Liner Trade Management

Liner Trade Management
Dr. Mostafa Abdelhafez

Contents
1. Introduction
2. The shipping market (liner & tramp)
3. Types of Liner Services
4. Liner Scheduling& Bunkering Scheduling
5. Forwarders roles and responsibilities in liner trade
6. 7th Exam
7. Freight Tariff & Payment methods by using electronic documents
8. Documentation of International Trade
9. The importance of Liner Trade in logistics system
10. Multimodal transport operations its relation with liner trade
11. 12th Exam
12. Liner code of Conduct 40 -40- 20
13. Organization of the shipping company
14. Marketing of liner Transport
10/1/2018 Dr. Mostafa Abdelhafez 2

Introduction
• Elements of maritime transport
•The maritime transport has main three elements:
1.The goods which will be born by sea.
2.The vessels which will carry these goods.
3.The ports which will receive these vessels where the goods can be loaded and
discharged
Introduction
• Shipping is a service industry that generally provides cargo transportation of
international trade.
• Approximate 90% cargo volume of international is transported by sea.
• Often, the shipping industry is categorized into two major sectors:
1. The bulk shipping which provides services mainly in the transportation of raw
materials such as crude oil, coal, iron ore, and grains; and
2. The liner shipping which provides services in the transportation of final and semi-final
products such as computers, manufacturing product and other consumption
goods…etc.

Introduction
• Cargo carried by liner shipping has come to be known as general cargo.
• Liner shipping is to provide regular services between specified ports

according to time-tables and prices advertised well in advance.
• The service is, in principle, open to all shippers and in this sense it look like
a public transportation service.
• The provision of such a service, often offering global coverage, requires

extensive infrastructure in terms of ships, agencies, and equipment.

Introduction
• The vast majority of liner cargo is containerized –that is, it is carried in sealed metal containers
from point of origin to destination.
• These containers come in standard sizes (typically 20’, 40’,and 45’ in length) and may include
various specialized technologies, such as refrigeration units for chilled and frozen foods, or
internal hanger systems for carrying garments.
• Containers serve, in essence, as a packing crate and in-transit warehouse for virtually every type of
general cargo moving in international commerce.
• The standard measure of the volume of containerized cargo is a TEU (twenty-foot equivalent unit).
• For example, one forty-foot long container of cargo would be counted as two TEUs of cargo.

Introduction
• Most of the world’s non-bulk cargo travels in marine shipping containers.
• The worldwide fleet of marine containers in circulation at the beginning of 2005 is

estimated to be about 13 million containers with overall capacity of approximately 20
million TEUs. (What is new?)
• Containers move along a network of nodes and links .
• The nodes are physical locations where container movement is interrupted and/or
containers are handled.
• Many of these concern multimodal transfer points where containers are transferred from
one mode to another.

Introduction
• The links between nodes are characterized both by a mode of transport (road, rail,
inland waterway) and a supporting infrastructure (roadway, canal/river, railroad
track, rail organising yard, etc.).
• As containers move along this network they can either be empty, loaded with a
single consignment (Full Container Load, FCL) or loaded with multiple
consignments (Less-than Container Load, LCL).

Introduction
• The Containerized cargo moves from inland point to inland point via a
multi-modal network linking vessels, port terminals, trucks and trains.
• At the heart of this service network is the planning, tracking and delivery of
cargo and state-of-the-art information systems needed to provide certainty
and reliability to shippers.
• These standardized boxes have revolutionized the international transport of

goods involving a sea leg since their first appearance in the 1950s and have
given rise to a multitude of specialized road, barge and rail carriers, a fleet
of over 2,700 cellular container ships and the emergence of a global
network of several hundred highly automated port handling facilities.

Introduction
• The basic shipping container is nothing more than a reinforced steel box
with one double door providing access on one side.
• These “dry box” containers are supplemented by many other container

types including tank containers for gaseous or liquid cargoes, open frame
containers for transporting odd-sized consignments, soft-top containers,
containers fitted with special garment racks and/or refrigeration units
(“reefers”) for transporting chilled food.
• All of these containers share standard fittings on all corners that allow them
to be stacked and racked on board vessels, train wagons, truck chassis, etc.

open frame containers
soft-top containers
The Nature of Shipping
• Shipping is an element of the international trade.
• It is a component of logistics.
• Demand of shipping service is derived from the demand for goods.
• Performance in shipping competition shows to which extent an operator

understands the characteristics of the market.

The Dynamics of Shipping
• Maritime transport is the most dynamic business, in which, change is the
rule rather than the exception.
trade patterns are changing
nature of the commodities are changing
new cargo handling equipment introduced
Innovation of ports’ facilities are taking place
• Flexibility and adaptability; are indispensable to survive in market.
• Demand for foresight, in order to see what is coming in time to take

appropriate action.

The Shipping Market
• Shipping market is diverse according to trade.
• It presents to the shipper the best choice of service (transportation) which he needs
on competitive terms.
• Shipper to get the best benefit of the market he should:

1. Know the type of shipping service available for a given cargo and a given route.
2. Know the general terms and conditions which apply.
3. Monitor the state to international freight market.

Shipping Market Divisions
• In general, the shipping market is organized more in relation to the
trading pattern of the vessels rather than in accordance with the
different ship types.
• There are two major divisions of the shipping market, namely:-
1. The liner market and;
1. The charter market (Tramp Market).

Shipping
Liner Tramp
General Bulk
Passenger Cargo
Cargo
Container/Ro- Ferry/Cruise Liquid

Dry Bulk
Ro & Others Bulk

The Tramp Market
• Market can be divided into 2 principal sub-markets.
1. Tankers
2. Dry bulk carriers
• Market is determined by demand and supply conditions.
• For example, if global industrial activity increases and the demand for petroleum goes up, the
demand for tankers will also go up, which will drive freight rates to go up.
• During a period of economic boom, demand for a large quantity of bulk commodities goes up,
pushing up demand for bulk carriers services and consequently freight rates.
• During a depression, the opposite is generally the case.

The Tramp Business
• Tramp shipping company are Private Carriers.
• They are free to offer cargo spaces and/or accept any rate/tariff for their
cargo.
• The competition in tramp business is very rare.
• Vessel are not working in specific routes.
• Contract of affreightment is any type of Charter Party (C/P).

The Liner Market
• This market is characterized by the frequency and regularity of sailing
incidence and its fixed rates.
• Sailings are conducted in accordance with a well predefined and

publicized schedules .
• Obligations to adhere to a fixed schedule irrespective of the amount of

cargo available gives this market its regularity.

The Liner Market
• Fixed freight rate lists are issued from time to time, rates are
relatively high in comparison with non liner vessels.
• liner service is provided by Common Carrier who offers cargo space

to all shippers.
• large container vessels call large ports called Hub ports.
• Smaller ports in route or nearby are served by feeder ships.

Efficiency of liner shipping
• 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 up to 8,000 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.

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.
• The benefits of liner shipping are:

1. Lowering of Costs
2. Increase in Availability
3. Economic Growth

1. Lowering of Costs
• The development of liner shipping has been a critical component in the low cost of
shipping throughout the world, which has made the transport of goods from lands far
away a possibility.
• Furthermore, a result of this has been the lowering of price for the goods being produced,
providing the consumer with a greater assortment of goods for a lower price.
• This in turn has served to increase standards of living for a large part of the human
population.

2. Increase in Availability
• The rise of liner shipping has also coincided with another positive effect -- the increase in
availability of many goods in a multitude of countries.
• By serving to increase trade between nations, goods inherent in certain countries

suddenly become available in others as well.
• As an example of this we can take oranges, not commonly present in the northern parts of
the world.
• With trade and massive liner shipping, oranges are now present at low cost even in the
cold expanses of the northern hemisphere

3. Economic Growth
• Liner shipping has also worked to achieve something greater as well.
• By pushing down costs and increasing efficiency of production, shipping has

yielded economic growth throughout the global arena.
• This has been achieved by a more efficient allocation of resources than before.
• With production managed more efficiently due to trade, resources that were
previously used in production can now be allocated to new production, increasing
economic growth.

Disadvantage of liner shipping
• Environmental Costs
• However, there is one great disadvantage of the massive increase in liner

shipping, and that is the environmental costs of it.
• A large number of great shipping vessels moving all over the globe produce
a large amount of environmentally disruptive emissions, even though liners'
emissions are lower than those of trains, cars and airplanes of corresponding
weight.
• This could serve to shake the fragile ecological balance in the world.
Disadvantage of liner shipping
• Furthermore, we must also take into account the indirect effects of
liner shipping.
• This indirect damage is caused through the goods that it carries.
• By encouraging increased economic output and production, liner

shipping has increased worldwide output of emissions which harm the
environment.

Difference Between Liner & Tramp
Li ne r Tramp
Employment
Regular and scheduled sailing Vary according to demand
Carrier Status Ship-owners are Common Carriers and Owners are Private Carriers and often
share holding ownership. family owned.
Nature of Cargo Medium and small parcel of high value Cargoes are of bulk nature in large
quantities and low value
Contract of Carriage Liner Bill of Lading Different kinds of Charter Party
Freight Rate Fixed for certain periods and Pre- Rates are negotiable according to supply
Announced and demand pattern
Vessel’s Design Modern and Fast ships Medium and slow speed ships
Company’s Infrastructure Very large and complex, may has sub- Very few but very well experienced
offices abroad Personnel
Procurement of Cargo By Advertising and Company’s agents Through Brokers
Passengers Sometimes passengers are carried to No passengers are carried

certain number (12)

Types of Liner Services
• It is important to know about the various type of Liner Services available and their
strengths and weaknesses.
• To list the various types, it can be stated as:
1. Independent Service
2. Conference Service
3. Consortia Service
4. Alliance Service

• When there are operators to offer the services in either one of the above mentioned
pattern, every one type of operator has got their own advantage and disadvantage in
operating in such a fashion.
• It is depending upon the service type they offer to the trade and the trade route they cover.
• The most commonly known services offered by liners are as below:

1. End to End Service
2. Round The Word Service
3. Pendulum Service
4. Hub & Spoke Service

1. END TO END SERVICE:
• The Liner Operator has a choice to select any one type of service option or
combination of more than one type.
• One of the characteristics of the liner service is that the vessel sailed from
the starting point to call on the various loading ports to the discharging ports
and then to return over the same route to its starting point.
• Traditional way of serving liner trade route was to cover a range of loading
ports at one end of the route and range of discharging ports at the other.
• At certain trade routes, there may be some differences as to the individual ports
called because of the availability of export cargo from a particular port that may
have no demand for imports or vice-versa.
• Example of such route might be from Hamburg, London, Rotterdam and Antwerp
to Sharjah, Mumbai and Colombo.
• The return route might add an Indian Export port such as Visakapatnam but omit
the Arabian Gulf Port.

2. ROUND THE WORD SERVICE (RTW)
• This is an alternative to the end to end service.
• The ship never turns round, it just keeps sailing until it completes a circumnavigation and
returns to its starting point.
• i.e., the ship will not have to report the ports through which she has traveled for loading
the cargo.
• Transatlantic, Transpacific and Far East To Europe route are the examples of
such service.

• The expected economy of this operation is that the vessel will have the opportunity
to carry cargo on every leg of the voyage including ports that are intermediary to
the main voyage legs.
• Ideally the service operates both west about and east about the world.
• One obvious limitation is that such a service is restricted to using PANAMAX

tonnage (the largest size of vessel that can transit the Panama Canal).
• This type of services have declined in importance now day.

3. PENDULUM SERVICE
• In its most ambitious form a pendulum service is a RTW service that omits the Panama
Canal allowing the largest size of vessel to be used.
• It would operate from the Eastern Seaboard of USA (ECUS) via Europe to the Far East
and vice versa.
• Compared with an RTW service it loses the ability to carry cargo between, for example,
ECUS and the Far East because its transit time is too long.
• Pendulum differs from End to End in that it combines two or more main trade routes.

4. HUB & SPOKE
• It is a type of service that is offered between the hub port and the gateway port.
• The mainline ship will call at key ports (hubs) on its route.
• From these hubs, it will operate feeder services to other local areas and ‘spoke’
services to serve other accessible trade routes.
• This concept is used to allow east / west service vessels to link to north / south
trades.
• Almost all deep sea container services today use the hub and spoke concept
to some extent and the major players support their worldwide services by
this method.
• After we understanding the various service options available in liner trade,

let us understand the nature and style of functioning of the Liner Service
Provider from the point view of Independent / Conference / Consortium /
Alliance.

Independent Services
1. INDEPENDENT SERVICES
• Independent service provider is a one who does not get into any arrangements of
consortium or alliance with other shipping line operators.
• He will be operating in a trade route having all necessary ingredients of a liner

service.
• To be successful, the operator should not only offer good service to shippers but
also a cheaper rate.
• In the last three decades, much bigger operators have challenged the conference
and have successfully reassured the merchants of the seriousness of the
independent lines’ endeavours.
• The emergence of independent operator coupled with changing attitude to business in
general and shipping in particular, provided the impetus for the liberalization of liner
shipping.
• This helped the shippers who wanted to negotiate the rates and terms with the
independent operators those who have been controlled by the strict conference rules.
• The rising strength, service and competitive rates offered by the independent lines won
substantial amounts of business from the conference members during the 1980 – 90s.
• Conference members, realizing that they were being left in behind in the pursuit of
business, were forced to undercut the conference tariffs and match these rates, thus
resulting in resignation from the conference or a much more flexible pricing regime.
• One result of this was that even long established lines that were historically
strong supporters of the conference system started to review their position
and to look much more closely at the role of the conference in individual
trade routes.
• A particular major liner company may now be a staunch conference

member in one trade, and yet be the leading independent competitor to the
conference on another route.
• The service operated by a single liner shipping company in a particular

trade route, competing with other liners or consortia operating in the same
trade route is called as Independent Service.

• CHARACTERISTICS OF INDEPENDENT SERVICES
A. DEPLOYMENT OF OWN VESSELS
• Under this pattern, a single operator deploys vessels in operation.
• The size of the vessels and the number of vessels that need to be put in operation is based
on the decision taken by him to cover the set of trade routes.
• More and more the ports he calls and operates in various routes, the requirement of
vessels will be more.

• To make out the presence in a sector, according to the requirements of the
trade and the frequency expected between the ports, he has to plan for the
deployment of vessel.
• Since it is a single operator, more number of vessels required for meeting

frequency and the point to be kept in mind is that he should be in a position
to continue with the services and the basic requirement for this should be
the economy of scale.
• The income generated in the operation should be sufficient enough to meet

out the expenditure in running the service and over a period of time the
returns should start coming in.

B. INDEPENDENT FREIGHT RATES
• As the basic characteristic is to put their own vessel, there would be no

sharing of resources and infrastructure with others.
• Depending upon the technical expertise available with the company

and its financial strength, an independent operator may put in their
own vessels in a trade route.

• The owning means purchasing the ship then putting the same in the service.
• Alternatively, the independent operator may take advantage over the falling time
charter rates, and charter a vessel then put it in operation.
• This results in the blocking of finance and continuous recurring expenditure in the
monitoring and up-keeping the ship seaworthy.
• The advantage of sharing the operating costs may not be available to an

independent operator as in the case of some benefits available in consortia
arrangements.

• According to the cost in running the service, the pricing on the customers should
be made.
• The tariff should be attractive enough to get more customers and at the same point
of time the revenue should be good enough to run the business without making a
loss.
• Considering the operating cost and economics of scale based on the vessels
deployed, the independent operator will fix up a freight rate.

C. FLEXIBLE AND INDEPENDENT SAILING SCHEDULES
• Unlike in the case of consortium / alliance arrangements, the independent

service operator has got more flexible and independent sailing
opportunities.
• Based on the arrangement between the consortium / alliance members,

every one member will have to deploy a vessel in order to meet out the set
frequency.
• Each and every member will have to agree for the same and the market
demand should also be there to feed for all the voyages.

• In the case of Independent Service Provider, the option of fixing the sailing
schedule is within the control of the service provider based on the business
forecast done considering the supply and demand position of the market where he
prefers to operate.
• Depending upon the trade route he prefers and the potential of the market, the
frequency can be set to meet the demand.

• ADVANTAGES
1. As an independent service provider he would be in a position to establish his

brand name and build up a better image with the customers.
• The identity of the service provider will be made well known in the market.
2. The pricing decision is independent of the service provider.

• Unlike the other services like consortium / alliance, where the pricing has to be
fixed taking into all the players views and suggestions, here the independent
service provider can take decisions on the price that he plans to charge on the user.
• Only point where the caution to be taken is that the pricing should not put him in
trouble and force him to shut the services.

• No doubt, the better price attracts more volume and customers.

• Flexible pricing will certainly build the volume and contribute to make the service
a successful one.
3. As an independent operator, based on the commercial viability, he can have

more flexible sailing schedules.
4. Over and above to all, the success of business is based on the amount of
confidentiality maintained.
• As an independent service provider, he can keep absolute confidentiality.

• DISADVANTAGES
1. No collective bargaining for berthing, port / terminal tariff etc., would be available to
an Independent Operator, unless he is holding a major share of the market.
2. No sharing of resources would be possible, which increases the operational cost.
3. The utilization of space in the ship may be lesser at times.
4. Since the independent operator will have to invest huge amount of money in deploying
larger number of ships in the trade route, the expected level frequency may not be there
and this may result in lesser sailing frequency.

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Liner Trade Management

Dr. Mostafa Abdelhafez

10/1/2018 Dr. Mostafa Abdelhafez 2

•The maritime transport has main three elements:

1.The goods which will be born by sea.

2.The vessels which will carry these goods.

• Approximate 90% cargo volume of international is transported by sea.

• Often, the shipping industry is categorized into two major sectors:

10/1/2018 Dr. Mostafa Abdelhafez 4

• Liner shipping is to provide regular services between specified ports

• The provision of such a service, often offering global coverage, requires

10/1/2018 Dr. Mostafa Abdelhafez 5

10/1/2018 Dr. Mostafa Abdelhafez 6

• The worldwide fleet of marine containers in circulation at the beginning of 2005 is

• Containers move along a network of nodes and links .

10/1/2018 Dr. Mostafa Abdelhafez 7

10/1/2018 Dr. Mostafa Abdelhafez 8

• These standardized boxes have revolutionized the international transport of

10/1/2018 Dr. Mostafa Abdelhafez 9

• These “dry box” containers are supplemented by many other container

10/1/2018 Dr. Mostafa Abdelhafez 10

• Demand of shipping service is derived from the demand for goods.

• Performance in shipping competition shows to which extent an operator

10/1/2018 Dr. Mostafa Abdelhafez 12

• Flexibility and adaptability; are indispensable to survive in market.

• Demand for foresight, in order to see what is coming in time to take

10/1/2018 Dr. Mostafa Abdelhafez 13

• Shipper to get the best benefit of the market he should:

10/1/2018 Dr. Mostafa Abdelhafez 14

• There are two major divisions of the shipping market, namely:-

1. The liner market and;

1. The charter market (Tramp Market).

Container/Ro- Ferry/Cruise Liquid

10/1/2018 Dr. Mostafa Abdelhafez 16

• Market is determined by demand and supply conditions.

• During a depression, the opposite is generally the case.

10/1/2018 Dr. Mostafa Abdelhafez 17

• The competition in tramp business is very rare.

• Vessel are not working in specific routes.

• Contract of affreightment is any type of Charter Party (C/P).

• Sailings are conducted in accordance with a well predefined and

• Obligations to adhere to a fixed schedule irrespective of the amount of

10/1/2018 Dr. Mostafa Abdelhafez 19

• liner service is provided by Common Carrier who offers cargo space

• large container vessels call large ports called Hub ports.

• Smaller ports in route or nearby are served by feeder ships.

10/1/2018 Dr. Mostafa Abdelhafez 21

• The benefits of liner shipping are:

10/1/2018 Dr. Mostafa Abdelhafez 22

10/1/2018 Dr. Mostafa Abdelhafez 23

• By serving to increase trade between nations, goods inherent in certain countries

10/1/2018 Dr. Mostafa Abdelhafez 24

• Liner shipping has also worked to achieve something greater as well.

• By pushing down costs and increasing efficiency of production, shipping has

10/1/2018 Dr. Mostafa Abdelhafez 25

• However, there is one great disadvantage of the massive increase in liner

• This indirect damage is caused through the goods that it carries.

• By encouraging increased economic output and production, liner

10/1/2018 Dr. Mostafa Abdelhafez 27

Contract of Carriage Liner Bill of Lading Different kinds of Charter Party

Procurement of Cargo By Advertising and Company’s agents Through Brokers

Passengers Sometimes passengers are carried to No passengers are carried

10/1/2018 Dr. Mostafa Abdelhafez 28