Sea Transport: Ashok Advani Visiting Professor IIFT & Jaipuria Institute of Management, Noida

Sea Transport
Ashok Advani
Visiting Professor
IIFT & Jaipuria Institute Of Management, Noida
Session Objectives
 To brief up the history of ocean transportation and its growing role in the international
trade logistics
 To appraise the factors determining the choice of ocean routes in international trade
logistics
 To critically explain the nature of ocean trade and major developments in ocean trade
 To discuss the classification and types of various kinds of ships used in international
trade logistics
 To discuss the major commodities traded in international shipping and developments in

world shipping
 To explain the major commodities transported by ocean transportation in international

logistics
Prof. Ashok Advani - Visiting Faculty : IIFT & Jaipuria Institute of Management, Noida
Session Outline
 Introduction
 History of Ocean Transportation
 Growing Importance of Ocean Transportation
 Factors Determining Ocean Routes
 Nature of Shipping Trade
 Classification of Vessels
 Developments in World Shipping Services
 The Major Commodities Traded By Ocean Transportation
 Types of Shipping Vessels
Introduction
 Ocean transportation is one of the most primitive, preferred, and popular modes of
transportation in world trade.
 The key advantages of ocean transport are low cost per tonne of transportation, large
cargo carrying capacity, safety and security of cargo, timely delivery due to absence of
congestion or traffic jams, standardized documentation for clearance of cargo, no
applicability of national rules and regulations, flexibility in transport operations,
availability of cargo freight for round trips, and environment-friendly nature.
 The popularity of ocean transport is evidenced by the growing number fleet of ships
worldwide.
 The fleet structure of global maritime carriers has reached a historic high of 16,28,783
ships with combined tonnage of these ships coming up to 72,82,25,000 gross tonnes.
 The entry of containers in global maritime shipping services has further facilitated the
growth of ocean transportation.
Main Advantages And Disadvantages Of Ocean Transportation
Low cost per tonne of transportation

Large carrying capacity ensures secure & timely delivery due to no
congestion/ traffic jams
Globally accepted standardized documentary procedures of Shipping
Low applicability of national rules & regulations
Flexibility in Transport Service Operations
Availability of cargo freight for round trips
Most environmentally friendly & efficient mode of Transport
Considerable resistance to unfavorable weather conditions
Relatively long delivery time due to slow movement of ships

Ineffective for LCL cargo as minimum size of cargo freight is a container
Unavailability of necessary infrastructure at majority of international
container ports
Limited flexibility of re-routing cargo during transit
Advance planning is mandatory for transportation
Cargo subject to possible price fluctuations during transit
World Fleet By Principal Types Of Ships In 2013
Total No. of Ships=1628783
Other Types
Gas & Chemical Total No. of Ships
Tankers
Container Ship
General Cargo Ships
Bulk Carrier
Oil Tanker
0 200000 400000 600000 800000
Source: Page No. 37 of Review of Maritime Transport (2013), UNCTAD, Geneva
History Of Ocean Transportation
 Indian historians particularly R. C. Majumdar claimed the Indians are one among the
first to know about the maritime trade at the times of Harrapan civilization.
 European claims that commercial shipping, for the first time, began with the activities
of the Phoenician merchants who operated their own vessels for transportation of
goods in the Mediterranean Sea.
 The shipping practices so developed and mastered by Phoenician merchants, was

subsequently adopted by the merchants of ancient Greece and Rome.
 It was continued by the maritime powers of Europe particularly Portugal, Netherland,

Spain, Britain and France from the middle ages to modern times.
 The Venetians in Europe has a strong maritime fleet during 1300 AD to 1500 AD
which served the commercial, political and social interests of the merchant traders
and the city-state exclusively.
 On the other hand, Chalukyas, a kingdom Southern Indian kingdom used to have
strong maritime fleet of over 100 ships in 900 to 1050 AD.
Fundamental Principal Behind Growing Importance Of Ocean
Transportation
The cost The tapering principle refer to

per unit of spreading of fixed costs over a
distance in larger distance base. As
Economy internation distance involved in ocean
of al logistics transportation are longer,
Distance decreases fixed cost of logistics
as the operations are spread larger
distance base of miles covered in
increases international transportation.
The tapering principle is only
valid for ocean transportation.
The cost per

unit of
weight Prime reason for this is that the
decreases in fixed costs can be spread over a
Economy larger weight base of
of Scale international
logistics as intentionally traded cargo
the size of resulting in scale economies,
the thus making it most economical
shipment
increases
Cargo Ship Fleet Of Top 5 Countries (In Terms Of No. Of Vessels & Dead
Weight Tonnage
Number Of Vessels Deadweight Tonnage

Country Or Natio Foreign Total National Flag Foreign Total Foreign Total
Territory Of nal And And And As A
Ownership Flag Internati Internati Internatio % Of
onal Flag onal Flag nal Flag World
As A % Of
Total
17520595
1. Greece 825 2870 3695 69644624 4 244850578 71.56 15.17
20659888
2. Japan 738 3253 3991 17216128 0 223815008 92.31 13.87
12314283
3. China 2665 2648 5313 66936002 3 190078835 64.79 11.78
4. 10913677
Germany 396 3437 3833 16641757 1 125778528 86.77 7.79
5. Republic 764 812 1576 16624445 58471361 75095806 77.86 4.65
of Korea
6. India 584 158 742 15063983 7377303

22441287 32.87 1.39
World Total 47122 16137559 100
Source: Page no. 44 of Review of Maritime Transport (2013), UNCTAD, Geneva 05
Top 5 Countries With Largest Ship Registration
Flag of Number Share of Deadweight Share of Cumulate National Dwt Growth

registration of world tonnage world d share (% ownership 2013/2012 (%)
vessels total (000 dwt) total (% dwt) (%)
vessels dwt)
1. Panama 8580 9.87 350506 21.52 21.52 0.14 5.03
2. Liberia 3144 3.62 198032 12.16 33.68 0.01 5.83
3. Marshall 2064 2.37 140016 8.6 42.27 0.11 11.08
Islands
4. Hong 2221 2.55 129806 7.97 50.24 12.15 16.87
Kong
5. Singapore 3339 3.84 89697 5.51 55.75 36.6 16.62
6. India 1385 15.9 15876 0.97 84.72 96.16 -3.45
World Total 86942 100 1628783 100 100 23 5.98
Source: Page no. 57 of Review of Maritime Transport (2013), UNCTAD, Geneva
Top 5 Liner Companies In International Trade Logistics In 2013
Operator Country Number Average TEU Share of Cumulated Growth in

Ranking (TEU) of Vessel World Total, Share, TEU TEU over
Vessels Size TEU (%) (%) 2012 (%)
1. Maersk Line Denmark 453 4745 2149524 13.40% 13.40% 2.10%
1. MSC Switzerland 398 5186 2064118 12.90% 26.20% 1.90%
1. CMA-CGM France 288 4004 1153088 7.20% 33.40% -0.70%
1. COSCO China 155 4614 715219 4.50% 37.90% 14.60%

1. Evergreen Taiwan 187 3795 709702 4.40% 42.30% 24.30%
Line
Total all Liner Companies 5829 2755 16058233 100.00%
Types Of Ship Fleet Registrations In India (Thousand Of DWT) In 2013
Total Fleet Size (Thousand of DWT)
Total
Oil Tankers
Bulk Carrier
Total Fleet Size (Thousand of
Container Ship DWT)
General Cargo
Others
0 5000 10000 15000 20000

Growing Importance Of Ocean Trade In International Trade Logistics
REASONS FOR GROWING

IMPORTANCE OF OCEAN TRADE
Increase Concentration of
Increased Globalization
Trade of Technological Production Centres to
Trade of of Trade
Energy Innovations Cost Competitive
Mineral Polices
Resources Locations
Demand For Particular Types Of Ships In International Trade
Iron Ore Exporters Iron Ore Importers

Demand for Shipping Services
(% Share of Global Market) (% Share of Global Market)
• Australia -45 • China -65 • Very Large Cargo Carriers

• Brazil -29 • Japan -12 • Ultra Large Cargo Carriers
• South Africa -5 • European Union -10 • Very Large Ore Carriers
• India -3 • Repubic of Korea -6
Grain Exporters Grain Importers

Demand for Shipping Services
(% Share of Global Market) (% Share of Global Market)
• United States -20 • Asia Pacific -31 • Panamax

• Argentina -12 • Developing America -21 • Malaccamax
• European Union -10 • Africa -20 • Suezmax
• Australia -10 • Western Asia -18
Source: Adapted from Review of Maritime Transport (2013) UNCTAD, Geneva
CLASSIFICATION OF SHIPS ON BASIS OF
USE & SIZE
Dry Cargo Tankers Passenger Support Other

• Bulk Carrier, • Cable Layer,
• Oil Tanker, • Cruise Ship, • Dive Support,
• Container • Crane Vessel,
Ship, • Chemical • Cruise Ferry, • Fireboat,
• Drillship,
• Barge,
Tanker, • Ferry, • Supply Ship,
• LNG Carrier, • Dredger,
• Hopper • Ocean Liner • Tender,
• Coaster, • Fishing
Barge, • Tugboat
Vessel,
• Reefer Ship, • FPSO Unit
• Icebreaker,
• RORO Ship, • Merchant
• Heavy Lift Submarine,
Ship, • Research
• Lighter Vessel,
Aboard Ship • Semi-
Submersible
Source: Review of Maritime Transport 2013, UNCTAD Geneva
Classification Of Ships On Basis Of Use & Size
• Small Handy Ship : 20,000-28,000 DWT

• Handy size Ship : 28,000-40,000 DWT
• Handymax Ship : 40,000-50,000 DWT
• Aframax Ship : 75,000-115,000 DWT
• VLCC (Very Large Crude Carrier) :150,000 -320,000 DWT
Classificat • ULCC (Ultra Large Crude Carrier) :320,000 -550,000 DWT
ion on the • Panamax Ship : A Ship which can traverse in
Basis of Panama Canal
Ship Size
• Seawaymax : A ship which can traverse in
(Small to St. Lawrence Seaway
Large) • Suezmax : A Ship which can traverse in
Suez Canal
• Malaccamax : A Ship which can traverse in
Malacca Straight
• Capesize : A Ship which can traverse in
Cape of Good Hope
Development In Word Shipping
 Liner Shipping
 Tramp Shipping
 Trade Routes
 Coastwise Shipping
 Inland Waterways
 Industrial Carriers
 Tanker Operation
Prominent Trade Routes In International Trade Logistics
The The South

Panama The South Pacific
The North Canal route The South The North route from
African
Atlantic, The connecting American Pacific western
route
between Mediterran Europe and route from route linking America to
linking
Europe ean-Asian the eastern Europe and western Australia,
Europe
and route via American North America New
coasts with and America to with Japan Zealand,
eastern the Suez
the western America South and China, Indonesia,
North Canal,
American with America, and and
America,
coasts and Africa, southern
Asia, Asia.
WATER TRANSPORT IS THE CHEAPEST MODE OF TRANSPORTATION
GLOBALLY: UNCTAD STUDY
Between 1980 and 1999, the value of world trade grew at 12% per year, whilst total freight costs during this period
increased by only 7%, demonstrating the falling unit costs of transportation, including those of ocean freight. In addition,
analysis carried out by UNCTAD in 2008 suggests that the ratio of the various freight costs to import values continues to
decline thus facilitating the deeper integration of global economy. The study concludes that total freight costs in
international trade logistics represent less than 6% of the import value (on an average of shelf price) of consumer goods.
With economical ocean transport, the shipping industry globally has enjoyed the ever increasing tonnage in world trade.
Freight cost in ocean transport represents only a small fraction of the shelf price of a product in contrast to other mode of
transport. With the continuous improvements in shipping operations, advancement in marine technology, efficiency as well
as effectiveness has been achieved that has ensured that maritime transport costs remain very competitive and ocean
transport may remain the preferred mode of transport in international logistics operations by firms globally.
a. Typical cost of transporting Iron Ore from Australia to Europe by Water Transport is around 12 US Dollar per Tonnes
only.
b. Typical cost of transporting a 20 feet container with 20 tonnes of load from USA to Asia is similar to the cost of one
passenger journey of same route by air transport.
c. The typical to the consumer in the United States of transporting crude oil from Middle East, in terms of purchase price
of gasoline at the pump, is about a US cent per liter.
WATER TRANSPORT IS THE CHEAPEST MODE OF TRANSPORTATION
GLOBALLY: UNCTAD STUDY
a. The costing in terms of other items transportation are as follows:
Product Unit Typical Shelf Price Shipping Cost
TV 1 Unit 700 10.00
DVD Player 1 Unit 200 01.50
Vacuum Cleaner 1 Unit 150 01.00
Scotch whisky Bottle 50 00.15
Coffee 1 Kg 15 00.05
Biscuit Tin 3 00.03
Beer Can 1 00.01
The transport cost element in the shelf price of goods varies from product to product, but is ultimately marginal. For example, transport costs
account for only 2% of a television shelf price and only 1.2% of a kilo of coffee.
The Major Commodities Traded By Ocean Transportation
Energy Trade From Energy Rich Countries To Energy Deficient Countries
Coal Exporting Coal Importing Oil Exporting Oil Importing

Countries : Countries: Nations: Nations:
• Indonesia :33 • European Union • Western Asia :33 • Asia Pacific :33
• Australia :30 :18 • Transition Econ. • North America
• United States • Japan :16 :23
:10 :17 • North America • Europe
• Colombia :8 • China :15 :15
• South Africa : 7 :17 • Developing • Developing
• India :15 America:12 America:10
• Repubic of Korea • Africa: • Western Asia : 9
:12 :11
OCEAN TRANSPORT FACILITATES GRAIN
TRADE
United States Asia Pacific
Main Grain
Main Grain
Exporters
Importers
:20 :31
Argentina Developing
America
:12 :21
European Union Africa
:20
:10 Western Asia
Australia :18
Europe
:10 :
Canada 7
OCEAN TRANSPORT FACILITATES
GROWING METAL INDUSTRY TRADES
Iron-Ore Iron-Ore Steel Steel
Exporting Importing Exporting Importing
Nations Nations Nations: Nations:
• Australia : 45 • China • China • China
• Brazil :29 :
• South Africa :5 : 65 46 :46
• India :3
• Japan • Japan • European
• Canada :3
Union
: 12 : 7 :10
• European • United • North
Union States America
: 10 : 6 :9
• Republic of • India • Transition
Korea : 5 econo.
: 6 • Russian :4
• Others Federation • Western
: 5 Asia : 3
: 7
Types Of Shipping Vessels
Figure : World Fleet By Principal Vessel Types, 1980-2013 (Beginning Of Year

1800 Figures, In Millions Of Dwt)
1600
1400
1200
1000
800
600
400
200
0
1980 1995 2005 2010 2013
Oil tanker 339 268 336 450 491
Dry bulk 186 262 321 457 685
General Cargo 116 104 92 108 80
Container 11 44 98 169 207
Other 31 58 49 92 166
Source: Review of Maritime Transport, 2013 UNCTAD Geneva
Key Features Of Traditional Freighter
• Length of traditional freighter used to be 600ft and width was in

Size of Ship
range of 15 to18 meters.
• Traditional freighter use to handle all types of break bulk cargo. They
Types of
are not fit for wet bulk or dry bulk or containerized cargo due to their
Cargo
design and structure
• Traditional freighter use to have numerous deck-mounted cranes

which help in stevedoring operations i.e. loading and unloading of
Stevedoring
uncontainerized cargo such as cartons, bales, drums, palletized
Arrangements cargo, machinery and vehicles from a wharf or lighter onto the
vessel.
Key Features Of Container Ship
• Container ships has designed accordingly the standard sizes of

containers. the standard dimensions of containers are 20 feet and
40 feet with height of 8.6 feet and width of 8 feet. High cube
Size of Ship container have height of 8.6 feet. Size may vary on container load
capacity which can be anywhere from 1000TEU to 140000TEU.
Recent innovation concludes that this capacity can be up to
18000TEU
• General Purpose, High Cube, Hardtop, Open Top, Flat, Platform,

Types of Cargo Insulated, Ventilated, Bulk, Refrigerated (Reefer) And Tank-Type
Containers
Stevedoring
• Require port-based cranes for loading and unloading operations
Arrangements
Key Features Of Ro-Ro Ship
Size of • Ro-Ro ships are usually very large. in terms of tonnage, Ro-Ro ship can
Ship carry cargo laod of 67,140 gross tons and 34,376 dwt.
• Motor vehicles, trucks, buses, tractors, bulldozers, yachts, heavy plant

Types of
equipment, rail cars, and general cargo. Oversize cargo can be loaded
Cargo
on flatbed or lowboy trailers or placed on deck
Stevedoring • Loading and Unloading is very easy as vehicles and rolling stock is
Arrangements driven on or rolled onto the vessel via a hinged ramp at the stern.
Key Features Of Heavy Lift Vessel
• The length and breath may vary and a large heavy

Size of Ship lift vessel can be 178 meters in length and 42
meters in width
• Usually high-value, complex cargoes such as

transformers, power plants, desalination units,
locomotives, rockets, crushers, semi-submersible
Types of Cargo rigs, jack-ups, oil platforms, generators, yachts
bridge spans, TLPs (tension leg platforms) and SPAR
buoys, etc
• Cargo is loaded on the vessel with help of onboard

cranes or shore-based cranes. Conventional loading
Stevedoring Arrangements
is the over-the-top Lo-Lo (Load-on/Load-off). Some
heavy lift vessels may also have Ro-Ro capabilities
Key Features Of LNG Tanker
• LNG carrier normally has a carrying capacity of 145,000 cubic

Size of Ship meters. Recent innovations conclude that capacity can be further
increased.
Types of Cargo • Liquefied Natural Gas
• LNG is loaded and unloaded through pumps at specialized

Stevedoring
terminals. The liquid is then turned back into gas and fed into
Arrangements
pipelines for distribution.
Key Features Of Refrigerated Vessel
Size of Ship • May vary as per requirement and purpose of use.
• All types of perishable cargo which require refreigeration like Fruits,

Types of
Meat, Fish, Vegetables, Dairy Products And Other Foodstuffs, Blood,
Cargo
Vaccinations, Medicines etc
• Break-bulk cargo is loaded in ship holds and also unloaded usually

Stevedoring
with small forklifts, Refrigerated container on the other hand is
Arrangements
loaded and unloaded with help of gantry cranes.
Key Features Of Dry Bulk Carriers
• Length and width may vary from 10,000 DWT (deadweight tons) to
Size of Dry 364,000 dwt in capacity. The largest known dry bulk carrier has a
Bulk Carrier length of 343 meters, a beam of 63 meters and a draught of 25
meters
• Fertilizers, cements, granites, moraines, cocoa, grains, coal,

Types of
phosphates, iron and other ores, loose cargo animal feeds, scrap
Cargo
metal or other dry cargo.
• Loading and Unloading process is done by terminal-based gravity

Stevedoring chutes or by shore- or ship-based overhead vacuum pumps, which
Arrangements suck the cargo in and out of the holds of the ship. Conveyors belts
are also used especially in case of Iron Ore.
Key Features Of Canal Barge
• Barges are categorized by their physical size, the type of cargo they
carry, and the waterways they can travel (i.e., oceans, coast, lakes,
Size of Barge
bays, sounds, rivers), the one used in Rhine river in Germany used
to have maximum beam size of about 14ft (4.27m).
Types of • Barge can handle all types of cargo from liquid to dry bulk,
Cargo containerised, lumber, railcars etc as barges are designed
accordingly
• By a land-based or floating crane for heavy-lift items, by spouting

Stevedoring
systems fed by conveyors (for grains), by pumps (for liquids), and
Arrangements
loading ramps (for vehicles or rolling stock)
34
Contact Details
Name: Ashok Advani
Mobile No.: +91-9810333002
Whattsapp No.: +91-9810333002
E-mail: ashok-20@hotmail.com
ashok.advani@jaipuria.ac.in
35
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Sea Transport

 To discuss the major commodities traded in international shipping and developments in

 To explain the major commodities transported by ocean transportation in international

 History of Ocean Transportation

 Growing Importance of Ocean Transportation

 Factors Determining Ocean Routes

 Nature of Shipping Trade

 Developments in World Shipping Services

 The Major Commodities Traded By Ocean Transportation

 Types of Shipping Vessels

Low cost per tonne of transportation

Relatively long delivery time due to slow movement of ships

Total No. of Ships=1628783

Source: Page No. 37 of Review of Maritime Transport (2013), UNCTAD, Geneva

 The shipping practices so developed and mastered by Phoenician merchants, was

 It was continued by the maritime powers of Europe particularly Portugal, Netherland,

The cost The tapering principle refer to

The cost per

Number Of Vessels Deadweight Tonnage

6. India 584 158 742 15063983 7377303

Flag of Number Share of Deadweight Share of Cumulate National Dwt Growth

Source: Page no. 57 of Review of Maritime Transport (2013), UNCTAD, Geneva

Operator Country Number Average TEU Share of Cumulated Growth in

1. Maersk Line Denmark 453 4745 2149524 13.40% 13.40% 2.10%

1. MSC Switzerland 398 5186 2064118 12.90% 26.20% 1.90%

1. CMA-CGM France 288 4004 1153088 7.20% 33.40% -0.70%

1. COSCO China 155 4614 715219 4.50% 37.90% 14.60%

Source: Page no. 52 of Review of Maritime Transport (2013), UNCTAD, Geneva

Total Fleet Size (Thousand of DWT)

0 5000 10000 15000 20000

REASONS FOR GROWING

Iron Ore Exporters Iron Ore Importers

• Australia -45 • China -65 • Very Large Cargo Carriers

Grain Exporters Grain Importers

• United States -20 • Asia Pacific -31 • Panamax

Source: Adapted from Review of Maritime Transport (2013) UNCTAD, Geneva

Dry Cargo Tankers Passenger Support Other

• Small Handy Ship : 20,000-28,000 DWT

The The South

a. The costing in terms of other items transportation are as follows:

Product Unit Typical Shelf Price Shipping Cost

TV 1 Unit 700 10.00

DVD Player 1 Unit 200 01.50

Vacuum Cleaner 1 Unit 150 01.00

Scotch whisky Bottle 50 00.15

Biscuit Tin 3 00.03

Beer Can 1 00.01

Coal Exporting Coal Importing Oil Exporting Oil Importing

Figure : World Fleet By Principal Vessel Types, 1980-2013 (Beginning Of Year

• Length of traditional freighter used to be 600ft and width was in

• Traditional freighter use to have numerous deck-mounted cranes

• Container ships has designed accordingly the standard sizes of

• General Purpose, High Cube, Hardtop, Open Top, Flat, Platform,

• Motor vehicles, trucks, buses, tractors, bulldozers, yachts, heavy plant

• The length and breath may vary and a large heavy

• Usually high-value, complex cargoes such as

• Cargo is loaded on the vessel with help of onboard

• LNG carrier normally has a carrying capacity of 145,000 cubic

Types of Cargo • Liquefied Natural Gas

• LNG is loaded and unloaded through pumps at specialized

Size of Ship • May vary as per requirement and purpose of use.

• All types of perishable cargo which require refreigeration like Fruits,

• Break-bulk cargo is loaded in ship holds and also unloaded usually