult road access are all physical limiting factors. Productivity must be considered in
a system perspective for it to be of maximum value to industry. This is important from a policy
perspective, thus emphasizing the need for co-modality and multimodal visions in policy
recommendations and guidance. All players should have an awareness of the entire system and be
wary of becoming its weak link.
Empirical results presented by Wilmsmeier et al. (2006) are quite clear and straightforward: increases
in port efficiency, port infrastructure, private sector participation and inter-port connectivity all help
to reduce the overall international maritime transport costs.
Unlike distance, port efficiency can be influenced by policymakers. Doubling port efficiency at both
ends has the same effect on international maritime transport costs as would a “move” of the two
ports 50 per cent closer to each other.
Hence, improving port efficiency and productivity and introducing technical advances as well as port
design and planning measures to improve efficiencies and reduce time can reveal important insights
to policymakers.
vii. Trade flows and imbalances
The volume and type of cargo has a direct bearing on the carrier’s costs. The volume of cargo is
important as it allows for economies of scale, both on the sea leg as well as in port, although at times
the economies of scale achieved on the shipping side may lead to congestion and diseconomies of
scale in the port.

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The extent to which the costs incurred by the carrier are passed on to the client depend on the
market structure and also on the trade balance. On many shipping routes, especially for most bulk
cargoes, ships sail full in one direction and return almost empty in the other.
Having spare capacity, carriers are willing to transport cargo at a much lower freight rate than when
the ships are already full. Freight rates are thus far higher from China to North America than for
North American exports to China.
By the same token, freight rates for containerized imports into Africa are higher than for exports.
To some extent the differences in freight rates that depend on the direction of trade may be
considered, in order that a market mechanism may help reduce imbalances. Those that have a trade
deficit pay less for the transport of their exports.
In containerized trade, balance of trade flows is key in price-setting for shipping lines. Shipping lines
calculate the costs to move a container on a return-trip basis, taking probability for empty
positioning into account. When trade balance is negative, a country’s imports exceed its exports and
the greater the imbalance, the lower the freight rates will be for the country’s exports; but if exports
exceed imports, then the larger the imbalance, the higher the expected freight rates for exports will
be.
Freight rates will be higher for the shipments transported on the leg of the trip with more traffic, as
the total amount charged for this leg must compensate the relatively reduced income from the
return trip, when part of the vessel’s capacity will inevitably be taken up with repositioned empty
containers. Excess capacity on the return trip will increase the competition between the various liner
services, and as a result freight rates will tend to be lower. Organization of the transport service
market can reduce empty movements through information and equipment sharing, freight-pooling,
and transnational cooperation of transport service provider.
Source; freight determinants.pdf
e. LINER CONFERENCES AND THEIR ABOLITION
LINER SHIPPING CONFERENCES

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Liner shipping has been dominated by the shipping conference system since the growth of the
liner industry in the 1870s. Although they still play a significant role on some routes, the importance
of conferences has been dwindling since the late 20th century.
In some areas of the world, the conferences have changed from being a major regulatory body to
being simply a discussion forum for members.
Additionally, the ability of conferences to operate as in the past has been affected by the action of
competition regulators. In the European Union they are prohibited by law, after the regulation
that gave conferences an exemption from the full force of European competition law (Regulation
4056/86) was repealed, effective from 2008.
The problem faced by the liner shipping conferences under competition law is that they are looked
on as a cartel.
A liner conference is a group of shipowners that both sets prices and co-ordinates their operations
on a given route, under conditions agreed by the members. This often left customers facing a
monopolistic situation, as there was little difference in price or nature of the service provided by the
different operators within the conference. In effect, a conference limits the choice for the consumer.
Without further explanation, such arrangements would immediately condemn the whole concept of
liner conferences from the perspective of both the regulator and the customer. However, there has
also been recognition of the beneﬁts provided by conferences both to the countries in which they
operate and to the users of the services.
This is why for many years conferences were allowed to operate, even when similar arrangements in
other industries were prohibited by competition law. These beneﬁts arose from the stability that the
conferences provided, and the commitment they had to meet the needs of the export and import
trades on which many countries depended.
By the 1970s and 1980s, competition had emerged on most trades from lines operating outside the
conferences (independents, also called outsiders), which weakened the monopoly position of
conferences.
The structure of a conference

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A liner conference is often referred to as an independent entity, like a commercial operation. A
conference is however, as the name implies, a collection of liner companies that have agreed to carry
out some of their activities in collaboration.
Decision-making in a conference is carried out by a committee consisting of representatives of its
members. In the days when conferences had significant control over a trade route, they would be
run by several committees, each with different functions. In larger conferences, the main committee
would be comprised of directors or other senior management members of the liner companies.
Other conference committees would be made up of specialists in particular areas of the business.
For example, a freight committee (which set the prices on specific commodities) would be made up
of managers of the liner companies’ trade or pricing departments.
The conference itself would also have permanent staff to carry out administrative functions, the
number of staff being naturally influenced by the size of the conference. Smaller conferences would
perhaps have a general secretary and one or two assistants. The larger, more influential
conferences would have a director at the head of a substantial number of specialised staff, possibly
including access to lawyers, economists and accountants.
As well as dealing with the arrangements between the lines, and communicating with customers in
the trade on specific prices, sailing schedules and suchlike, conferences would often have to hold
meetings with shippers’ organisations and government departments.
Formal negotiations took place on the general level of freight rate increases and it was not unusual
for the liner conference to retain the services of independent consultants to verify operating costs of
the liner companies in order to justify tariff increases. In some countries this was also needed to
provide reassurance to the relevant government department, as well as a justification to customers
for any price increases.
Monopoly investigations
Since the UK to Calcutta conference was set up in 1875, the justification for all conferences was to
protect the interest of the shipowners. Given the virtual monopolistic method of operation and
the way they rapidly spread to cover almost all liner trades, they inevitably faced criticism that they
curtailed free competition and prevented other lines from entering a trade.

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In particular, the deferred rebate system, which began as early as 1877, was seen as a deterrent to
other operators entering the trade outside the conference agreement. This system provided the
shipper with a rebate, usually 10%, after a given period of time, usually six months, if the shipper
had remained ‘loyal’ to the conference during that period. However, if the shipper had consigned
even the smallest amount of cargo to a non-conference ship on the trade route, no rebate would be
paid on any of the shipper’s conference consignments.
The system effectively tied the shipper to the conference and prevented other non-conference
operators from obtaining any business if they entered the route.
Already in 1902, questions were put to the British Parliament and complaints made to the Board of
Trade. In 1906 a Congress of the Chambers of Commerce of the Empire protested against the
payment of rebates by liner companies, while in the USA, shippers were also beginning to complain.
In that same year a Royal Commission on Shipping Rings was set up in London, which reported in
1909. In 1911 the first actions were brought in the United States by the Department of Justice
against three conferences for violations of American antitrust laws.
The two investigations reported similar conclusions:
1. Unrestricted competition in the liner trades was undesirable;
2. Competition among conference members was regulated by rate agreements, control of sailing
schedules, pooling of capacity or earnings and performance bonds;
3. Competition from outsiders (non-conference members) was reduced by:
a) The use of ‘fighting ships’ (a conference sailing would be deliberately scheduled on the same
dates as that of a non-conference carrier, offering the same service at an equal or lower rate.
The financial loss on the fighting ship would be borne by the conference);
b) The use of certain contract arrangements, such as deferred rebates.
The US Shipping Act of 1916 made the following changes to how conferences could operate in the
USA:
• It outlawed the use of fighting ships and the deferred rebate system;
• It forced conferences to be open so that any line could become a member of the conference.
However, because of ambiguity in the rules about open conferences, it was possible to

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impose some restrictions on entry by demanding entry fees and by challenging the ability of
the entrant to provide a common carrier service;
• It prohibited the practice of shipowners retaliating against shippers that supported
nonconference lines, by refusing to carry their cargo at a later date.
Advantages gained from the conference system:
i. Greater regularity of sailings;
ii. Greater rate stability, which was seen as being beneficial to the development of services/
trading;
iii. Uniform rates to all shippers;
iv. Higher standards of ships. This was made possible by the greater security of earnings
provided by the conference, which allowed shipowners to raise more funds for investment;
v. Cost reduction by the elimination of wasteful competition between members by rationalising
sailings and port calls;
vi. The ability of conference members to charge ‘what the trade would bear’ and adjust rates to
supply and demand criteria when needed;
vii. Their ability to forecast and provide for future requirements of the trade as a whole;
viii. Lines did not compete with their own customers;
ix. The conference system protected the weaker members.
Despite these distinct advantages, both reports also commented unfavorably on the
monopolistic situation and set out the following disadvantages:
i. The possibility of charging high rates, which gave lines excessive profits;
ii. The secrecy of the conference operations and the difficulty of obtaining rate quotations;
iii. The failure to give adequate notice of rate changes;
iv. The indifference towards the care for the cargo as there was no need to compete with other
operators;
v. The arbitrary nature of claims settlements.

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Conference tariffs
Throughout most of the history of the liner conference system, it was a fundamental principle that
all members charged the same tariffs. The strength of the liner conference was the uniformity of the
rates and surcharges levied by its members. Hence, all members of the liner conference would have
identical contracts with their customers, removing any potential internal competition among the
conference members.
As time progressed more lines opted to offer their own individual service contracts to shippers,
which effectively undermined the conference system of common and uniform pricing. For example,
the Trans-Atlantic Conference Agreement (TACA) had 593 conference service contracts in 1999,
but this had reduced to three by 2001.
g. GROUPINGS AND ALLIANCES
A shipping alliance is a group of shippers who have aligned together for common goals in a way that
benefits everyone, not just the carriers themselves, but also the customers by obtaining better rates,
routes, and transit times for their shipments.
Importance of shipping alliances in global trade.
They are essential when it comes to negotiating on behalf of shippers everywhere all around the
world for various trade routes.
Shipping alliances help to reduce variable costs in ship’s overhead operation through the usage of
shared resources like networks, port terminals, and ships along specific routes. With such alliances,
larger shipping lines can utilize the resources of all members. In contrast, smaller lines can capitalize
upon that extended service coverage and resources without investing in an increase in fleet size.
Benefits shipping alliances offer to shippers
Shipping alliances have brought Mega ships and mega ports benefits in the form of better allocation
of resources, reduced operational costs, expansion of service coverage, and optimization at all
levels, which in the end contributes to better economies of scale. This is something that can be
felt in larger companies who take advantage of every single major trade route around the world, as
well as middle-of-the-road shippers, all the way down to smaller shippers who are using just one of
the multiple international trade routes.

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Three significant alliances dominate the world of global trade today
i. The Transport High Efficiency Alliance or “THE Alliance”
ii. The “Ocean Alliance”,
iii. The “2M Alliance”.
The three control a great deal of volume (77.2% of global container capacity and 96% of all East-
West trades’ container capacity) which means they have a lot of negotiation power and can put
pressure on different ports to create more favorable conditions for all members of the alliance
The bargaining power leads to better tariffs and higher volume discounts, which enables everyone
involved to remain competitive. Moreover, these cost-savings can be passed along to their
customers.

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Source; Shiplilly.com
TOPIC 2; TYPES OF VESELS
Container ships
The most efficient vessel for the carriage of containers, with regard to speed and cost of
transportation between loading at one port and discharging at another, is the specialised container
ship.
The first generation of container vessels appeared in the mid-1960s and had a capacity of between
500 and 700teu. Many were conversions of other ship types, mostly tankers. They had very different
levels and types of equipment.
The first purpose-built container ships for the deep-sea trades were constructed around 1969 with a
carrying capacity of about 1,200 to 1,600teu (of which about 40% were carried on deck). The vessels
had a service speed of 22 to 25 knots. By 1971/72 the newest vessels had a capacity of 1,800 to
2,200teu and speeds of 26 to 27 knots. The Trio consortium Liverpool Bay class, introduced in
1971, had a capacity of 3,000teu and a maximum speed of 27 knots.
Further development led on the one hand to super-fast ships with speeds of up to 33 knots and
carrying capacities of only about 2,000teu, and on the other hand to larger container ships of
4,000teu and speeds of 25 to 26 knots. However, the consequence of the 1970s oil crisis was to

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increase substantially the price of oil and hence bunker fuel for ships, which led to a considerable
reduction in the operating speeds of container ships.
Until the mid-1980s, all container ships were built to Panamax dimensions, which limited their
capacity to about 4,500teu.
A Panamax vessel is the largest that can navigate the Panama Canal, and has dimensions up to:
Length: 294.1m Beam: 32.3m Draught: 12.8m Ships larger than this size are referred to as post-
Panamax.
The following table shows how the size of the largest container ships has developed since the first
containers were carried on converted vessels.
A chronology of the world’s largest container ships (based on nominal TEU)
A chronology of the world’s largest container ships (based on nominal TEU)
Year Vessel name TEU
1956 Ideal X*** 96
1957 Gateway City* 395

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1960 Santa Eliana* 405
1960 Hawaiian Citizen* 490
1962 Elizabeth Port** 833
1966 Trenton* 1,066
968 American Lancer 1,210
1969 Encounter Bay 1,512
1970 Dart Europe 1,556
1971 Euroliner 2,050
1972 Tokyo Bay 2,968
1981 Frankfurt Express 3,430
1984 American New York 4,234
1988 President Truman 4,528
1988 Marchen Maersk 4,814
1994 NYK Altair 4,953
1995 OOCL California 5,344
1996 Regina Maersk 7,403
1997 Sovereign Maersk 8,200
2000 Cornelius Maersk 8,400
2003 Axel Maersk 8,650
2005 Gudrun Maersk 9,500
2006 Emma Maersk 15,550
2013 Maersk McKinney Moller 18,340
2014 CSCL Globe 18,982
2015 MSC Oscar 19,244
*converted cargo vessel **converted tanker *** experimental deck load on tanker
Source: Alphaliner

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Panamax container ship
Super post-panamax container ship

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Types of container ship
Cellular container ships (gearless)
The standard type of container ship used in the main deep-sea trades is the gearless cellular
container ship. Cellular means that the vessel’s holds are ﬁtted with framing called cell guides into
which boxes are slotted from the top and so secured from any movement fore, aft or sideways.
The holds are covered with substantial hatch lids, and further stacks of containers can be stowed on
deck. The bottom rows of on-deck containers will sit on securing positions on deck which hold the
bottom four corners of the container
As subsequent rows of containers are placed on top, a twist lock is placed at each corner to secure
one row of containers to the row underneath. However, this arrangement leaves each stack of
containers free standing, and to be able to withstand the significant lateral forces when a container
ship encounters heavy weather, the on deck stacks of containers are secured to each other using
lashing rods.
In spite of these securing arrangements, from time to time containers are lost from the decks of
container ships in heavy weather.

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Hatchless container ships
This alternative design of container ship has no hatch lids, and the cell guides are extended above
the main deck level so that all containers are held in place by the cell guides. With no hatch lids,
adequate pumps are required to remove any water which may enter the holds, as the holds will not
be watertight.
The main advantages of this design are:
 Less steel required in the construction of the vessel (no hatch lids);
 Faster operations, and less labour required, as no twist locks or lashing bars/rods required;
 Operations do not have to stop for hatch lids to be removed/replaced.
However, only a few of these ships were ever built, due to the following disadvantages:
 There are problems with the weight of a single stack of containers from the bottom to the
top of a ship, and the containers at the bottom may not be strong enough to withstand the
weight on top (based on ISO standards for the strength of container corner posts);
 Loading/discharge of containers is slower due to the need to move vertically to the top of
the cell guides, before moving horizontally (and vice versa).
In the deep-sea trades, Nedlloyd Lines built a series of Hatchless ships, the ownership of which
passed to Maersk Line, and which are now being scrapped.

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Geared container ships
These vessels are equipped with cranes that can be used to load/discharge cargo at ports which lack
suitable cranes for working container ships. As container trades developed, but before container
terminals were built in developing areas, these ships were used extensively, in areas such as Latin
America, West and East Africa, and parts of Asia.
Geared ships are still required in some areas, particularly for their flexibility in covering a wider
range of ports. Because of the areas and trades in which geared vessels operate, they are relatively
small, with the largest commonly available being about 2,000–2,500teu.
Feeder vessels
It is uneconomic for large deep-sea container ships to call at numerous small ports to load and
discharge a very small number of containers. In many cases, such ports are unable to accommodate
or handle the biggest deep-sea vessels. To deal with these difﬁculties, smaller feeder container ships
run between hub ports and smaller ports, moving incoming boxes to their eventual destination and
fetching back outbound containers.
Refrigerated cargo on container ships
When container ships were designed for liner trade routes where reefer cargo was carried, the
question arose as to how reefer cargo could be carried and refrigerated in containers.
Two systems were developed
a. Insulated containers
The containers are insulated on all sides and blanked holes at the non-door end of the container
through which cold air can be circulated through the container when connected to a refrigeration
unit able to deliver cold air.
The ship is equipped with a refrigeration plant that produces cold air, so once the containers have
been loaded on to the ship, they are connected via ﬂexible trunking to the cold air supply.
There is a similar system at all the terminals where the ship calls, so that cold air can be supplied to
the containers before loading and after discharge.
Integral reefer containers

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As well as being insulated, these containers incorporate their own refrigeration machinery. The
containers just need to be plugged into electrical power, either on the ship or on land.
The insulated system was thought to be cheaper for those trades with large volumes of
homogeneous reefer cargo (where all the cargo had to be carried at the same temperature), as it
avoided the need to equip every container with expensive machinery.
It was introduced in the 1970s in the trades between Europe and South Africa, South America,
Australia and New Zealand. It proved to be too inﬂexible, however, as the ships could then only
operate on their designated trades and expensive equipment had to be installed in all the terminals.
The integral reefer container has therefore become the standard system and the last ships using
insulated containers were phased out in the early 2000s.
Ro-rO
Roll-on/roll-off (ro-ro) ships come in several varieties. Many are capable of carrying containers as
well as vehicles, unit loads and other cargoes that can be wheeled on board.
Loading and discharging the cargoes from a ro-ro vessel is usually via a ramp, which in modern
ships may be able to support loads of up to several hundred tonnes. Some ro-ro ramps can be
rotated in an arc. Other ramps inside the ship, and sometimes lifts, are provided for distributing the
cargo over various decks, including the weather deck, which provides large open spaces on which
containers, vehicles and/or heavy lifts can be stowed.
The vessel illustrated above is an imaginary ship drawn to demonstrate all the different types of
ramp, deck and lift facility that could be used. No real vessel would incorporate all this equipment.

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Ramps can be at the stern, side or bow of the vessel. Some ships can operate stern and bow ramps
together so as cargo is discharged via one ramp, the other ramp is employed for loading.
Deep-sea ro-ro/container ships
These are hybrid vessels the largest of which are comparable to 4,000–5,000teu container ships.
They are used mainly in liner trade routes where there is a substantial volume of vehicles (including
constructional and agricultural machinery, private cars and Lorries) as well as a regular and
consistent movement of containerized cargo.
The ﬂexibility of these vessels has proved most successful in services such as between the USA and
the Middle East Gulf or Northern Europe. Others operate between Europe and East or West
Africa. These large ro-ro/container ships are extremely expensive to build and maintain and face

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competition from the more economic large container ships and specialised vehicle carriers. Some of
the newer vessels have cell guides on deck.
They are now in the hands of a few specialised shipping companies, Grimaldi Line and Messina Line
(both Italian companies) being the most notable. Atlantic Container Line (ACL), now a subsidiary of
Grimaldi, has operated this type of ship on the North Atlantic trade since the late 1960s. They have
ordered a series of the largest of this type of vessel which will be delivered in 2015.
These vessels (called the G4 series by ACL) will have capacity for 3,800teu of containers together
with 28,900m3 of ro-ro space (including space for 1,307 cars).
Dry Bulk ships
The principal types of dry bulk ships include the general bulk carrier, the ore carrier, the
combination carrier and the self-discharging bulk carrier. They vary in size from small coastal
bulkers to those engaged on transocean passages which may exceed 400,000dwt. The principal dry
bulk cargoes carried are coal, iron ore, grain and fertilizer. New ship designs allow the bulk carrier to
accommodate the carriage of specialist cargoes including aggregates, cement and wood chips.
Liquid bulk carriers/tankers
Tankers are ships carrying liquid cargoes in bulk; crude oil, oil products, chemicals, liquefied gases,
molten sulphur, even orange juice. The nature of their cargo requires special forms of construction
and outfitting. Some cargoes, as liquefied gases, are transported at very low temperatures down to –
164°C, others as molten bitumen, must be transported at high temperatures up to 250°C in
independent tanks supported by means of special methods.
Tankers can be divided into the following types: oil tankers, chemical tankers, gas carriers and
combination carriers.
Crude oil tanker is an oil tanker engaged in the trade of crude oil. Product tanker is an oil tanker
engaged in the trade of oil other than crude oil. A clean product tanker carries light petroleum
products, a dirty product tanker carries heavy petroleum products. The product tanker is intended
for transportation and distribution of crude oil derivatives from the refineries to consumers. The
main difference between a product tanker and a crude carrier is, that with the former, several
batches of cargo of different kinds are transported simultaneously and the respective cargo

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quantities are smaller. It requires a large number of cargo tanks and a complicated pumping and
piping system to facilitate a separate handling process for each type of cargo.
High heat tankers are product carriers for the transportation of molten sulphur, bitumen,
dirty petroleum products, coal tar, pitch and coal tar products. They maintain a cargo
temperature between the ranges of 160°C and 240°C, which places very heavy demands on the
heating, insulation of the tanks and pipework, as well as associated valves and pumps. See also High
heat tanker BITFLOWER.
Chemical tankers are ships constructed to carry a cargo of noxious liquid substances in bulk. There
are two kinds of chemical tankers: one is an exclusive chemical tanker for carriage of an exclusive
cargo, and the other one is a parcel chemical tanker capable of carrying many kinds of chemical
cargoes. The two disctinct categories of chemical tanker comprise vessels with all or most of the
cargo tanks fabricated from stainless steel, and those vessels embodying only coated, mild steel
tanks. See also Chemical tanker BOW SUN.
Cargo Stowage
Bulk cargoes can vary considerably in their stowing properties. For example, iron ore stows around
12 cubic feet for every tonne, whereas coke may stow as high as 90 cubic feet per tonne. Obviously,
in the cases of iron ore, full deadweight will be reached with cargo holds little more than a third full,
while a cargo of coke will fill cargo holds to capacity and the vessel may theoretically be losing
potential revenue earnings because of lack of space in cargo compartments.
Unlike free-flowing bulk barley, coke cannot be loaded in upper wing tanks, because it would not
only be extremely difficult and time consuming, if not impossible, to load it through the restricted
deck openings to the wing tanks, it would probably continually block the bleeding apertures when it
came to discharge.
For heavy cargoes of iron ore, it is important that bulk carriers be designed so they do not become
too stiff and dangerous in their handling at sea.
In 2006 new rules were introduced concerning part loading of bulk carriers and a ban was imposed
on sailing with empty holds for some ship and cargo types. The ban is in line with Regulation 14 of
SOLAS XII which was adopted in December 2004. Ships affected are those over 150m in length

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and carrying bulk cargoes with a density of 1,780 kg/m3 or above. This is equivalent to a stowage
factor of around 20 and relates to ores and concentrates.
The reasoning behind the new regulations concerns hold-flooding scenarios and the strength and
stability of the vessel. These matters were the subject of a 1997 IMO SOLAS amendment based on
work done by IACS on bulk carrier issues and covered in a string of IACS Unified Requirements
(URs) – notable S17-S23. Ships built after 1998 will comply with the stiffer IACS requirements and
are therefore unaffected by the ban. For other ships, the ban comes into force as soon as a ship
reaches 10 years of age.
Such ships must show that they comply with the provisions of IACS UR S17 which deals with the
longitudinal strength of the hull girder, S18 which covers the evaluation of all corrugated transverse
watertight bulkheads and S20, the evaluation of allowable hold loadings based on shear strength of
the hold’s double bottom. If they do not then the ban will apply.
In practice this means the vessel will not be permitted to put to sea with any hold loaded to less than
10% of that holds maximum allowable cargo weight when fully loaded. Fully loaded is considered as
meaning carrying a cargo equal to or above 90% of the ship’s deadweight capacity at the relevant
assigned freeboard. The restriction will be noted at the front of the ship’s loading manual and so
should be flagged up whenever the ship is preparing to load a cargo.
Sailing with empty holds is common when multiport operations are being carried out, but since this
would typically involve the ship sailing with around 60%-70% of a full cargo after a partial load or
discharge, the ban on alternate hold loading will not apply. Operators can, of course, continue to
operate with empty holds if the ship meets the strength requirements of the new rules, but where it
does not then a decision will have to be made about strengthening the ship.

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TOPIC 3:
IMPACT OF TECHNICAL DEVELOPMENTS AND MARKET CHANGES ON THE
GLOBAL CONTAINER MARKET.
Lesson Objectives
By the end of this lesson learners should be able to explain;
a. Primary import and export markets of containerized goods
b. Container load rates
c. Types of container vessels
d. Typical container vessel specifications
e. Trends in vessel specification and how this affects the container market
f. Challenges faced by container lines and responses to those challenges
CONTAINER LOAD RATES
How freight rates are Determined
Freight rates are simply the price at which a certain cargo is delivered from one point to another.
Traditionally that’s where the simplicity ends, as the calculations involved in producing these prices
can depend on the mode of transport (road freight, air freight or sea freight), the nature and form of
the cargo (Loose cargo, containerised cargo etc) the weight or volume of the cargo, and the distance
to the delivery destination.

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Shipping freight rates across the different modes
Sea Freight Rates
The two main elements to the cost of transporting goods by sea are:
 The sea freight charges set by the carrier,
 Costs associated with handling and clearing the goods at the ports of loading and discharge.
Another factor that affects the cost of containerised sea freight, is whether the goods require a
dedicated full container (FCL) or can be consolidated with other cargo (LCL).
FCL (Full Container Load)
FCL is the abbreviation for a “Full Container Load“. The shipping line charges a flat fee per 20′
container, 40′ container or 40′ High cube container, and the amount is dependent on many factors
including origin, destination, volume, time of year, plus many other variables. Unless you have a
contract with the shipping line or are moving significant volume, you will usually get a more
favorable deal from a freight forwarder, who will likely have access (directly or indirectly) to a
discounted rate based on certain volume agreements.
LCL (Less than Container Load)

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When you do not have enough cargo to fill a shipping container (also known as groupage shipping)
, LCL is usually a very viable option. Specialist LCL sea freight consolidators run services to all of
the major ports and gateways around the world. They do this by paying for a full container from the
shipping line, consolidating multiple smaller shipments at their warehouse, loading and shipping the
full container in the usual manner and then earning their profit by charging a pro rata rate per 1000
kgs or 1 Cubic Meter (whichever is greater), known as weight or measure (w/m)
FCL or LCL ?
There are some instances where a shipper will not want to share a container even if LCL is cheaper,
but for most the decision of which option to choose comes down to cost.
Consider the below example when shipping from London to Durban, South Africa (fictional rates !)
Let’s say shipment size of 2000 kgs and 10.000 M3
20 ‘container would cost £2500 including all costs from collected to arrival port.
LCL rate would be £95 w/m (per 1000 kgs or 1.000 m3) from collected to arrival port.
This leaves the following options
 Pay £2500 if shipping as full container load (FCL), or
 Pay £950 if shipping as less than container load (LCL)
How to calculate freight rates.
Sea Freight rates are normally provided in the form of a Freight quotation, and the format of these
quotations can vary from freight forwarder to freight forwarder and sea freight company to sea
freight company. Whilst new surcharges seem to be introduced daily, your sea freight price will most
likely be made up of the below freight & surcharge items.
Name Description FCL Charge Type LCL Charge Type

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Inland Haulage Haulage from shipper
to export warehouse or
port of exit.
Lump Sum Can include OR
be subject to Fuel surcharge
Lump Sum Can include OR be
subject to Fuel surcharge
UK THC Terminal handling
charge – container
handling at the port or
consolidation
warehouse
Lump Sum Weight or Measure (W/M)
Usually based on per 1000 kgs or
1.000 M3 whichever the greater.
Documentation Admin charge for
required shipping
documentation.
Lump Sum Can be multiple
items for different
documentation. I.e. Shipping
line Bill of lading / House Bill
of lading / certificates of
origin
Lump Sum Can be multiple
items for different
documentation. I.e. Shipping line
Bill of lading / House Bill of
lading / certificates of origin.
Customs
Clearance
Production and lodging
of customs declaration.
Lump Sum Lump Sum
Security Surcharge for additional
security measures
usually imposed by the
port.
Lump Sum Lump sum
Ocean freight Base rate for ocean
freight.
Lump Sum Rates sold per size
unit. I.e. 20′ cntr = $1000 40′
cntr = $2000
Weight or Measure (W/M)
BAF Bunker adjustment
factor – fuel surcharge
for the ocean transport
Lump Sum Rates charged per
size unit. I.e. 20′ cntr = $350
40′ cntr = $700
Weight or Measure (W/M)

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CAF Currency adjustment
factor – hedging of
currency exchange risk
Percentage of Freight
Normally advised as
percentage of freight rate. I.e.
20′ cntr = $1000 CAF @ 12%
= $120
Usually a percentage of the
freight or sometimes W/M. This
really comes down to how the
freight forwarder choose to
present it, often it will be shown
as ‘inclusive’
There may be additional charges depending on where you are shipping to, but the above are the core
freight rate components when shipping under CFR incoterms. Some freight forwarders will charge
for providing sea freight tracking services, but most now offer this as standard, unless some bespoke
form of sea freight tracking is required and they need to incorporate something outside of their
internal systems.
Some sea freight forwarders or the consolidators themselves will incorporate some or all of these
charges into the Ocean freight rates to simplify the calculation. Nothing wrong with this, but just
ensure you are comparing ‘apples with apples’.
For example if you requested a rate for a shipment of 4 pallets at 1000 kgs and 4.000 M3 from
London to Hong Kong.
Asking two different forwarders it’s quite likely you could receive rates as different as below.
Charges Forwarder A Forwarder B
UK Haulage INC £50
UK THC INC £5 W/M
Documentation INC £10
Security INC £5
Customs INC £15
Ocean Freight $100.00 W/M $30.00 W/M
BAF INC INC

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CAF INC INC
At first glance it’s very difficult to tell which option is cheaper. Option A is easy to understand and
works out to $400. But it’s only by calculating all the charges in Option B that we see that they the
cheapest option at £175 v £240 (approx)
Not to say there is anything wrong with either of the above methods of pricing, just highlighting that
the shipper needs to be aware of the total cost for all charges before making a comparison.
There has been some development recently in creating a sea freight calculator solution to make this
sea freight rates comparison easier, and this is a subject we at Freight Filter are putting a huge
amount of resource into creating and perfecting.
The Open to Export article on using price comparison websites to find the best freight
forwarder gives further information about this recent development.
Destination charges
The above guide has been written from the point of view of exporting from the UK and under
CFR incoterms. You can read Open to Export’s explanation of what Incoterms are for more
information.
This means that consignments are usually shipped from ‘Door to port’ and charges not included in
the prepaid freight amounts will be for the account of the buyer/consignee i.e. Destination THC,
Destination documentation, Destination customs clearance and any delivery to the consignees door.
In some instances these can be included in an international sea freight shipping price, but will usually
be noted with a clear caveat i.e. ‘Quotation based on collected London to arrival New York port –
including destination THC’
Types of container ships
Those vessels can be categorized in several ways based on:
1. Development generations
2. handling modes: LOLO, RORO
3. ship sizes: Panamax, Post-Panamax, Suezmax, Post-Suezmax, Post Malacamax

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4. level of specializing: general cargo, semi-container, purpose-built container ships
5. service range: feeder ships, mother ships
Development generations
Containerships can be divided into development generations based on capacity, which is determined
by number of TEU to carry on board.
A container for storage can carry just about any cargo, and these massive ships were the facilitators.
Generally, there are 6 generations, each of which have a marking time and according range of
capacity.
Generations of containerships
Source: The geography of transport systems
Dividing into generations like above-said is only relative, and usually used to assess the technology
development in the industry. Modern liners belonging to sixth generation (over 8,000TEUs) are in
operating together with smaller vessels with capacity ranging from a few hundred to thousands of
TEUs.
That means, at the same time, many generations can be in service. In fact, vessels with different
sizes are deployed on different routes: those with capacity of around 1,000 TEUs are suitable for

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feeder services, while larger ships of thousand TEUs as mother vessels can serve on trans-ocean
routes.
Typical container vessel specifications
Refer to notes on Introduction to shipping by ICS
Assignment
Make notes on the following
a) Trends in vessel specification and how this affects the container market
b) Challenges faced by container lines and responses to those challenges

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TOPIC 4:
THE IMPACT OF CARGO CHARACTERISTICS ON VESSEL’S SELECTION
Learning Outcome;
Analyse the characteristics of the principal commodities carried in ships and the impact these have
on the selection of vessels and shipping routes to get them to market
a. Major dry bulks
b. Minor dry bulks
c. Liquid bulks
d. Liquefied gases
e. Routes and vessels used for the main
MAJOR DRY BULK CARGOES
A dry bulk cargo is defined as a homogeneous unpacked cargo such as grain, iron ore or coal. A dry
bulk cargo has various characteristics which may impact upon loading, discharge and storage.
Dry bulk characteristics include:
 Stowage factor
 Angle of repose
 Moisture content
Stowage factor is defined as the ratio of the cubic measurement to its weight and is expressed in
cubic metres per tonne. For example, iron ore has a stowage factor of about 0.33 cubic
metres/tonne. Hay has a stowage factor of about 4 cubic metres/tonne.
The angle of repose of a bulk cargo is defined as ‘the angle the natural slope the commodity makes
to the horizontal’. Iron ore has an angle of repose of about 35°. Grain has an angle of repose in the
order of 15°. A cargo with a low angle of repose, such as grain, needs to be trimmed to prevent
surface movement when at sea.

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Moisture content. Most dry bulk cargoes contain moisture. Excess moisture in a bulk cargo can
cause the cargo to act as a liquid. This poses a danger to the stability of the ship. Before loading a
dry bulk cargo the shipper has to declare to the ship’s Master the moisture content of the cargo.
Dry bulk cargoes have other characteristics which will influence their handling and stowage
including, flammability, friability, corrosiveness, flowability, dust nuisance, biological activity,
abrasiveness and thixotropocity (variance to viscosity).
MINOR DRY BULK
The main minor dry bulk commodities are the following:
— Steel products
— Forest products
— Agricultural products in bulk
— Fertilisers
— Cement
— Petroleum Coke
— Bauxite & Alumina
— Scrap
— Other minerals
The minor dry bulk commodities are mainly traded in smaller parcels and they are usually carried in
mini-bulkers (in the case of short sea shipping) or handysize and supramax bulkers.
Steel is the cargo with the largest trading volume among the minor bulk cargoes (21% of the total).
Steel products consist of materials such as bars, beams and rods as well as plate, coils and pipes.
Steel products are exported mainly from the major industrialised countries for importing to other
industrialised nations and to developing countries.
Major steel products are coming out of Black Sea, South Korea and China heading mainly to
Europe, USA, Egypt, South East Asia and India.

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Forest products hold the second position with about 18% of the total minor bulk cargoes. This
category includes any wood-derived product and can be divided into either raw materials or
processed goods.
Raw materials include the logs (round wood), sawn timber, wood pellets, pulp and woodchips. Logs
require specialized vessels (loggers) which are fit with stanchions and other handling materials which
are required in order to load and discharge logs.
Russia is a major exporter of round woods exporting almost the 16% of the total, followed by New
Zealand, USA, Canada and Malaysia. The main importing countries are: China (which imports
almost 40% of the world round wood, holding the leading position), Germany, Sweden, Austria,
India and Finland. Sawn timber is mainly exported out of Canada, Russia, Sweden, Germany and
Finland to China, USA, Japan and UK which are the major importers.
USA is the main exporter of wood pellets, followed by Russia, Sweden and Germany, while it is
mainly imported into UK (imports almost 1/3 of the global imports), Denmark, Italy and South
Korea. The pulp is mainly exported from Brazil (which holds about 20% of the global exports),
Canada, USA and Chile while it is mainly imported into China, USA, Germany, Italy and South
Korea. Nothing is wasted and the sawdust and all other general remains from sawmills, which are
called “woodchips”, are also used for various wood products (e.g. paper, linerboard etc) and a major
trade exists in this commodity from the West Coast of USA to Japan.
On the other hand, processed materials are ranging from plywood through to newsprint. Especially
from newsprint, since this is a valuable cargo and vulnerable to mishandling damage, its trade is
usually conducted by specialized vessels which have been employed in long-term contracts.
Furthermore, since the top exporting countries are Canada and Finland, these vessels should be ice
strengthened.
The agricultural products category includes various cargoes however the most important of them
is sugar. Sugar is carried in either in its raw bulk form of cane sugar or beet sugar from the
production areas to the refining place or refined sugar, usually in bagged form, from a refinery to a
consumption area. Brazil is the major exporter of bulk sugar, followed by Thailand, Australia, India
and Guatemala. On the other hand, major importers include the United Kingdom, France and USA.
Tapioca, a tropical plant, is another known agricultural bulk cargo.

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Thailand is by far the largest exporter of this cargo and loading usually takes place from the port of
Bangkok or in the case of larger vessels (e.g. Capesize bulker) in Kohsichang port. Tapioca is usually
imported into European ports or China. Other agricultural products carried in bulk might be the soy
meal, oilseeds and rice which are loaded mainly ex South East Asia (Thailand, Indonesia, and
Malaysia) to Europe, USA, China and West Africa. Though, the rice cargo which is discharged in
West Africa is mainly in bagged form due to the lack of infrastructures.
It is worth to note at this point that vessels loading agricultural products ex Indonesia or Malaysia
may need to load in more than one port their full cargo and therefore the voyage lasts for a longer
period. Fertilisers are the 4th largest -in terms of trading activity- minor dry bulk cargo and their use
is very important for the development of the grain and agricultural industry. To understand the
importance of fertilisers it is worth to note that India has been transformed from an importer of
grains to a producing country within 25-30 years due to the use of fertilisers.
The three main chemicals required for plant growth are nitrogen, phosphate and potash. All of them
occur naturally but nitrogen is also produced as a by-process of the oil and chemical industries.
Nitrates are also in demand due to its other constituents, such as iodine. Sulphur is mainly exported
from United Arab Emirates, Russia, Qatar, Canada, and USA while the largest importers are China
(about 16% of global imports), DRC, South Africa and Indonesia.
Phosphate is found all around the African coastal nations from Togo (Kpeme port) in West Africa,
Senegal (Dakar) and Morocco (Casablanca, Jorf Lasfar, Safi) and Tunisia (Sfax and Gabes). Other
exporters of phosphate are Jordan (Aqaba port), Egypt (El Hamrawein) and USG (Tampa port).
Russia is also an exporter via the port of Murmansk and overland via Finland (port of Kokkola).
Potash can be shipped naturally or as processed potassium chloride. The major exporter is Canada
followed by Russia, Germany, Jordan and Israel. USA, Brazil and India are the major importers of
potash. Bauxite is another main mineral which is carried in bulk and it is considered as the most
famous raw material used to produce alumina used in the aluminium metals production.
It is exported in large quantities from West Africa (Guinea), Brazil, Dominican Republic and
Australia into USA, Canada, North Europe and China. Cement is a raw material which is used in the
construction industry and it is usually carried in the form of grey or white powder and clinker.
Bulk cement is the main exporting type is accounted for almost 60% of the total while clinker
represents about 25% of the total cement trade. The remaining 15% is bagged cement. The major

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exporting countries are China, Thailand, UAE, Turkey and Germany. USA, Algeria, Bangladesh and
France are some of the main importers however the global imports are distributed in various
countries around the world. About 90% of the total bulk cement is carried in specialized self-
discharging cement carriers while bulk carriers load a small proportion of the total bulk cement
trade, along with clinker as well as cement in bags.
Due to the fact that the bulk cargo is dirty, dusty and with a high risk in case it comes in contact
with water or moisture, only few shipowners accept to load bulk cement/clinker in their bulk
carriers and in these cases a protective clause is usually incorporated in the charter party so as to
protect Owner’s interests.
Scrap metals form another important dry bulk seaborne commodity. Scrap is steel/metal/iron
which is used for recycling purposes and it is obtained either from the disposal of unused/unwanted
metals or from the excess metals which produced during the fabrication. The largest exporter is
USA, followed by North European countries (i.e. Germany, UK) and Japan. Turkey imports almost
20% of the global scrap imports holding the leading position and followed by South Korea and
India in the second and third position respectively.
Scrap cargoes are loaded in various bulkers of any size from coasters up to supramax. In most cases,
the vessels should be geared with their cranes in good working order while the shipowners are trying
to incorporate specific protective clauses in their charter party in order to ensure the soft loading of
the cargo into the holds which is required in order to avoid damages on the tank top.
Petroleum Coke (Petcoke) may be considered as part of the coal market, however, it is a by-
product of the oil refining and it is mainly consumed in the cement industry. USA is the major
exporter with a global share of almost 25%, while Venezuela, South Korea and China are also
exporting nations. India, Europe and Japan are the major importers.
Petcoke cargoes are not very popular with Owners since some of their grades are granular and rather
oily, while others are fine and cause a dust problem. Therefore, it is considered as a very dirty cargo
and it is difficult for the cargo holds to be cleaned after its discharge. Therefore, in most cases, the
vessel is not able to load a grain cargo or similar clean cargo after she has discharged a petcoke. For
this reason, in the case of a time charter fixture, it is common for shipowners to ask for a protective
clause to be incorporated which also refers to a higher hold cleaning cost.

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On the other hand, in the case of voyage employment, this increased cost should be taken into
consideration when making the TCE calculations.
Read More: https://www.opensea.pro/blog/minor-dry-bulk-commodities
LIQUID BULK CARGOES
A liquid bulk cargo is defined as an ‘unpacked homogeneous liquid cargo’. Examples of liquid bulk
cargoes include crude oil, palm oil or liquefied natural gas. Liquid bulk characteristics include:
 Density;
 Temperature;
 Viscosity.
The density and temperature of a liquid bulk cargo will determine the volume it occupies. Density,
sometimes referred to specific gravity, is defined as ‘the ratio of the weight of a volume of liquid
substance at its actual temperature, to the weight of an equal volume of pure water at a fixed
temperature.
As the temperature of bulk liquid increases, its volume will increase. Likewise, when the temperature
of the bulk liquid falls, its volume will decrease. Allowance has to be made for the change of volume
in the stowage of a liquid bulk cargo. Additionally, the actual temperature of the bulk liquid cargo on
loading and discharging needs to be known to establish its mass at a standard temperature and
pressure.
The viscosity of a liquid describes its resistance to movement. A liquid cargo with a high viscosity is
less easy to move than one with a low viscosity. Viscosity can be reduced by heating. Liquid bulk
cargoes have other characteristics which need to be considered including flammability, toxicity,
vapour pressure and corrosiveness.
TRADE ROUTES
Trade routes are the spatial highways between ports along which goods are moved from areas of
supply to areas of demand. Seaborne trade routes are not static, they vary over time, with the

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discovery of new sources and the development of new technologies. It is difficult to describe all but
the most defined trade routes which dominate today’s international shipping industry.
Bulk liquid trade routes – crude oil
Crude oil is the largest commodity in terms of tonnage moved by seaborne trade. In 2014, in excess
of 1,800 million tonnes were carried by tanker. There are three main exporting regions: the Middle
East, North and West Africa and South America. Crude oil tankers collect crude oil from the export
regions and transport it over many thousands of miles to refineries located in Europe, the United
States of America, China, Japan and south-east Asia. The map below shows the general pattern of
the seaborne movement of crude oil. As crude oil does not have a homogeneous character and as
refinery demand varies, some unusual trading patterns result; an example is North Sea crude oil
being transported to the United States of America. Recent developments in unconventional
methods of producing crude oil and the use of transnational pipelines impact on the pattern of
crude oil movement by sea.
At the refinery, the crude oil is converted into petroleum products which are distributed to meet
demand. In 2014, 900 million tonnes of petroleum products were transported by sea.
Bulk Dry trade routes- Coal
Coal fueled the 19th-century industrial revolution and is still a very important commodity in world
trade. One point two billion tonnes of coal was carried in seaborne trade in 2013 making it the
second-largest traded commodity. Two major types of coal are moved in world trade.
Coking coal is used in steel production and steam coal is used by coal-fired power stations to
generate electricity. More than twice as much steaming coal is moved by sea transport than coking
coal. The growth rate at the turn of the twenty-first century for steam coal is second only to
liquefied natural gas. Coal is exported by sea from several main regions in the world of which
Australia is dominant. The United States of America, Russia, South Africa, Indonesia and
Colombia are also significant providers of coal to world markets. The world’s major import regions
are the Far East, including Japan, South Korea, China and Western Europe. The map below shows
the general pattern of seaborne trade in coal.
Bulk dry trade routes – iron ore

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Iron ore is the necessary component required for the production of steel. Steel is a fundamental
construction material. Demand for steel and hence iron ore reflects the world’s economy. The
amount of iron ore moved in seaborne trade in 2013 was 1.2 billion tonnes, similar in amount to
coal. Growth in seaborne trade of iron ore has more than doubled in 10 years with demand for iron
ore being significantly influenced by the needs of China’s steelmakers.
While iron ore can be found in many areas of the globe, significant deposits of economic worth are
mined in Australia and South America. Other export areas of iron ore include South Africa, West
Africa, the United States of America, Canada, India and Scandinavia. The dominant importers of
iron ore include Europe and the Far East, including Japan, South Korea, Taiwan and China.
Bulk dry trade routes – grain
Grain, including wheat, coarse grain and soybeans, is the third-largest dry bulk commodity moved by
sea. The amount of grain which entered world seaborne trade in 2013 exceeded 380 million tonnes.
Year on year, demand varies depending on harvest yields.
There are three regions of the world which produce excess grain for export, namely, the United
States of America, South America and Australia. There are many importing countries but Africa,
India, the Far East and Europe are the main beneficiaries. The seaborne pattern of trade in grain is
indicated on the map below. In 2013, Japan was the largest importer of wheat and coarse grains.

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Liquefied gas carrier
Two types of gases are carried in liquefied form. Liquefied natural gas (LNG) and Liquefied
petroleum gas (LPG). The cargo containment system for LNG is usually fully refrigerated although
the compressed natural gas (CNG) carriers have recently been developed for bespoke operations.
Liquefied natural gas carriers are built to one of two basic designs, using either self-supporting tanks,
such as the Moss spherical tanks, or membrane tanks of a type originally developed by Technigaz.
At the end of 2013 there were 357 vessels in the global LNG fleet, each having an average capacity
of 150,000 cubic metres. The largest category of LNG carriers, known as the Q Max Series have a
capacity exceeding 265,000 cubic metres.
The carriage of LPG may be fully refrigerated and fully pressurised, or semi-pressurised and semi-
refrigerated. They are of a smaller size than the LNG carrier.
VLGC tanker

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Pressurised LPG Tank

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LNG Moss Tank

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LNG Prism Tank

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TOPIC 5:
THE SPECIFIC FEATURES OF DRY BULK CARRIERS AND BULK TANKERS
By the end of this lesson the learner should be able to analyse;
a. Types and specifications of dry bulk carriers
b. Cargoes carried by dry bulk carriers
c. Loading and unloading of dry bulk vessels
d. Types and specifications of bulk tankers
e. Types and specifications of LPG/LNG carriers
f. Transfer of liquid goods to/from vessels by pipeline
Types and specifications of dry bulk carriers
Major Category of Bulk Carriers as Per Size
Mini Bulk Carrier
 Dead weight tonnage of these vessels is less than 10,000.
 They have less than 5 Cargo Holds.
 They typically carry minor or general cargoes.

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DWT,
Deadweight
Length,
(m)
Draught,
(m)
Cargo
Holds
Cargo Type
3000-14,999 up to-130 Less than 10 1-3
Varies of Dry cargo, including
Containers
Small Bulk Carrier
 Dead weight tonnage of these vessels is between 10,000 to 25,000.
 They have less than 5 holds.
 They carry minor bulk or steel products in general.
Handy Size Carriers
 They usually have 5 holds.

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 They carry minor bulk or steel products in general.
DWT,
Deadweight
Length,
(m)
Draught,
(m)
Cargo
Holds
Cargo Type
35,000-
59,999
150-
200
11-12 5
Cereals, Coal, Steels, Cement, Potash, Rice, Sugar,
Gypsum, Forest Products, Logs, Wood chips, Scrap,
Sulfur, Salt, Vehicles
Handymax Carriers
 They usually have 5 holds.

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 In general, they carry Minor Bulk, Steel products, Coal and Grains.
Image Credit: https://www.flickr.com/photos/wbaiv/ under CC BY-SA 2.0 License
Panamax Carriers
 It usually has 7 cargo holds.
 They generally carry Bauxite, coal, grain, Ore, Phosphate etc.
 These vessels have a maximum breadth of 32.2m.
 This size of bulkers was introduced to pass through the Panama Canal.

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DWT,
Deadweight
Length,
(m)
Draught,
(m)
Cargo
Holds
Cargo Type
60,000-
79,999
200-
230
13-15 6-7
Oil seeds, Grains, Bauxite, Coal, Iron Ore,
Phosphate, Gypsum, Wood chips, Wood
Pellets, Sulfur
Post-Panamax Bulk Carrier
 They usually have 9 cargo holds.
 These vessels have more breadth than the Panamax and were designed for the bulkers to
transit through the New locks of Panama Canal.

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Image Credits: @canaldepanama – Twitter
Capesize Bulk Carrier
 They usually have 9 cargo holds.
 These vessels travel from Asia to Europe without entering the Suez Canal.
 They are completely gearless with no cranes or derricks and completely rely onshore facilities
for loading and discharging.

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Capesize
Capesize bulk carriers are the biggest common bulk carrier. Vessel is too big to cross the Panama or
Suez canals. Known as Capesize vessels because they have to go around the Cape of Good Hope or
Cape Horn. Due to the large size, only big harbors are able to accommodate this
class in fully loaded condition.
Subcategory: Suezmax, with maximum capacity of 150,000DWT,The largest vessel that can
pass through the Suez canal. The maximum allowed Draught of the Suez canal is currently 18.90 m
(62 feet).
DWT,
Deadweight
Length,
(m)
Draught,
(m)
Cargo
Holds
Cargo Type
80,000-179,999 230-270 17 9 Oil seeds, Cerials, Grains, Coal, Iron Ore
VLBC (Very Large Bulk Carriers)
 Dead weight tonnage of these vessels is over 200,000.
 They usually have 9 cargo holds or more.
 They are completely gearless with no cranes or derricks and completely rely onshore facilities
for loading and discharging.
Basic Bulk Carrier / Conventional Bulkers
Combined Bulk Carriers
 These type of bulk carriers have special design and are quite expensive in comparison to
other types of Bulk Carriers.
 The vessels have greater flexibility in order to carry Ore bulk and even oil as Cargo.
 These vessels could be easily identified as the deck area has both pipelines and Pontoons.

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 Combined Bulk Carriers
 These type of bulk carriers have special design and are quite expensive in comparison to
other types of Bulk Carriers.
 The vessels have greater flexibility in order to carry Ore bulk and even oil as Cargo.
 These vessels could be easily identified as the deck area has both pipelines and Pontoons.
Gearless Bulk Carrier
 Bulkers that are unequipped with cranes and conveyor facilities are gearless bulkers.
 Huge in size, these bulk carriers make port only on those ports of call which provide
conveyor and crane facilities to discharge their bulk loads. And since only a few ports offer
such facilities, there automatically comes a cap on the number of port calls made by a
gearless bulk carrier.
 These are the bulkers which have no cranes or even conveyors of their own.
 Because of the above reason, these bulk carriers are unable to carry out operations were
shore assistance is not provided.
 These bulkers are big in size and can only go alongside the largest and avant-garde ports.
 These bulk carriers are very cost effective as there is no expense on installation, maintenance
and operation of the Cranes/Gears.

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Self-Dischargers
 These type of bulkers have Self-discharging/Loading facilities on board in the form of
Conveyors or Cranes.
 These vessels can operate in any inaccessible waterway as they do not require any shore-
based system to carry out operations.
 These bulk carriers have the capability to discharge directly on the quay, a barge, a
warehouse or hoppers.
 This application was introduced basically for deep sea trade in view of the adequacy of the
bulk handling facilities around the world.
 In these bulk carriers, hold terminates above the Double bottom tank top, setting up a series
of hoppers which are hydraulically operated.

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Self-Discharging Bulk Carrier
Bulker Lakers
 The bulk carrier ships that ply in the American Great Lakes are called as the Lakers.
Recognisable on account of their distinct constructional style, these vessels enjoy better
operational longevity.
 These type of bulk carriers were embossed specifically for trading in Great Lakes
 elf Dischargers
 These type of bulkers have Self-discharging/Loading facilities on board in the form of
Conveyors or Cranes.
 These vessels can operate in any inaccessible waterway as they do not require any shore-
based system to carry out operations.
 These bulk carriers have the capability to discharge directly on the quay, a barge, a
warehouse or hoppers.
 This application was introduced basically for deep sea trade in view of the adequacy of the
bulk handling facilities around the world.

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 In these bulk carriers, hold terminates above the Double bottom tank top, setting up a series
of hoppers which are hydraulically operated.
 Self-Discharging Bulk Carrier
 Bulker Lakers
 The bulk carrier ships that ply in the American Great Lakes are called as the lakers.
Recognisable on account of their distinct constructional style, these vessels enjoy better
operational longevity.
 These type of bulk carriers were embossed specifically for trading in Great Lakes
BIBO or “Bulk-In, Bags Out”
 Acronym for Bulk-In, Bags Out; these kinds of bulkers streamline the loaded bulk cargo in the
vessel by sacking the same into smaller quantities. Since the process occurs simultaneously,
while the cargo is loaded onto the ship, these vessels command unique respect amongst the
other existing vessel kinds.
 This is a very special type of bulker, where the cargo is loaded as bulk but are equipped with
equipment to bag those bulk cargo and discharge them in bags.
 The port stay of these vessels are very short in their destinations as the time taken to
discharge bagged cargo is very less.
Category of Bulk Carriers under Size as Per Region
Karsarmax Bulker
 These Bulkers were designed to berth specifically at the Port of Kamsar (Republic of New
Guinea).
 Max allowable length overall is 229 m and are larger than the Panamax.
Newcastlemax Bulker
 This size of bulkers referred to the largest vessels which can enter Port of Newcastle,
Australia.

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 This size of vessels has a maximum Beam of 50m and length of 300m.
Setouchmax Bulker
 This size of vessels was designed for vessels to navigate in Setouchi Sea, Japan.
 They were restricted to 203,000 DWT(Dead Weight Tonnage)
Seawaymax Bulker
 This size of the vessel is referred to the vessels which can pass through the Locks of the St.
Lawrence Seaway (Great Lake, Canada).
 Their length was restricted to 226m and draught of 7.92 m.
Malaccamax Bulker
 This size of the vessel is referred to vessels which could pass through Strait of Malacca.
 The maximum allowable LOA is of 330m, the draught of 20m and DWT of 300,000.
Dunkirkmax Bulker
 These bulkers were designed to trade in the eastern Harbour lock in the Port of
Dunkirk(France)
 The Maximum allowable beam is of 45 m / LOA of 289 m and 175,000DWT.
LOADING AND UNLOADING OF DRY BULK VESSELS
SPECIFIC ASPECTS OF LOADING OPERATIONS
VESSEL LOADING PLAN
A vessel loading plan should be available for all but the simplest of loading operations. Plans are
prepared in consultation with the master or chief officer of the ship and/or the terminal
representative.
Loading risks should be assessed by competent persons.
Possible risk factors include:

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• The risks to the health and safety of personnel involved in the cargo handling operations
including the risks associated with the cargo handling
• Safe means of access and egress to and from the ship’s holds at all stages of loading; i.e.
there may only be hold ladders fitted at one end of the hold and the load plan should
therefore be designed to ensure that access to it does not become restricted during the cargo
handling operation
• Safe means of access and egress to and from tops of cargo stows such as during trimming
operations
• the safety of personnel entering ships compartments, with particular regard to build up of
toxic gases, oxygen depletion, dusts and ill health effects from cargoes
• The safety of third party personnel not involved in the cargo handling operation including
the safety of the vessel’s crew
• Safe means of access and egress for cargo surveyors or inspectors
• The rate and order in which the ship’s holds are to be loaded or unloaded. The ship will
require all cargo operations to be undertaken in a manner, which complies with the vessel’s
loading/unloading procedures as required by the International Safety Maritime code (ISM).
This may require cargo handling to be suspended whilst ballasting/de-ballasting takes place.
Particularly with large vessels the ship’s Master will need to ensure the stresses imposed on
the ship’s hull are at all times acceptable.
SPECIFIC ASPECTS OF DISCHARGING
Ships often arrive in ports for discharge without providing the cargo handler prior notification of
how the ship is stowed. Discharging risks should be assessed by competent persons.
Possible risk factors include:
• working at heights due to cargo being on tank tops, access platforms or other high areas
within the hold
• the safety of personnel entering ships compartments, with particular regard to build up of
toxic gases, oxygen depletion, dusts and ill health effects from cargoes
• manual handling during cleaning out operations
• shifted cargo during sea passage
• the potential for cargo shift during discharge

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• the condition of cargo and deterioration on passage, e.g. water ingress
• cargo liquefying or solidifying
Good communication between ship, terminal and or shipping agents is important to ensure that no
issues are overlooked.
The requirements of the Safe Loading & Unloading of Bulk Carrier Regulations for terminals
handling ships that come under the definition of a “Bulk Carrier” such as a terminal operations
manual, nominated terminal representative, agreed loading/unloading plan and holding an
accredited quality management system go a long way to ensuring operations are conducted in a
suitable manner.
• The Safe Loading & Unloading of Bulk Carrier Regulations 2003 define a bulk carrier as any
ship of over 500 gross tonnes or more:
• Constructed with a single deck, topside tanks and hopper side tanks in cargo spaces and
intended primarily to carry dry bulk cargo in bulk; or
• An ore carrier, where “ore carrier” means a sea-going single deck ship having two
longitudinal bulkheads and a double bottom throughout the cargo region and intended for
the carriage of ore cargoes in the centre holds only; or
• A combination carrier mean a tanker designed to carry oil or alternatively solid bulk cargo
Notwithstanding the definition above dry bulk cargoes may be carried in ships that do not meet this
definition. Consequently terminal operators must risk assess each operation on its own merits and
determine what controls are required to ensure operations are managed in a safe manner.
However the terminal remains responsible for the safety of its staff and must ensure that adequate
risk assessments and safe systems of work are in place to ensure that the operations can be
undertaken safely. Some bulk cargoes may not be covered by some or all of this legislation - an
example of this is grain cargoes, which are covered by the Grain Rules.
Dry bulk cargoes may also create problems that affect the environment and it is important that
terminals engaged in handling this type of cargo give consideration to the impact on the
environment of their activities. Such controls will generally go hand in hand with the safe handling
of these products.

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REQUIREMENTS IN RELATION TO THE OPERATIONAL SUITABILITY OF BULK
CARRIERS FOR LOADING AND UNLOADING SOLID BULK CARGOES
Terminal operators shall satisfy themselves as to the operational suitability of bulk carriers for the
loading or unloading of solid bulk cargoes by checking that the bulk carriers comply with the
following requirements:
i. They shall be provided with cargo holds and hatch openings of sufficient size and
such a design to enable the solid bulk cargo to be loaded, stowed, trimmed and
unloaded satisfactorily;
ii. They shall be provided with the cargo hold hatch identification numbers as used in
the loading or unloading plan. The location, size and colour of these numbers shall
be clearly visible to and identifiable by the operator of the terminal loading or
unloading equipment;
iii. Their cargo hold hatches, hatch operating systems and safety devices shall be in good
functional order and used only for their intended purpose;
iv. List indicating lights, if fitted, shall be tested prior to loading or unloading and
proved to be operational;
v. If required to have an approved loading instrument on board, this instrument shall
be certified and operational to carry out stress calculations during loading or
unloading;
vi. Propulsion and auxiliary machinery shall be in good functional order;
vii. Deck equipment related to mooring and berthing operations shall be operable and in
good order and condition.
Requirements in relation to the suitability of terminals for loading and unloading solid bulk
cargoes
i. Terminals shall only accept bulk carriers for loading or unloading of solid bulk cargoes at
their terminal that can safely berth alongside the loading or unloading installation, taking into
consideration water depth at the berth, maximum size of the ship, mooring arrangements,
feedering, safe access and possible obstructions to loading or unloading operations.

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ii. Terminal loading and unloading equipment shall be properly certified and maintained in
good order, in compliance with the relevant regulations and standards, and only operated by
duly qualified and, if appropriate, certified personnel.
iii. Terminal personnel shall be trained in all aspects of safe loading and unloading of bulk
carriers commensurate with their responsibilities. The training shall be designed to provide
familiarity with the general hazards of loading and unloading of solid bulk cargoes and the
adverse effect improper loading and unloading operations may have on the safety of the ship
iv. Terminal personnel involved in the loading and unloading operations shall be provided with
and use personnel protective equipment and shall be duly rested to avoid accidents due to
fatigue
RESPONSIBILITIES OF THE MASTER
1. The master shall be responsible at all times for the safe loading and unloading of the bulk carrier
under his command.
2. The master shall, well in advance of the ship's estimated time of arrival at the terminal, provide
the terminal with the information set out in part 2
Before any solid bulk cargo is loaded, the master shall ensure that he has received the required cargo
information and, where required, a solid bulk cargo density declaration. If the ship is due to unload
solid bulk cargo then the master shall give a copy of the form for cargo information to the terminal
representative, before the unloading operation begins
Prior to the start of and during loading or unloading the master shall discharge the duties listed in
Part 3.
Part 2- Information to be provided by the master to the terminal
The ship’s estimated time of arrival off the port as early as possible. This advice shall be updated as
appropriate
At the time of the initial time of arrival advice:
i. Name, call sign, IMO number, flag, port of registry;

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ii. loading or unloading plan, stating the quantity of cargo, stowage by hatches,
loading or unloading order and the quantity to be loaded in each pour or
unloaded in each stage of the discharge;
iii. Arrival and proposed departure draughts;
iv. Time required for ballasting or de-ballasting;
v. ship’s length overall, beam, and length of the cargo area from the forward
coaming of the forward-most hatch to the after coaming of the aft-most
hatch into which cargo is to be loaded or from which cargo is to be
unloaded;
vi. distance from the waterline to the first hatch to be loaded or unloaded and
the distance from the ship’s side to the hatch opening;
vii. location of the ship’s accommodation ladder;
viii. air draught;
ix. details and capacities of ship’s cargo-handling gear, if any;
x. number and type and size of mooring lines;
xi. specific requests, such as for trimming or continuous measurement of the
water content of the cargo;
xii. details of any necessary repairs which may delay berthing, the
commencement of loading or unloading, or may delay the ship sailing on
completion of loading or unloading;
xiii. Any other information related to the ship requested by the terminal.
Part 3: Duties of the Master Prior to and During Loading or Unloading Operations
Prior to and during loading or unloading operations the master shall ensure that:
i. The loading or unloading of cargo and the discharge or intake of ballast water is under the
control of the ship’s officer in charge;
ii. The disposition of cargo and ballast water is monitored throughout the loading or unloading
process to ensure that the ship’s structure is not overstressed;
iii. The ship shall be kept upright or, if a list is required for operational reasons, it shall be kept
as small as possible;
iv. The ship remains securely moored, taking due account of local weather conditions and
forecasts;

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v. Sufficient officers and crew are retained on board to attend to the adjustment of the
mooring lines or for any normal or emergency situation, having regard to the need of the
crew to have sufficient rest periods to avoid fatigue;
vi. the terminal representative is made aware of the cargo trimming requirements, which shall
be in accordance with the procedures of the IMO Code of Safe Practice for Solid Bulk
Cargoes last published in 2002, ISBN 92-801-5129-0.
vii. the terminal representative is made aware of the requirements for harmonisation between
de-ballasting or ballasting and cargo loading or unloading rates for his ship and of any
deviation from the de-ballasting or ballasting plan or any other matter which may affect
cargo loading or unloading;
viii. The ballast water is discharged at rates which conform to the agreed loading plan and does
not result in flooding of the quay or of adjacent craft. Where it is not practical for the ship to
completely discharge its ballast water prior to the trimming stage in the loading process, he
agrees with the terminal representative on the times at which loading may need to be
suspended and the duration of such suspensions;
ix. There is agreement with the terminal representative as to the actions to be taken in the event
of rain, or other change in the weather, when the nature of the cargo would pose a hazard in
the event of such a change;
x. No hot work is carried out on board or in the vicinity of the ship while the ship is alongside
the berth, except with the permission of the terminal representative and in accordance with
any requirements of the competent authority;
xi. Close supervision of the loading or unloading operation and of the ship during final stages
of the loading or unloading;
xii. the terminal representative is warned immediately if the loading or unloading process has
caused damage, has created a hazardous situation, or is likely to do so;
xiii. The terminal representative is advised when final trimming of the ship has to commence in
order to allow for the conveyor system to run-off;
xiv. The unloading of the port side closely matches that of the starboard side in the same hold to
avoid twisting the ship’s structure;
xv. When ballasting one or more holds, account is taken of the possibility of the discharge of
flammable vapours from the holds and precautions are taken before any hot work is
permitted adjacent to or above these holds.

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TRANSFER OF LIQUID GOODS TO/FROM VESSELS BY PIPELINE
Guideline for Oil transfer system on board ship
Liquid cargo is nowadays usually transferred using an articulated arm loading/discharge system, and
groups of arms are often found on a shore refinery or offshore loading facilities. It connects to the
tanker's manifold, usually located near the center of the ship. Before commencing fuel oil transfer
operation, chief engineer shall post a line diagram of the vessel’s oil transfer piping including the
location of each valve, pump, control device, vent and overflow. Also the location of the shut-off
valve or other isolation devices that separate all bilge or ballast system from the oil transfer system.
Cargo piping – tankers: Cargo piping in tankers is usually mild steel and is protected from rusting
by external painting. Most large oil tankers have the main ring system that allows increased
operational flexibility and the penalty of reduced segregation.
Tankers fitted with deep-well pumps in cargo tanks have dedicated piping. Each tank will have its
pump, pipe, and cargo manifold. Stainless steel piping is invariably used with stainless steel tanks.
On chemical tankers, cargo pipes must be joined by welding. Flanged connections are allowed on oil
tankers, as well as on chemical tankers at valve connections and for fitting portable spool pieces,
which are removable short lengths of pipe used for segregation of piping. Regular pressure testing of
cargo pipes is essential to detect weak points before they fail.
Hydraulic piping systems
Hydraulic pipes are high-pressure pipes. Hydraulics are used for:
 Manoeuvring the steering gear
 Actuating controllable pitch propellers and thrusters
 Control of watertight doors and valves
 Lifting appliances and deck equipment
 Opening stern, bow or side doors
 Moving mobile ramps for hatch covers

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 Driving cargo and ballast pumps and for many other minor shipboard utilities.
It is a requirement that hydraulic systems for steering, pitch control and watertight doors
have dedicated piping and pumps.
Some hydraulic fluids are highly flammable. As a result, hydraulic equipment and pipework
must be kept clear of hot surfaces.
Alternatively, hot surfaces must be protected by spray shields. It is important to prevent the
external corrosion of hydraulic piping located on the deck. Hydraulic pipes operate at very
high pressure, and corrosion-induced weakness frequently causes hydraulic pipes to burst. A
high standard of cleanliness is necessary when working with, or replacing, hydraulic piping.
Check the systems regularly for leaks, corrosion or mechanical damage.
Use only good-quality and clean hydraulic fluid.
Oil discharge containment and procedures for emptying the oil containment.
The oil discharge containment is a metal box welded to the deck under or around each fuel
oil, bulk lubricating oil tank vent, overflow, and filling pipe in accordance with
33CFR155.320. Drop the oil into fuel oil tank using the by-pass valve or transfer into the
fuel oil tank by other methods.
Oil Discharge Monitoring And Control Equipment
Vessels fitted with equipment for monitoring the discharge of effluent from slop tanks must
ensure that this equipment is operational before any release is made. The operation of this
equipment must be following the approved "Oil Discharge Monitoring and Control Systems
Operation Manual." The ODME shall be calibrated following the manufacturer's
recommendations as necessary to conform to manufacturer's specifications, but in no case
shall the interval between calibrations exceed five years. The ODME shall be self-tested
before each use. According to the manufacturer's manual, a test is to be carried out at
intervals, not exceeding one month. Printed records from the monitoring equipment must
be retained on board for inspection by surveyors.
Number of personnel on duty
More than two crew members (at least one engineer) shall be on duty to conduct the oil
transfer operation. Each crewmember engaging in the oil transfer operation shall familiarize
himself with the line diagram of the piping, valves, tanks, etc.
Chief engineer

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The chief engineer shall inspect each equipment and confirm their reasonable condition and
give adequate instructions to the person in charge. The person in charge shall aid the chief
engineer and operate valves and check ullage.
Engine hands
Engine hands shall engage in oil transfer operation under the command of chief engineer
and the person in charge.
Procedures for tending the vessel’s mooring
The person in charge of oil transfer shall assure that the vessel is securely moored, and the
moorings are being tended as necessary through consultation with the deck officer on duty.
Each deckhand on duty shall watch ship mooring and report to the officer on duty and
operate the mooring winch.
Operations at SBM, CBM / MBM and Tandem Moorings (F(P)SO’s)
Environmental and operating conditions will vary from terminal to terminal, and working
practices are developed accordingly. When operating at an SBM, CBM, or a terminal utilizing
tandem mooring, the terminal's operational requirements shall be carefully reviewed and
strictly complied with. Any abnormal condition shall be immediately reported to the Loading
/ Mooring Master as appropriate.
Environmental conditions – wind/sea / swell conditions and currents / tidal streams (as
appropriate) shall be monitored throughout and appropriate actions taken as agreed with the
terminal in the event of unexpected changes or operating conditions deteriorating to close to
operating limits. Weather forecasts shall be obtained from all available sources. In all cases,
the hose string shall be carefully monitored for product leakage. If the terminal hoses/lines
are to be flushed with seawater on completion of operations, this should be addressed
appropriately.
Procedures for operation the emergency shutdown
When charging fuel oil from shore facility or barge, the emergency shutdown must be
provided by the transferring facility. When transferring fuel oil by ship's pump, an engineer
in charge shall operate the emergency shutdown button.
Procedures for topping off tanks
When topping off tanks, an engineer in charge shall check ullage continuously and request

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the shore personnel to reduce the loading rate if necessary to avoid the possibility of the oil
spill.
Communications during oil transfer operation
The chief engineer shall discuss with shore personnel about communications during the
transfer operation. Communications require that continuous two-way voice communications
be possible at all times, ex. walkie-talkie.
Procedures for closing all valves used during oil transfer operation
The chief engineer shall ensure that all valves used during the oil transfer operation are
closed after completion of the transfer.
Procedures for closing and opening the vessel’s openings
 i) Hatches
 ii) Ullage openings
 iii) Sounding pipes
 No person shall open the abovementioned openings without permission of the chief
engineer.
Procedures for reporting oil discharge into the water
In the case of an oil spill, Master shall report to the terminal and the undermentioned
immediately
 Local port authority
 In U.S. water: The National Response Center(NRC), Washington,
If directly reporting to the NRC is not practicable, reports may be made to the Coast Guard or
Government Officials for the geographic area where the discharge occurred.
Contents of Reporting
 Date and time of discharge
 Date and time of reporting

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 Ship’s name
 Company’s name
 Where the discharge occurred
 Kind of oil
 Quantity of discharge
 Weather
 Tide and current
 Sea condition
 Cause of incident
The above facts shall be entered in the Log Book and the Oil Record Book. Advise owners office
and also report to ships flag authority regarding all details.
Assignment
Write brief notes on Ships bunkering operation - planning, preparation, safety checks & confirmation;
Ref; http://shipsbusiness.com/bunkering-checklist.html
Write brief notes on basic procedures and guidelines on ship to ship transferring of oil
Ref: http://shipsbusiness.com/ship-to-ship-transfer.html

Unit 2 ; Marine Cargo Management

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Unit 2 ; Marine Cargo Management