Valionienė, E., Belova, J., Belakova, O., Mickienė, R., Varnienė, M., Kutka, G. (2019) - Management of Seaport Terminal Operation

Elena Valionienė
Jelena Belova
Olga Belakova
Rima Mickienė
Margarita Varnienė
Gintautas Kutka
MANAGEMENT
OF SEAPORT TERMINAL
OPERATION
Lithuanian Maritime Academy
Lietuvos aukštoji jūreivystės mokykla
Elena Valionienė
Jelena Belova
Olga Belakova
Rima Mickienė
Margarita Varnienė
Gintautas Kutka
MANAGEMENT
OF SEAPORT TERMINAL
OPERATION
Coursebook
Klaipėda, 2019
Leidinio bibliografinė informacija pateikiama Lietuvos nacionalinės Martyno Mažvydo
bibliotekos Nacionalinės bibliografijos duomenų banke (NBDB)
Approved by Lithuanian Maritime Academy Publishing Committee on 12 November,

2018, protocol No. 4P-7
Reviewers:
prof. dr. Tadas Sudnickas,
Mykolo Romerio universiteto Vadybos instituto direktorius
assoc. prof. dr. Genutė Kalvaitienė,

Head of Career and Communication department of Lithuanian Maritime Academy
Translated to English by UAB ,,Eurolingvija“.
© Elena Valionienė, 2019

© Jelena Belova, 2019
© Olga Belakova, 2019
© Rima Mickienė, 2019
© Margarita Varnienė, 2019
© Gintautas Kutka, 2019
© Lietuvos aukštoji jūreivystės mokykla, 2019
ISBN 978-609-481-014-5
LLI-42 Improvement of the workforce mobility and skills in
Latvian-Lithuanian Maritime Transport Sector (LatLitNaviPort)
Two educational institutions Liepaja Marine College (LMC) and Lithuanian Maritime Acad-
emy (LMA) has joined their efforts to solve human resource problem, both institutions provide
high quality Maritime Education and Training, located in cities having sea ports–Liepaja and
Klaipeda-cities which have direct territorial demand for qualified maritime transport sector
specialists.
The main objective of the project is to improve the competitiveness of seafarers and logistic
specialists in ports by improving education quality with teaching/learning innovations.
With the support of European Regional Development Fund (ERDF) within the framework of
LatLitNaviPort project of the interreg V-A Latvia-Lithuania Cross Border Cooperation Pro-
gramme 2014–2020, project partners from Latvia and Lithuania aimed to increase the scientific
and educational capacity. The project will have the following outputs: subjects in study pro-
grammes will be updated, new short training course for logistic port operation specialist will
be developed in in both institutions, and modern training facilities: Navigation, manoeuvring
and Engine control Laboratory will be installed in LMC and Port operation simulator in LMA.
Teaching staff of both institutions will upgrade their qualification by participating in 3 train-
ing courses, experience exchange, create 5 learning materials for joint use (Latvian-English
and Lithuanian-English versions). Two joint pilot group trainings will be organized. One joint
simulation trial will be held.
The project common territorial challenge is to fulfil the demand to reduce workforce mismatch
and increased the number of people receiving upgraded skills matching labour market, increase
mobility and employability in territory of Latvia and Lithuania.
in general, the planned activities of the project will give a significant contribution to economic
development in Kurzeme region and Lithuania. Both project partners will be able to provide
quality education matching labour market needs, thus making it possible to reach the goal of
iNTERREG Programme 2014–2020 – to enhance sustainable socioeconomic development of
the participating regions by raising their competitiveness and making them more attractive for
living, entrepreneurship and tourism. Project budget is 900 286.38 EuR of which 765 243.42
EuR is the co-funding from the European Regional Development Fund.
This publication has been prepared with the financial assistance of the European union. The
contents of this publication are the sole responsibility of Lithuanian Maritime Academy and
can under no circumstances be regarded as reflecting the position of the European union.
Liepaja Marine College (LP), J. Zalomova, kanceleja@ljk.lv; http://ljk.lv/projekti

Lithuanian Maritime Academy (PP1), i. Bartusevičienė, lajm@lajm.lt; http://www.lajm.lt/lt/
apie-lajm/igyvendinti-projektai/latlitnaviport.html
3
C O N TEN T
INTRODUCTION / 6
1. THE CONCEPT OF OPERATION OF SEAPORTS / 8
1.1. The Structure of the Operation of the Seaport / 8
1.2. Classification of Seaports / 13
1.3. The Territory of Seaport and Its Users / 18
1.4. The Impact of the Seaport Development on the Operations of the Port / 23
1.5. Self-test questions / 30
1.6. References / 31
2. PORT TERMINALS / 33
2.1. The Concept of the Port Terminal / 33
2.2. The Classification of the Seaport Terminals / 35
2.3. The Technological Peculiarities of the Port Terminals / 36
2.4. The Parameters of the Port Terminal / 51
3. STEVEDORING OPERATIONS AT THE PORT TERMINAL / 59
3.1. Technological Process of Port Terminal Activities / 59
3.2. Organization of Loading Process at the Port Terminal / 65
3.3. Cycle Time of Stevedoring Operations at the Terminal / 72
3.4. Regulation of Stevedoring Operations / 77
4. MARITIME FREIGHT FORWARDING / 85
4.1. Freight Forwarder’s Activity / 85
4.2. Freight Forwarding Schemes / 93
5. SHIPS’ AGENCY / 105
5.1. Ship’s agency description / 105
5.2. Ship’s agency appointment / 107
5.3. The content of the ship’s agency activity / 109
5.4. Summary of process of ship’s agency / 119
4
6. PRINCIPLES OF CHARTERING / 123
6.1. Regulation of the international trade / 123
6.2. Commercial terms of voyage charter contract / 131
6.3. Commercial terms of a time charter contract / 141
6.4. Commercial terms of charter / 147
6.5. Brokerage / 151
7. THE CHANGE OF THE CONCEPT OF SEAPORT MANAGEMENT
IN MANAGEMENT RESEARCH / 161
7.1. The Concept of Seaport / 161
7.2. The Evolution of Seaport Management Research / 166
7.3. Overview of Seaport Management in Modern Research / 177
8. THE PRINCIPLES OF PORT MANAGEMENT / 189
8.1. Port Management Functions / 189
8.2. Port Authority Governance Activities / 191
8.3. Legal Status of Port Authority / 200
8.4. Port Governance Models / 208
8.5. Overview of the Governance Principles Prevailing in European Ports / 214
9. APPLICATION OF THEORETICAL ASSUMPTIONS AND PRINCIPLES OF
PUBLIC ADMINISTRATION IN THE MANAGEMENT OF STATE AND MIXED
CAPITAL SEAPORTS / 222
9.1. Theoretical Assumptions for Effective Management of State Enterprises from the
Point of View of Changes in the Management of Seaports / 222
9.2. Interaction of the Theory of Public Administration and Complexity / 230
5
INTR O D U C TI O N
The activity strategy of the maritime transport sector is formed in the strategic
transport development documents of the European Union and the Republic of Lith-
uania, i.e. Strategic Goals and Recommendations for the EU’s Maritime Transport
Policy until 2018, Roadmap to a Single European Transport Area (2011); Commu-
nication from the European Commission: “Blue Growth. Opportunities for Marine
and Maritime Sustainable Growth” (2012), strategy of the European Commission
“Ports 2030: Gateways for the Trans-European Transport Network” (2014), the
National Programme on the Development of Transport and Communications for
2014-2022 (2015), etc. The strategy “Port 2030” states that ports are important
for economic recovery and the development of long-term competitiveness, with
ports playing a key role in developing an efficient and sustainable trans-European
area by diversifying the choice of transport and contributing to the development
of multimodal transport. On the other hand, the strategy highlights that the current
policy of the European ports is at the crossroads: although some European ports
are operating efficiently, there are structural problems related to inadequate con-
nections with the outermost regions, cases of the lack of transparency in the use of
public funds, barriers to the market access, obsolete management models, exces-
sive bureaucracy, and inadequate standardization of the system for the collection
and evaluation of port performance. These challenges shall be addressed through
the promotion of the European Ports Policy, improvement of ports’ access to the
outermost countries, monitoring, if EU law is applied correctly in ports and to
the concessions, simplification of administrative, especially customs, procedures,
ports procedures, promotion of environmental technologies and short sea shipping
in accordance with the general principles of port infrastructure charges.
Lithuania is often referred to as a “maritime state”. However, to answer, if
one is right in making such a reference when speaking about a country, we need
to analyse the meaning of the concept “maritime state”. From the legal point of
view, any state that has ratified the United Nations Convention on the Law of the
Sea (Official Gazette, 13.11.2003, No. 107-4786), whether coastal or land-locked,
has the right to sail ships flying its flag on the high seas (Article 90). Therefore,
the very fact that a state is located on the coast of the sea, is not the sole criterion
of a maritime state (Isokaitė, 2010). A maritime state is, first of all, defined by
maritime mentality of its citizens, national maritime policy, sea-related traditions
and economic activities (Isokaitė, 2010; Puidokas, Andriuškaitė, 2012; Lileikis,
6
2015). There have been ongoing discussions on whether nation or state can be
referred to as a maritime. Undoubtedly, the sea has always been and continues
to be of special significance for the countries. It is of exceptional importance to
many areas of nation and state life – from tourism and recreational activities to
the national economy or security. The Baltic states has always been and still is a
coastal state, and solution of various “marine” issues, such as port, navigation,
fishing, marine environment protection and other issues, has always been relevant
to every coastal country.
The authors of this coursebook, the lecturers of the Lithuanian Maritime Acad-
emy and Liepaja Maritime College (Latvia), aim to form readers’ opinion about
modern seaport: general operations concept, port terminals, cargo handling, cargo
forwarding, ship agency and charterering, as well as to present a thorough analysis
of seaport management issues.
The authors hope that the publication will be useful for students of maritime
training institutions and for those interested in seaport activities.
7
1.
T H E C O N C E P T O F O P E R AT I O N
O F S E A P O RT S
Rim a M ickie nė
Different publications indicate different number of seaports in the world, rang-

ing from 3,500 to 9,000. The difference is determined by the concept of the port in
each state and by the national legislation (Alderton, 2008). The concept of the port
determines the basic economic factors and economic activities that can influence
the operations of the port and its development trends.
1.1. The Stru c tu re o f th e O p e r a t i o n o f t h e S e a p o r t
The maritime transport system that is a connective link between maritime

routes and other modes of transport consists of the following key elements:
–– port/harbour;
–– ships fleet.
The operation of the maritime transport system is seen as a catalyst for the
country’s economic development and prosperity, a key import and export tool,
an important source of employment and income, which is significant not only for
maritime states, but also for neighboring economies in terms of ensuring energy,
food and goods supply. Maritime business that encompasses operation of seaport,
as well as significance of the operation of seaport for the national economy, is
an important criterion of welfare of a maritime state. Seaports are international
cargo forwarding transit hubs. Meanwhile, if industrial and service companies are
established by the ports, those seaports become centres of economic development
(Fig. 1.1.).
Seaports provide a sufficiently large added value, which is important for the
national and regional economy. From the point of view of the global economy,
8
Fig. 1.1. Maritime transport sector as centre of economic development
seaport activities are related to the development of countries as integral parts of

the world or regional economy, with international economic cooperation, the at-
traction of foreign investment, membership in international organizations, and
other activities that strengthen the international economic and political position
of maritime countries.
The general structure of the maritime transport sector consists of the following
elements:
–– shipping;
–– stevedoring;
–– ship building, repairs, disposal of ships;
–– ship service at the port (food supplies, technical maintenance of ships,
etc.);
–– maritime finance (navigation finance, cargo insurance, ship insurance,
etc.)
–– logistics services (ship agency, brokerage, cargo forwarding, customs bro-
kerage, ship and cargo insurance; technical maintenance of ships, etc.);
–– training of maritime transport specialists;
–– port and shipping administration (infrastructure management, customs,
maritime safety management, ship register, phytosanitary and veterinary
monitoring, etc.);
–– other services to the clients and users of the port.
The general structure of the maritime transport sector is presented in Fig. 1.2.
A strip of a coastal line used for seaborne trade activities is usually called a
port. Cambridge dictionary provides the following definition of the “Port” (Lith.
Uostas): “a town by the sea or by a river that has a harbour, or the harbour itself”,
9
Naviga- steve-
tion doring
ship
ship
building
service at
and
the port
repairs
Port and Training

shipping of
administ- specia-
ration lists
Logistics
Crewing
services
Other
Maritime
services
finance,
to clients
insurance
and users
Fig. 1.2. The structure of the operation of maritime transport sector

Source: Maritime transport review 2016 (2017). UNCTAD
or the “Seaport” (Lith. Jūrų uostas): a city or town with a port that can be used
by ships, or a town or city on the water where ships load and unload freight”. The
English term “harbour” in Lithuanian bears the same meaning as the term “Port”
and this term can be used to define open raids, jetties along the coast, as well as a
large industrial complex related to transport, distribution and other systems.
In the maritime law, the port is described as part of the land and water that is
constructed and equipped in such a way that it can be used for boarding, unload-
ing and loading of ships, for the storage of goods, for receiving cargo from and
transporting such cargo to the internal transport operators. The law also regulates
the activities of the companies related to cargo transportation by sea. Article 2 of
the Law on Klaipėda State Seaport Authority of the Republic of Lithuania (Of-
ficial Gazette, 1996, No. 53-1245) gives a definition of the port highlighting its
purpose “<...> a territory (port land and water area) intended for the entering/leav-
ing, mooring, servicing/maintenance of ships, loading and unloading of cargos,
also for servicing of passengers”.
Taking into account the definition hereinabove, the ports can be divided ac-
cording to their purpose as follows:
–– commercial ports;
–– container ports;
10
–– military port;
–– fishing port, etc.
From a modern point of view, the port is a transport centre with a complex of
buildings and facilities for the provision of ships; the rapid and convenient trans-
portation of goods and passengers from land transport to maritime transport or, vice
versa, from maritime transport to other modes of transport; storage, cargo prepara-
tion and consolidation, provision of ships in the port with the needed supplies.
In order to minimize cargo transportation and handling costs, industrial plants,
in particular metallurgy, petroleum refineries, petrochemical plants, etc., are es-
tablished near the port terminals. The establishment of such industries is often
promoted by a favourable customs and tax system, such as free trade areas, free
economic zones, etc. In addition, the area around the port facilities is used as a
place of storage of goods, sometimes with speculative operations (in which case
the period of storage depends on the dynamics of raw material prices). The port
zone has become the centre of economic development and the material technical
trading base. (Belova, Mickienė, 2014)
When analysing the modern economic functions of the port, it can be stated
that the port is (Belova, Mickienė, 2012; Paulauskas, 2015; Burns, 2015):
–– trade partner communication centre;
–– transport systems communication centre;
–– the place of concentration of commercial infrastructure and industry;
–– economic growth multiplier.
The concept of the port is formed on the basis of the following main technical
characteristics of the port:
–– navigational position;
–– cargo specialization;
–– technical supply and the intensity of loading-unloading works;
–– access to bunkering, delivery and other services;
–– repairs depot;
–– interfaces with various modes of transport;
–– warehousing and distribution network.
Starting from the 7th and 8th decade of the 20th century, with the development of
scientific and technical progress and multimodal and intermodal freight, as well
as the development of containerization and transportation by trucks, the term “ter-
minal” was introduced and started to be used. Terminal (Lat. Terminus – border
stone, pole, furrow) is a specialized cargo handling site consisting of quaysides
(one or more) and a nearby territory with buildings and various or specialized
handling equipment. In general, it is a stevedoring company engaged in a cycle
of technological operations for the transfer of goods from one vehicle to another
at the intersection point of two or more roads. The terminal is equipped with a
11
warehouse and has cargo forwarding services and other commercial and adminis-
trative services provided (customs services, sanitary and quarantine control, cargo
insurance, etc.). A modern port is a totality of terminals.
From the point of view of intermodality of transport systems, the traditional
concept of the port is expanded by adding the concept of the Dry Port or the
so-called “cargo village” (Long-Term (until 2025) Lithuanian Transport System
Development Strategy, 2004; Roso, Lumsden, 2009). Dry Port (“cargo village”)
is a territory intended for storage, redistribution of the cargo transported by road,
usually connecting land and sea transportation modes (Roso, Lumsden, 2009).
There is no single answer to what seaport activities could or should be devel-
oped in dry port. The following advantages of the dry port can be identified (Roso,
Lumsden, 2009):
–– better seaport connection with the territory of the hinterland, which gives
the seaport a competitive advantage in the market;
–– helps to attract new clients;
–– promotes national and regional economy;
–– provides favourable conditions for avoiding congestion of cargo and land
transport and delays in the delivery of goods;
–– speeds up the transportation of cargo to the port or from the port;
–– increases the throughput and capacity of the seaport and the stevedoring
terminal;
–– creates a precondition for the creation of a single supply chain by intro-
ducing the concept of a dry port in a seaport, creating a “port in the port”
model;
–– has a positive influence on the development and integration of other trans-
port systems into the international supply chain;
–– generates more revenue, increases profits;
–– reduces the costs of the consignor, the carrier and the consignee.
The processes taking place on the eastern coast of the Baltic Sea illustrate the
view that the factors affecting the development of the region, as well as other parts
of the world, are related to the impact of globalization and the national policies
of each country. The economic growth that prevailed at the beginning of the 21st
century was replaced by stagnation and economic recession at the end of the first
decade that was followed by the variation in the results of the Lithuanian, Latvian,
Estonian and Russian ports since 2010 (Belova, Mickienė, 2014). Due to the inter-
national politics, changes in the transport policy of a particular country, the ports
of other countries of the region are in decline; therefore, the activities of seaports
are important for strengthening the country’s international economic and political
position in the region and in the world.
12
The eastern coastal region of the Baltic Sea is dominated by state and free
ports, the operator of which normally is a state; therefore, when assessing port
activity and its impact on the national economy, it is relevant to take into account
the management issues of the state sector. Taking into account the concept of a
seaport, it is necessary to analyse the possibility of integrated management of the
property of modern port based on the public-private partnership (Abouchakra,
Hammami, Najjar, Shediac, 2008). Such partnership creates conditions for attract-
ing not only national, but also foreign capital.
The state, i.e. the administrator of the port, is interested in a holistic evaluation
of port activities, for example, by linking operational, economic and geopolitical
factors. This enables to strengthen the maritime cluster of the country’s port and
the region, the economic and geopolitical position of the eastern coastal region of
the Baltic Sea.
1.2. Classific a tio n o f S e a p o rts
Different port classification systems are used in practice of economic activi-

ties. Below is a list of the main features of the ports used as classifiers:
–– geographical position;
–– natural conditions;
–– nature of port activities;
–– purpose and level of development of the port;
–– turnover of goods and ships;
–– the role of the port in the national and regional economy;
–– the level of involvement of the port in international transport systems and
the transport corridor;
–– type of ownership;
–– type of management;
–– port dues system, etc.
Only some of the most widespread systems are analysed below (Roa at al.,
2013; Alderton, 2008; Bichou, 2009; Huybrechts, Meersman, Van de Voorde et
al., 2002; Baublys, Petrauskas, 2002; Baublys, Vasiliauskas, 2005; Paulauskas,
2004, 2007; Rodrigue, Comtois, Slack, 2009; Stevens, 1999; Turkina, Belova,
2006, 2008, 2009, 2010).
By the purpose and nature of activity, ports are classified into ports having
connections with other transport systems and ports without this connection. The
interface between the port and international transport corridors is crucial for such
port classification system.
13
The ports that have connections to other transport systems are the following:
–– multifunctional ports providing services to vessels designed for transpor-
tation of different types of cargo, passengers, including passenger service
operations (such as Marseille, London, Antwerp, New York and many
other large international seaports);
–– specialized ports providing services and operations with single type cargo
defining the overall type of seaport for instance, Cardiff coal port.
Specialized cargo handling areas are installed in multifunctional ports. Almost
all modern large ports have specialized territories for the handling of goods car-
ried in large-sized loading units (containers, trailers, packages, etc.), as well as
specialized passenger terminals.
Passenger service and industrial ports may be classified as specialized ports.
The main function of passenger ports is providing services to passenger flows,
thus, cargo handling operations are of secondary functional purpose, for example,
ports in Turkey, Greece, etc. The main function of industrial ports is providing
services to various large production lines, for instance, in China, Japan, some EU
countries, etc.
Ports that do not have connections with other transport systems usually are
ports of refuge, bunker, fishing and other purpose ports. Ports of refuge are re-
quired for ships that, due to the navigational technical parameters or the technical
condition of the vessel, cannot be in the open sea during a storm. Also, such ports
are used in case of a ship’s emergency/accident. Such ports usually have ship re-
pair companies and ship lifting equipment/facilities necessary for providing ship
repair services.
Bunker ports are usually set up at the main maritime routes and their main pur-
pose is to ensure the supply of fuel to certain ships on certain routes.
Fishing ports are intended for service and storage of fishing vessels. These
ports also have fish processing companies operating in their territory.
According to geographical position, the ports can be classified as follows:
–– ports set up on the coast of the sea, in natural and artificial bays, in fiords
(Norwegian and most Baltic ports);
–– estuary ports located on the estuary of a river (Rotterdam and New York
ports) or not far from the estuary upstream of a river (Hamburg, Antwerp
and London ports);
–– inland ports set up on an inland waterway, such as a river or a canal (Mon-
treal and New Orleans ports).
Natural conditions also form the duration of navigation, i.e. there are ports that
operate all year round, other ports are operated only in seasons, others are open for
regular entry of vessels, while some ports allow vessels to enter only depending
on the water level (floods and tides periods).
14
According to the port’s relation to international transport systems, ports are
classified as follows:
–– global;
–– international;
–– national.
Global ports are global trade centres and accept ships navigating in all the
countries of the world. International ports most often accept ships navigating
along international shipping routes, but operating within the boundaries of a cer-
tain water area (Rotterdam, Singapore). National ports are also called cabotage
ports, as they are most often meant for ensuring navigation operations within the
territory of one country.
With the development of containerised cargo shipment market, the ports were
started to be classified into base and feeder (supply) ports. Base ports are the main
hubs of containerized cargo movement between the global economic centres.
Meanwhile, feeder ports are established not far from base ports and are the ulti-
mate destination points of cargo shipment by sea (water) transport chain. Cargo is
shipped in large and very large vessels between the base ports, while in base ports
such cargo is distributed and transhipped into smaller tonnage ships. As a rule,
basic ports are characterized by a high technological level of specialized container
terminals, work productivity and the integration of various transport routes.
One of the most important characteristics of the port is the size and location of
the port in the national or regional economy. When using this approach, the ports
can be classified as follows (Stevens, 1999; Stopford, 2009):
–– Small Local Ports serving local trading system, as a rule, within the terri-
tory of a specific region or country. Such a trading system is dominated by
a variety of goods, while the level of the system itself has a positive effect
on the type and intensity of cargo flows, as well as on the turnover of ships
in the port. Small local ports usually accommodate small-tonnage feeder
ships. The level of the port’s technological infrastructure is determined by
the types and volumes of cargo, peculiarities of their processing in a port:
the port terminal is usually versatile, and stevedoring equipment is of low
productivity. Depending on the possibility of cargo delivery by ships, such
ports can handle both bulk and containerized cargo. The cargo is unloaded
from the ship and loaded onto the quayside and partially stored. Cargo
batches can be also formed on the quayside of the port.
–– Large Local Ports, the development of which is facilitated by the growing
flow of specific types of cargo. In most cases, an increase in bulk cargo
flows in a given region promotes additional investments in port infrastruc-
ture. In this way, the growth of specific type of cargo flows in the region
creates preconditions for the development of port specialization, improv-
15
ing portal technologies, transport and storage infrastructure for large ves-
sels, for example, for bulk carriers with 3.5 thousand dwt tonnage. The
characteristic features of such ports – they are equipped with several bulk
cargo terminals, and cargo is stored and repacked in the port territory. Port
development is also related to the possibility of receiving and servicing
containerized cargo.
–– Large Regional Ports usually service the cargo flows of the entire region.
The level of regional ports depends on the intensity of cargo flows and on
investments in the construction of specialized terminals and facilities in
order to increase the work productivity of the existing infrastructure. The
key handling elements are the increased number of cargo units (pallets,
packages, etc.). A large regional port has different specialized terminals
for bulk cargo, oil products, etc. The capacity of such port terminals is
measured in millions of tons per year, and their operating possibilities al-
low the acceptance of 6 thousand dwt and larger tonnage ships. Such ports
are often integrated into international trade networks.
–– Regional Distribution Centres are ports serving cargo delivered by the main
shipping routes, shipping lines and performing the main functions of cargo
transhipment from very large tonnage vessels to feeder ships transporting
cargo to smaller ports. Regional distribution centres are multifunctional
ports consisting of specialized terminals equipped with high-performance
technological complexes intended for loading a respective type of cargo:
bulk, liquid cargo and container terminals. The port of this type has a well-
developed necessary transport, manufacturing, warehousing, information
and other infrastructure for the fulfilment transport, distribution and com-
mercial logistic functions. The functions of the distribution port are aimed
at the development of regional activities, enhancement of the port’s at-
tractiveness. The activities of these ports are usually based on the principle
of the hub: regional distribution centres are the base ports, the function
of which is the distribution of freight flows to the inland regions, both by
water and by land transport.
As to the type of ownership, the ports can be classified as follows (Alderton, 2008):
–– state;
–– municipal;
–– private;
–– mixed type of ownership (autonomous).
All the activities of the seaport can be managed by the state: from absolute
political control, as in case of Klaipėda State Seaport, to the vast majority of share
package owned by the state. The biggest advantage of municipal ports, for in-
stance, Rotterdam, Hamburg, Kobe, Yokohama ports, etc. is that their cooperation
16
Level 1 Warehousing
small Quayside
local with cranes
port General-
purpose
terminal
Level 2 Open storage areas for packing-

Large bulk cargoes Dry bulk cargo
local Warehousing for break bulk storage
port Quayside with cranes
Multifunctional
Dry bulk terminal
terminal
Level 3 Open storage areas for packing-

Large bulk cargo
regional storage for unit loads on
Dry bulk Dry bulk
port conventional ships
cargoes cargoes
Warehousing for break bulk
A B
Quayside with cranes
Dry bulk Dry bulk
unit load terminal
terminal terminal
Level 4 Multifunctional
Regional Warehousing for
Container Dry bulk
distribution break bulk
storage Other unit Other unit storage
centre
loads loads Grain, coal,
Quayside Gantry A B oil handling
with cranes cranes equipment
General specialist
Container Multi-purpose terminals (timber,
cargo bulk
terminal ro-ro, iron ore, steel, etc.)
terminal terminals
Fig. 1.3 Classification of ports by purpose and level of development (Stopford’s system)
Source: Stevens, H. (1999). The Institutional Position of Seaport. Klauwer Academic Publisher.
with various partners in attempt to satisfy port maintenance needs is absolutely

unrestricted. Municipalities may come to an agreement to subsidize the port, as
competitive port charges and encouragement of trade help to increase the overall
economic prosperity in the city and in the region. The main disadvantage of such
ports is complicated coordination of the activity plans of a seaport and the state.
A certain part of share portfolio of a private port is owned by the employees
themselves. Historically, the privatization of a seaport results in 40% increase in
labour productivity. After the privatization, the assets of the port may be not cen-
tralized and used for the new needs. This contributes to the increase in the capital
of the port and promotion of local economy. However, this does not contribute
to the competitiveness, attraction of bigger capital investments and increase in
overall commercial efficiency.
17
A port of mixed ownership is a port, where partly state-owned non-profit or-
ganization established by the parliament of the country offers single functional
administration in a functionally defined territory. Such management of the port
may lead to issues related to unfavourable funding.
The type of the port ownership management is particularly significant for sus-
tainable development of the port and the formation of the maritime cluster. The
form of ownership and management of the port are directly related to the effi-
ciency of the port’s operations, so this is one of the most discussed topics.
Detailed analysis of the port management issues is provided in Chapter 7-9 of
this publication.
Port classification system by purpose and development level is provided in
Fig. 1.3.
The type of the seaport and the level of development (Fig. 1.3) defines not only
the activities of the port, but also determine the level of intensity of port opera-
tions, as each cargo handling terminal is related to a certain number of quaysides
and handling equipment, which determines the cargo turnover of the port.
1.3. The Te rrito ry o f S e a p o rt a n d I t s U s e r s
Seaport and port land users operate in certain port areas. Taking into account
the diversity of ports and the peculiarities of each of them, the following key ele-
ments of the port territory are distinguished: (Law on Klaipėda State Seaport of
the Republic of Lithuania, Official Gazette, 1996, No. 53-1245; Belova, Mickienė,
2012, Paulauskas, 2015 et al.):
–– water area of the port;
–– quayside area of the port;
–– land access;
–– water access.
The water area consists of outer harbours (or roads) and port water area. Outer
harbours are divided into cargo handling or ship mooring harbours, while port
water area is divided into į inside harbours and water area for port operations
(handling, etc.). The depth and dimensions of the water area must ensure free
movement of ships that enter the port. In order to ensure the safety of ships in
the water area, it must be equipped with all the necessary navigational measures.
Depending on the natural conditions prevailing in the port, the port area is addi-
tionally protected from the rough water impact by the installed protective barrier
structures – piers and breakwaters.
18
Outer harbours (roads) is an area of the water area protected from rough wa-
ters, where ships, including cargo ships assisted by auxiliary port fleet, can anchor
while waiting for permission to moor at the quay or until completion of certain
operations. Behind the port partitioning structures, not far from the port gateway,
are external limits for ships waiting for permission to enter the port or permission
to enter the handling outer harbour. Standing anchored vessels shall not obstruct
the free movement and manoeuvring of other ships entering or leaving the port.
Inside the fenced water area is the inside harbours (roads) available for the ships
during the storms or while waiting for the permission to moor at a free quayside.
The water area for operations is a part of the inner port area directly adjacent to the
quay structures and equipment, which ensure the mooring of ships, cargo unloading
processes from ship to shore and vice versa, as well as execution of other operations.
A modern quay is a complex consisting of quay structures, cargo and its handling
equipment, various communication equipment, including fresh water supply, elec-
tricity networks, etc., that is adjacent to the coastal area and the water area.
The main features of the quay, that describe the throughput capacity of the
quay, are:
–– specialization by cargo type;
–– the area of the quay territory;
–– allowable loading per 1 m2 of the quay;
–– depth at the quay;
–– form and position in the layout scheme of the port.
The area of the port quayside is a part of the coast, on which the entire in-
frastructure of the coast is installed. The infrastructure of the coast consists of
warehouses, buildings, roads, equipment, communications and all other facilities
necessary for stevedoring, servicing of ships, as well as providing normal working
conditions for port workers and employees.
The area of the quayside consists of the following elements:
–– land access – railways, roads and transportation pipelines;
–– area adjacent to the quay with railway tracks and roads, cargo handling
complexes and mechanisms, warehouses and open cargo storage areas;
–– passenger terminal;
–– a part of the area of the quay usually containing railway tracks, roads (in-
cluding city transport roads), warehouses for long-term storage, auxiliary
port companies, service and administrative buildings;
–– with the rapid development of the container cargo sector, the port area
for ro-ro ships and specialized cargo handling complexes has increased
significantly.
Port activities taking into account the division of the area of the port and the type
of ownership in the field of infrastructure, superstructure and services (Fig. 1.4).
19
Elements of infrastructure Elements of superstructure Elements of services
• Port entrance canal • Cargo handling terminals • Port administration

• Quays • Passenger terminals • Administration of
• Harbour roads • Handling equipment (cranes, navigation/shipping
• Vehicle parking areas loaders) • information systems
• Roads • Cargo warehousing and • Approval of cargo shipment
• Cargo handling areas for processing areas (distribution agreements
different types of cargo centres, warehouses) • Regulation of port rates
• Other infrastructure services • ship building and repairs • Regulation of ship traffic safety
provided to stevedoring, • Administrative buildings in the port
shipping and logistics • information systems • Customs services
companies (power supply, • Other superstructure services to • services to the ships (bunkering,
connections, etc.) stevedoring and logistics towing, docking, waste disposal,
companies etc.)
• services to ship agents and
cargo forwarders
Fig. 1.4 Division of port’s elements
Port infrastructure is a complex of hydro-technical and engineering facilities

and structures, navigational equipment, as well as road and access railways (Law
on Klaipėda state seaport of the Republic of Lithuania, Article 2). infrastructure
is understood as the elements of the port structure for general use. Port super-
structure (or suprastructure) is the complex of ship stevedoring facilities and other
structures and equipment not included in the port infrastructure. The elements of
the superstructure are meant for special operations, i.e. stevedoring equipment,
warehouses, etc. additional elements are the ones used for cargo and passenger
transport operations: legislation, document system, customs, bunker depos, ser-
vice and technical fleet mooring place, ship repair companies and shore objects of
companies operating in the port.
Article 2 of the Law on Klaipėda state seaport of the Republic of Lithuania
provides a definition of port and port land users. A port user is a company regis-
tered in the Republic of Lithuania or a branch of a foreign legal entity that has a
right to engage in commercial and economic activities under the laws of a respec-
tive country that has signed an agreement on engagement in activities in the port
with the Port Authority. A user of the port land is a user of the port that has signed
an agreement on port land rent with the Port Authority.
Port infrastructure, superstructure and services define the groups of port users
and port land users (Fig. 1.5).
Port activity operators are divided according to the activities carried out in one
or another port element (Fig. 1.5). Activity operators are entities managing ship-
ping and cargo transportation (freight brokers, agents, forwarders, etc.). Physical
operators are vehicle owners or operators, whose principal activity is management
and execution of the cargo handling process. The infrastructure managers manage
20
ACTiViTY OPERATORs
ship agents / Cargo
Brokers forwarders
PHYsiCAL OPERATORs
shipping Cargo terminals Cargo sea and road

lines transportation transport operators
from port
ship tugs Mooring Port Port Customs Veterinary shipping

Pilot service Authority inspection service inspection
service Office
MANAGERs OF iNFRAsTRuCTuRE
Fig. 1.5 Key port activity operators and port users
the elements of the port infrastructure and execute the key general functions of
port activities (security, control, development, etc.).
Each port has certain peculiarities of the organization of port operations, which
define the procedure for the reception and servicing of ships in the port. The organi-
zation of work in the port is governed by the rules for the operation of the seaport,
also known as the Port’s Code of Practice, a compilation of traditions and prac-
tices. The term “port” used in the rules usually describes various business structures.
Typical rules are formulated based on the national statutory business management
framework, port operation laws, international maritime law and experience.
The modern conditions of the international carriage of goods by sea are increas-
ing the requirements as to the quality, price and efficiency of the stevedoring compa-
nies in the ports. The stevedoring companies of the ports are the main element in the
chain of port operations, as the number of ships entering the port depends directly on
the operational efficiency of those companies. Cargo operations in the port are car-
ried out by the stevedoring companies that can also provide other additional services
in the port, such as tallyman, ship agency, freight forwarding, etc. Cargo handling
operations are carried out in the port area, and the involvement of the port in load-
ing processes depends on the level of state participation in the port management,
although the organizational form and the state share in port management processes
differ. Taking this into account, the ports can be divided into two groups:
1. Ports, in which stevedores or so-called port handling managers organize
cargo handling operations, and the port quays, warehouses, quayside equipment,
etc. are supervised by the managers hereinabove.
2. Ports, in which cargo handling operations are not planned or coordinated,
but the port only rents the land of the port to private users, who build cargo han-
dling terminals, warehouses, acquire cargo handling equipment/machinery and
carry out cargo handlings works.
21
The stevedoring companies play the key role in the stevedoring process, as
they carry out cargo handling operations; therefore, a stevedoring company is the
main element of port activities. Maritime stevedoring companies, as organization-
al, legal, commercial units, are divided according to the following main features:
–– type of ownership;
–– specialization by the types of handled cargo;
–– the level of integration of the founders of the company;
–– the participation of the founders in the capital formation of the company.
The scheme showing the grouping of the stevedoring companies according to
their main features is presented in Fig. 1.6.
In practice, the desire of the shipowner or the consignor and the consignee to
ensure the most favorable terms and conditions for handling of cargo creates the
need for having an own cargo handling company or at least some decision-making
share in the capital formation of a large stevedoring company. The obligations of
the stevedoring company and the shipowner are defined in the stevedore agree-
ment. In most cases, for each particular vessel service, the stevedoring company
and the shipowner agree on the fulfillment of the necessary handling operations
on mutually acceptable terms and conditions, also negotiate the price based on the
valid rates of cargo handling operations and works. All the details listed herein-
above are the basis of a stevedore agreement, which also defines the legal rela-
tions between the ship or cargo owner and the stevedoring company.
• Private
Type of
• state-owned
ownership
• Mixed
speciali- • specialized
zation • universal
stevedoring
companies
• individual
integra-
• Joint
tion level
• Global
• independent
• Controlled by
Control
shipowner
of capital
• Controlled by cargo
owner
Fig. 1.6. Distribution of stevedoring companies

Source: Belova, J., Mickienė, R. (2012). Port operations management: economic aspect.
Klaipėda: KU Publishing-house.
22
To sum up, the manager of the port infrastructure provides possibilities and
regulates the activities of the port and port land users in the port when providing
services to consignors, carriers and consignees. The family of these activities de-
scribes the operations of the port.
1.4. The Im p a c t o f th e S e a p o rt De v e l o p m e n t
on the O pera tio n s o f th e Po rt
The nature of the activities of seaports is determined by a certain stage of the

development of the port, the so-called “port generation”. Modern ports are divided
into various categories and generations based on the following criteria:
–– port development strategy;
–– level of development of the types of port activities;
–– port organization and integrity, etc.
The most important elements of the development of the port that distinguish
the ports of the old generation from the ports of the new generation are port policy,
development strategy and position in the region.
The port development stages and port generations are defined based on the fol-
lowing publications of the United Nations (hereinafter - UN) Conference on Trade
and Development (hereinafter – UNCTAD): Port marketing and the challenge of
the third generation port (1992); Technical note: Fourth-generation port (9-12) in
Ports Newsletter, UNCTAD, NE19, 1999.
Until the 1960’s in the 20th century, the ports of the first generation were mere-
ly the interface between the land and sea transport. The activities of the port were
only related to the cargo handling and storage. Such simplified conception of the
port is a factor limiting the development of the modern port. Such conservative
and passive attitude can have a negative impact on the decisions of the national
government, municipality or company. Consequently, governments may restrict
the activities of the ports to a minimum, such as cargo handling, storage and some
navigation services. Investments are concentrated on waterfront infrastructure
without any awareness of what is happening to the vessels and cargo outside the
waterfront area. Such attitudes and restrictions lead the port towards organiza-
tional isolation. This phenomenon has three major aspects:
1. The port is isolated from the transport and trade activities. Often in a mo-
nopolistic situation, these ports are rarely concerned about the port users’ needs.
Participation off trade and transport interest in port decision-making process is
limited and port marketing promotion is rarely considered. Usually these ports
23
have their own systems of information, documentation and statistics and have no
regard for their compatibility with port users’ systems.
2. The isolation of port organization can be found in its relationship with the
local authorities. Just like municipality, the port is independent, so each party has
an individual development plan and cooperates on rare occasions. Ports, by their
very nature, are strong compared to other local units of economic activities and
are often the only organization capable of being independent entities.
3. In a first generation port, the different port activities or port companies are
isolated from one another. This means that at a commercial level the different port
services never act together in unison, but make their decisions independently of
how other organizations in the same port will react. This was quite natural at the
time of pre-containerization, since the commercial relationship between different
activities of the port was casual. Productivity was not high and cargo movement
was slow. Users were more familiar with individual sectors of different port ser-
vices, rather than with the port in its entirety.
It is however worth noting that the notion of the first generation port applies
particularly to general cargo ports and some bulk cargo ports, while some other
bulk cargo ports, especially those located near raw material producing sites, have
always concentrated on transhipment activities from one type of transport onto
other type of transport.
In the second generation port, the government, port authorities and those, who
provide port services, have a broader understanding of the functions of the sea-
port. The port is regarded as a transport, industrial and commercial service centre.
These ports are allowed to undertake and offer industrial or commercial services
to their users, which are not directly connected to the traditional loading and dis-
charging activity. Port policies, legislation and development strategies are made
based on a broader conception and management attitude. As a result, the scope
of port activities is extended to commercial and any other relevant services, such
as cargo packing, marking and industrial services, such as cargo transformation.
Industrial facilities are built up within the port area. Therefore, the port develops
and expands towards its hinterland with industries such as iron and steel, heavy
metallurgy, refineries and basic petrochemicals, aluminium, paper pulp making,
fertilizers, sugar and starch, flour milling and various agro-food activities. The
second generation ports are not only transport centres, but also industrial and
commercial centres. They emerged in the sixties with an increase in the quantity
of raw materials imported into industrialized countries. This was accommodated
by the use of large tankers and dry bulk carriers in maritime transport. These ports
are commonly called industrial ports.
24
Organization within a second generation port is different from that of a first
generation one. Second generation ports enjoy a close relationship with transport
and trade partners, who have built their cargo transformation facilities in port
area. Big shippers or shipowners benefit from that activity. The number of privi-
leged port users is small and their relationship with the port organization is quite
simple and direct. The second generation ports also have a closer relationship
with the municipality, since they are more dependent on the surrounding city as
regards land, energy, water and manpower supply, as well as installation of other
modes of transport terminals, stations, such as dry bulk carriers. Inside the port
organization, different activities are becoming more integrated in keeping with the
increase in quantity and the quick turnover of cargo.
The third generation ports emerged in the 1980’s principally due to worldwide
large scale containerization and intermodalism combined with the growing re-
quirements of the international trade. The policy makers, managers and operators
of the third generation port see their port as a dynamic node in the complex-inter-
national production and distribution network. They have changed their manage-
ment attitude from a rather passive offer of facilities and services to that of active
concern and participation in the overall international trade process. In attempt to
attract cargo flows, efforts have been made to promote trade and transport ac-
tivities. This promotes generation of new revenue-making and value-adding busi-
nesses. As a result, the ports have been turning into integrated transport centres
and logistic platforms for international trade.
Activities and services in such third generation ports are specialized and inte-
grated. They can be divided into the following major categories:
–– traditional port services;
–– industrial services;
–– administrative and commercial services;
–– logistic services;
–– information services.
Traditional port services are cargo handling, which is and will remain the back-
bone of port activities. However, cargo handling is carried out at a new organiza-
tional, technical and information level. The development of production services
was a precondition for the formation of two main types of activities: industrial
technical services (ship repairs, container repairs, etc.) and cargo-related services.
Such strategic attitude to port development forms a precondition for generation
of intense cargo flows and increase in number of ships entering the port that need
industrial technical services, thus creating added value of the port. The basis of
port administrative and commercial services is document management and or-
ganization of working schedule. The aim of such services is to reduce the time
25
that means of transport spend in the port to the maximum and to remove any
obstacles to the storage of legal cargoes in the port area, for instance, by optimiz-
ing the working schedule and reorganization of procedures of the customs office.
Third generation port activities are related to the existence of significant number
of commercial services, such as bank, insurance and legal services. In order to
make commercial activities of the port more efficient, special trade and cargo flow
distribution centres can be established in the ports. Logistic services is a major
element of the third generation port activities, which creates preconditions for
the organization of activities, respectively, in accordance with the movement of
cargo flows and their distribution. Typically, cargo flow distribution functions are
important for exported and imported goods, and these functions are usually car-
ried out by specialized companies and not by freight companies. Logistic services
allow different operators to cooperate in joint projects. Information services that
define the existence of rational information systems covering all aspects of the
port’s activity are particularly important for third-generation ports.
The fourth generation ports started to form in the 1990’s at the end of the 20th
century due to more intense globalization processes. An important role in shap-
ing such a port was played by large international companies, ship and shipping
lines operators. Globalization has led to an increase in the time and space gap
between production and consumption, and therefore the movement of goods has
become a systematic phenomenon. That is why the operation of the port should
also be assessed systematically, i.e. how the port’s activities are integrated into the
scheme together with other system participants - inland waterways, land transport
systems, technical supply systems, city and regional systems. On the basis of the
management of port activities, a vision of the perspective of cargo flows and their
management, approved by the management and development strategy, should be-
come a common vision for all participants in the system. An important feature of
the port is 3PL and 4 PL service providers that fundamentally change the compo-
sition of the main port of actors, organization of the relationship and document
management systems.
The stages of port evolution can be described from different approaches. Ac-
cording to the UN Trade and Development Conference (UNCAD) version, the
main stages of port evolution and development in 1960-1990 are related to the
changes and development of cargo flows, cargo handling technologies, port func-
tions and activity strategies.
26
Table 1.2
Stages of seaport development
Criteria of
1st generation, 2nd generation, 3rd generation, 4th generation,
port
before 1960s after 1960s after 1980s after 1990
development
Cargo - Break bulk - Break bulk - Bulk and - Unification
cargo cargo unitized of the main
- Liquid bulk - Container- cargoes
cargo ized
Port - Conservative - Expansion of - Commercial - Total automa-
development change industrial trans- oriented tion level
port centres - Integrated
transport centre
Scope of - Cargo han- - Cargo transfor- - Cargo - Information
activities dling, storage, mation handling and standardization
navigational - Ship repairs information
services and commercial procurement
- Quay and services - Logistic
waterfront - Enlarged port activities
areas area - Terminals
and cargo
distribution
centres
Organization - Indepen- - Close relation- - United port - Globalization
dent activities ship between port community of port com-
within port and port users - Integrated munity
- Indepen- - Loose relation- port with trade - Development
dence from ship between and industrial of environment
municipalities activities within area protection
port - Close
- Limited rela- relationship be-
tionship between tween port and
the port and municipality
municipality - Proper infor-
mation base
Functions - Cargo han- - The main - Cargo-infor- - Service qual-
dling centre transport corridor mation trans- ity management
- Simple indi- centre port corridor - Constant
vidual services - Cargo transfor- - Multi- improvement
mation purpose cargo of employees’
- Combined transformation qualifications
services - Distribution
functions
- Multi-pur-
pose service
27
Criteria of
1st generation, 2nd generation, 3rd generation, 4th generation,
port
before 1960s after 1960s after 1980s after 1990
development
Production - Work - Capita - Technologies - Information
factors - Capital - Know-how technologies
Sources: Port marketing and the challenge of the third generation port (1992). UNCTAD. [retrieved
on 10.09.2017]. Internet access:
https://www.google.lt/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0
ahUKEwiyq vLU3LvXAhXoQpoKHfHLDMcQFgglMAA&url=http%3A%2F%2Functad.org%
2Fen%2FPublicationsLibrary%2Ftdc4ac7_d14_en.pdf&usg=AOvVaw1qS-XCMDkUXUC-fYJ-
d7Oyz; Technical note: Fourth-generation port (9-12) in Ports Newsletter, UNCTAD, NE19, 1999,
[retrieved on 10.09.2017]. Internet access: http://unctad.org/en/Docs/ posdtetibm15.en.pdf.
In order to ensure the competitiveness of the port, country and region in the
international market, the conception of the fourth generation port identified the
following factors defining the nature of the port:
–– operational process technologies;
–– information communication technologies;
–– interface between port activities and hinterland (city, country, region);
–– port openness;
–– integration of port activities;
–– standardization and unification of processes and procedures, etc. (Stevens,
1999; Stopford, 2009; Strategic goals and recommendations for the EU’s
maritime transport policy until 2018, 2009; Roadmap to a Single European
Transport Area, 2011)
As globalization evolved, there was an unavoidable need to standardize the
information and organizational and administrative resources of port operations
processes. A large part of cargoes in the fourth generation port is transported in
containers. Container placement requires significant areas and additional distri-
bution activities: storage, batch transformation, by consignees and long-distance
shipment operators. The growth of containerized cargo flows results from a high
level of automation of carbo handling processes, which requires sufficient pro-
fessional skills and competencies of personnel and technologies, which affects
investments in the infrastructure and superstructure of the port and the demand
for manpower.
From the point of view of the development of the scope of activity and spatial
area, the evolution of the ports is described by Y. H. Bird (1963) in the Anyport
model (Fig. 1.7).
28
setting Expansion specialization
1b
1a
Downtowns, 1a Terminal facilities (1, 2, 3, 4) Water ……. Rail Reconversion, 5

urban expansion, 1b Port-related activities depth _____ Highways
Fig. 1.7 Bird Anyport model (1963) of port area evolution

Source: Rodrigue, J.P., Comtois, C., Slack, B. (2009).
The Geography of Transport Systems. New York: Routledge.
This model (Fig. 1.7) summarizes various phases of port evolution from setting
to narrow specialization. It is relevant nowadays and summarizes the experience
of the development of British ports. Below are the main steps of port development:
1. Setting. According to this model, the port is set in a city (Fig. 1.7: 1a), in the
centre of commerce of the city, as it is related to cargo logistics, maritime and land
road geography and infrastructure, i.e. depends on geographical circumstances.
A standard evolution of a port starts from the fishing or commercial port with
respective shipbuilding activities, which includes several quaysides. Until the in-
dustrial revolution, ports remained rather rudimentary in terms of their terminal
facilities. Port-related activities were mainly focused on warehousing and whole-
saling, located on sites directly adjacent to the port.
2. Expansion. The expansion of the port (Fig. 1.7: 1b) is an integral part of the
development of industry, urbanization and maritime technology. Existent quays
are expanded and new ones are constructed, new cargo handling terminals are
constructed and the port entrance is dredged (Fig. 1.7: 2, 4), so that bigger draft
ships could be accommodates in the port. The spatial relationship of the city and
the port change, for instance, shipbuilding and repairs docks were built further
away from the downtown (Fig. 1.7: 2, 3). The integration of rail lines with port
terminals enabled access to vast hinterlands with a proportional growth in cargo
flows and intensity in maritime and land traffic. Port-related activities also ex-
panded to include industrial activities. This expansion mainly occurred due to the
development of the industry.
3. Specialization. This phase involves the construction of specialized piers to
handle freight such as containers, ores, grain, petroleum and coal (Fig. 1.7: 4),
which expanded warehousing needs significantly. Larger high-capacity ships of-
29
ten required dredging or the construction of long jetties granting access to greater
depths. The port infrastructure moves away from the original site of the port. In its
turn, original port sites, commonly located adjacent to downtown areas, in the old
town, gradually become obsolete and are abandoned. This leads to reconversion
of the existent buildings and territory that are adapted for the implementation of
the city’s social or commercial purposes, such as installation of parks, construc-
tion of dwelling houses and commercial buildings or development of commercial
activities (Fig. 1.7: 5).
A port is set over several decades or centuries. The improved J. H. Bird (1983)
Anyport model presents five port development-evolution alternatives:
1. Closure, where the facility is abandoned because of poor operating condi-
tions.
2. Expansion, where operating conditions require the existing sites to be ex-
tended or modified.
3. Addition, where because of newly emerging demands, such as new cargo
flows, the canal is dredged, new berths and terminals are established.
4. Consolidation, where several existing port areas or terminals, warehouses
are combined to provide new expanded facilities, such as cranes necessary
to service bigger tonnage ships.
5. Redevelopment, seen as the outcome of functional assessment of existing
facilities and the establishment of a super terminal.
The main phases of modern port evolution process are related to the changes
and development of the cargo flows, cargo handling equipment and technology,
port functions and activity strategies. With the evolution of the port, the attitude to
port interfaces and relationships with other economic entities changes from work
and capital to interface organization and information communication technologies
(Beresford, Gardner, Pettit et al, 2004).
1.5. Self -te s t q u e s tio n s
1. What is a seaport?
2. Provide a graphical map of the structure of the Lithuanian maritime sector.
3. Describe the key stages of seaport development, port generation, pointing
out similarities and differences.
4. Define the concept of a modern service port.
5. Name the reason for choosing the main port classification criteria.
30
6. Describe any selected seaport according to the following criteria: geo-
graphical position; type of activity; purpose; development; relationship
with international transport systems.
7. What is characteristic of the seaport structure?
8. Describe port infrastructure and superstructure.
9. Describe the concept of the port and port land users, economic entities and
their interrelationship. Illustrate it graphically.
10. Reason why stevedoring companies are the main participant in the port.
11. Illustrate graphically the process of cargo transportation via the seaport in
the chain: ship-port-land transport.
1.6. Ref eren c e s
1. Belova, J., Mickienė, R. (2012). Uosto veiklos valdymas: ekonominis as-

pektas. Klaipėda: KU leidykla.
2. Belova, J., Mickiene, R. (2014). Assessment of Maritime Industry Effec-
tiveness in the Post-Crisis Period. Tarptautinės mokslinės konferencijos
pranešimų rinkinys “Transport means 2014”, 300-303.
3. Beresford, A. K. C., Gardner, B. M., Pettit, S. J., Naniopoulos, A., Wool-
dridge, C. F. (2004). The UNCTAD and WORKPORT models of port de-
velopment: evolution or revolution?; Maritime Policy & Management,
31(2), 93-107.
4. Burns, M. G. (2015). Port management and operations. Boca Raton: CRC
Press, Taylor & Francis Group.
5. Isokaitė, I. (2010). Jūros erdvių reglamentavimas tarptautinėje ir Lietuvos
Respublikos teisėje. Daktaro disertacija. Vilnius: Vilniaus universitetas.
6. Jungtinių tautų jūrų teisės konvencija, 2003, Žin., Nr. 107-4786.
7. Kembridžo žodynas [žiūrėta 2017-08-11]. Prieiga internetu: https://dic-
tionary.cambridge.org/ dictionary/english/port
8. Lietuvos Respublikos Klaipėdos valstybinio jūrų uosto įstatymas, 1996,
Žin., Nr. 53-1245.
9. Lileikis, S.(2015). Jūrinės savivokos formavimosi kontūrai: asmenybės
vertingumo linkmė. Klaipėda: Lietuvos aukštoji jūreivystės mokykla.
10. Maritime transport review 2016 (2017). UNCTAD.
11. Matutis, V. (2017). Nyksta Lietuva kaip jūrinė valstybė. Dienraštis
,,Vakarų ekspresas“, 2017-07-30, prieiga internetu: http://www.albatrosas.
lt/Nyksta-Lietuva-kaip-jurine-valstybe-p1305.html#.WgixQ1uCzDc.
12. Paulauskas, V. (2015). Jūrų transporto plėtra. Klaipėda: KU leidykla
31
13. Port marketing and the challenge of the third generation port (1992).
UNCTAD.
14. Puidokas, M., Andriuškaitė, L. (2012). Klaipėdos valstybinio jūrų uosto
transporto politikos analizė pozicionuojant Lietuvą kaip jūrinę valstybę.
Viešoji politika ir administravimas, 11, 3/2012, 404-419.
15. Roa, I., Peña, Y., Amante, B., & Goretti, M. (2013). Ports: definition and
study of types, sizes and business models. Journal of Industrial Engineer-
ing and Management, 6(4), 1055-1064.
16. Roso, V., Lumsden, K. (2009). The dry port concept: moving seaport ac-
tivities inland? Transport and Communications Bulletin for Asia and the
Pacific, 78, 87-101.
17. Sarafinas, G. (2005). Ar Lietuva – jūrinė valstybė? Savaitraštis ,,Veidas“,
Nr. 31, 2005-08-04.
18. Stevens, H. (1999). The Institutional Position of Seaport. Klauwer Aca-
demic Publisher
19. Stopford, M. (2009). Maritime Economics. NY: Routledge.
20. Technical note: Fourth-generation port (9-12) in Ports Newsletter,
UNCTAD, NE19, 1999, [žiūrėta 2017-09-10]. Prieiga internetu: http://
unctad.org/en/Docs/posdtetibm15.en.pdf.
32
2.
P O RT T E R M I N A L S
J elena Belova
This chapter provides a description of the concept of a port terminal, analyses

the functions of the port terminal and the technological features of different termi-
nals, identifies the factors that shape the terminal’s parameters and identifies the
risk factors that may affect the operation of the port terminal.
2.1. The C o n c e p t o f th e Po rt Te r m i n a l
The port is the main element of the maritime transport system. A port (Lat. Por-
tus) is a part of the coast with adjacent water area equipped with a complex of facili-
ties and installations used for loading and discharging of ships and providing other
services to the ships (Belova, Mickienė, 2012). A modern port is the entirety of
terminals. A terminal is a complex of facilities distributed at the initial, final and
intermediate point of transport, ensuring diverse cooperation of various transport
companies in transportation of goods and passenger (Baublys, 2010).
2.1.1. The F unc tions of the Port Ter m i n al
In transportation of cargo and goods, a certain node is needed, where vehicles

can be changed, and cargoes can be unloaded, loaded and stored. A terminal is a
complex of facilities distributed at the initial, final and intermediate point of trans-
port, ensuring diverse cooperation of various transport companies in transporta-
tion of goods and passenger (Baublys, Vasilis Vasiliauskas, 2011).
A terminal must perform the following functions:
–– guarantee access to transport means travelling by certain type of roads;
–– guarantee easy change of one type of transport with another;
–– facilitate traffic connectivity (Baublys, Vasilis Vasiliauskas, 2011).
33
A terminal is an element of the common transport system, where different
types of transport cooperate. Technological interoperability is achieved through
harmonized schedules for rail, road, water and other modes of transport, by devel-
oping joint work technologies for transhipment points, concentrating cargo han-
dling works in case of lesser number of loading-unloading points and aligning it
with rolling stock diversion planning and the precise interoperability of all modes
of transport, organizing coordinated import and export of goods, expanding the
scope of direct transhipment of cargo, using contact work schedules at tranship-
ment points using automated dispatch control systems (Baublys, 2016).
2.1.2. The Struc ture of the P ort Te rmi n al
The terminal has a corresponding complex of terminal elements, operating ac-

cording to the planned technology for carrying out the technological process. The
structure of the terminal structure consists of the following elements:
–– cargo handling front: quays, piers, flyover, platforms, areas/yards;
–– road infrastructure: external access roads, internal access roads;
–– warehouse infrastructure: distribution warehouses; long-term storage
warehouses; completion warehouses;
–– other elements (buildings): administrative, auxiliary; industrial complex
(Baublys, Vasilis Vasiliauskas, 2011).
A quay is one of the main elements of the terminal and its cargo handling
front. The quay is meant for the mooring of the ships. The dimensions of the quay
(depth, length) may limit ship accommodation possibilities.
It is necessary to have certain technological equipment at the terminal for the
performance of technological processes: handling, sorting, warehousing, trans-
portation in the territory of the terminal, etc.
The main technical means of the terminal can be divided into the following
groups:
–– motor vehicles;
–– cargo handling equipment;
–– management, measurement, calculation and communication equipment;
–– warehouse equipment and machinery.
The choice of the handling technology and the terminal largely depends on the
features of cargo/goods. Properly chosen terminal operation technology makes it
possible to optimize the interoperability of all the elements of the terminal and
determines the efficiency of the terminal’s work.
34
2.2. The C la s s ific a tio n o f th e S e a p o r t Te r m i n a l s
The seaport terminals can be classified by the following features:

–– according to the interaction of modes of transport: a hub of one mode of
transport interacting with other modes of transport, and a hub of two or
more modes of transport;
–– according to the size: ranging from ordinary to the port complexes;
–– according to versatility: universal, specialized.
When building or expanding the territory of the port terminal and its quays, it
is necessary to analyse the purpose of the port terminal, navigational conditions,
cargo flow, opportunities for the development of the ground infrastructure, etc.
Usually a universal port terminal is defined as port terminal, where a huge va-
riety of cargo can be loaded and stored despite the fact that the cargo is placed in
boxes, on pallets, in bags or it is bulk cargo, i.e. irrespective of the type of cargo
or its physical properties (Brodie, 2016). Universal terminals are provided with
multifunctional non-specialized stevedoring equipment, so they are adapted to the
changing cargo flow by using the same loading equipment. A universal terminal
has specialized warehouse groups with a distribution centre, which is responsible
for collection, delivery, protection, processing and export of cargo and for su-
pervision of the equipment, which is designed to process heavyweight, long and
perishable cargo. It should be emphasized that the efficiency of terminals using
non-specialized loading equipment is often not equal to the efficiency of special-
ized terminals. Moreover, some operations require manual work (Baublys, Vasilis
Vasiliauskas, 2011). This explains why universal terminals are not so widespread
all around the world. Universal port terminals are often identified with general
cargo terminals due to the similarity of the capability of their suprastructure and
infrastructure to process different cargo flows.
Specialized terminal is designed for loading a certain type of cargo, for in-
stance, fertilizers or containers, or handling of a certain type of a vessel, such as
carton container ships or Ro-Ro ships. Terminals, which are specialized according
to the type of cargo, are characterized by different disposition and equipment used,
but they are similar when analysing the used stevedoring technology and the ar-
rangement of their subsystems. The advantage of specialized seaport terminals in
comparison with the universal ones is that the loading and storing mechanisms of
specialized terminals are fully standardized and adapted to a certain type of cargo,
which increases the efficiency of loading activities. However, specialized seaport
terminals, contrary to the universal ones, are sensitive to instability of cargo flow.
35
2.3. The Te c h n o lo g ic a l Pe c u liar i t i e s
of the P ort Te rmin a ls
The technological peculiarities of the port terminals are determined by the stevedor-
ing process technology, as well as by the integrity of the technical equipment used in
this process. Thus, when designing and building the quays of the terminals, especially
specialized terminals, or when replacing the stevedoring equipment, it is vital to deter-
mine the optimal possibilities of the terminal and strive to use them to the maximum.
2.3.1. General C a rgo Termina ls
General cargoes are unitary or packed cargo, machinery and equipment, metal
and metal products, wood and wood products, etc. The nomenclature of the gen-
eral cargo is highly diverse. Taking into account the cargo status and the cargo unit
weight, general cargo can be transported packed in following types of packages:
–– in bags: grain, sugar, salt, chemicals;
–– in special bags: fertilizers, peat;
–– in boxes: food products;
–– in parcels: cotton, cellulose;
–– in rolls: paper;
–– in packages: wood products;
–– in separate units: equipment, metal constructions.
The transportation and handling of this type of cargo is complicated due to
a great variety of packages and dimensions of general cargo. The consolidation
of cargo units and the standardization of packaging helps to simplify the cargo
handling operations. Usually general cargo is packed on pallets, which makes the
loading of this type of cargo on board ships, on trucks and railway wagons and the
storage of the said cargo more comfortable.
The equipment of the general cargo terminals is classified into the following
groups:
–– equipment designed for loading and unloading of ships (ship cranes, portal
cranes, mobile cranes);
–– equipment designed for transportation and loading of cargo in the ware-
house (terminal tractor-units with platforms);
–– equipment designed for loading and unload of road vehicles (forklifts);
–– other additional equipment.
The main requirement for the equipment of those terminals is their versatility
and flexibility. A typical example of the layout of the elements of the general cargo
terminal is presented in Fig. 2.1.
36
Fig. 2.1 General cargo handling at the terminal of Klaipėdos Smeltė, LKAB
Source: General cargo handling. Klaipėdos Smeltė, LKAB [retrieved on 11.12.2017]. Hyperlink:
http://www.smelte.lt/lt/paslaugos/generaliniukroviniu-krova/.
The loading operations on a ship are performed using the following equipment:
–– vessel boom cranes;
–– portal cranes;
–– mobile cranes.
Vessel boom cranes are not efficient, so this equipment is only used in excep-
tional cases, when there is no opportunity to use the stevedoring equipment of the
terminal (Baublys, Vasilis Vasiliauskas, 2011).
The main characteristics of cranes are as follows:
–– lifting capacity from 6 t (for small cargo units, pallets) up to 40 t (for load-
ing of containers);
–– maximum distance of the working area;
–– lifting height of cargo;
–– dimensions/parameters;
–– stevedoring speed.
Portal cranes are used for stevedoring activities on the quays, in open ware-
houses, also for loading on/in railway wagons. The main disadvantage of portal
cranes is complicated automatization of their operations and connectivity between
their operational efficiency and qualification of the staff.
Forklifts are used for lifting and transportation of cargos at the general cargo
terminal. Side and frontal forklifts are used most often. The lifting capacity of
forklifts may vary from 1 ton up to 40 tons, according to the purpose of use (for
operations in ships’ holds, containers, warehouses or for the handling of contain-
er). Forklifts are used only for short-distance transportation of cargo (up to 100
meters). For longer-distance transportation of cargo, tractor-units with trailers of
the terminal are used. Types of attachment tools: straps, hooks, pincers and grabs.
Straps are the simplest and most comfortable means of attachment, which can be
37
chosen according to the lifting capacity and the scheme of attachment. Side fork-
lifts are used for the loading and unloading of ships, other means of transport and
for the storage operations (Baublys, Vasilis Vasiliauskas, 2011).
There are two types of warehouses of the terminal: open and closed. Open-type
warehouses are used for cargoes, which are barely sensitive to the environmental
impacts. Cargoes that are sensitive to the environmental impacts are stored in
closed warehouses and refrigerated warehouses.
2.3.2. Conta iner Termina ls
According to their purpose, the port container terminals are divided into fol-
lowing groups:
1) according to cargo transportation technology:
–– designed for handling of containers, cellular vessels and semi container
carriers;
–– designed for handling of container carriers and other consolidated cargo
units, for instance, of ro-ro type;
–– designed for handling of container carriers and other consolidated cargo
units and lighters.
2) according to cargo turnover:
–– export container terminals;
–– import container terminals;
–– cabotage terminals.
A typical specialized container terminal consists of the following technological
elements:
1. A maritime stevedoring front with operational site where ships are loaded
directly and containers which have to be loaded on board ships are stored.
2. A sorting site, where containers are stored and sorted out that have to be
loaded on or unloaded from ships leaving first (Vasilis Vasiliauskas, 2013).
3. A storage site for storing containers which are to be loaded on board ships,
also containers which have been unloaded and transported by roads. The area of
the storage site at the terminal is divided into the sorting site, the long-term stor-
age site; the empty container storage site; container completion site; a site for
storage of containers with dangerous cargo (Kemme, 2013).
4. A railway stevedoring front with operational site, where containers are loaded on
railway platforms or on motor vehicles, and where containers to be handled are stored.
5. A closed warehouse with operational site designed for forming, reforming
and unforming of containers and tractor-units with semitrailers. It also has a cargo
front for handling of railway and road vehicles carrying non-containerised cargo.
38
6. A terminal checkpoint equipped with a weighing-machine for controlling of
the reception and issue of containers delivered to and dispatched from the terminal.
7. A road transport stevedoring front with an operational site designed for the
storage of containers that have to be transported by road transport and where the
loading operations of the road vehicles are carried out.
8. Auxiliary and administrative buildings (Baublys, Vasilis Vasiliauskas, 2011).
The layout scheme of the elements of the container terminal is presented in
Fig. 2.2. The maritime stevedoring front consists of quays equipped with cargo
handling gear. The container sorting site is set out behind the operational site of
the maritime stevedoring front (Skerys, Christauskas, 2010). The storage site re-
ceives containers that for some reasons could not be sent to the consignees right
away from both road transport and from vessels. The containers are placed behind
the storage site in the railway stevedoring front. The road transport cargo front is
organized only when there is a sufficient flow of containers transported by road.
Modern container handling systems are presented in Table 2.1.
Table 2.1
The loading systems of the container terminals
Type of system Technological peculiarities Main advantages
1. Chassis system –– container is loaded from a –– simplicity;
ship on the chassis and is –– containers are loaded just
transported with a tractor- once;
unit to the site; –– the possibility of damaging a
–– containers at the terminal container is reduced;
are stored on the chassis of –– it is possible to attach chassis
a trailer. to the tractor-unit directly and
quickly;
2. Matson system –– containers are transported –– technologically flexible;
and loaded by straddle load- –– straddle loaders can be expedi-
ers; tiously distributed for various
operations at the terminal;
–– storage territories are used
well;
3. Transteiner –– the key element is mobile –– used in large terminals;
system frame cranes; –– only minimum storage areas
are needed, as containers are
placed in six floors;
–– possibility to fully automatize
operations of cranes;
39
Type of system Technological peculiarities Main advantages
4. Speed trainer –– designed for storage of –– automated control of cranes
system containers in automated and removal of wagons from
multi-storey warehouses containers;
with racks; –– simple technology, except for
–– quay cranes are joined via the placement and control of
ring railway tracks for spe- containers in the warehouse;
cial wagons with containers;
5. Leidenborg –– the terminal is island-shaped –– high level of process automa-
system with a distribution ware- tion.
house in the centre;
–– consists of five-storey
warehouse and pentahedral
edge connected by container
lines;
–– a quay loader with an
adjustable-length crane arm;
–– a crane arm operates with
elevator and platform;
6. Automatically –– quay loaders and cranes are –– used in large terminals;
operated forma- used for handling of means
tions system of transport used for deliv-
ering/ removing containers;
–– containers are transported
using fully automated
railway platforms inside the
terminal;
7. Mixed systems –– consist of different elements –– advantages of coordinated
of stevedoring/handling systems.
systems.
Source: Baublys, A., Vasilis Vasiliauskas, A. (2011). Transporto infrastruktūra. Vilnius: Technika.
Inside the terminal, containers are transported using the following systems:
–– Linear motor conveyance system (LMCS): containers are carried on sim-
ple shuttle train platforms (Radovic, Avramovic, Vukosavljevic, 2017);
–– Ro-Ro: containers are carried on platforms by the seaport tractors;
–– Luf: trucks transport containers on special frames with rubber wheels.
The handling equipment of the container terminal consists of the stevedor-
ing front equipment, container storage equipment and the internal transportation
equipment of the terminal.
Below is a list of typical equipment of stevedoring front used at the port
container terminals:
–– quay cranes;
–– site cranes;
40
Fig. 2.2 Container terminal of Klaipėdos Smeltė, LKAB
Source: Container terminal [retrieved on 11.12.2017]. Hyperlink: http://www.smelte.lt/lt/
fotogalerija/,category_id.9
–– gantry cranes and straddle carriers;

–– terminal tractor units (transportation of containers between different areas
of the terminal).
There are two types of quay cranes used at the specialized container terminals:
–– gantry cranes with running chassis (STS cranes);
–– mobile quay cranes (Kemme, 2013).
The container storage equipment. The cargo is handled using site cranes at
the specialized container terminals. There are two types of cranes used for con-
tainer handling in the warehousing area:
a) rubber tyred gantry cranes (RTG);
b) rail mounted gantry cranes (RMG).
Depending on parameters, an RTG crane can load containers at the width of up
to 8 rows, while an RMG crane – up to 13 rows. Each of these cranes can load up to
6 containers in hight (Meisel, 2009). In smaller terminals, straddle carriers or reach
stackers are used instead of gantry cranes. Reach stackers can be used in various ways,
for instance, they can be used as an additional crane at stevedoring front or as the only
handling equipment at the terminal. Their lifting capacity reaches up to 3-4 container
height. Structural features of reach stackers do not allow to reach all containers.
Using the internal transport of the terminal, containers are transported from
a frame crane to a container lifting place and vice versa. The following main
equipment is used:
–– straddle carriers;
–– automated-guided vehicle, AGV;
–– truck-trailer units;
–– multi trailer systems, MTS).
41
2.3.3. Ro- Ro Termina ls
At Ro-Ro terminals (Fig 2.3) motor vehicles move on board a ship and out of
it on their own. That is a great advantage of Ro-Ro cargo transportation, as less
time is needed for cargo handling operations. On the other hand, this type of cargo
is handled in different ways and this requires mobile equipment.
Ro-Ro terminal can be set up at any quay. However, it must be estimated that
those terminals cover huge areas of land, which has a big impact on the price of
such terminal. Major share of investments in Ro-Ro terminals are used for setting
up specialized quays and connecting structures between land and ship.
In order to provide efficient services to Ro-Ro ships and to achieve the produc-
tivity of the terminal activities, it is necessary to ensure a safe connection of the
ship‘s ramp with the shore. It is necessary to plan the terminal complex appropri-
ately, to lay a sufficiently solid paving, and to decide on the type and amount of
handling equipment to be used for handling operations.
a) Ro-Ro ship at the terminal b) Con-Ro ship at the terminal
2.3 pav. Ro-Ro terminal

Source: Talley, W. K. (2009) Ports Economics. New York: Routledge.
When designing the Ro-Ro terminals, the following aspects should be taken
into account:
–– sufficiency of storage areas and parking places;
–– sufficiency of lighting in the entire territory of the terminal;
–– proper layout of mooring equipment (should not hinder ramps of vessels);
–– proper road configuration (roads must be laid in such a way as to avoid
intersections between different types of transport)
–– brightness and visibility of markings of parking places and traffic lanes;
42
–– efficiency and accessibility communication system to the employees and
customers of the terminal.
The main criterion that has an impact on the handling activities at the Ro-Ro
terminal is the way a vessel is moored at the quay. There are following types of
quays (Fig 2.4):
–– angle quays (common for servicing of Ro-Ro ships, as they allow servic-
ing ships of different type and size; such quays can practically be set up
at any angle of the port, where there is an appropriate depth and a suffi-
ciently solid paving);
–– special Ro-Ro quays (suitable only for Ro-Ro ships with forebody or stern
handling equipment; quays of this type can only accept Ro-Ro ships);
–– mixed purpose (corner type) Ro-Ro quays (can accept vessels of all types
and the dimensions of the ships to be moored are not limited).
a) b) c)
Fig. 2.4 Types of quays at Ro-Ro terminal a) angle b) special c) mixed type (angle type)
Source: Baublys, A.,Vasilis Vasiliauskas, A. (2011). Transporto infrastruktūra. Vilnius: Technika.
First of all, the efficiency of cargo handling at the Ro-Ro terminal depends on
the type and quantity of cargo handling equipment, professionalism of the staff of
the terminal and the crew of the ship.
The handling of ships by using roll trailers is used in all seaports which accept
Ro-Ro ships. A platform is attached to the terminal truck-trailer. The platform is
equipped with one or several pairs of wheels at one end, and with a special device
for attachment to a truck-trailer at the other end. The platform has been designed
for ship loading operations in terminals, also for loading containers and other
large size cargoes on board Ro-Ro ships. The length of the platform is 6.1 m or
12.2 m, its width is 2.44 m and its height varies from 0.6 m up to 1 m. The lifting
capacity is up to 80 tons.
Forklifts are used for cargo handling at the Ro-Ro terminals (for formation of
loading units, for loading of general cargo on board Ro-Ro ships, for stacking of
containers on the platforms). The forklifts are used not only for delivery of cargo
on board a ship, but also for placement of cargo. The main advantage of forklifts
is their comparatively low price and high level of reliability.
43
Self-propelled wheeled machinery can move on board a ship on its own at Ro-Ro
terminals. If a vessel has not only a stern ramp, but also a forebody ramp or even a side
ramp, a vehicle can drive on board a ship right away. If the ship is equipped only with
a ramp at the stern, a vehicle must be turned around and drive in backwards on board a
ship (if it is possible, the vehicle turns around on board a vessel). Special roll trailers are
used to load non-self-propelled wheeled machinery at the Ro-Ro terminal. Oversized
heavyweight cargoes are also transported on board a ship using truck-trailer units. When
cargoes are transported on board a ship using forklifts, the cargo is loaded on the shore
and then taken to the vessel and placed in the dedicated place, after which the forklift
leaves the ship. Loading of railway wagons at the Ro-Ro terminal can be performed only
using specialized bridges connecting ships with land. There is a vast diversity of techno-
logical schemes for loading of railway wagons (Vasilis Vasiliauskas, 2013).
2.3.4. Bulk Ca rgo Termina ls
Bulk cargo is the type of cargo that consists of different size of particles or
pieces. Bulk cargoes are transported unpackaged and in huge amounts. There are
the following groups of bulk cargo:
–– agricultural products (grain);
–– food products and feeds (sugar, flour, grain, feedstuff);
–– solid mineral fuel (coal);
–– different ores (iron ore, non-ferrous metal ores);
–– metal products (ferroalloys);
–– mineral and building materials (sand, gravel, concrete);
–– fertilizers (mineral, chemical);
–– chemicals (chemical substances).
The following cargo characteristics determine the bulk cargo loading and stor-
age technology: density; humidity; natural angle of deflection; compacting; dusti-
ness; resistance to environmental impacts.
Large batches of bulk cargo are transported by special ships (bulkers), and this
type of cargo is handled at the special terminals (Fig 2.5). Specialized equipment
can only be used for loading one type of cargo. Bulkers are usually designed with
one deck and larger hold hatches. Such structure of vessels enables to use efficient
cargo handling equipment. Occasional and unstable bulk cargo flows are loaded
at the universal port terminals.
Loading of several types of cargo can be performed using wide-purpose equip-
ment. Portal grab-cranes are used for loading of bulk cargo at the universal termi-
nals. As there are no special warehouses for storage of bulk cargo at the terminals,
environmentally sensitive cargoes are handled directly according to the loading
scheme, railway wagon - ship, ship - railway wagon. However, environmentally
non-sensitive cargoes can be stored at temporary storage sites.
44
Fig. 2.5 Bulk cargo terminal of Klaipėda stevedoring company Bega, UAB (Klaipėda)
Source: Bulk cargo terminal of KJKK Bega, UAB [retrieved on 11.12.2017]. Hyperlink: http://
www.bega.lt/terminalai/birus-kroviniai/biriu-trasu-terminalas
Mobile and stationary stevedoring equipment is used for the loading of bulk
cargo on board ships. The loading operations are mostly performed using transport-
ers/load carriers, pneumatic loaders and other machinery which allows to store this
type of cargo further from quays (at a distance of up to several hundred meters).
Bulk cargoes can be handled not only by land cranes, but also using floating cranes.
An exclusive unit of the bulk cargo terminal handling equipment is a convey-
or. This equipment simplifies and speeds up the works at the terminal. Terminal
fronts of cargo unloading and loading and warehouses are joined through belt
conveyors. Those conveyors are installed in covered galleries to prevent cargoes
from the environmental impacts.
Bulk cargoes can be stored in open or covered warehouses depending on the
type of cargo.
The bulk cargo loading fronts, warehouses and conveyor lines are placed tak-
ing into account the general layout of the terminal and local conditions
2.3.5. Liquid C argo Te rminals
Different types of cargo are attributed to liquid cargo group:

–– oil;
–– petrol and other liquid oil products;
–– liquefied natural gas;
–– liquid chemical substances;
–– liquid food products.
The liquid cargo ahndling technology is determined by features of th cargo,
which depend on the type of cargo. For instance, such features as viscosity, saturated
vapour pressure (evaporation), toxicity and other qualities of dangerous cargoes are
45
characteristic of oil and its products. The specialization of the terminal is influenced
by the types of cargo. Oil and its products are divided into dark and lights products.
The dark oil and its products include crude oil, bituminous solutions, black mineral
oil, etc. The light oil and its products include diesel fuel, jet fuel and petrol.
Specialization of liquid cargo terminals is linked to the stevedoring activities
of some group of oil and its products. For instance, crude oil is shipped in huge
batches by tankers. It is a type of cargo, the large volumes of which determine the
organization of the operational processes and influence the productivity of the
terminal equipment.
The oil terminal is a special territory consisting of a land territory with any exist-
ent buildings, oil reservoirs, pipelines and other related equipment, and also the wa-
ter area of the terminal with any existent navigational objects. The purpose of the oil
terminal is to collect, store, pump over and prepare for transportation any imported,
exported or transit crude oil or its products (Skerys, Christauskas, 2010).
Technological functions of the terminal are as follows:
–– to transfer crude oil and its products from railway tanks (road transport,
other ships) into containers or tankers (and vice versa);
–– to temporarily store (accumulate) crude oil and its products;
–– to receive water contaminated with oil products from ships;
–– to set parameters for the quality of oil products;
–– to mix oil products;
–– to moor ships, to provide ships with fuel and water, etc.
Typical technical elements of the terminal are the following: quays, contain-
ers, railway flyovers, tank truck charging/filling stations, pumping stations and
pipelines, cleaning equipment.
An example of the complex of a liquid cargo terminal is presented in Fig. 2.6.
Principle technological schemes of oil and oil products handling operations are
presented in Fig 2.7.
The following elements make the chains of loading and storage of oil and oil
products to be imported and exported (Fig. 2.7):
–– In case of import: oil and its products are transferred from tankers into con-
tainers on shore for storage purposes; oil and its products are transferred
from containers on shore to railway wagons/tanks.
–– In case of export: oil and its products are transferred from railway wagons/
tanks into tanks on shore for storage purposes; oil and its products are
transferred from containers on shore to tankers.
The structure of the oil and oil product handling processes depends of the pro-
cess technology.
46
Fig. 2.6. Oil product terminal complex of Klaipėdos nafta, AB
Source: BMGS to Build Jetty for Lithuania LNG Terminal [retrieved on 11.12.2017]. Hyperlink:
https://www.lngworldnews.com/bmgs-to-build-jetty-for-lithuania-lng-terminal/
ship-land
land-land
Mixed type of
loading
Type of loading
Type of loading
Railway wagon - tank

truck - container
Container - railway
Container - tanker Container - tank truck
wagon - - tank truck
Railway wagon - tank
truck - tanker.
Fig. 2.7 Technological scheme of oil product handling operations

Source: Jaržemskis, A., Jaržemskis, V. (2014). Krovininis transportas. Vilnius: Technika.
The oil terminal can be visited on a virtual tour around the territory of Klaipėdos
nafta, AB [retrieved on 11.12.2017], hyperlink: https://www.kn.lt/en/sustainable-
development/social-responsibility/virtual-excursion/531.
Transportation of liquefied natural gas (LNG) has become a vital segment of
the market of liquid cargo recently. Liquefied natural gas (LNG) is one of the
cleanest kinds of fossil fuel. LNG are odourless, colourless, non-explosive, non-
toxic and non-corrosive. According to the statistics of Klaipėdos nafta, AB, liq-
uefied natural gas processed at the LNG terminal and storage stations is cooled
down up to -161oC and takes up to 600 times less space than in gaseous form.
The natural gas terminal may be stationary, installed on the quay, but it also
can have a container on a ship. Such a terminal operates near Kiaulės nugara, i.e.
47
an island in the Curonian Lagoon, in the southern part of Klaipėda Seaport. LNG
storage-carrier “Independence” stays moored at the quay all the time. The termi-
nal is connected to the natural gas transmission system. The terminal of liquefied
natural gas in Klaipėda consists of LNG storage-carrier “Independence“, a quay
and a gas pipeline (Fig. 2.8).
Fig. 2.8 Liquefied natural gas terminal „Independence“

Source: Klaipėda small-scale LNG terminal [retrieved on 11.12.2017]. https://www.kn.lt/en/our-
activities/lng-terminals/klaipeda-lng-terminal/559
The scheme of LNG supply to the trunk pipelines consists of the following
elements:
–– a storage vessel, a floating storage facility with degasifying device;
–– high-pressure discharge sleeves;
–– high-pressure gas pipelines;
–– metering station.
The LNG supply chain is presented in Fig. 2.9.
An important activity of the LNG distribution station is receiving LNG from

gas tankers and its temporary storage; transfer of LNG into tank trucks and direct
bunkering of LNG into ships. The gas from the LNG terminal is transported to
the LNG distribution station using special small ships–gas tankers and distributed
using road vehicles (tank trucks) or vessels. It makes it possible to partially reduce
the costs of Klaipėda LNG terminal in those cases, when LNG designated for
the LNG distribution station is going to be imported via Klaipėda LNG terminal
(Klaipėda small-scale LNG terminal, 2017).
48
Marking:
1-gas tanker,
2-LNG storage vessel;
3-bunkering vessel;
4-LNG powered sea-going
vessel;
5-small LNG distribution
station;
6-LNG tank truck;
7-LNG powered road transport;
8-users of cold energy;
11-other remote users.
Fig. 2.9 LNG supply chain in Klaipėda

Source: Klaipėdos nafta, AB [retrieved on 11.12.2017], https://www.kn.lt/en/our-activities/lng-
terminals/klaipeda-small-scale-lng-terminal/560
2.3.6. Compa rison of the Maintenance o f Tech n o l o g i cal

Pr oces s es at the P ort Te rminals
In order to achieve productivity at the seaport terminals, it is necessary to per-

form stevedoring and other terminal operations efficiently. The efficiency of the
processes at the port terminal is closely interrelated with the technical supply and
arrangement of cargo transportation routes at the terminal itself. The purpose of
technical terminal supply is increase of intensity of cargo handling process, quali-
ty assurance and fulfilment of the stevedoring company’s contracts. The provision
of terminal technological processes with handling and other technological means
is determined by the technological characteristics of the cargoes, the purpose of
the terminal in cargo transportation and distribution process, the volumes of cargo
flow, the type and parameters of ships and other factors.
An important goal for the activity of the terminal is reduction of the cargo
handling time of the vessel by choosing a proper set of technological means. The
efficiency of the ship increases with the reduction of the ship‘s mooring time at
the quay, i.e. the costs of the ship decrease, while its income and the efficiency of
the terminal increase. The efficiency of the terminal increases, as the terminal can
receive more vessels and handle more cargo.
Sets of port terminal stevedoring equipment and means are presented in Table 2.2.
Positioning of cargo (containers, vehicles, etc.) near the quay is a factor con-
tributing to an effective planning of the stevedoring process at the terminal. Even
if port cranes or tractor units operate at full speed, there are breaks during the load-
49
Table 2.2
Cargo handling equipment and means at the terminals
Liquefied cargo
RO-RO terminal Container terminal Bulk cargo terminal
terminal
Forklifts Forklifts Forklifts Forklifts
Hoists Hoists Side loaders Hoists
Trucks / tractor Trucks Container loader Hydraulic hoists
units
Terminal tractor Cranes Hoists Trucks / tractor units
units
Roll trailers Loading sleeves Trucks with a grab Skid steer loaders
Other machinery Pipelines Terminal tractor Hoists
units
Loading/ un- Wheeled tractor Cranes
loading arms units
Other equip- RTG and other Transporters, elevators
ment cranes
Manoeuvring Ship loading/unloading
locomotives for machinery
the formation of
railway container
platforms
Cleaning equipment Bridges for overturning
wagons, overturning
equipment
Other equipment Terminal tractor units
Cleaning equipment
Other equipment
Sources: Burns, M. G. (2015). Port Management and Operations. Florida: CRS press.; Talley, W. K.
(2018). Ports Economics. New York: Routledge.
ing process because cargo must be brought in and out from the territories that are
further away. Graphical comparison of the distances of the positioning of different
cargoes is presented in Fig. 2.10.
Loading and storage technologies also have an impact on the position of car-
goes at the terminal. For instance, packaged cargo can be directly handled from
a ship to a storage place using port cranes, bulk cargoes, which might be several
tens of meters away from the quay, are mostly handled using load carriers, liquid
cargo can be pumped over at the distance of a few hundred meters; the transfer of
gas via pipelines is even simpler than the transfer of liquids. That is why contain-
ers may be placed further from quays. It should be noted that environmental and
fire safety is of utmost importance in the liquid cargo handling process.
50
Types of cargo
Containers, trailers, metal alloys, euro pallets, others
small equipment, packages, bags, other packed cargoes
Loose bulk cargo (cast iron blocks, etc.), packaged (boxes of frozen fish, etc.)
Bulk cargo (coal, fertilizers, grain, etc.)
Liquid (oil, oil products, etc.)
Gas
Distance from the quay
Fig. 2.10 Distances of positioning of terminals and cargo at the quay

Source: Baublys, A., Vasilis Vasiliauskas, A. (2011). Transporto infrastruktūra. Vilnius: Technika.
2.4. The Pa ra me te rs o f th e Po r t Te r m i n a l
Different transport systems interact at the seaport terminal. The terminal has
to ensure secure mooring of the ship at the seaport, safe implementation of ship‘s
and land transport stevedoring operations, distribution of cargo, processing of
goods (creating added value). Proper parameters of the terminal infrastructure
and technological equipment must be chosen in order to ensure efficient opera-
tions of stevedoring terminal and the development of the terminal. The capacity
of machinery should also be properly assessed.
2.4.1. Dis tr ibution of the P arameter s o f t h e Term i n al
The main parameters of the terminal are the following:

–– throughput capacity of the terminal quays;
–– length of quays;
–– width of quays;
–– throughput capacity of storage places;
–– throughput capacity of land transport system.
When assessing terminals, it is essential to assess the capacity of a quay. Those
assessments are mostly based on the throughput capacity of the terminal quay
within a month or a year. The throughput capacity of the quay is determined by the
parameters of the efficiency of stevedoring equipment and serviced vessels. The
more efficient is the cargo handling machinery, the higher is the loading capacity
of a quay, as bigger volumes of cargo will be handled during the same unit of time.
The same might be said about the importance of parameters of vessels: the more
ships of bigger tonnage and loading capacity will be processed at the seaport, the
higher the throughput capacity of a quay. For example, if a cargo can be loaded
on board a big ship in a certain unit of time, then arithmetic estimation would
51
make one believe that two vessels of lesser tonnage could be loaded during the
same unit of time. However, it is not possible as during the loading activities an
additional amount of time is necessary for indispensable ship’s operations, such
as mooring and document processing procedures (related to cargo and ship). This
interference can be avoided by loading a vessel of bigger tonnage. In this way the
stevedoring process goes on without any breaks, as ship’s and formal procedures
are performed only once.
When planning parameters of a certain terminal, it is necessary to foresee, what
factors might have an impact on the cargo flow and the operations of the terminal.
The main criteria determining the parameters of a terminal are the following:
–– land transport;
–– transportation technologies;
–– parameters of ships;
–– technologies of stevedoring operations;
–– foreseen cargo flows;
–– legal norms and seaport procedures;
–– weather conditions.
The location of the terminal at the seaport may hugely influence the employ-
ment and efficiency of the terminal. The following criteria determine the layout of
the terminal at the seaport:
–– the number of terminals;
–– capacity of terminals;
–– systems of land transport;
–– ships space swinging parameters.
When planning the parameters of the terminal, it is vital to analyse the cargo
flows. A specialized high-capacity terminal designed for loading of cargoes of one
type or other is totally unnecessary, if the expected volume of cargo is low. And
vice versa, if intense cargo flows are expected, it would be a mistake to handle
such flows at a low capacity terminal. Thus, it is important to examine the cargo
market in order to establish the biggest possible volume of cargo flows.
Calculation of the parameters of the terminal starts with the analysis of differ-
ent cargo flows. It is a necessity to assess as accurately as possible the potential
flow of a certain type of cargo. Another parameter is based on the evaluation of
whether a particular cargo flow is sufficient for the efficient activities of a termi-
nal. If cargo flow is too low in the given period, it should be determined, when the
flow will be sufficient to maintain the terminal activities. Usually, linear program-
ming methodology is used for the forecasting of cargo flows, which allows fore-
casting the optimal, pessimistic or optimistic options of changes in cargo flows.
As a rule, calculations of all the elements of a terminal are related to the cargo
flows. It is an advantage when all components and elements of a terminal analysed
52
can handle the same or almost the same amount of cargo. In such a case, the steve-
doring complex will operate productively and at full capacity. This effect cannot be
achieved, if at least one element stops the operations of another element in the chain.
2.4.2. Settin g of Pa ra me te rs of the P o rt Term i n al
Setting of the throughput capacity of a quay. The throughput capacity of a

quay for servicing the cargo flow is calculated using formulas (2.1)-(2.3) (Paul-
auskas, 2015).
The throughput capacity of a quay Qmėn. is calculating using the following for-
mula (2.1).
720 ∙ 𝐷𝐷1 ∙ 𝛼𝛼 ∙ 𝑘𝑘𝑚𝑚𝑚𝑚𝑚𝑚. ∙ 𝑘𝑘𝑢𝑢ž.

𝑄𝑄𝑚𝑚ė𝑛𝑛. = (2.1)
𝑡𝑡1 + 𝑡𝑡𝑝𝑝𝑝𝑝𝑝𝑝.

Where:
D1 – lifting capacity of an estimated vessel (t);
α – coefficient for measuring a lifting capacity of a vessel;
kmet. – coefficient of the working time at a quay, usually it is 0.8;
kuž. – coefficient for measuring employment of a quay, at specialized terminals
it is 0.75;
t1 – employment time of a quay or a vessel during stevedoring operations;
tpag. – employment time of a quay for performing auxiliary operations, usually
it is 12 hours;
Annual throughput of a quay Qm. is calculated using the following formula

(2.2).
𝑄𝑄𝑚𝑚ė𝑛𝑛. ∙ 𝑛𝑛𝑚𝑚ė𝑛𝑛.
𝑄𝑄𝑚𝑚. = (2.2)
𝑄𝑄𝐿𝐿 ∗ 𝑓𝑓𝐿𝐿

Where:
Qm.. – cargo flow per year, t;
Qmėn. – throughput capacity of a quay per month, t;
nmėn. – number of months;
QL – average vessel capacity, t;
fL – correction of a ship load, taking into account casual origin of transportation
operations (load of special ships is 0.9, load of usual ships is about 0.60-0.80).
53
Number of vessels necessary to service the annual cargo flow, is calculated
using the following formula (2.3).
’
(2.3)

Where:
Q – annual cargo flow, t;
QL – average vessel capacity, t or it can also be D1 – lifting capacity of a ves-
sel, t;
fL – correction of a ship load, taking into account casual origin of transportation
operations (load of special ships is 0.9, load of usual ships is about 0.60-0.80).
Throughput capacity of railways. This indicator characterizes the amount of

cargo which can be loaded into wagons and unloaded in a minimum time period
by using the capacity of railway wagons to the maximum. Throughput capacity of
wagons (n) is calculated using the following formula (2.4).
Qij
n  (2.4)
ki qi

Where:
Qij – cargo flow of category j which are transferred in wagons of type i, t;
ki – coefficient of use of wagon carrying capacity;
qi – i wagons‘ carrying capacity, t.
Capacity of a storage place is calculated using the following formula (2.5)

(Baublys, Vasilis Vasilaiuskas, 2011).
Qm * Td
P (2.5)
Tng

Where:
Qm – annual amount of cargo flow, t;
Td – average duration of cargo storage, number of days;
Tng – number of working days per year as cargo arrives.
54
Capacity of a warehouse indicates the amount of cargo that can be stored
during a certain period of time (month, year) by using the capacity of a storage
site over an average storage duration. This indicator is calculated by using the fol-
lowing formula (2.6).
T
Psand  Qsand (2.6)
Ts
Where:
Qsand – capacity of a storage site (t);
T – navigation period or terminal working time (twenty-four hour mode) per
year;
Ts – average storage duration of a cargo (twenty-four hour mode).
Troughput capacity of a terminal and operational risk. The intensity of

cargo flow is usually unstable. When assessing the throughput capacity of a ter-
minal, it is important to set the throughput deviation limits from target value. The
probability of the intensity of terminal activities is influenced by probabilities of
cargo transportation and handling (Paulauskas, 2015). Calculations are made us-
ing the following formula (2.7).
P’ = 1 – Q’ (2.7)

Where:
P‘ – favourable probability;
Q‘ – unfavourable probability.
Favourable probability of cargo transportation and stevedoring is assessed us-

ing the following formula (2.8).
′
𝑃𝑃𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡𝑡 = 𝑃𝑃1′ ∙ 𝑃𝑃2′ ∙ 𝑃𝑃3′ ∙ … ∙ 𝑃𝑃𝑛𝑛′ (2.8)

Where:
P’1 – favourable probability of transportation conditions;
P’2 – favourable probability of means of transport;
P’3 – favourable probability of the terminal activity and other probabilities.
55
Risk factors include changes in working time of a terminal due to the impact of
weather conditions, malfunctions of equipment and other operational conditions.
Probability may be established using results of statistical analysis and process
monitoring (for example, photos from work or timing). Correlation dependence
between loss of time and activity results established during research enables to
evaluate the impact of adverse conditions on the intensity of terminal activities.
The assessment of risk factors enables specifying the necessary throughput capac-
ity of a terminal, methods of process organization and intensity of handling opera-
tions in order to keep up with a planned loading time.
2.4.3. Ter m ina l De ve lopment F ac tors an d I s s u es
The analysed development factors may influence probability of mistakes in

planning of the terminal parameters.
Below is a list of development factors of a terminal:
–– types of cargo: determine types of vessels, technical elements and their
location at a terminal;
–– dimensions of existent and planned ships: depend on the intensity of cargo
flows, transportation route, technical and other restrictions;
–– cargo flows: determine specialization of terminals and the extent of activ-
ity;
–– transportation and cargo handling technologies;
–– interaction of means of transport.
When planning the development of a terminal, it is vital to predict the following:
–– possibility to partially change types of vessels and cargo handling tech-
nologies;
–– possible alterations of the hinterland of the seaport and infrastructure de-
velopment prospects.
Problems contributing to the increase of risk of the terminal development:
–– area adequacy of the terminal territory and use of reserve areas;
–– distance to the seaport and area of the territory;
–– the network of the transport system of the seaport and the port connectivity
with transport systems;
–– geographical conditions and navigational restrictions;
–– investments into the development (the cost of development) and aspects
of ownership;
–– impact of development on the environment;
–– cargo transportation and stevedoring technologies.
56
1. Describe the concept of a seaport terminal.

2. What main functions does a stevedoring terminal perform?
3. What elements does a typical terminal structure consist of?
4. What does a universal or a specialized terminal mean?
5. What are the main elements of the technological structure of a general
cargo terminal?
6. What are the main requirements for the handling equipment of a general
cargo terminal?
7. What are the main elements of the technological structure of a container
terminal?
8. What type of container handling machinery is used at specialized termi-
nals?
9. What are the main elements of the technological structure of a Ro-Ro ter-
minal?
10. What types of Ro-Ro terminals are there?
11. What are the main elements of the technological structure of a bulk cargo
terminal?
12. What equipment for the handling of bulk cargo is used at specialized and
universal terminals?
13. What are the main elements of the technological structure of a liquid cargo
terminal?
14. What are the main parameters of a seaport terminal?
15. Describe the concepts of terminal‘s capacity and terminal‘s throughput
capacity.
16. What determines the throughput capacity of the railway system of a sea-
port?
17. What determines the throughput capacity of a warehouse of a seaport?
2.6. Ref eren c e s
1. Alderton, P.M. (2008). Port Management and Operations. London: In-

forma Law.
2. Baublys, A., Vasilis Vasiliauskas, A. (2011). Transporto infrastruktūra.
Vilnius: Technika.
3. Brodie, P. (2016). Illustrated Dictionary of Cargo Handling. Oxon: In-
forma Law.
57
4. Burns, G. (2015). Port management and operations. Florida: CRS press.
5. Jaržemskis, A., Jaržemskis, V. (2014). Krovininis transportas. Vilnius:
Technika.
6. Kemme, N. (2013). Desing and Operation of Automated Container Stor-
age Systems. Heidelberg: Physica- Verlag.
7. Meisel, F. (2009). Seaside Operations Planning in Container Terminals.
Berlin: Physica- Verlag.
8. Paulauskas, V. (2015). Jūrų transporto plėtra. Klaipėda: KU l-kla.
9. Skerys, K., Christauskas, J. (2010). Transporto statiniai: Uostai. Vilnius:
Technika.
10. Radovic, M., AvramoviC, S., Vukosavljevic, P. (2017). New container ter-
minal technologies. Proceeding of 3rd Logistic international conference,
belgrtade, Serbia, 25-27 may, 2017, p. 259-264.
11. Talley, W. K. (2018). Ports Economics. New York: Routledge.
12. Thoresen, C. (2014). Port Designer‘s Handbook. London: ICE Publishing.
13. Klaipėda small-scale LNG terminal [retrieved on 2017-12-11]. https://
www.kn.lt/en/our-activities/lng-terminals/klaipeda-small-scale-lng-termi-
nal/560
14. Vasilis Vasiliauskas, V. (2013). Krovinių vežimo technologijos. Klaipėda:
Socialinių mokslų kolegija.
58
3.
S T E V E D O R I N G O P E R AT I O N S AT T H E
P O RT T E R M I N A L
J elena Belova
The modern conditions for the international carriage of goods by sea are pos-
ing higher requirements to the quality, pricing and efficiency of the stevedoring
companies. Stevedoring companies are the key link in the activities of the port, as
the number of ships calling at the port depends directly on the efficiency of activi-
ties of those companies. This section describes the technological process of the
port activity, the concept of handling operations, analyses the technological and
organizational peculiarities of handling operations, terms and conditions of cargo
handling contract and port rules.
3.1. Techn o lo g ic a l Pro c e s s o f P o r t Te r m i n a l Ac t i v i t i e s
3.1.1. The Structure of the Technological Process of Port Terminal
Port technological process is an important element of cargo transportation pro-

cess. During the stevedoring operations, ship loading, cargo placement and stow-
age on the decks or holds of the ship works are performed in accordance with the
requirements set out in the relevant regulatory documents and examples of good
practices, so as to ensure the security and safety of the transported cargo during
the voyage (Belova, Mickienė, 2012).
Stevedoring operations at the port are carried out by the port stevedoring companies
that can also perform other operations and provide other services at the port, such as tal-
lyman, ship agency, cargo forwarding, etc. for instance, the following services are also
classified as stevedoring operations and related services in Australian ports:
59
–– passenger embarkation and disembarkation services;
–– loading and unloading of baggage and mail packages;
–– services for managing and operating the machinery and equipment neces-
sary for cargo storage and handling;
–– cargo manifest, making plans for initial and stevedoring operations, prepa-
ration of payment documents, accounting of ship’s time at the port, other
services related to planning, organising and implementation of stevedoring
operations;
–– stevedoring staff management, control, supervision and briefing.
The technological process of the port consists of the following operations:
–– reception of cargo: preparation of the port or its individual territories,
quays, warehouses for receiving cargo, reception and despatch of cargo,
including cargo weighing, marking and other operations, such as docu-
ment processing, cargo stowage and storage at the port;
–– preparation of the port for receiving cargo: preparation of quays and other
port facilities, including port tug-boats, for receiving ships of various types
and sizes ships, about the arrival of which the port is informed in advance;
also preparation of all the facilities necessary for ship’s loading and mak-
ing of a loading plan;
–– stevedoring services: delivery of cargo to the quay, ship’s stevedoring ser-
vices and cargo stowage in the holds of the ship;
–– preparation of the port for the departure of the ship: preparation of cargo
documentation, preparation of the necessary port facilities, including tug-
boats, ship’s inspection and formalisation of ship’s departure documents.
3.1.2. Stevedoring Proc ess
The aim of each stevedoring process is to change the place of the cargo (to
move the cargo from one place to another). Stevedoring process consists of a con-
sistent sequence of operations that are divided into the main (technological) and
auxiliary operations, depending on their significance. Technological stevedoring
process defines the following elements of the process:
–– the nature and sequence of the operations carried out with the load;
–– the types, technical specifications and the amount of necessary mecha-
nisms used in the stevedoring process;
–– number of port staff, their distribution and work technology for perform-
ing various operations.
When performing cargo handling from the ship operations, the factors of ship
maintenance costs and cargo quality that are defined by the cargo handling tech-
nology and meteorological conditions are of great importance. Besides, stevedor-
60
ing technology not only affects ship’s time at the port, but also stevedoring costs,
and therefore substantially affects the efficiency of the entire transport chain.
The main processes (works) of ship’s loading (from a vessel or on board a ves-
sel) are preparation of a port for reception of vessels, cargo handling, and cargo
delivery to the consignee.
Auxiliary ship operations include ship mooring operations, opening / closing
of the covers of cargo holds, cargo fastening and document management (bills of
lading, manifests, etc.) (House, 2016).
The main phases of the stevedoring process are:
–– receiving of cargo;
–– cargo transfer;
–– internal cargo handling operations at the terminal;
–– unpacking;
–– packing, etc.
Auxiliary cargo handling operations include weighing, sorting out of cargo,
document management (for instance, feature accounting, import, export of Com-
munity or non-Community goods, etc.). In the ports, cargo handling operations
are carried out in accordance with the cargo handling technological process plan,
which is usually prepared for specific cargo, keeping in mind cargo specifics and
the technical capacity of the port.
3.1.3. Technologica l Ste ve doring Op erat i o n s
Technological stevedoring operations are all the actions performed with the
cargo (cargo (cargo pick up, transfer, loading, etc.) that ensure achievement of
the main aim of the handling process – changes in the place of the cargo. Every
loading operation is carried out in a specific work place (hold, wagon, warehouse,
quay, etc.), and the name of the operation depends on the place of work: ship,
wagon, warehouse, quay operation.
Every sequence of the handling operations may be named according to the
direction, taking into account the place of cargo at the beginning and at the end of
the handling operations, for instance, “ship-wagon”, “ship-warehouse”, etc.
There are two types of stevedoring operations at the port: direct (Fig. 3.1) and
indirect, i.e. in storage (Fig. 3.2).
Direct stevedoring operations are the ones that involve cargo handling from
one type of vehicle to another, e.g., “ship – wagon”, “ship – truck”, “ship – ship”,
“truck – ship”, etc.
Direct stevedoring operations in the port are more cost-effective because they re-
quire less cargo handling operations during the carriage of cargo and cargo handling
at the port, and the costs of cargo storage at the port are reduced at the same time.
61
Fig. 3.1 Direct handling of bulk cargo to the ship according to “wagon – ship” scheme
Sources: House, D. J. (2016). Cargo work for maritime operations. London and New York
Indirect stevedoring operations are the ones in which the cargo is stored at
the port for a certain period of time before it is loaded or after its unloading from
the ship, for example, schemes “ship-warehouse-truck”, “ship-warehouse-ship”,
“wagon-warehouse-quay-ship”, etc. .
Fig. 3.2 Indirect handling of bulk cargo according to scheme “ship-warehouse-wagon”

Source: House, D. J. (2016). Cargo work for maritime operations. London and New York
Handling of loads transported in large quantities is usually carried out at special-

ized terminals. Equipment of specialized terminals is designed to handle loads at
high capacity / performance and at the lowest cost. The equipment of specialized
terminals can only be used for unloading and loading of one type of cargo, while
versatile specialization facilities can handle several types of cargoes (Visa, 2014). In
such terminals, loading operations are usually carried out via warehouse (Fig. 3.2).
The choice of the type of works must be very efficient. It is namely for this
reason that, in determining the efficiency of the operation of a ship’s service, it is
necessary to take into account the indicator of the total cost of loading and servic-
ing of the ship during the cargo handling period in the port and to strive to reduce
the total costs. The type and efficiency of loading works can be determined by the
transshipment coefficient, which shows the number of cargo handling operations
62
performed with 1 t of cargo during its movement within the port: from the moment
it is received at the port to the moment of it is transported from the port. When direct
stevedoring operations are performed, the loading operations coefficient is K=1, and
when indirect stevedoring operations are performed, the coefficient is K >1. This
means that prevalence of direct stevedoring operations in a specific port may be
assessed by the fact how close the value of the “transhipment coefficient” is to one.
3.1.4. Peculiaritie s of Tec hnologic al Op erat i o n s

f or Diff er ent Type s of C a rgoes
General cargo loading to ship operations are carried out in the following
sequence:
–– forklift is taken down into the hold;
–– the handling operations in the underdeck part of the hold are performed:
the cargo is taken down to the hold hatch by portal crane;
–– cargo is brought to the underdeck part of the hold by forklift;
–– once the handling operations in the underdeck are completed, the forklift
is lifted up from the hold;
–– cargo is stowed layer by layer by portal crane in the total area of the hold
hatch.
General cargo loading from ship operations are carried out in the following
sequence:
–– the entire hold hatch is unloaded by portal crane;
–– forklift is taken down into the hold;
–– cargo is taken from the underdeck part of the hold by forklift;
–– cargo is unloaded from the ship by portal crane;
–– the underdeck area is unloaded row by row;
–– forklift is lifted up from the hold (House, 2016).
Container loading operation by frame gantry crane is called a cycle. Con-
tainer loading into the ship and from the ship makes a crane work cycle. Container
loading from the ship operations are carried out in the following sequence (Alder-
ton, 2008):
–– STS spreader is lowered down above the ship and placed on the container;
–– container is fastened with twistlocks and then lifted;
–– lifted container is transferred to the quay and placed on the quay or on the
vehicle;
–– the container is disconnected from the STS spreader by releasing the
twistlocks.
Container loading into the ship is carried out in the opposite sequence.
63
Bulk cargo loading into the ships is carried out in the following sequence:
–– a discharge pipe of the charging equipment is lowered inside the hold, and
the cargo is discharged at the width of the bilge cover;
–– cargo spreading mechanism is lowered into the hold and fills up the under-
deck part of the hold;
–– once the spreading mechanism is lifted up, the remaining part of the hold
is filled up/charged.
If the underdeck area is small, cargo spreading mechanism is not used, and the
ship loading is performed using the following technology (House, 2016):
–– a discharge pipe of the charging equipment is lowered inside the hold, and
the cargo is discharged at the width of the bilge cover;
–– discharge pipe is placed in the corner of the hold and auxiliary heap of
cargo is formed;
–– the remaining corners of the hold are charged in the same manner;
–– the second and further layers of the cargo are discharged in the same manner.
In Ro-Ro terminals, the loading operations depend on the peculiarities of the
vehicles.
1. Self-propelled wheeled vehicle can drive into the ship:
–– if the ship is equipped not only with a stern ramp, but also with a bow ramp
or side ramp, the vehicle can drive in right away;
–– if the ship is equipped only with a stern ramp, the vehicles must drive into
the ship backwards (if possible, the vehicles can turn around inside the
ship).
2. Special port trucks with platforms (described in Sub-clause 2.3.3) are used
for loading non-self-propelled wheeled vehicles at the Ro-Ro terminal. In this
case, the truck must be turned around and drive backwards into the ship. When
cargoes are brought by forklifts into the ship, the cargo is fetched on the coast,
taken to the ship, stowed in its place and the forklift then leaves.
3. Heavy-duty large-sized cargoes are brought to the ship by trucks.
4. Loading of railway wagons at the Ro-Ro terminal can be carried out only
using specialised bridges that connect the ship with the coast.
The speed of loading of non-self-propelled wheeled vehicles depends on the
skills and experience of wheeled vehicle drivers, as loading operations involve
complicated manoeuvres (House, 2016).
5. Liquid cargo loading process depends on the type of cargo, loading opera-
tions schemes, the totality of ship and terminal technological maintenance speci-
fications. For instance, the following operations are planned in the transfer of oil
products from the tanker to the container:
–– mooring of the tanker;
–– measurement of the amount of cargo in tanks and quality analysis;
64
–– closing of valves in the technological line;
–– connection of the hoses of the technological line to the tanker;
–– selection of containers;
–– opening of the valves;
–– feeding of the first foot of cargo to the container;
–– analysis of the quality of charged product;
–– renewal of loading;
–– selection of the loading capacity;
–– disconnection of the hoses from the tanker and drainage of the hoses.
The sequence of technological operations must also be planned for other load-
ing schemes (container-ship, cistern-container, container-cistern, etc.). Cargo haz-
ard is an important feature of the liquid cargo terminal, as it affects the entire
technological process.
3.2. Organiz a tio n o f Lo a d in g P r o c e s s

at the P or t Te rmin a l
3.2.1. Regula tion of the C argo P roces s Org an i zat i o n
The rational performance of the technological loading process must be planned in

such a way that the productivity of all the main phases of the technological process
is approximately the same and approximates to the main indicator of the productiv-
ity of the loading mechanisms used (Belova, Mickienė, 2012). The technological pro-
cess consists of individual operations, so the intensity of the process is determined by
evaluating the efficiency of each element of the process (phase). The most restrictive
factor in the intensity of the port handling process is considered to be the phase of the
process with the lowest productivity. The very technological process of stevedoring
operations is carried out in separate mechanised lines. A mechanised line is a set of
loading machinery, equipment and cargo picking mechanisms used for the transfer of
the cargo from one place to another using the type of stevedoring operations that was
selected in advance. One mechanised loading line is usually served by a separate team
of port workers. The technological loading process in a specific mechanized loading
line is shown in a technological scheme, the use of which in the planning of stevedoring
works allows ensuring the maximum intensity of loading works in the port.
The provisions and requirements of the documents regulating the processes
must be adhered to in order to ensure that the processes are carried out quickly,
qualitatively and without incidents. An example of the structure of the set of docu-
ments regulating container loading processes is shown in Figure 3.3.
65
Documents
regulating loading
processes
Occupational safety
Technological design international
requirements in
documents conventions
container handling
Technological
Technological card Loading plan
graphic diagrams
Fig. 3.3 The structure of the set of documents regulating container loading processes
The following information is provided in the technological design documenta-

tion (Fig. 3.3):
1. The position of the ship at the quay, layout scheme of the loading equipment,
wagons and vehicles at the terminal;
2. Internal transport traffic of the terminal, railway wagon manoeuvring
schemes;
3. Detailed cargo loading and stowage plan;
4. Number and layout of dockworkers;
5. Number of required loading machinery and transport vehicles, specification
of their capacity;
6. Type and number of lifting gear, number of required means;
7. Procedure for organization of work in cargo holds and warehouses;
8. Procedure for provision of specific services, for instance, weighing of car-
goes, cargo transfer from/to containers (CFS services).
A technological card for stevedoring works is the document regulating the
planning and execution of the port technological processes with different loading
plans, depending on the type of cargo. It is the main document regulating loading
operations which provides for options of performance of technological processes
in order to ensure the quality of work, the sustainability of loading operations in
time and space, and occupational safety (Fig. 3.4).
Technological diagram is a scheme for performing a specific technological
operation, the sequence of loading operations, the layout of the mechanisms and
staff. An example of a typical container loading process technological diagram is
presented in Fig. 3.5.
Loading plan is cargo transportation organised using terminal resources for ship,
wagon or truck loading (Alderton, 2008). The loading plan describes the sequence of
the loading operations. Loading plan is made taking the following factors into account:
66
scope of
application
loading
Occupational technology and
safety organization of
process
Technological
card Accounting of
labour costs
Work
and working
schedule
time of
mechanisms
Quality
Material and requirements
technical and
resources acceptance
of works
Fig. 3.4 stevedoring technological card departments
unloading from ship Transportation to storage site Loading in storage place
Quay crane Truck site crane
Loading to another type of Transportation by another

Warehousing
transport transport mode
site crane
Fig. 3.5 Container loading process technological diagram

Source: Phan M. T., Kim K. H. (2015). Estimating the Cycle Time of Container Handling
in Terminals. National Research Foundation of Korea.
– maximum use of cargo containers;

– safety of ship hull and other cargoes;
– convenience of loading in interim ports;
– convenience of loading operations.
67
Loading plan depends on the type of cargo and loading technology. Container
loading plan is different from other cargo loading plans in that it must contain the
following information:
–– table of number of containers loaded on board ship, specifying type, load-
ing (containing cargo, empty), port of departure, destination port, voyage
number, ship’s departure date;
–– table to help calculate the gross weight of the container cargo and its over-
turning moment in respect of the ship plane and the midship;
–– table to help calculate the buoyancy and draft of the ship loaded with container
cargo on departure from the loading port and on arrival at the destination port;
–– drawings showing the transversal and longitudinal layout of container
rows on board a ship and indicating the total number of containers in each
row (numerator – number on deck, denominator – number in the hold) and
marking provisionally the place of each container.
The organization of the loading process must be compliant with the require-
ments of the international conventions (Fig. 3.3). For instance, amendment of the
International Convention for the Safety of Life at Sea SOLAS 74) concerning
container weight verification certificate came into force from 1 July 2016, where-
by it is required that each container has a VGM (Verified Gross Mass) certificate.
This certificate is important in container transportation process, as based on it the
layout of the containers on board a ship may be planned more efficiently, the fuel
costs may be calculatedly more accurately, ship and cargo are safer.
Container handling operations at the terminal are regulated by the International
Convention for Safe Containers (CSC). The regulation seeks to ensure the safety
of people in the container transport and handling process and to facilitate the in-
ternational transport of goods in containers, applying uniform international safety
provisions for all modes of transport. This would solve the problems arising due to
different national safety provisions. According to this convention, the cargo in the
container does not need to be transshipped to another container when the contain-
er transportation means is changed or the border of another state is being crossed
because the requirements for the transport of goods in containers are standardized.
3.2.2. Inter re la tion betwe en Loa din g P ro ces s Tech n o l o g y

and Organization
The technology and organization of loading works and process depends on the type
of cargo and type of ship. Thus, the transhipment works of ships transporting loose bulk
cargo largely depends on the structure of the ship, as most works are performed in the
holds, where the cargo carried can be reached using mechanical or automated technol-
ogy for loading and unloading of loose bulk cargoes to/from the ship. Although loading
68
works schemes remain the same during the entire loose bulk cargo loading process,
the technological process is consistently changing, and therefore requires additional
intermediate calculations in the organization of the loading process (Baublys, 2016).
The load securing operation is not carried out during the entire loading pro-
cess, so it is divided into smaller stages. When the loading operations of loose
bulk cargo are carried out using grab cranes, the entire loading process is divided
into three main stages: unloading without securing, unloading with securing and
cleaning of holds when unloading the cargo residues. The work productivity of
securing operation may also change, as loading work technology depends on the
distance of cargo transfer and the number of cargo transfers. The crane output
indicators will change accordingly, as during the final stage of work, when the
remaining amount of cargo is unloaded from the hold, the fill factor of the crane
grab falls significantly. Therefore, there are cases, when bucket cranes are used
for unloading operations of the remaining amount of cargo from the hold, and the
buckets of the cranes are loaded manually (Baublys, 2016).
Liquid cargo loading works are performed in specialised quays or roads. Cargo
charging is performed using coastal handling technologies and facilities, and discharge
is carried out using pumping stations installed on board ships. In tankers that do not have
clean ballast water, it is necessary to pump dirty ballast water into special floating tanks
or into tanks located on quays. When oil products are loaded, special tank cleaning op-
erations are included in the handling process (House, 2016). The peculiarities of general
cargo influence a specialised choice of loading technologies and equipment. The peculi-
arities of general cargoes include cargo size, type of packaging, cargo weight, place, etc.
The special technical parameters of the general cargo are important for choosing the type
of lifting mechanisms and the design of the cargo grabbing part (House, 2016).
The organization of the loading operations process depends on the ways, in
which cargo is loaded on board ships or into the train wagons. The greater the
share of general cargo is packaged in containers and packages, the higher the level
of mechanization of stevedoring works. Cargo in containers and packages also has
a significant impact on the rationalization level of the loading process technolo-
gies. It is more convenient for the ports to carry out the loading of transit batches
and containers from one type of transport to another, while modifying cargo ac-
cording to the provided loading methods. Delivery of small batches to (or from)
the port increases the number of unmechanised cargo handling operations and the
proportion of manual handling during handling operations. Due to the diversity
of the general cargo, the use of different loading technologies and universal load-
ing mechanisms becomes inefficient, and investment in specialized equipment
is usually not cost-effective (Alderton, 2008). For example, container handling
operations starting at the front of the cargoes and the equipment that can be used
to perform these operations are presented in Figure 3.6 and in Table 3.1.
69
Coast Road
RMG, RTG crane
Crane Truck tractors Truck tractors Trains,

ship (underframe) vehicles
Fig. 3.6 Container loading process scheme

Source: Alderton, P.M. (2008). Port Management and Operations. London: Informa Law.
There are five container loading schemes that start from the ship (Table 3.1).
An example of the available equipment is indicated according to the combined
system, and several equipment options are provided for each operation. Container
loading operations (Table 3.1.) schemes are presented in Figure 3.7.
In process A, container loading operations start when a shore crane on the
seaborne cargo front transfers a container from the ship onto the vehicle that is
under the crane and is used for internal operations. This vehicle transport con-
tainer to the storage site (Branch, Robarts, 2014). At the storage site, the container
is transferred to the storage place by using storage equipment. If the container
has to be transported by vehicle from the terminal, then the truck meant for the
transportation of the container shall arrive at the gates to the territory of the ste-
vedoring company, arrange all the documents and wait until it is informed, in
which territory of the storage site it must wait for the container to be transferred
onto the vehicle. The truck drives to the specified place, a crane operating in the
storage site arrives at the truck and lifts a container onto the truck. The truck with
the container then leaves from the terminal. Process D runs in a similar procedure,
only excluding internal and storage operations, i.e. the truck arrives straight by the
crane unloading the ship, and not by the crane in the storage site.
Container loading operations in process B run in the same sequence as in pro-
cess A. Only transportation of the container from the terminal is different, as rail-
way is not that flexible, i.e. container needs to be transported to a special railway
loading/unloading place. This action needs internal operation, when a container is
carried from the storage place to the railway loading/unloading place, where it is
lifted and placed on a railway platform. Process C runs analogically, only exclud-
ing storage operations.
70
Table 3.1
Container loading technological processes: starting from the front
Process Operation Technical means
Ship – storage site – truck
Operation 1 STS crane and mobile crane
A Operation 2 terminal truck or gantry crane
Operation 3 container crane or gantry crane
Operation 4 truck
Ship – storage site – railway platform
Operation 2 terminal truck or gantry crane
B
Ship – railway platform
C
Ship - truck
D Operation 1 STS crane and mobile crane
Operation 2 truck
Ship – storage site - ship
E
Source: Branch, A. E., Robarts, M. (2014). Branch’s Elements of Shipping. New York: Informa Law
from Routledge.
Container loading process E is different from other processes in that a container

is unloaded from the ship and stored in the terminal, until it is loaded onto another
ship. Such logistic chains are frequently used in container distribution centres.
Container loading processes A, B and E include container storage technologi-
cal operation. When containers are stored, it is highly important to stow them
correctly. Import, export and empty containers are stored separately. Export con-
tainers are stowed closer to the quay, so that containers could be delivered to the
loading place quicker, when the ship loading operations start. Import contain-
ers are loaded as close as possible to the outer limit of the terminal, so that it is
convenient to transport them by vehicles from the terminal. Meanwhile, empty
containers are stored so that they do not interfere with other loading operations.
There are containers that need special technical maintenance, for instance, refrig-
71
ship's internal storage Vehicle
A technological technological technological technological
operation operation operation operation
ship's internal storage internal Wagon
B technological technological technological technological technological
operation operation operation operation operation
ship's internal Wagon
C technological technological technological
operation operation operation
ship's Vehicle
D technological technological
operation operation
ship's internal storage internal ship's
E technological technological technological technological technological
operation operation operation operation operation
Fig. 3.7 sequences of container loading processes starting from the seaborne cargo front.
Source: Meidutė, i. (2012). Logistic System. Vilnius: Technika.
erator containers that are stored in places equipped with power supply; containers
carrying hazardous goods that are stored separately from other containers, etc.
(Baublys, Vasilis Vasiliauskas, 2011).
3.3. Cycle Time o f ste v e d o ring Op e r a t i o n s

at the Term in a l
3.3.1. Cycle Time of ship Handling P ro ces s
The cycle time (time) of the ship handling process is assessed using methodol-
ogy for the calculation of transport handling process provided by V. Paulauskas
(2011, 2015).
Considering the handling technology and process and document management
procedure, the general cycle time of liner ship mooring in the port is calculated
using the following formula (3.1) (Paulauskas, 2011).
. (3.1)
Where:
Tš – ship’s mooring time (in ice-free conditions, usually from 10 to 30 min.);
72
Tfl – time for formalities upon arrival at the port that depends on the working
conditions of the line and state authorities; usually from 0 to 1 hour (it is unaccep-
table for the formalities of the liner to last over 1 hour at the port);
Tiškr – cargo unloading time that depends on cargo loading and unloading tech-
nology and ship’s structure; it varies from half an hour to a few or several hours for
other types of ships; it is determined for each type of vessel and port separately;
Tsut – after unloading of the cargo, preparation of the ship for loading of other
cargoes; attempts are made to minimise ship’s preparation time (usually no prepa-
ration is needed for container ships);
Tpakr.kr. – cargo loading time, accepted as cargo unloading time, if it is not related
to special cargo or terminal loading conditions and necessity to secure the cargoes;
Tform – time for arranging formalities prior to departure of the ship; in most
liners, formalities are arranged during the ship’s loading operations, so the ship is
ready for departure from the terminal quay upon completion of the loading opera-
tions (arrangement of customs and border security formalities for container ships
usually takes from 0 to 1 hour);
Tatš. – time for unberthing of the ship; this usually takes 10 – 30 minutes, de-
pending of the structure of the ship and unberthing conditions;
Tk – time for ship’s trip along the port canal; depends on specific port condi-
tions (as per our calculations, about 30 min.);
ΔTu – extra time for unforeseen circumstances; most usually it makes up to
5-10 % of the total length of ship’s mooring time in the port.
When calculating ship’s mooring time at the quay, it is necessary to take into
account possible hindrances due to adverse weather conditions or other circum-
stances. In case of liners (container ships), the coefficient must be less than 0.6.
The length of loading into the ship or from the ship is calculated using the
following formula (3.2) (Paulauskas, 2015).
𝐷𝐷𝑠𝑠 ∙ 𝛼𝛼
𝑇𝑇𝐻𝐻𝐻𝐻𝐻𝐻𝐻𝐻𝐻𝐻𝐻𝐻𝐻𝐻𝐻𝐻 = (3.2)
𝑀𝑀𝑠𝑠
Where:
Ds – ship’s capacity, t;
α – coefficient for assessing the use of the ship’s capacity (usually it is about 0.9);
Ms –ship’s unloading/loading rate, t/hour.
Once the length of the ship’s mooring time at the berth is calculated, the tech-
nological capacity of the terminal required for various ships can be estimated.
73
3.3.2. Es tima ting of the Le ngth of L o ad i n g Op erat i o n s
at the Por t Termina l
When estimating the cycle time of the loading process, it is necessary to determine
the working time of the means used for ship handling and loading technologies. Calcu-
lation stages can be distinguished by the type of equipment used for a certain operation.
For example, the length of container handling consists of the following elements:
1) crane operation cycle (formulas are presented in Table 3.3);
2) terminal truck or truck operation cycle (Table 3.4);
3) gantry crane operation cycle (Table 3.5).
The length of the operations performed by the terminal is calculated using
formulas presented in Table 3.2.
Table 3.2
Estimating the length of the technological process in the terminal
No. Indicator Formula
1. Length of technological Tc1=φ(Tt+2To+Tt+To); (3.3)
process, when gantry φ – coefficient showing overlapping of different op-
crane is used for stor- erations of the cycle;
age, s Tt – length of movement of terminal truck or truck
with and without the cargo, s;
To – cycle time of gantry crane, s.
2. Length of technological Tc2=φ(Tt+2Tk+Tt+To); (3.4)
process, when container φ – coefficient showing overlapping of different op-
crane is used for stor- erations of the cycle;
age, s Tt – length of movement of terminal truck or truck
with and without the cargo, s;
Tk – cycle time of container crane, s.
Source: Phan, M. T., Kim, K. H. (2015). Estimating the Cycle Time of Container Handling in
Terminals. National Research Foundation of Korea.
The length of technological process is calculated by adding cycle times of equipment

by the number of operations performed using the equipment, and the received amount is
multiplied by coefficient showing overlapping of different operations of the cycle.
The cycle time of the crane is calculating using formulas presented in Table 3.3.
Terminal truck’s cycle time formulas used for calculation of cycle times of
internal operations are presented in Table 3.4.
Gantry crane’s cycle time formulas (Table 3.5) are used for calculating storage
and ship operations time. RTG (Rubber Tired Gantry) or RMG (Rail Mounted
Gantry) cranes are usually used for storage of containers. The cycle of a gantry
crane is performed twice in container storage process: first, when it is transported
to the storage site from the onshore handling area, and second, when container
must be transported from the warehouse to the stevedoring front.
74
Table 3.3
Calculating the cycle time of the crane
1. Cycle time of crane, s Tk=φ(t1+t2+t3+t4+t5+t6+t7+t8+t9+t10); (3.5)
φ – coefficient showing overlapping of different
operations of the cycle;
t1 – time for fastening of spreader onto the container, s;
t2 – time for crane to turning around, s;
t3 – time for crane to move with cargo, s;
t4 – time for positioning of the frame of the crane
in the vertical position, s;
t5 – time for lifting a container into the required height, s;
t6 – time for stowing the cargo into its place, s;
t7 – time for leaning the frame of the crane back
into the position, s;
t8 – time for lowering down the empty frame, s;
t9 – time for crane to turn around without the load, s;
t10 – time for crane to return back to the next cargo, s.
2. Time of crane movement
with and without the cargo, s . (3.6)
Lkraut – crane movement distance, m;

Vkraut – crane movement speed, m/s;
tgr.st. – crane acceleration and breaking time, s.
3 Cargo lifting or putting
down time, s (3.7)
Hkrov – cargo lifting (lowering) height, m;

Vkrov – cargo lifting (lowering) speed, m/s.
Table 3.4
Estimating the cycle time of a terminal truck
1. Time of movement 𝐿𝐿𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣
of terminal truck or 𝑇𝑇𝑡𝑡 = ( + 𝑡𝑡𝑔𝑔𝑔𝑔.𝑠𝑠𝑠𝑠. ) ; (3.8)
𝑉𝑉𝑣𝑣𝑣𝑣𝑣𝑣𝑣𝑣
truck with or without
cargo, s Lvilk – terminal truck or truck’s movement distance, m;
Vvilk – terminal truck or truck’s movement speed, m/s;
tgr.st. – terminal truck or truck’s acceleration and breaking
time, s.
75
Table 3.5
Estimating the cycle time of a gantry crane
1. Cycle time of gantry To.=tuž+tat+tn1+tn2+φ(4tkrov+2tv+tkr); (3.9)
cranes, s tuž – container hooking time, s;
tat – container unhooking time, s;
tn1 , tn2 – time for positioning the spreader above the con-
tainer for hooking/unhooking, s;
φ – coefficient showing overlapping of different operations
of the cycle;
tkrov – container lifting or lowering time, s;
tv – carriage movement time, s;
tkr – crane movement time, s.
2. Cycle time of cargo 𝐻𝐻𝑘𝑘𝑘𝑘𝑘𝑘𝑘𝑘
lifting or lowering, s 𝑇𝑇𝑘𝑘𝑘𝑘𝑘𝑘𝑘𝑘 = 𝑉𝑉 ; (3.10)
𝑘𝑘𝑘𝑘𝑘𝑘𝑘𝑘
Hkrov – container lifting (lowering) height, m;

Vkrov – container lifting (lowering) speed, m/s.
3. Carriage movement 𝐿𝐿𝑣𝑣
time, s 𝑇𝑇𝑣𝑣 = ; (3.11)
𝑉𝑉𝑣𝑣
Lv – carriage movement distance, m;
Vv – carriage movement speed, m/s.
4. Crane movement 𝐿𝐿𝑘𝑘𝑘𝑘
time, s 𝑇𝑇𝑘𝑘𝑘𝑘 = ; (3.12)
𝑉𝑉𝑘𝑘𝑘𝑘
Lv – crane movement distance, m;
Vv – crane movement speed, m/s;
Formulas used for estimating cycle times of gantry cranes are also necessary for
estimating cycle time of ship’s operations. STS cranes are most often used for container
ship’s loading operations. These cranes are specially designed for loading of containers.
STS crane cycle for loading a container on board a ship is performed once per container.
3.3.3. Stevedoring Ope ra tions C osts
In the activities of the stevedoring companies, the main factors influencing the
productivity and cost level of the loading process are the number of employees
(people) and the amount of machinery used in the process. The productivity and
costs of the load process depend on the efficiency of the handling equipment and
on the number of technological lines.
Loading cycle time and costs are calculated using the formulas presented in
Table 3.6.
76
Table 3.6
Cycle time and costs of loading operations
No. Indicator Formula Where
1. Ship’s loading t – time, hours; (3.13)
time q – number of containers;
t= q
m m – number of crane movements
per hour
2. Loading costs S =St + Sd St – container handling equip- (3.14)
ment costs;
Sd – container loading labour
costs
3. Machinery/ St=n1S1+n2S2 n1 – number of cranes used; (3.15)
equipment costs n2 – number of hoists used;
S1 – one crane’s costs per hour;
S2 – one hoist costs per hour;
4. Labour costs S d = (1 + 𝑡𝑡𝑠𝑠 )𝑡𝑡𝑣𝑣 ∙ 𝑛𝑛𝑑𝑑 d – number of employees;
n (3.16)
tv – social taxes of stevedoring
company;
ts – hourly rate per employee.
Source: Talley, W. K. (2018). Ports Economics. New York: Routledge.
The technological handling line is selected in accordance with the conditions

of the cargo transportation and forwarding agreement, more precisely, the ob-
ligations of the stevedoring company, and the quantity of containers (TEU). A
maritime stevedoring company can have various obligations to customers, such
as maintaining the ship’s stevedoring performance rate, the time of completion of
stevedoring operations, etc.
Stevedoring performance indicator means the mandatory number of containers
loaded per hour, the fulfillment of which depends on loading technology: number
of lines; the crane’s technological specifications and number of movements; con-
tainer transportation or delivery technology and speed; container securing opera-
tions on board or on shore (Bichou, 2009).
3.4. Regula tio n o f S te v e d o rin g Op e r a t i o n s
3.4.1. Role of Stevedoring C ompa ny i n t h e Han d l i n g P ro ces s
The stevedoring companies have a key role to play in handling stevedoring

operations, and therefore the stevedoring company is a key element in the port’s
activity.
77
Different countries have a different explanation of the English term “stevedore”.
On the one hand, it is a company or a person, who has signed a contract for ship’s
stevedoring operations in the port with the shipowner, its agent or cargo owner and
is responsible for the management and direct control of handling operations. On the
other hand, sometimes the term “stevedore” is translated identifying the employees/
workers of the port, who are performing loading works during the cargo handling
operations. A stevedore is an employee of a stevedoring company, who is involved
in cargo handling operations under a fixed-term employment contract, for instance,
hired for loading works of a specific ship, or under a long-term employment con-
tract, for instance, hired for specific type of ship loading operations. Usually, steve-
doring companies use a mixed staffing method: a minimum number of stevedores
are employed under long-term employment contracts, mainly in a position of a su-
pervisor of stevedoring team. Taking into account the intensity of the stevedoring
operations, extra port staff are employed under fixed-term employment contracts for
specific cargo handling works. Additional staff is usually selected from the waiting
list of reserve labour resources available in the port information system.
It should be emphasized that a whole complex of cargo handling operations both
on board and on shore area carried out by stevedoring companies in most ports of
the world. In some ports, for instance in the USA and Canada, stevedoring opera-
tions are divided into loading and terminal operations, therefore, different handling
operations are performed by different stevedoring companies or terminals. Very of-
ten such distribution of stevedoring companies is found at container terminals, due
to the work intensity and lack of storage sites of which after completion of unload-
ing operations from the ship containers are transported to special container storage
sites, container depots, outside the port area, where they are further processed or
stored. In this case, the shipowner must cooperate with two stevedoring operators,
i.e. a stevedoring company and a terminal company. This causes some inconven-
ience and, therefore, a shipowner is interested in cooperating with a stevedoring
company that can carry out a full range of licensed loading operations.
3.4.2. Ter ms a nd C onditions of Ste v ed o re Ag reem en t
The obligations of the stevedoring company and shipowner are defined in the
stevedore agreement. In most cases, for each particular vessel service, the steve-
doring company and the shipowner agree on the performance of the necessary
loading operations under mutually acceptable terms and conditions, negotiate the
rates according to the price-list of handling operations and works. All such details
are a basis for drawing up a Stevedore Agreement, which defines legal relation-
ships between the ship or cargo owner and stevedoring company.
78
Below are the main terms and conditions of a stevedore agreement:
–– list of obligations on the part of the stevedoring company (preparatory ship
servicing works, making a list of works, determination of the intensity of
works, use of ship’s loading equipment (cranes, lift winches, rigging, elec-
tricity resources and other mechanisms);
–– list of rates for the handling of different types of cargo for all services pro-
vided by the stevedoring company;
–– procedure and form of payment for the services provided by the stevedor-
ing company, including unforeseen expenses (overtime, work in hazardous
conditions, work in unclean premises, costs related to the constructional
features of the ship, which makes it difficult to work, etc.);
–– approval of terms and conditions, methods for submission of invoices for
the provided stevedoring services, their payment terms and methods;
–– negotiation of the discounts for the performed stevedoring works;
–– determination of mutual responsibility, place and procedure for resolution
of disputes arising during the stevedoring operations;
–– in case of performance of container or wheeled vehicle stevedoring works,
the stevedore agreement must include terms and conditions regulating spe-
cial operations (filling up of containers with cargo, lifting of containers on
transporter and/or semi-trailer, container sealing, etc.).
The obligations of a stevedoring company included in the stevedore agreement:
–– unloading of cargo from the holds of the ship onto the quay, transfer to
other types of transport (wagons, vehicles), transport to storage sites;
–– formation of cargo stowage places at storage or warehousing sites;
–– cargo transportation from the storage sites to ships and cargo loading into
the holds of the ship;
–– provision of stevedores, crane operators, electric forklift drivers, truck ser-
vices;
–– provision of automated vehicles, trucks, wheeled trailers and semi-trailers,
cargo grabbing mechanisms and the related services;
–– opening/closing of holds, preparation of ship cranes, crane arms, ship’s
ropes and rigging for loading operations;
–– provision of cargo separation services and technical support in ship’s holds
or decks;
–– organization of cargo handling operations, including rotation of ports of call;
–– cargo marking, minor repairs of damaged spots;
–– organization of the cargo quantity accounting process at loading places;
–– clearance of loading documents;
–– organization of cargo storage in warehouses, execution of cargo issue to
the consignees.
79
The obligations of a shipowner provided for in the stevedore agreement:
–– timely notification about the ship’s arrival time, cargo characteristics and
quantity, its distribution in the holds;
–– organization of loading operations in accordance with the layout scheme
of the ship’s cargo;
–– ensuring proper functioning of the ship’s lifting winches, arms, rigging,
ship’s ropes, and authorising the stevedoring company to use the equip-
ment, including ensuring the required power supply;
–– ensuring proper ship’s lighting system, mobile lighting equipment;
–– provision of the necessary separation means, as well as means for securing
cargoes, containers, wheeled trailers or semi-trailers;
–– timely payment for the services provided by the stevedoring company
(payment terms, types and periodicity).
In some stevedore agreements the stevedoring companies seek to include con-
ditions that would not oblige them to be liable for the damage to the ship equip-
ment, such as hatch covers of bulk cargo ships, or cargo damage or falling of cargo
overboard during cargo handling operations.
The stevedore agreements are usually long-term agreements or 1-2 years’
agreements with a possibility to terminate the agreement by any party by notify-
ing the other party about its intention to terminate the agreement.
3.4.3. Inter r elationship be twee n Ste v ed o ri n g Op erat i o n s

and Por t Regula tions
The organizational peculiarities of port works are defined by the regulations

of the operation of the seaport, also called the code of practice, customs and ex-
periences. In most cases, such regulations use the term “port” summarizing the
various business structures. Typical regulations are based on the national statutory
business management framework, port operation laws, international maritime law
and experience.
Port regulations are the main documents describing the following activities:
–– port operation regime;
–– sequence and conditions for ships’ entering into the port;
–– stevedoring conditions;
–– conditions for servicing ships at the port;
–– terms and conditions and procedure for cargo transportation to/from the
port by railways, road or other mode of transport;
–– terms and conditions for cargo storage within the territory of the port;
–– terms and conditions for passenger service.
80
Below are some of the conditions for stevedoring operations that can be de-
fined in the Regulations for Port Operations.
The agreement made between the port and the charterer defines the service
conditions at the port: the applicable rates for loading and unloading operations,
the procedure for calculating the length of the ship mooring in the port, the dis-
patch and downtime rates, the dispatch and demurrage.
Ship’s berthing time is the time of the port operations provided for in a specific
case in the agreement and, in general, it is the time provided for the unloading and
loading of cargo in the regulations of the port, including cargo separation, weigh-
ing, securing or removal of securing and stowage, opening-closing and partition-
ing of cargo hatches, formalisation of documents for unloaded-loaded cargo, time
of dry cleaning and tidying of freight facilities after the unloading operations,
fuel and fresh water filling operations, if the operations hereinabove cannot be
performed simultaneously with cargo unloading and loading operations, also the
duration of the mooring operations related to the specialization of the berth in the
port. In cases, where the technical specification of a vessel requires special opera-
tions for the attachment or securing of cargoes, or when very intensive preparatory
loading operations are required according to the specificity of the cargo, taking
into account the condition of the cargo, for example, explosive, scarification, re-
packaging works, assessment of wet or damaged cover, handling of poisonous and
flammable cargo, when additional protective equipment is required, the port has
the right to extend the period of stevedoring operations by mutual agreement of
the parties, and this period is added to the ship’s berthing time.
The ship’s berthing time is estimated by dividing the cargo weight (volume)
measured in tons (t), cubic meters (m3) or TEU by cargo loading/unloading rate
per day determined for a ship of classified group, for example, divided by rate per
day in favourable weather conditions.
When loading cargo with different weight standards, the weight of the respec-
tive cargo is divided by the established daily rate under favourable meteorological
conditions.
In cases, when loading-unloading operations are carried out only to some cargo
facilities (hold, deck, twin-deck), the established rate is multiplied by the number
of freight hatches and divided by the total number of freight hatches on board a
ship. The time of additional operations not compatible with the main stevedoring
operations is added to the ship’s berthing time at the port.
When estimating the ship’s berthing time at the port, the days of the weekend
and public holidays, as well as time after the indicated hour, for instance, after
3.00 p.m. on specified days, e.g. days before weekend and public holidays, and
until the indicated time, e.g. until 8.00 a.m., shall not be included into the ship’s
berthing time even in cases, when the ship loading/unloading works were carried
81
out. The calculation of the ship’s berthing time starts from a specific time. From
4.00 p.m., if the ship’s master or agent gave notice on the ship’s readiness for load-
ing until noon of the current day, or from 8.00 a.m. of the next day, if the notice of
readiness was given after the noon of the current day. The calculation of the ship’s
berthing time is interrupted in cases, when the ship is queuing at the quay or in a
specialized outer harbour, when the stevedoring operations cannot be performed
due to adverse weather conditions (precipitation, cold, heat, strong wind, etc.) due
to strikes or in other unforeseen cases due to Force Majeure, due to the fault of the
shipping administration, the charterer, the owner of the cargo, in the absence of
vacant railway wagons during direct loading operations, if the owner of the cargo
has applied for the whole rolling stock.
The accounting of the ship’s berthing time is carried out by filling in time
sheets in the port and on board a ship. If a ship is unloaded and then loaded in a
specific port, then the time sheets must be filled in for the unloading operations
and for the loading operations separately. Time sheets must be signed by the mas-
ter of the ship (or ship’s agent) and representatives of the port, and the procedure
of document signing should not interfere with ship’s departure time. The entries
in the time sheets cannot be adjusted or corrected after they are signed by both the
parties (by master or agent of the ship and representative of port authority). In case
of disagreements regarding the signing of the time sheets, the disagreeing party
shall describe the essence of the disagreement next to its signature.
According to the requirements of the port, the ship must accept or deliver the
cargo both during the day and at night, as well as on weekends and holidays, by
providing conditions for gratuitous use of steam, electricity, hoisting gear, hinges,
cranes, lighting and other equipment and mechanisms required for loading or un-
loading of cargoes.
The reception and transfer of cargo must be carried out by the side of the ship
(at the entrance ramp in ro-ro ships) with the required tallyman’s receipt for each
lifting of the cargo. The ship must ensure the delivery of the cargo under the bill
of lading. If the ship does not have a tallyman, the number of tallymen should
be estimated according to the number of tallymen recommended by the owner
of the cargo.
In case of breaks during loading operations due to various reasons, including
unfavorable meteorological conditions, the hatches shall be opened or closed ac-
cordingly on board a ship.
The costs of the downtime of the workforce that occurred due to the fault of
the ship, such as failure of loading equipment, lack of steam, lack of lighting,
mistakes in the sorting and layout of the bulk cargo, etc., shall be borne by the
shipowner / ship operator according to the applicable port rates and the downtime
is deducted from the ship’s berthing time at the port.
82
1. What is the aim of the stevedoring process?

2. What is the structure of the port technological process?
3. How can the ship’s stevedoring operations be divided?
4. Describe the interrelationship between the stevedoring operations technol-
ogy and efficiency.
5. Describe the interrelationship between stevedoring process technology
and organization.
6. What does ship’s stevedoring cycle time consist of?
7. What factors may influence the cycle time of the loading operation?
8. Describe the term “technological card”. What is the purpose of the tech-
nological card?
9. What are the functions of the stevedore agreement?
10. What are the obligations of a stevedoring company in fulfilment of steve-
doring operations?
11. What are the obligations of a ship in fulfilment of stevedoring operations?
12. What port regulations affect the execution of the stevedoring process?
3.6. Ref eren c e s
1. Alderton, P.M. (2008). Port Management and Operations. London: In-

forma Law.
2. Baublys, A., Vasilis Vasiliauskas, A. (2011). Transporto infrastruktūra.
Vilnius: Technika.
3. Belova, J., Mickienė, R. (2012). Uosto veiklos valdymas: ekonominis as-
pektas. Klaipėda: KU leidykla.
4. Bichou, K. (2009). Port operations, planning and logistics. Oxon: Informa
Law.
5. Branch, A. E., Robarts, M. (2014). Branch’s Elements of Shipping. New
York: Informa Law from Routledge.
6. Brodie, P. (2016). Illustrated Dictionary of Cargo Handling. Oxon: In-
forma Law.
7. Burns, G. (2015). Port management and operations. Florida: CRS press.
8. House, D.J. (2016). Cargo work for maritime operations. London and
New York
83
9. Lietuvos Respublikos muitinė (2016). Lietuvos Respublikos integruotas
tarifas (TARIC). Prieiga internete: http://litarweb.cust.lt/taric/web/browse-
tariff_LT?Year=2016&Month=02&Day=29. [Žiūrėta 2017-11-02].
10. Lietuvos Respublikos Vyriausybės 2010 m. kovo 3 d. Nutarimas Nr. 205.
Prekių gabenimo, laikymo ir tikrinimo Klaipėdos valstybinio jūrų uosto
pasienio kontrolės punktų teritorijoje esančiose muitinės prižiūrimose
uosto komplekso zonose taisyklės.
11. Meidutė, I. (2012). Logistikos sistema. Vilnius: Technika.
12. Lietuvos Respublikos civilinis kodeksas (2001). Šeštoji knyga: Prievolių
teisė, str. 6.824.[žiūrėta 2017-11-04]. Prieiga internetu: http://www.in-
folex.lt/ta/12755:str6.824
13. Muitinės konvencija dėl tarptautinio krovinių gabenimo su TIR knygelėmis
(1975 m. TIR konvencija). Žin., 2000, Nr. 6-155.
14. Paulauskas, V. (2011). Optimalus uostas. Klaipėda: KU leidykla.
15. Paulauskas, V. (2015). Jūrų transporto plėtra. Klaipėda: KU leidykla.
16. Phan, M. T., Kim, K. H. (2015). Estimating the Cycle Time of Container
Handling in Terminals. National Research Foundation of Korea.
17. Talley, W. K. (2018). Ports Economics. New York: Routledge.
18. Vasilis Vasiliauskas, A. (2013). Krovinių vežimo technologijos. Klaipėda:
Socialinių mokslų kolegija.
84
4.
M ar i t i me F R E I G H T F O R WA R D I N G
M argar ita Va rnie nė
This chapter defines the concepts of a maritime freight forwarder and carrier,
analyses the peculiarities of these participants in the international logistics process
and identifies the specifics of freight forwarding activity, describes the main func-
tions, the features of the freight forwarding process, and presents typical freight
forwarding schemes.
4.1. F reight Fo rw a rd e r ’s A c tiv i t y
4.1.1. Is s ues R egarding the C onc ept o f a F rei g h t F o rward er
The concept “freight forwarder” originates from the Latin term “Expedition”
(dispatch), and the concept “forwarding” originates from the Latin term “Expe-
dire” (prepare, perform, handle). The first meaning of the concepts hereinabove
was related to the dispatch and escort of the cargo, but in nowadays logistics there
is no need for the physical escort of the cargo; however, there still is a need for
processing and submission of cargo documents.
Forwarding process focusing on a carrier’s function is comprehensively ana-
lysed in the publications of A. Baublys (2016), R. Palšaitis (2011), A. Jarašiūnienė
(2011), as well as international publications, such as “FIATA Model Rules for
Freight Forwarding Services” prepared and published by FIATA (International
Federation of Freight Forwarders Associations), a member of which is Lithuanian
Forwarder’s Association, general freight forwarding terms and conditions pub-
lished by the German Freight Forwarders Association (ADSp), standard trading
condition prepared by the Belgian Freight Forwarders Association (CEB Rules)
85
and other sources. However, it should be noted that general freight forwarding
conditions/rules are of a recommendatory nature.
The concept of a forwarder defined in the publication “Forwarder – Transport
Architect” by A.Baublys (2016), A.Jarašiūnienė (2011), is provided as logistic
solution and is one-sided, thus does not fully reflect and express the concept of
a modern forwarder’s practical activity. Freight forwarding usually includes or-
ganization of freight carriage and related activities, when the cargo is abroad or a
forwarder, consignor, consignee or carrier are natural or legal persons from for-
eign countries. However, freight forwarding activities are not directly regulated
internationally or regionally, international legal acts only indirectly regulate the
contractual legal relationships that arise on the basis of forwarding activities, and
the national legal acts are the main source of regulation of forwarding activities
(Staskonis et al., 1999). The concept of a freight forwarder and its obligations
are defined precisely in the Article 6.824 of the Chapter 41 of the Civil Code of
the Republic of Lithuania (hereinafter CC RL Ch. 41 Art. 6.824): “A freight for-
warder shall mean a legal person (an entrepreneur, who has concluded a contract
of freight forwarding with the customer, whereby he has undertaken to transport
at the expense of the customer (the customer’s client) and on the customer’s or his
own behalf the customer’s goods, as well as to perform any other operations re-
lated thereto”. The activity and obligations of a freight forwarder depend namely
on the actions stipulated in a freight forwarding contract. If under the said contract
the freight forwarder does not assume responsibility as a carrier, he shall not be
liable for the fulfilment of carrier’s obligations.
The cargo transportation process consists not only of cargo transportation,
loading, warehousing but also of a freight forwarding technology. Throughout
the transportation process, the cargo, when it is transported from third countries
(non-European Union) to other third countries via the European Union or to the
European Union via other countries of the European Union, it is controlled (until
taxes are paid) by the customs authorities and (depending on its specificity) the
controlling services (State Plant Service, Food and Veterinary Service). According
to the movement of cargo (goods), which is governed by Chapter 2 Article 15 of
the General Provisions of the Title (1) of the Union Customs Code (hereinafter –
UCC), in the places of cargo unloading and loading (in a port, terminal or place of
delivery) it is mandatory to provide information (in certain cases, documents) in
advance to the regulatory authorities for obtaining of permits for the organization
and execution of cargo handling works. Failure to comply with the aforemen-
tioned legal requirements results failure to obtain the required permits and further
handling of cargo is not permitted (Chapter 15 Articles 210-217 of the Code of
Administrative Offenses of the Republic of Lithuania (hereinafter referred to as
the RL CAO) until the fulfillment of the above requirements. In individual cases,
86
depending on the specificity of the cargo (Commission Decision 2007/275/EC
(2007), Council Directive 2000/29 / EC (2009), the cargo is not allowed to enter
the territory of the European Union at all. The problem was inspired by practical
experience, as without legal actions and documents legal requirements will not be
met, which would result in failure to fulfill the obligations set out in the forward-
ing contract and the company may incur significant losses.
The examples and conclusions described in theory not always reflect the real
events and incidents. Lack of publications and sources on the topic of freight for-
warder technologist and freight forwarding technology (specific actions and docu-
ments) inspired to describe the specifics of certain freight forwarding technology
focusing on both the theoretical and empirical aspects. Every type of freight may
have both technological and organizational peculiarities. This chapter focuses on
the actions and responsibilities of the forwarder technologist in the process of
forwarding on the basis of the legal environment.
This chapter contains a definition of the concept of a freight forwarder and
cargo forwarding, highlighting functions and responsibilities. It also identifies the
main features of a carrier and freight forwarder, the differences, functions and
responsibilities.
4.1.2. Diff ere nc es betwe en Freight F o rward er

and Car r ier Ac tivities
As a rule, the functions of a freight forwarder and carrier and their relations with
other persons involved in cargo transportation process are closely interrelated. Very
often a freight forwarder acts in a capacity of a carrier, and the carrier – in a capacity
of a forwarder. However, from a legal point of view, a freight forwarder and a carrier
are two distinct and independent entities involved in the transport of goods.
Below is a list of essential differences between the carrier and freight forwarder:
1. Regulation of the activity;
2. Contracts signed with cargo owner and/or consignor;
3. Obligations and responsibility assumed in the cargo transportation process
(Vasilevskaja, 2014).
In order to distinguish between the activities of a forwarder and a carrier, it is
necessary to clarify the meaning of the concepts Carrier and Freight Forwarder.
A carrier is an undertaking registered in accordance with the laws and author-
ised to engage in the transport of passengers and freight. The definition of an
undertaking is provided in Article 2 - Definitions – of the Regulation (EC) No.
1071/2009. A carrier is a person who, on his own behalf and at his own expense,
undertakes to carry out the transport of freight by assuming responsibility. Any
entity that has obtained a license in accordance with the procedure established by
87
law, can engage in freight transport activity. Such entity must meet the require-
ments as to its financial situation, professional skills and impeccable reputation.
Book 6 Chapter 41 Article 6.824 of the Civil Code of the Republic of Lithuania
provides the following definition: “A freight forwarder shall mean a legal person
(an entrepreneur), who has concluded a contract of freight forwarding with the cus-
tomer, whereby he has undertaken to transport at the expense of the customer (the
customer’s client) and on the customer’s or his own behalf the customer’s goods,
as well as to perform any other operations related thereto.” “Freight forwarding
shall mean the organisation of the carriage of goods and operations related thereto
provided for in the contract of freight forwarding.” In some foreign countries, for
example, in the Russian Federation, the essential rules of forwarding are identified
in a separate section 41 of the Civil Code, while the detailed requirements are laid
down in the Law on Freight Forwarding of the Russian Federation.
In legal practice, it is decided on a case-by-case basis, whether only the for-
warder’s, or also the carrier’s obligations shall be assumed under the contract
when concluding contracts. If a forwarder, who signed a freight transport contract
with a cargo owner, under the signed contract undertook to provide carrier’s ser-
vices (undertook to transport the freight to the place of destination, although the
forwarder is not providing the carrier’s services himself, as it is only providing
forwarder’s services), then the forwarder shall also be responsible to the consign-
or as a carrier irrespective of whether it carries the freight himself or commissions
this obligation to any third party (Vasilevskaja, 2014).
Thus, the organization of the carriage of goods and the related actions depend
on the obligations agreed upon by the freight forwarder and what the customer
expects from the freight forwarder.
To sum up, below is a list of the main differences between the carrier and
freight forwarder:
1) different regulation of the activity: carrier’s activity is licensed, while for-
warder’s activity is not licensed;
2) the contracts concluded define specific functionality: it’s either the carrier,
or the freight forwarder, or both;
3) different obligations and responsibilities are assumed under the contracts
concluded in the process of cargo transportation: the freight forwarder assumes
obligations and responsibilities, while the carrier executes them.
4.1.3. Specifics of F re ight Forwarde r ’s Act i v i t y
The concept of a freight forwarder’s activity. As discussed in Chapter 7.1.,

Article 6.824 of the Civil Code of the Republic of Lithuania provides the follow-
ing definition: “A freight forwarder shall mean a legal person (an entrepreneur),
88
who has concluded a contract of freight forwarding with the customer, whereby
he has undertaken to transport at the expense of the customer (the customer’s cli-
ent) and on the customer’s or his own behalf the customer’s goods, as well as to
perform any other operations related thereto.” “Freight forwarding shall mean the
organisation of the carriage of goods and operations related thereto provided for in
the contract of freight forwarding.” In the Resolution No. 205 of 3 March 2010 of
the Government of the Republic of Lithuania “On the amendment of the Resolu-
tion No. 75 of 22 January 1999 of the Government of the Republic of Lithuania
“On approval of the rules for the transportation, storage and inspection of goods
at the border inspection posts of Klaipėda State Seaport located in the port com-
plex zones supervised by the customs”, the following concept is used “A freight
forwarder is a person, who concluded a contract with a consignor or consignee
(seller or buyer) and undertook on his own behalf or on behalf of a client and at
the expense of the client, to transport the cargo owned by the client, to arrange
cargo documents, execute the required customs, veterinary and other procedures
and execute other actions related to freight forwarding (dispatch, receive, escort,
etc.)”. Freight forwarding services may include any freight-related services, in-
cluding logistic services, also including information technology services related
to the preparation, dispatch and warehousing of goods. However, the Civil Code
of the Republic of Lithuania does not include the carriage of goods itself into
the forwarding activities, and considers the link between the operations and the
organization of the transport process as an essential criterion for the attribution of
the actions to forwarding activities. Taking into account the above definitions of
forwarding activities, it can be stated that forwarding activities are the provision
of complex actions related to the organization of freight transport.
The diagram of the freight forwarder’s activity is presented in Fig. 4.1. At the
initial stage, a forwarding agreement is signed, which specifies a specific cargo
with specific characteristics (specifics: physical-chemical characteristics of the
cargo, packaging), responsibilities, services, and documents accompanying the
consignment and cargo. The second stage covers the distribution of responsibili-
ties. The third stage is action execution and control.
In summary, it can be stated that conclusion of freight forwarding agreement is
the crucial moment, as the agreement sets out a complex of actions (specific actions)
in accordance with the specifics of the cargo and this determines further technolo-
gies: carriage, handling, documentation (accompanying the cargo, such as bills of
lading, invoices, certificates of quality, conformity and origin, veterinary and phy-
tosanitary certificates, import permits, if required, such as GED (general entry docu-
ments for feeds and food products of non-animal origin), GVED (general veterinary
entry documents for products of animal origin), GPED (general phytosanitary entry
documents for plants and plant products, customs declarations).
89
Forwarding agreement (cargo Execution of the
specifics that determines other Actions stipulated in the actions+control/fulfilment of
technologies: carriage, agreement contractual obligations
handling, documentation)
Fig. 4.1 The diagram of the freight forwarder’s activity
4.1.4. Fr eight Forwarde r ’s F unction s an d R es p o n s i b i l i t y
in the forwarding agreement, the functions are described and specified as the
freight forwarder’s responsibility for the fulfillment of certain processes. The
main functions of the freight forwarder are:
1. information management – Provision of information;
2. Organization and Execution – submission of data and documents;
3. Control – Certificates / permits.
The main objective of the freight forwarder’s activity is the fulfillment of the
responsibilities provided for in the forwarding agreement, and the freight forward-
er’s duty is to respect the contractual and legal requirements, including liability to
the controlling agencies (Fig. 4.2).
FREiGHT FORWARDER
Provision of
responsibilities
information information
Types of
management
rūšys
REsPONsiBiLiT REsPONsiBiLiTY
Y FOR THE TO submission of
Organization sAFETY OF CONTROLLiNG data and
and execution THE CARGO AuTHORiTiEs documents
Certificates /
Control permits
Fig. 4.2 The structure of freight forwarder’s responsibilities
Below is an explanation of the concepts provided in the Fig. 4.2:

a) information management and provision of information is advance and time-
ly obtaining/transfer of information for the organization and execution of further
actions and timely submission of information to controlling authorities (customs,
food and veterinary service, plant protection service) in accordance with the
regulatory acts (general import and export declarations, freight import and ex-
port permits). These actions are governed by Chapter 2 Article 15 of the General
Provisions of the Title (1) of the uCC (1), Commission Delegated Regulation
(Eu) 2015/2446 Article 4 Clauses 105-113, 190-194, 199-203, Council Directive
90
No. 2000/29/EB (2009) Articles 1-3, Commission’s Decision No. 2007/275/EC
(2007) and national laws (in Lithuania, Law No. IX-2183 (2016) amending the
Law on Customs of the Republic of Lithuania, Law No. XI-653 (2010) amending
the Law on Phytosanitary of the Republic of Lithuania, Law No. XI-1189 (2010)
on amending the Law on Veterinary Activities of the Republic of Lithuania).
b) Organization and execution of actions / Submission of data and documents:
search for and finding reliable participants (depending on the type of agreement: car-
rier, stevedoring company, terminal, customs brokers), signing contracts with them,
organization and approval of further planned freight forwarding actions (stipulated in
the agreement), stevedoring operations and authorizations to unload/load the freight
by competent authorities, preparation of cargo for further transportation, submission
of cargo and accompanying documents to controlling authorities (customs and, in ac-
cordance with the specifics of the cargo, Food and Veterinary Service, Plant Protection
Service), filling in customs declarations and submission of data required for the chosen
customs procedure (according to client’s instructions) or other customs control meas-
ure. The process is organized in accordance with the actions stipulated in the forward-
ing agreement and instructions received from the client (one clause of the agreement
should concern submission of instructions and daily reports and regulatory interna-
tional and national legislation (e.g. in Lithuania, Law No. IX-2183 (2016) amending
the Law on Customs of the Republic of Lithuania, Law No. XI-653 (2010) amending
the Law on Phytosanitary of the Republic of Lithuania, Law No. XI-1189 (2010) on
amending the Law on Veterinary Activities of the Republic of Lithuania).
c) Control/ Certificates/ Permits: is carried out through receiving and submission of
information from all the parties participating in the process to the client (daily reports)
and vice versa, i.e. transfer of information obtained from the client(instructions, claims)
to all the participants in the process, solution of emerging problems, submission of
information to respective authorities (if required) for obtaining certificates / permits,
filling in and submission of other dispatch (including bills of lading) documents. One
of the clauses of forwarding agreement relates to provision of instructions and daily re-
ports, the form of which should be agreed in the terms and conditions of the agreement.
Every country of the cargo consignee has its legal requirements and nuances, therefore,
the forwarder needs instructions on proper submission of information (documents) in
the country of departure and the country of the consignee, so that the cargo would reach
the consignee without any hindrances, time costs and financial losses.
4.1.5. Def initions of Freight F orwa rd er ’s Act i v i t y
Taking into account the description provided hereinabove and based on em-
pirical freight forwarder’s activity experience, the following concepts of freight
forwarder can be defined and distinguished:
91
1. Freight forwarder is a representative authorised by the cargo owner (under
agreement);
2. Freight forwarding is a system of closely interrelated actions and documents
(actions and localization specified in the agreement);
3. Freight forwarder-technologist is a specialist managing all the information
and data (document) flow related to specific cargo, providing a detailed report on
the progress of the cargo transportation process (in the form agreed upon in the
concluded forwarding agreement) either directly or using information systems for
these participants in the cargo transportation process:
3.1. to all the participants in the logistic chain: carriers, stevedoring compa-
nies, cargo handling terminals, independent cargo quantity and quality inspectors
(surveyors), etc.;
3.2. to the authorities controlling the freight forwarding process (Lithuanian
Customs Office, State Plant Service, Food and Veterinary Service);
3.3. to the customer ordering a freight forwarding service.
4.1.6. Peculiaritie s of Freight F orward i n g P ro ces s
The peculiarities of freight forwarding process are determined by the follow-

ing factors:
1. specifics of cargo, i.e. physical and chemical properties of cargo;
2. information on the TARIC / LITAR database code commodity nomenclature,
such as prohibitions on specific cargo (goods), restrictions (if any), taxes, the
belonging of the cargo to a particular control group (Commission Regulation
(EC) No. 669/2009 (2009), Commission Implementing Regulation (EU)
No. 1001/2013 (2013), Council Directive No. 2000/29/EB (2000));
3. cargo (goods) customs status (Union goods and non-Union goods);
4. the freight forwarding agreement provides for a specific cargo forwarding
place (localization) and specialization.
We should focus on point 2: what is goods’ (cargo, hereinafter – goods) code

and TARIC database? Classification of goods means the attribution of all goods in
international trade to a specific heading under a particular product classification
system, i.e. the attribution of a specific code. The lists of goods, based on which
import or export duties, restrictions, prohibitions or special regimes are imposed,
are made in accordance with the Combined Nomenclature (CN). Classification
determines what customs duties and other taxes will be applied to your goods
(cargo), what tax rate will apply to the goods, whether you will need a license or
another document for import or export of the goods. TARIC is a central database
developed and supervised by the experts of EK DG TAXUD, which provides
92
summary information on tariff and some non-tariff regulatory measures in the Un-
ion. The information in TARIC is updated on a daily basis and transferred to the
Member States and published on the internet at: http://ec.europa.eu/taxation_cus-
toms/dds2/taric/taric_consultation.jsp
For example, for the transport of goods - ostriches (EMU) from Australia, the
commodity code 010633 (TARIC Consultation) indicates that a CITIES certifi-
cate for import / export for this product are required (if the goods are listed in the
Annex to Regulation (EC) No. 338/97, as last amended), General Veterinary Entry
Document (for imports of live animals, GVED must be submitted in accordance
with the conditions laid down in Regulation (EC) No. 282/2004), etc. (Fig. 4.3).
- Birds:
0106 33 - - Ostrich; emu (Dromaius novaehollandiae)
ERGA OMNES (ERGA OMNES)
import control – CiTiEs (04-02-2017- ) (CD370)
[show conditions] R0160/17
Control of import of organic product (01-01-2017 - ) (CD808)
Except: switzerland (CH), iceland (is), Liechtenstein (Li), Norway (NO)
Third Party Customs (01-01-2012 -): 0 % R1006/11
Visos trečiosios šalys (ALLTC)
Veterinary inspection (01-06-2017 - ) (CD625)
Except: Andorra (AD), switzerland (CH), Liechtenstein (Li), Norway (NO), san Marino (sM)
[show conditions] D0275/07
Export control – CiTEs (04-02-2017 -) (CD371)
ERGA OMNES (ERGA OMNES)
supplementary unit of measurement (01-01-2012 -): p/st R1006/11
Fig. 4.3 TARIC information about goods (ostriches)
These factors form the need for specific control and the need for developing a
specific freight forwarding scheme (actions and documents).
If it is provided for in the agreement that the forwarding of cargo shall be per-
formed in Klaipėda (or other) port, the cargo forwarding scheme will provide only
actions and documents that will be performed and presented only in Klaipėda (or
other) port. Thus, the place of cargo forwarding forms the premise for a new con-
cept - port forwarder. The railway operations of international cargo are regulated
by cross-border agreements and railway administration agreements.
4.2. F reight Fo rw a rd in g S c h e m e s
There are two main freight forwarding schemes, freight/ goods customs status.
93
4.2.1. Fr eight Forwarding Sc he me “ C o n t ro l b y C o n t ro l l i n g
Author ities a nd C ustoms”
It is expedient to highlight the control of the customs, the State Plant Service
and State Food and Veterinary Service.
1. Customs is a state authority controlling international trade, controlling taxes
on imported, exported and transit goods, contributing to ensuring the safety of the
entire goods supply chain.
2. State Plant Service (in Lithuania - State Plant Service under the Ministry of
Agriculture of the Republic of Lithuania; each Member State of the European Un-
ion has this type of service) is an institution, whose one of the areas of activity is
phytosanitary activities, i.e. inspection of imported and exported products of plant
origin in order to prevent the spread of pests of plants and plant products in the
countries of the world. The most important purpose of phytosanitary regulation is
to inspect products imported from third countries in order to ensure the provision
of safe products in the domestic market.
3. The Food and Veterinary Service (in Lithuania it is a governmental institution)
is a competent authority that controls the compliance with the requirements of the
regulatory feed and food product laws, compliance with the import requirements of
the country of destination in case of export of animals and products to third coun-
tries, carries out official control of the import of non-animal origin feed and food
products. For exported animals and products of animal origin, the territorial state
food and veterinary services issue veterinary certificates in the form agreed between
the EU and the third countries. All the information to this Service is submitted using
a web-based veterinarian certification tool (TRACES that was installed in 2004).
When the cargo is controlled by the State Plant Service and / or Food and
Veterinary Service and the customs authorities, then, in forwarding of such cargo,
specific actions and compulsory documents such as certificates, permits, import
documents should be provided. In case of failure to provide the said compulsory
documents, it is impossible to import and/or export the cargo into/from the terri-
tory of the European Union irrespective of the customs procedure applied in any
specific case.
Certain cargo/goods documents refer to the very process of the transport of
goods, others – to the transported goods/cargo, therefore, they are divided into:
–– cargo/goods transport documents (packaging lists, international bills of
lading, cargo and vehicle insurance documents);
–– cargo/goods documents (customs documents, invoices, goods certificates,
permits, etc.).
The general freight forwarding scheme “Control by controlling authorities” is
presented in Fig. 4.4.
94
Cargo/goods supervised
by state Plant service specific actions and
and/or Food and Customs
compulsory documents
Veterinary service
Fig. 4.4 Freight forwarding scheme “Control by controlling authorities”
Detailed explanation of the freight forwarding scheme (Fig. 4.4) is provided in

the example below.
Example. under the signed freight forwarding contract, the forwarder shall trans-
port bulk rice CiF (iNCOTERMs), but the forwarder shall not be the carrier. The
cargo is shipped from Japan by sea to Klaipėda port, where it should be unloaded in
a special terminal. under the said agreement, a certain amount of cargo shall be sold
in Lithuania (released for free circulation, i.e. submitted for import customs proce-
dure) and the remaining amount shall be transported by transit (by road) in individual
batches to Russia. When performing these processes, it is important to know what
documents should accompany the cargo, when and where they should be submitted,
and what document package should be prepared for the export of the cargo.
if the customer does not provide timely and accurate information about the cargo
or provides it too late, this may increase the risk of non-compliance of the docu-
ments. Failure to comply with requirements of the laws or regulatory authorities, the
cargo/goods may be not accepted or the very transportation process may be stopped.
This can both increase the transit time and increase financial costs (Table 4.1).
Table 4.1
Cargo/goods code and specific scheme
Nomenclature
Cargo/goods Specifics
code (TARIC)
Bulk rice 10061079 Third country customs: 211.00 EuR/1,000 kg
Compulsory documents: Control of imports of geneti-
cally modified organisms (GMOs) and products con-
taining GMOs; import control of organic products (if
the labeling of goods, advertising or accompanying
documents contains an indication of organic produc-
tion, the declarant must provide a certificate of verifica-
tion). The release for free circulation is subject to the
submission of a general entry document (GED) duly
completed by the competent authority and the Veteri-
nary Entry Document (VED) or its electronic copy after
all the necessary checks have been carried out and the
positive results of the physical checks, if required, are
obtained.
95
It is necessary to note the specific country of origin of this cargo (rice), i.e.
Japan, to which, as a result of the accident at the Fukushima nuclear power plant,
special import conditions for feed and food originating or consigned from (Com-
mission Implementing Regulation (EU) 2016/6, (2016), apply, http://eur-lex.eu-
ropa.eu/legal-content/LT/TXT/?uri=CELEX%3A32016R0006).
The substantial moments under the signed freight forwarding agreement:
1. Customs procedure - release for free circulation (import for domestic use) =
Customs + Food and Veterinary Service control.
1.1. This batch of products should be imported into the territory of the Union at
the designated point of entry (Commission Regulation (EC) No. 669/2009 (10) (2009),
Article 3 (b) (hereinafter referred to as the “designated point of entry”). The freight
forwarder shall submit the relevant documents (GED, VED, GMO, Fig. 4) to the State
Food and Veterinary Service (hereinafter – SFVS) at the designated entry or border
control point (Klaipėda port) that shall be submitted at least 2 days prior to the physical
transport of goods/cargo. Once the cargo/goods is imported, freight forwarder-technol-
ogist shall submit an application for permission to unload the goods and the general
declaration (hereinafter – APU and GD) to the customs office for the documentation
of a temporary warehousing (temporary warehousing – a status of non-Union goods,
when they are temporarily stored under customs control during the period from their
provisions to the customs authorities to the customs clearance or their transportation,
the Union Customs Code (UCC) Articles 133-135, 139, 140, 144-145).
1.2. The GED (form) must be completed for all consignments imported from
the third countries when transporting them into free warehouses, customs ware-
houses, temporary storage warehouses (import and export terminals), the official
state control (documentary) of which I started by a veterinarian at the border vet-
erinary post, and completed (compliance and physical control) by the inspectors
of territorial SFVSs. Upon filling in boxes 1-10 of Part II of the GED, the veteri-
narian of the border veterinary point makes a record on the performed documenta-
ry inspection of the non-animal food consignment, the consignment is forwarded
for further veterinary inspection to the territorial SFVS officer who, having filled
in boxes 11 to 21 of Part II of the GED, shall make a decision (e.g. suitable for re-
lease for free circulation (for human consumption, further processing, feed, etc.),
not suitable for the domestic market (indicating, if the consignment should be
returned, destroyed, recycled or used for other purposes). The SFVS inspectors
of the border inspection point or the designated point of entry shall carry out the
following checks: a) inspection of the documents of all consignments, b) selec-
tive identity and selective physical checks, including laboratory tests. The results
of the tests must be received within no more than five working days. After the
consignment has been inspected for veterinary purposes and it has been found not
compliant with the legal requirements, the consignment is returned to the sender
96
or directed for recycling or destruction. This procedure is mandatory for imports
from third countries for goods designated for the domestic market.
1.3. Only after completion of the above-mentioned procedures and receiving a
positive reply the goods can be placed under the customs procedure for release for
free circulation (import for the domestic market and consumption) by providing
other cargo/goods documents to the customs office: invoice, certificates of origin
and quality certificates, sales-purchase contract.
2. Customs procedure - transit (under contract, freight will be transported by
road to Russia) = Control by Customs + State Plant Protection Service.
2.1. For this product (bulk rice), on the transportation to Russia under customs tran-
sit procedure, a phytosanitary control is required, i.e. according to the legislation of the
recipient country (Russia), it is mandatory to submit phytosanitary, GMO certificates,
certificate of origin, issued and approved by the competent authorities of the country
in which they were transhipped to different type of transport, in this case, by the State
Plant Service. CED is not filled in, as the food consignment (the remainder) is shipped
to a third country (Russia), which does not require veterinary import control.
Right from the moment of import, the entire process hereinabove is controlled
by the customs authorities, which do not formalize the customs procedure chosen
for the cargo until receipt of written (or e-system) approvals and corresponding
documents (certificates) from other control services
The actions of a freight forwarder in the port of Klaipeda, which is the desig-
nated point of entry, i.e. the Border Veterinary Point (BVP), at the receiving and
dispatch of the goods are graphically presented in Fig. 4.5.
Explanation of cargo forwarding scheme presented in Fig. 4.5:
–– Information to customs and stevedoring companies is provided by the Cargo
and Goods Information System (hereinafter - KIPIS). KIPIS is designed for
transfer and processing of information about cargo/goods transported via
Klaipėda port. The originals of the freight and cargo documents shall be
submitted to the controlling services and the customs authorities in accord-
ance with the procedure established by legal acts. Copies of the documents
hereinabove are attached when providing information by KIPIS (Fig. 4.5).
–– The forwarder technologist must forward the information (by fax, e-mail,
etc.) to the official veterinarian before bringing the consignment to the
BVP, through which the consignment will be imported, about the consign-
ment, i.e. a completed copy of the GED, and the original of this document
must be submitted to the official veterinarian of BVP upon arrival of the
consignment. Information can be transmitted in advance by TRACES sys-
tem, if the freight forwarder has access to the TRACES system. Such ac-
cess may be authorized by the Communication Systems and Information
Division of the SFVS (Figure 4.5).
97
ARRiVAL OF KLAIPĖDA PORT/BVP/
DisPATCH OF CARGO Cargo
CARGO TERMiNAL
documents
when
transporting
Transportation and Forwarder’s actions: cargo to
cargo/goods Forwarder’s actions: 1. Provision of Russia:
documents: 1. Provision of documents information to authorities 1.
B/L; CM; MR; GED, in advance (GED) BVP. for obtaining certificates. Phytosanitary
GMO, VED, 2. VZT-PRK/BDK certificate;
(KiPis)-KDA (approval) 2. VZT-PRK (KiPis)-
Certificates of KDA (certification). 2. CMR,
Origin, Quality, 3. submission of daily Transit
reports to customer 3. submission of daily customs
Organic Product, report to customer.
iNV declaration;
3. TiR Carnet;
4. GMO,
Controlling authorities’ Controlling authorities’ Origin,
actions: actions: Quality,
1. BVP GED/VED 1. Customs permit for Transshipment
formalisation (for import); handling works (loading , cargo
to another type of quantity
2. customs permit for transport). certificates;
handling works 2. issue of certificate by 5. iNV
(unloading after BVP state Plant service (and 6. Others
actions and their others, if required) (under
(according to provided customer’s
certification on instructions or
completion of procedure. information). consignee’s
3. Formalisation of requirements)
customs procedure
transit).
Customs procedure
release for free
circulation (import) Mutinio tranzito
procedūra
Abbreviations: J/T – sea transport, K/T – road transport, VZT – bill of lading, PRK – request for
handling, KDA – handling works act, BDK – general declaration, KK – stevedoring company,
TR – customs transit declaration, BiD – general entry document, ViD – veterinary entry document
(certificate), GMO – genetically modified organisms and product certificate, iNV – invoice, CMR –
bill of lading for transport by road, B/L – bill of lading for transport by sea, CM (cargo manifest – list
of cargo transported by sea to be submitted to customs office instead of transit customs declaration,
but exclusively for transportation by sea), M/R – Master’s Receipt (master’s receipt on accepted
original cargo accompanying documents to be delivered to competent authorities), Ks – certificate
of origin, TC - TiR Carnet (carnet (document) issued by TiR Association for transportation of good
from the European union to third countries, TiR Convention (1975).
Fig. 4.5 Freight forwarding scheme at Klaipėda port
– Once the cargo arrives at Klaipėda port, the forwarder-technologist sub-

mits VZT (agreed abbreviation underneath Fig. 4.5, hereinafter AA) by
KiPis tools (hereinafter KiPis) copies of documents accompanying the
cargo. upon submission of VZT, a request for loading PRK (AA) is gen-
erated and submitted, which is submitted together with the BDK (AA)
customs and loading company. upon receipt of the customs authorization
(which is seen by KiPis according to the status of the e-document - PRK/
Approved, BDK/Formalized), loading works are started. upon unloading
of cargo, stevedoring company provides handling works act KDA (AA),
98
wherein it indicates the amount/volume of the unloaded cargo that must be
approved by forwarder-technologist, if the latter agrees with the indicated
amount/volume of cargo. In case of dispute over the amount/volume of
the unloaded cargo, the client is informed and the parties wait for further
instructions of the client; meanwhile, the customs office does not allow
changing the amount/volume of cargo indicated in the bill of lading until
the problem is resolved. Upon resolution of the dispute, a respective docu-
ment (PTI) is provided in KIPIS system for adjustment and revision of the
amount/volume of cargo between the parties. The cargo is stored in the
warehouse for an agreed period of time (indicated in the agreement) until
its preparation for further transportation (Fig. 4.5).
–– Upon receipt of the relevant instructions and data for the completion of the
transportation documents from the Customer, the freight forwarder-technol-
ogist shall again submit a request in the KIPIS system for the loading PRK
(AA) regarding the loading of the cargo to the vehicle for transportation by
road. Upon loading of the goods, the stevedoring company shall submit the
cargo handling act (KDA) for the quantity of goods loaded (Fig. 4.5).
–– While the loading works are going on, the freight forwarder, in accordance
with the instructions received from the customer, completes, submits to the
necessary authorities all the documents accompanying the cargo, which to-
gether with the cargo already loaded and cargo loading act (KDA) submit-
ted by the stevedoring company by KIPIS system, submits to the customs
office the selected customs procedure (in our case, the transit procedure
to Russia and release for free circulation) along with the cargo documents
(established for the customs procedure, Fig. 4.5).
–– Upon completion of the customs procedure and completion of all other
formalities, the forwarder-technologist enters the data in KIPIS, i.e. sub-
mits the VZT (AA), which specifies the reference numbers of customs
documents. All formalised documents and documents accompanying the
goods (to Russia) (Transit customs declaration, TIR CARNET, phytosani-
tary, GMO, quality, origin, quantity of cargo certificates, invoice) are for-
warded by the forwarder-technologist to the representatives of the carrier
(drivers) for departure from the port territory to the destination place in
Russia. Cargo to a Lithuanian entity is transported together with local bills
of lading, as release for free circulation customs procedure was formalised
(Sub-clauses 1.1, 1.2 and 1.3 of Clause 1 of this paragraph) (Fig. 4.5.).
To sum it up, it can be stated that the forwarder’s actions in fulfilment of con-
tractual obligations depend on the specifics of the cargo that determines cargo
transportation, handling and documentation technologies that can also have spe-
cific requirements (restrictions, prohibitions, etc.), and forwarding schemes are
99
made taking into account the technological and organizational peculiarities, e.g.
timely submission of information and documents, sound knowledge of legal re-
quirements of the countries of cargo consignor and consignee.
4.2.2. Fr eight Forwarding scheme “U n i o n Go o d s / C arg o ”
When the goods/cargo have Union goods/cargo customs status, when import-
ing it in the territory of Union’s customs, it is necessary to submit substantiating
documents in the established form (T2L or other documents listed in UCC Ar-
ticles 153–155, Articles 199-213 of the Commission Implementing Regulation
(EU) No. 2015/2447 laying down provisions for implementing Regulation (EU)
No. 952/2013 of the European Parliament and of the Council). Union goods are
goods originating from the customs territory of the Union that do not contain any
imported goods, or goods release for free circulation in that territory, also various
combinations of the goods hereinabove. goods that are not from the Union are
goods that do not meet the requirements applicable to the goods from the Union.
Due to the specific features of the geographical limits of the Union customs
territory, goods from one part of the customs territory of the Union are quite often
transported not through the customs territory of the Union. Therefore, it is crucial
that when the goods are imported into the customs territory of the Union, evidence
would be submitted to the customs office that the goods have a customs status of
the goods from the Union.
If goods are found to be goods from the Union, they will no longer be subject
to customs supervision, and the goods that are not from the Union shall remain
under customs control until their customs status is changed or they enter the free
zone, placed in free warehouse, re-exported or destroyed under customs supervi-
sion (Fig. 4.6).
In practice, the document (T2L) proving the customs status of the cargo
(goods) is filled in by exporter or a forwarder (or customs broker) at the cargo dis-
patch place, while at the cargo destination place this document is provided to the
customs office by the carrier or its representative. This diagram (Fig. 6) is usually
followed, when the forwarder of the cargo also acts in the capacity of the carrier
or port freight forwarder. The sequence of the actions of a forwarder at Klaipėda
port is provided in Fig. 4.7.
Below is a detailed explanation of the scheme of forwarder’s actions (Fig. 4.7).
A forwarder organises cargo transportation from Denmark to Klaipėda Port.
The cargo will be shipped to Klaipėda Port by sea, and then transported to Lithu-
anian companies by road. The goods transported are enzymes that are from the
Union (Union goods). The cargo is packaged in proper packaging (Big bags)
1,000 kg per bag that are stowed on pallets (24 kg per pallet). There are 20 cargo
100
verification
status of of status of
union union
goods/cargo goods/cargo
T2L (C)
Fig. 4.6 Freight forwarding scheme “union goods/cargo”
T2L
KiPis VZT PRK KDA VZT/

PRK KDA
CMR
CARGO
Fig. 4.7 sequence of forwarder’s actions at Klaipėda Port

Abbreviations: T2L – document proving the status of union goods, VZT – bill of lading, PRK –
request for handling works, KDA – handling works act, CMR – bill of lading for goods transported
by road.
units packed in one container, the goods are protected from adverse weather con-
ditions (mould, humidity). When the cargo is dispatched from the port of loading,
T2L document is filled in and presented to Klaipėda port, in which case customs
procedures are not applied. All the information to customs and stevedoring com-
pany is provided by KiPis system. A copy of T2L document is submitted together
with request for handling works, the original document is submitted upon arrival
of the ship to the port and a customs officer marks the customs status of the deliv-
ered goods in KiPis system.
4.3. s elf -te s t q u e s tio n s
1. Define the area of activity of a freight forwarder.

2. List the functions and responsibilities of a freight forwarder. Give some
examples.
3. Define the area of activity and the limits of responsibility of a freight for-
warder. Give some examples.
4. Describe the key differences of the activity of a carrier and a freight for-
warder. Give specific examples.
101
5. List the features of a freight forwarding activity and give some examples.
6. What state authorities supervise freight forwarding process? Give some
examples.
7. Make a freight forwarding scheme for the cargo (liquid nitrogen fertilisers,
goods code 31028000, transported from Belarus) and point out its specific
features.
8. Make a freight forwarding scheme for the cargo (cement, goods code
25231000, transported from Sweden) and point out its specific features.
4.4. Ref eren c e s
1. 1975 M. TIR Konvencija. (1975). [retrieved: 2017-07-09]. Internet ac-

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2. Baublys, A. (2016). Krovinių vežimas. Vilnius: Technika.
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09-09]. Internet access: http://www.conexbe.be/img/user/file/AlgBelgEx-
pVw%20ENG.pdf.
4. Canadian International Freight Forwarders Association (CIFFA). Freight
Forwarder’s Role in Transportation. [retrieved: 2017-09-09]. Internet ac-
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5. Commission Decision No. 2007/275/EC concerning lists of animals and
products to be subject to controls at border inspection posts under Council
Directives 91/496/EEC and 97/78/EC (notified under document number
C(2007) 1547) (Text with EEA relevance). (2007). EUR-Lex, No. OJ L
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7. Gurevicienė, J. (2008). Kaip klasifikuoti prekes, Vilnius: LPPARA.
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2017-07-09]. Internet access: http://eur-lex.europa.eu/legal-content/LT/
TXT/?uri=CELEX%3A32016R0006.
9. Lietuvos ekspeditorių bendrosios ekspedijavimo sąlygos. [retrieved: 2017-
07-09]. Internet access: http://www.lineka.lt/images/stories/Naujienos3/
lebes2016.pdf
10. Lietuvos Respublikos administracinių nusižengimų kodekso patvirtinimo,
įsigaliojimo ir įgyvendinimo tvarkos Įstatymas. (2015). TAR, Nr. 11216.
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11. Lietuvos Respublikos Civilinis kodeksas. Šeštoji knyga. Prievolių teisė.
41 Skyrius. Krovinių ekspedicija. 6.824-6.829 str. [retrieved: 2017-06-05].
Internet access: http://www.infolex.lt/ portal/start_ta.asp?act=doc&fr=pop
&doc=12755.
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access: http://www.cust.lt/.
13. Lietuvos Respublikos Muitinės įstatymo NR. IX-2183 pakeitimo įstatymas
Nr.XII-2694. TAR, 2016-11-16, Nr. 26857.
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mas. Vilnius: Technika.
15. Prekių gabenimo, laikymo ir tikrinimo Klaipėdos valstybinio jūrų uosto
pasienio kontrolės punktų teritorijoje esančiose muitinės prižiūrimose uos-
to komplekso zonose taisyklės. (2010). Žin., Nr. 205.
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cil establishing common rules concerning the conditions to be complied with
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Internet access: http://eur-lex.europa.eu/eli/reg/2009/1071/oj.
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cil on official controls performed to ensure the verification of compliance
with feed and food law, animal health and animal welfare rules. (2004).
Eur-Lex, No. OJ L 165. [retrieved: 2017-07-09]. Internet access: http://
eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32004R0882.
18. Regulation (EU) No 952/2013 of the European Parliament and
of the council. (2013). EUR-Lex, No. OJ L 269. [retrieved 2017-
07-09]. Internet access: http://eur-lex.europa.eu/legal-content/LT/
TXT/?uri=CELEX%3A32013R0952.
19. Staskonis, V., Misiūnas, J., Valeckaitė, V. (1999). Ekspedicinės veiklos
teisinis reguliavimas: mokslo tiriamasis darbas. Vilnius: Teisės institutas.
20. Tarybos Direktyva Nr. 2000/29/EB, dėl apsaugos priemonių nuo augalams
ir augaliniams produktams kenksmingų organizmų įvežimo į Bendriją
ir išplitimo joje. (2000). Eur-Lex, Nr. OLL 169. [retrieved 2017-07-09].
Internet access: http://www.vatzum.lt/uploads/docu ments/2000l0029__
lt.pdf.
21. Tarptautinė ekspeditorių asociacijų federacija (FIATA). FIATA model
rules on freight forwarding services. [retrieved 2017-08-01]. Internet ac-
cess: http://www.fiata.com/ uploads/media/Model_Rules_05.pdf
22. The integrated computerised veterinary system (TRACES). [retrieved
2017-09-09]. Internet access: https://ec.europa.eu/food/animals/traces_
en; http://www.linguee.com/english-lithuanian/translation/traces.html.
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23. Valstybinė augalininkystės tarnyba prie Žemės ūkio ministerijos. Fitosani-
tarija (2017). [retrieved 2017-06-05]. Internet access: http://www.vatzum.
lt/lt/teisine-informacija/teises-aktai/fitosanitarija.
24. Valstybinė maisto ir veterinarijos tarnyba. Eksportas/Importas. (2017).
[retrieved 2017-06-05]. Internet access: http://vmvt.lt/eksportas-importas/
tranzitas.
25. Vasilevskaja, A. (2014). Ekspeditorius ar vežėjas? Transporto naujienų
portalas/ CargoNews. [retrieved 2017-03-28]. Internet access: http://www.
cargonews.lt/aktualijos/ekspeditorius-ar-vezejas/.
26. Žygus, A. Uosto informacinė Sistema KIPIS. Internet access: https://
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KIPIS_pristatymas_2.pdf.
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деятельности» от 30 июня 2003г. № 87-ФЗ. (2003). Oфициально
опубликован в «Российской газете» за 3 июля 2003 г. [retrieved 2017-
07-24]. Internet access: http://base.garant.ru/12131604/.
104
5.
SHIPS’ AGENCY
Gintautas Kutka
This section describes the activities of the ship’s agent and the ship agency
process at the seaport, analyses the ship agent’s functions with respect to the ship
and cargo, provides guidance on formation of ship agent’s portfolio formation,
calculation of port dues and fees.
5.1. Ship’s a g e n c y d e s c rip tio n
Shipping is one of the world‘s most internationalized industries in functional

and regulatory terms of business. The shipping and maritime business involves
a large number of parties – shipowners, charterers, shipbuilders and ship repair
companies, intermodal transport operators, terminal operators, port authorities,
maritime lawyers, ship agents, shipbrokers, scrap dealers, cargo forwarders, crew-
ing companies, maritime training institutions, classification societies, insurers,
ship chandlers, technical repair and maintenance companies, transport unions,
regulatory authorities.
Ship agent – a company that represent shipowner and is engaged in the daily
routine activities related to vessel’s arrival to the port or terminal. The port agent
should in all respects assist to the Master in his contacts with all local authorities,
including harbour authorities, and he also has to procure provisions and other
necessities, communicate orders and messages to and from the shipowners and/or
charterers (Gorton, Hilenius, Ihre, Sandevarn, 2009).
The concept of ship agent was defined in the new IMO Convention on Facilita-
tion of International Maritime Traffic (FAL Convention), which comes into force
on 1st January 2018, as follows:
105
Ship agent - the party representing the ship’s owner and/or charterer (the Prin-
cipal) in port. If so instructed, the agent is responsible to the Principal for ar-
ranging, together with the port, a berth, all relevant port and husbandry services,
tending to the requirements of the Master and crew, clearing the ship with the port
and other authorities (including preparation and submission of appropriate docu-
mentation) along with releasing or receiving cargo on behalf of the Principal.
The main ship agent’s duties ensure that the port visit is as smooth as possi-
ble to maximize the ship’s profitability for its owners, managers and charterers.
The Federation of National Associations of Shipbrokers and Agents (FONASBA)
estimates that up to 150 separate actions may be necessary to get a ship into the
port, to perform cargo operations and sail to the next port, many of which must
be carried out well in advance or in a very short timeframe dictated by the ves-
sel’s schedule. Any delay in the progress of the port call, compliance with statu-
tory requirements or arranging the delivery or collection of the cargo can have a
significant effect on the cost of the call to the port and on the vessel’s subsequent
employment.
The ship agent’s activity is licensed in many countries. The authorities check
whether the company has adequate equipment and working facilities. Depending
on the country there may also be requirements for the company staff to prove for-
eign language proficiency and professional knowledge. The agency has to provide
24 hours a day service all year around. Due to the necessity of all year continuous
service the location of the company is crucial to the efficiency of the organiza-
tion. Due to a need to spend a large part of time on board, at the quayside or at the
office, the agent should consider relocating personal residence closer to the port.
This would help to respond faster to the emerging issues where physical presence
is essential.
An agency company determines the timetable for the agents. This ensures
that ships arriving, sailing or requiring attendance outside normal office hours
receive full attention to their requirements or possible issues. In such case the of-
fice is used as a base location to transfer information and to monitor any incoming
messages on either a facsimile or an e-mail (Institute of Chartered Shipbrokers,
2011). An agency company shall use various kinds of communication means such
as VHF radio, phones, faxes and internet. Nowadays many agencies use mod-
ern computers and data treatments. Moreover, the wide use of the internet has
changed the way an agent carries out his daily activities. The Agent can always
be easily accessed by phone or e-mail and some of his work can be done using
personal communication tools. However, in liner shipping, where a large flow of
information is continual, the work is executed from the office.
106
5.2. Ship’s a g e n c y a p p o in tme n t
Many agency appointments particularly in tramp shipping are agreed on the

basis of the phone exchange or a simple exchange of emails meaning that there
is no legal and binding ship‘s agency agreement signed. Most often an agent gets
such wording by an email from the shipowners „We are pleased to nominate you
as our agent to attend our vessel during her stay in the port…”.
Although the agent is most commonly appointed by the shipowner, alternatively
appointee can be nominated by time or voyage charterer as well. In this case shipown-
ers use a standard nomination expression „On behalf of charterers we are pleased to
nominate you as our agent to attend our vessel during her stay in the port…”.
Charter Party agreements have an Agency Clause, which stipulates whether the
ship agent at the loading and/or discharging ports is to be nominated by the ship-
owners or by the charterers. Upon receipt of the agency appointment the agent has
to confirm the agreement to act on behalf of the Principal (charterer or shipowner).
Shipowner’s appointment. As earlier expressed this is the most common form of
appointment whereby the agent receives his appointment from the shipowner. Now-
adays we can notice that shipowners who are engaged in liner shipping have more
power to appoint their ship agent rather than shipowners engaged in tramp shipping.
The Liner Agent appointment. Liner shipping companies that have not estab-
lished their own daughter’s companies in the ports appoint liner agents. In contrast
to tramp ship agents who seldom enter to written contracts with their Principal,
liner agents and the owner or operator often enter into liner agency contract (for
example, FONASBA uniform agreement “Standard Liner Agency Agreement” is
widely used). A liner agent is a general agent for the line within a geographical
area (Gorton, Hilenius, Ihre, Sandevarn, 2009).
The liner agent has more responsibilities than a port agent. The liner agent
has to ensure not only a quick dispatch of the vessel, look after the interests of
the Master and the crew of the ship, but also to be responsible for managing the
inward and outward cargoes. Liner agent has to contact possible shippers and
forwarding agents within the area, to provide tariff quotations, arrange booking of
cargoes and loading and unloading operations.
Voyage Charterer appointment. Nowadays it has become a very common situ-
ation when voyage charterers insist upon their nominated agent being appointed
by the shipowner. In case of vessel’s agent nomination by charterers at nominated
ports of loading and discharging most Charter Parties have explicitly reference that
„such agents, although nominated by Charterers, shall be employed and paid by
Owners”. Several reasons why charterers appoint their own agents are as follows:
107
–– Confidentiality. A charterer wants to be sure that functional information
and details of his business would not be given to competitors or third par-
ties hands. One way to limit such kind of a risk is to appoint trusted agent,
who is well-known to the charterer.
–– Professionalism. Charterers may wish ensure that the agent has an expert
knowledge of the trade or the market. Nowadays we can see that the ship
agents have some specialization in servicing of different types of ships.
For example, there are ship agents who have more experience in servicing
tankers than containerships.
–– Financial benefits. The agent may be demanded by the charterers a finan-
cial contribution or a certain percentage from its agency fee.
Upon agency appointment the charterer expects to be kept closely informed
about the expected arrival of the ship (ETA), the expected berthing prospects
(ETB), the progress in the port and the expected time of sailing (ETS).
Time Charterer appointment. Normally Time Charter agreement stipulates
that the charterer shall appoint and pay for the agent at all ports. Upon receiving
an appointment from the time charterer it is very important for the agent to clarify
who will pay and for what. Although under the Time Charter agreement time char-
terer has to pay all the normal port dues, including pilotage and towage. Moreover,
the actual owner has to pay for services such as repairs, technical maintenance and
provision, crew matters, cash to Master and all other subjects which directly relat-
ed to the ship itself. Upon any third party request to render service or provision to
the ship the agent has to ask relevant parties for a written confirmation. Customar-
ily the time charterer will instruct the agent to look after the owners themselves for
reimbursement of owner items. Under such circumstances the agent should make
a separate disbursement accounts (D/A) and request to settle them accordingly.
Protecting Agent appointment. Agent appointed by the owners or charterers to pro-
tect their interest and to supervise the work carried out by the ship’s agent. If the Charter
Party calls for owner’s agents, the charterer may appoint a protecting or supervisory
agent to protect its interest at the port of loading or unloading. The same applies to ship-
owners, time charterers and voyage charterers. For example, when the owner is obliged
to take the charterer’s agent (which is realized during the signing of the charter party)
the owner can nonetheless protect his interests up to a certain point by appointing a
„husbandry agent”, who will then assist the Master and crew and protect the interests of
the owner. Such activities can include - reporting on the day-to-day operations, check-
ing cargo documents, arrangement of crew change, obtaining shore-passes, medicine
assistance to crew members, ship to ship operations, appointing stevedoring and tally-
ing companies, bunkering, settlement of disbursement account and more.
As mentioned above, the agent’s appointment is often carried out without signing
the ship’s agency contract. Unfortunately, such situation creates legal uncertainty. How-
108
ever, it should be noted that in liner shipping, the ship’s agent’s relationship with the
shipowner is almost always fixed by the contract. In 2017 FONASBA and BIMCO
launched a new Agency Appointment Agreement form. The Agreement provides a set
of standard provisions for appointing an agent. It is therefore expected to be used main-
ly in the tramp trades for representation or where the ship-related services are required.
The form is suitable for use in all trades including bulk, project cargoes, short sea ship-
ping and for liner shipping as well. It is worth mentioning that the new form does not
replace „Standard Liner & General Agency Agreement, 2001”.
Upon the agency appointment the agent acts at all times as an agent for and on
behalf of the Principal and has authority to place orders with suppliers as agent for the
Principal. The agent has to perform the services under the agreement with due dispatch,
but is not liable for any loss or damage arising from any delay which the agent could
not reasonably prevent. It is very important that the agent shall maintain regular contact
with the Master and the Principal keeping them fully informed about all matters relat-
ing to or affecting the services being provided. The agent shall liaise with and ensure
that third parties including, but not limited to, port and terminal operators, port service
providers, and shore authorities are provided with all relevant information and timely
notices. There is the agent’s obligation to pass on information provided by the Principal
promptly, however the agent is not liable for the accuracy of that information. In return
for the agent’s work, the agent shall be remunerated with an agreed agency fee in re-
spect to the customary and expected services provided to the ship.
5.3. The co n te n t o f th e s h ip ’s a g e n c y a c t i v i t y
5.3.1. A dvanc e re porting and arra ng em en t s
Prior to a ship’s arrival to the port, the ship agent’s duties begin with pre-arrival
planning for the ship’s port call. These arrangements begin when the agent notifies
the port of the ship’s pending arrival (ETA). The ship and its cargo must comply
with a complex set of administrative procedures, including customs, immigration,
taxation, safety and security, health protection, waste, etc.
There are many international and regional initiatives to put this kind of report-
ing formalities on the Electronic Data Interchange platform as exemplified by
the IMO members adopting new mandatory requirements on the aforementioned
platform. According to the new standard, public authorities have to establish sys-
tems for the electronic exchange of information by 8 April 2019. The directive
2010/65/EU sets up obligations for the EU member-states to introduce Port Single
Window (PSW) reporting system. A new recommended practice encourages the
109
use of the PsW concept to enable all the information required by public authori-
ties in connection with the arrival, stay and departure of ships, persons and cargo,
to be submitted via a single portal without duplication.
The PsW aims at further simplifying port clearance procedures for arriving and
departing ships and to alleviate the administrative burden on the ship’s Master and
agent. ship data providers have very important functions within the single window
since they are responsible for submitting ship notifications and hence they are re-
sponsible for ensuring that the information transmitted to the single window is cor-
rect. They are also responsible for the validation and updating of the information
received from other data providers. All the reporting formalities deal with informa-
tion that concern details of the ship, its particulars, voyage, generated waste, and
the persons and cargo carried on board, etc. (European Commission, 2015).
ship’s clearance process in the port presented in Fig. 5.1.
Departure clearance
Arrival clearance
Voyage in port Next voyage

Pre-arrival notification
Departure notification
Further information
Further notification
Fig. 5.1 ship’s clearance process in the port

Source: National Single Window guidelines (2015). European Commission,
Directorate-general for mobility and transport
Pre-arrival documents very often have different deadlines for submitting – 72,
48, 24 hours prior the arrival. For some ports ship’s agent task is to handle the
reporting, for other ports - the Master communicates directly to the authorities.
As the single window enables authorities to process submitted information, both
faster and more accurately, ships should benefit from faster clearance and release
times, allowing a faster turnaround in ports (European Commission, 2015).
110
A ship’s agent must fulfil a series of preliminary works before arrival of the
ship into the port. Such activities include:
–– Submitting all required pre-arrival information to relevant authorities;
–– Keeping the port authority, the harbour master, stevedoring companies,
cargo forwarders, the surveyors, immigration and customs authorities well
informed about the ship‘s expected time of arrival (ETA);
–– Ordering a pilot. Nowadays many ports of the world have made pilotage
compulsory in order to ensure safe vessels traffic. It is crucial to mention
that a pilot is never responsible for his advice and actions, and only acts as
an advisory to the Master. Each port has inherent rules regarding the pilot
exemptions for liner ships and certain types and sizes of the ships;
–– Ordering tugboats’ assistance (if needed). The number and power of tugs
required will normally be recommended by either the Master or the pilot
in consultation with the Master;
–– Ordering linesmen for safely mooring of the ship.
5.3.2. For m alities related with the arri v al an d d ep art u re o f a s h i p
Considering that shipping is a global industry the need to establish unified

rules for ships’ arrival and departure from foreign ports have arisen. In 1965 mem-
bers of the International Maritime Organization (IMO) adopted the Convention of
Facilitation of International Maritime Traffic, the so-called FAL Convention. The
convention entered into force on 5 March 1967 and has been amended 13 times
so far (in 1969, 1973, 1977, 1986, 1987, 1990, 1992, 1993, 1996, 1999, 2002,
2005, 2009). With this convention members aimed to facilitate maritime transport
by simplifying and minimizing the formalities, data requirements and procedures
associated with the arrival, stay and departure of ships engaged on international
routes. FAL Convention contains standards and recommended practices regarding
formalities, documentary requirements and procedures which applied to ships,
their crew, passengers, baggage and cargo carried on board.
These standardized forms are below:
–– IMO General Declaration (FAL form 1);
–– Cargo Declaration (FAL form 2);
–– Ship’s Stores Declaration (FAL form 3);
–– Crew’s Effects Declaration (FAL form 4);
–– Crew List (FAL form 5);
–– Passenger List (FAL form 6);
–– Dangerous Goods manifest (FAL form 7);
–– Maritime declaration of health.
111
Three additional declarations will enter into force from 1 January 2018. These
are: security-related information as required under SOLAS (International Con-
vention for the Safety of Life at Sea, 1974), advance electronic cargo information
for customs risk assessment purposes and advance notification form for waste
delivery to port reception facilities (IMO database on FAL convention).
Also it should be noted, that all ships are required to carry certificates that
confirm their seaworthiness, type of the ship, competency of seafarers and so on.
These certificates are provided by the flag State or/and classification society of the
ship and may be inspected by a Port State control officers.
Certificates to be carried on board ships are listed below (some dependent on
type of ship):
–– International Tonnage Certificate;
–– International Load Line Certificate;
–– Intact stability booklet;
–– Damage control booklets;
–– Minimum safe manning document;
–– Certificates for masters, officers or ratings;
–– International Oil Pollution Prevention Certificate;
–– Oil Record Book;
–– Shipboard Oil Pollution Emergency Plan;
–– Garbage Management Plan;
–– Garbage Record Book;
–– Cargo Securing Manual;
–– Document of Compliance and Safety Management Certificate (ISM Code).
–– (IMO database on FAL convention).
Normally the ship agent is alone responsible for the ship which is entering into
the concerned port. He/she should take care of all activities, including advance re-
porting, which are required for the clearance of the ships. The ship agent has to ob-
tain an official permission for the ship to enter a port and then to depart after com-
pletion of her operations. Port documents (general declaration, crew list, passenger
list, crew effects declaration, ship‘s store declaration, health declaration, cargo
manifest and others) are in majority of ports handed over to authorities through the
agent. In some ports the various authorities, typically Immigration, Customs and
Health authorities attend the ship upon her arrival to check and collect documents.
However, the precise procedures vary widely between countries. It is therefore
very important for the ship’s agent to inform the ship’s Master well in advance
about all procedures for necessary the submission of documents, required num-
ber of copies of documents and so on. As we have noted earlier, the states are
encourages to introduce Port Single Window for ship clearance. In a long run the
ship clearance can be a simple process where all information from all reporting
112
IMO GENERAL DECLARATION
Arrival Departure
1.1 Name and type of ship 1.2 iMO number
1.3 Call sign 1.4 Voyage number
2. Port of arrival/departure 3. Date and time of arrival/departure
4. Flag state of ship 5. Name of master 6. Last port of call/Next port of call
7. Certificate of registry (Port; date; number) 8. Name and contact details of ship’s agent
9. Gross tonnage 10. Net tonnage
11. Position of the ship in the port (berth or station)
12. Brief particulars of voyage (previous and subsequent ports of call; underline where remaining cargo will be discharged)
13. Brief description of the cargo
14. Number of crew 15. Number of passengers 16. Remarks
Attached documents
(indicate number of copies)
17. Cargo Declaration 18. Ship’s Stores

Declaration
19. Crew List 20. Passenger List 21. The ship’s requirements in terms of waste and residue reception
facilities
22. Crew’s Effects Declaration (only on 23. Maritime
arrival) Declaration of Health
(only on arrival)
24. Date and signature by master, authorized agent or officer
Fig. 5.2 IMO FAL Form 1 (For official use)
formalities is sent from the data providers to the system in one step and a single
clearance acknowledgement is returned from the system when the ship has been
cleared by the relevant authorities (European Commission, 2015).
5.3.3. A gent’s dutie s during ship’s p o rt s t ay
At the ship’s arrival to the port, the ship’s agent’s main functions are as follows:
1. To attend the ship on arrival in the port. As previously mentioned, upon
arrival the agent must attend the ship with officers of the relevant authorities (if it
113
is required) for the ship’s inward clearance. The agent has to ensure that the Mas-
ter has tendered Notice of Readiness (NOR). NOR is a document issued by the
Master that advises charterers / shipowners / shippers / receivers that his ship has
arrived to the port and is prepared for the loading or discharging of the cargo. In
fact the Master’s legal responsibility to present his NOR, but the agent is there to
share that responsibility. NOR must always be submitted in writing.
2. To ensure that crew has the permission to go ashore. Many countries have rati-
fied or acceded to the International Labour Organization (ILO) Seafarers’ Identity Doc-
uments Convention, 2003 (No. 185). Each Member state in which this Convention is
enforced permits the entry of a seafarer (granted that he/she is holding a valid seafarer‘s
identity document) into its territory when entry is requested as a temporary shore leave
while the ship is in the port. For the purpose of shore leave seafarers are not required to
hold a visa. The agent has to ensure that an appropriately signed and stamped crew list
is handed over to the guard of the port or the terminal.
3. To supervise operations and ensure efficient dispatch of the vessel. The
agent has to inform stevedores and surveyors that the ship is ready to load or dis-
charge a cargo. What is more, another agent’s duty is to inform aforementioned
parties about any reasons which might have a negative effect on smooth loading
or discharging operations. The agent should be aware of what kind of surveys will
be conducted before arrival of the ship or during her stay in the port. For example,
these inspections and surveys may be carried out:
–– Pre-Shipment/Pre-loading surveys;
–– Pre-loading/loading container inspection, sealing/unsealing;
–– Condition and Securing of the cargo survey;
–– Supervising of loading/discharging operations;
–– Draft Survey: Initial, Intermediate and Final;
–– Sampling and Tallying;
–– On/off Hire Bunker and/or Condition Surveys;
–– Pre-Purchase Condition Surveys;
–– Hull & Machinery Damage Condition Surveys;
–– Hatch covers and safety doors tightness test (Ultrasonic);
–– Cargo Damage and Loss Issue Investigation/Assessment;
–– Sealing / Unsealing Hatches, Tanks, Stores;
–– Hold / Tank Cleaning / Condition Survey;
–– Heavy lift and cargo project.
1. To inform charterers and shipowners on a daily basis about the ongoing
cargo operations including an estimated completion of operations (ETC) and ex-
pected vessel’s sailing (ETS). The example of such daily report might be phrased:
„Please be advised that mv „Blue Star” loaded 8300,0 mts by today 08.00 local time,
balance to go – 14000,0 mts., ETC – 28th/PM weather permitted, all going well“.
114
2. To attend the ship at least once daily and whenever requested by the Mas-
ter, owner or charterers.
Upon the ship‘s arrival it is vital to show respect to the Master and crew in
order to establish close contacts and a mutual trust. Listed below are some more
common requirements of the Master and/or the crew while the ship is in the port.
1. Fresh water. Clean fresh water is used for both drinking and for washing
purposes. Water may be supplied from a quay hydrant or alternatively delivered
by special road transport or barge with the price based upon delivered volume,
transportation method and the timing of delivery.
2. Waste removal. 24 hours before calling at the port or not later than be-
fore departure from the previous port, provided the sailing time is shorter than 24
hours, the Master or the ship agent shall inform the port about the type and amount
of waste on board. This notice shall contain the following information: name of
ship, IMO identification number, flag, call signs, the ship’s agent, the last port
of call and ETA, the next port of call, each waste category on board. Under the
Master’s notification the ship’s agent shall submit an application for collection of
waste to the port authorities or service provider.
3. Stores. Many ship operators have arrangements with ship chandlers world-
wide for a supply of provisions and deck/engine stores. A ship agent has to have
a close contact with local suppliers in case there are any ships requirements. In-
voices for rendered service should be endorsed by the signature of the Master or
Chief Mate. Regardless of the case it is appropriate to obtain a written approval
issued in advance by the Principal (shipowner or charterer) for the provision of
services. The agent must take care of customs clearance for in and outgoing goods
(spare parts) as instructed by the Principal.
4. Cash to Master. Cash might be required for crew’s wages or to settle invoic-
es of the local suppliers. No doubt, the agent should not tender the money to the
Master until the permission and fund has been received by the agency company.
5. Crew repatriation. The agent should deal with the immigration and customs
formalities regarding the signing and off-signing of the crew. Arrangement of
travel should follow the Master’s or shipowner’s instructions taking into account
the travel costs, booking of hotels and the mode of transport.
6. Medical assistance and Hospitalization. Ports normally have available doctors
who specialize in the seafarer’s routine requirements. It is useful when the agent knows
certain specific medical terms, symptoms of the diseases in English or other mutual
understandable language that help to communicate with the doctor and the patient.
The medical treatment of the crew is usually covered by the shipowners Protecting &
Indemnity insurance. The agent should be aware that separate invoices and medical
reports covering all aspects of the treatment might be required by the shipowners.
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7. Mail. The port agent has a duty to deliver mail on board promptly. Equally
important is the correct re-direction of mail and/or provision received after the
ship’s departure.
The agent is responsible for the preparation of the Statement of Fact (SOF) where
all relevant facts and times concerning loading or unloading operations are to be re-
corded. The SOF has to be signed by the agent and the Master and in some cases by
the shipper’s or receiver’s representative. A SOF must contain following data (the
exact content may vary depending on ship type, loaded cargo, arrival purpose etc.):
–– Name of the vessel
–– End of sea passage (E.O.S.P.)
–– Arrival roads
–– Reasons for any delay on the outer roads
–– Pilot on board
–– Passing breakwater
–– First line ashore
–– Notice of Readiness (NOR) tendered/accepted
–– Authorities on board
–– Ullages taken
–– Samples taken
–– Tanks (or holds) inspected/accepted
–– Hose connected
–– Commenced loading /discharging
–– Completed loading/discharging
–– Reasons for none loading/discharging
–– Ullages/samples taken
–– Hoses disconnected/ loading or discharging completed
–– Cargo documents on board
–– Authorities on board
–– Pilot on board
–– Pilot dropped
–– Start of sea passage
After the completion of ship’s operations the agent has to ensure that cargo docu-
ments are on board and signed by the Master. Furthermore, he/she has to arrange the
ship’s departure, including outward formalities, order a pilot and tugboats (if needed).
Immediately following the departure of the ship, the ship’s agent must notify the ship-
owner, charterers and next port agent about the departure of the ship. Moreover, the
agent has to forward cargo documents (Bill of lading, Cargo manifest, stowage plan)
and to advise about the expected time of the ship’s arrival to the port of destination.
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5.3.4. Ships agent ac tivities related t o t h e carg o
As previously mentioned, functions of the ship agent are related not only to the
particular ship, but also to the cargo she carries. Such functions include:
1. To prepare and issue cargo documents. Very often the ship agent has an obli-
gation to prepare cargo documents. The ship’s agent must follow the shipowner’s or
charterer’s instructions on what types and forms of the Bill of lading or other cargo
documents should be used and what wording and remarks are to be incorporated in
those documents. After receiving instructions, it is advisable to prepare draft docu-
ments and coordinate them with all the parties involved in the process.
If the Bill of loading forms the basis of a documentary credit the bank usually
demands a clean Bill of lading. The clean Bill of lading means that a document is
signed without Master’s reservations and remarks. If for any reason the cargo is not
loaded as prescribed, the Master can put reservations and remarks on the Bill of
lading. By doing so, the Bill of lading is no longer clean and the bank will not give
documentary credit. In order to remedy this, it is custom to put the reservations and
remarks not on the Bill of lading but on the Mate’s receipt. Undoubtedly the Mas-
ter’s intentions to sign cargo documents must be known in advance before the com-
pletion of loading or discharging operations. This is the responsibility of the agent.
Moreover, the ship’s agent must be aware of the importance and purpose of these
documents – Bill of lading, Mate’s receipt, Waybill, Stowage plan, Invoice, Cargo
manifest, Quality certificates, Phytosanitary and Veterinary certificates.
2. To deal with additional services in connection with claims, disputes etc.
The ship’s agent plays a vital role in helping to resolve any disputes and claims
arising between a ship and a stevedores or freight forwarders. The Master of the
vessel may submit various protest letters through the ship’s agent, for example
improper cargo loading or lashing, cargo damage, cargo quality and quantity in
dispute, oil pollution during ship’s bunkering and many others.
After a rough voyage the Master on arrival at the port for purpose to protect own-
ers interests may decide to make a protest before a consul or notary public, declaring
that he and his crew have exercised all reasonable care and skill during the voyage
to avoid damage to ship and cargo, and that any actual loss is due to extraordinary
circumstances was beyond their control. The protest is usually handed through the
ship’s agent who must arrange the translation of the protest documentation into the
local language and to ensure the arrival of the Master and crew-witnesses at the no-
tary’s office. In the majority of cases this task is highly time-consuming for the agent.
3. Other with cargo related questions. An agent should be aware who has the
express, implied or apparent authority of the carrier to sign Bills of lading. In the
case of the agent signing Bill of lading on behalf of the Master, he/she must obtain
the Master’s authorization accordingly.
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The ship’s agent must be aware of situations related to non-availability of orig-
inals of Bills of lading upon ship’s arrival to the destination port. The Master of
the vessel may not authorize the discharge of the vessel.
For instance the agent may be instructed to collect all or part of the freight for
carriage of goods. Under such circumstances neither documents, nor cargo should
be released unless the freight was paid and the corresponding permit was received.
5.3.5. Adm inistration of ship’s port d u es an d t ax es
All merchant ships pay port dues collected by the port authorities. This is a charge
paid by the ship operator to port authorities for the usage of the port. The funds collected
are used to ensure safe navigation, to support the construction of infrastructures (quays,
buoys, entry channels) and their functionality. The Regulations on application of port
dues define the procedure for calculation, payment and application of the port dues.
Typically port dues are calculated on the gross registered tonnage of the ship as per
issued tonnage certificate. A company providing ship agency services at the port must
enter into an agreement on the procedure of payment of port dues with the port authority.
Most shipowners or charterers appeal to agents with request to revert with estimated
port proforma disbursement and any available discounts. The port authorities apply the
usual practice when discounts are granted to the seagoing or inland “greener” vessels or
liner vessels that visit the port on regularly basis. Many uniformed charter parties have
taxes and dues clause that governs which party and what taxes are payable.
For example, “GENCON 94” Charter Party taxes and dues clause states:
a) On vessel – The Owners shall pay all dues, charges and taxes customarily
levied on the Vessel, howsoever the amount thereof may be assessed.
b) On cargo – The Charterers shall pay all dues, charges, duties and taxes
customarily levied on the cargo, howsoever the amount thereof may be assessed.
c) On freight – Unless otherwise agreed, taxes levied on the freight shall be for
the Charterers’ account.
In most cases the ship’s agent is responsible to the port authorities for the dues
and taxes to be paid. The ship’s agent must provide an insurance policy against
non-payment of dues or to pay dues in advance before the arrival of the ship.
In return to agent‘s attendance of the ship in the port the agent is remunerated
with an agreed fee. Ships operators typically prefer that the agent quotes a com-
petitive all-inclusive or a lump-sum agency fee covering the intended port opera-
tion and the whole time that the vessel is at the port. The fee is agreed through ne-
gotiation between the agent and the principal and is often subject to a competition
from other agents. By mutual agreement the agent also is entitled to an additional
fee in the event of unexpected ship’s delay or additional work to be done.
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It is a common practice when a ship agent requires ship‘s operator advance
payment of port dues. This minimizes the risk of a ship’s agent when the ship op-
erator is insolvent or has financial difficulties. It should be noted that the agency
fee often amount to only 10% of all the necessary port dues. Thus, the ship agent
carries a high risk when comparing it with his earnings.
After departure of the attended ship, the agent shall use their best endeavours to en-
courage port and terminal operators, authorities and service providers to render their
invoices in time. The agent has to check the invoices and make payments to the relevant
parties. Even more after all invoices are collected by the ship’s agent he has to prepare
and forward the final disbursement account to the shipowner or charterer. The agent
has to ensure that final disbursement account is presented in English (or with the trans-
lated keywords) and supporting original vouchers and/or invoices are attached. It is the
agent’s duty to ensure that the proforma disbursement account is as accurate as possible.
5.4. Summa ry o f p ro c e s s o f s h i p ’s a g e n c y
At the time of the initial appointment, the Principal will issue instructions to the agent
detailing the services required and the limits of delegated authority. Within the limits of
that authority, the agent is entitled to enter into agreements or contracts, disburse funds
and make other arrangements that may bind the Principal or incur costs on their behalf.
The agent should undertake to use its reasonable endeavours in representing the interests
of the Principal and to fulfil its tasks with the necessary care and diligence.
Assuming that the agent has not exceeded the delegated authority granted by the
Principal, the Principal agrees to undertake the obligations and to indemnify the agent
for any costs resulting from contracts or arrangements entered into by the agent on the
Principal’s behalf. The agent is entitled to benefit from the protections available under
the above agreement. However, in order to do so the agent has to use the phrase „as
agents only” in all correspondence written or verbal. And opposite the agent agrees
to indemnify and hold harmless the principal at all times from and against all claims,
charges, losses, damages and expenses caused by or arising from the agent’s negligence,
misconduct or failure to comply with the reasonable instructions of the Principal. The
ship’s agent may be required to provide proof of insurance with the International Trans-
port Intermediaries Club (ITIC) or other similar organisation against errors and omis-
sions of its offices and employees. The insurance shall contain adequate public liability
insurance for protection against liability arising out of any wrongful or negligent act or
omission of the agent’s responsibilities under the appointment.
Most of the agency companies have prepared a handbook for shipping agency
procedures (Table 5.1).
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Table. 5.1
An example of the handbook for procedures
PROCESS OF CONTROLL. SHIPS’ AGENCY

1. M/V 2. Contract number 3. Reg. number
4. Voyage
5. Cargo
6. Description of nomination
6.1 Disbursement proforma has been sent to shipowner
6.2 Are there any restrictions applicable to the ship at the loading or dis-
charging berth?
6.3 is the ship in the debt list?
7. Head of Department 8. Date
9. Initial control
9.1 All information is received and sent to all parties involved in process
9.2 Orders collected
10. Process of control
10.1 All required documents are ready for ship’s arrival
10.2 Notice of Readiness is tendered
10.3 Captain’s declaration is received
10.4 The ship’s orders are received and ready for execution upon the ship’s
arrival.
10.5 Daily information to all parties has been sent
Date
10.6 statement of facts (sOF) is completed and signed
10.7 Captain’s authorization (if needed) is received
10.8 All shipowner’s instructions were taken in action
10.9 Advance payment of Disbursement Proforma is received
10.10 All documents for the ship’s departure are ready
10.11 All cargo documents are approved and signed by the Captain before the
ship’s departure
11 Final control
11.1 All documents (including cargo documents) are sent to all parties in-
volved in process.
11.2 All documents (including financial documents) are collected and for-
warded to the financial department
12. Agent (name, surname) 13. Date
14. Head of department (name, surname) 15. Date
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1. What FAL documents are required to be presented for the ship’s clearance?
2. Should the agent inform charterers/shipowners about the ship’s loading or
discharging progress on the daily basis? Please write such a notice.
3. What does expression ETA, ETB and ETS mean?
4. What information should be included in the Statement of fact (SOF) and
under what circumstances such document is needed?
5. What is the main purpose of conducting the draft survey?
6. Extract from Charter Party “The vessel’s agents shall be nominated by
Charterers at nominated ports of loading and discharging. Such agents,
although nominated by Charterers, shall be employed and paid by Own-
ers.” Should the agent appointed by charterers is to assist the shipowners
matters or to look after the charterers interests only?
7. In your opinion what kind of ship’s agent’s personal qualities are impor-
tant? Name three and illustrate the need of these qualities by an example
of situation where they might be particularly useful.
8. Situation: Mv “Lady Gaga” with the Philippine crew has arrived to Ham-
burg (Germany) port. The crew want to go ashore. Please select the right
answer:
A) they can go ashore without any limitation;
B) they do not have permission to go ashore unless they have German visa;
C) they can go ashore during the ship’s stay in the port if they have seaman’s
books.
9. What is the main reason prompting the use of a Flag of Convenience?
5.6. Ref eren c e s
1. Gorton, L., Hilenius, P., Ihre, R., Sandevarn, A. (2009). Shipbroking and
Chartering practice. 7th ed. London, Informa.
2. International Labour Organization (ILO) Convention on Seafarers’ Identity
Documents (Revised), 2003 (No. 185). [viewed 18th October, 2017] from:
http://www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO:
:P12100_INSTRUMENTID:312330
3. International Maritime Organization (IMO) Convention on Facilitation
of International Maritime Traffic (FAL) [viewed 20th August, 2017] from:
http://www.imo.org/en/OurWork/Facilitation/News/Pages/default.aspx
121
4. Baltic and International Maritime Council, Charter Party „Gencon-94”
[viewed 12th November, 2017] from: www.bimco.org
5. European Commission, Directorate-general for mobility and transport
(2015), National Single Window guidelines.
6. Institute of Chartered Shipbrokers (2011). Port Agency. Witherhy Seaman-
ship International Ltd., Livingston, UK.
7. United Nations Committee on Trade and Development (UNCTAD), Re-
view of Maritime Transport 2016 (2017).
8. Standard Liner & General Agency Agreement (2001). [viewed 22nd Sep-
tember, 2017] from: https://www.fonasba.com/documentation
9. The Federation of National Associations of Ship Brokers and Agents [viewed
22nd September, 2017] from: https://www.fonasba.com/documentation
122
6.
P R I N C I P L E S O F C H A RT E R I N G
Olga Belakova
The chartering of ships is one of the most important aspects of commercial

work in maritime transport and the basis of tramp shipping. The commercial in-
terests of ship owners and traders, then acting as charterers, and industrial enter-
prises that export and import raw materials and other goods are involved in the
chartering process. Contracts for the International Sale of Goods serve as the basis
for chartering contracts. Knowing the conditions for chartering ships, such as a
charter party, is necessary not only for ship owners and professional shipbrokers,
but also for exporters and importers of goods.
This chapter deals with the types and forms of chartering contracts for vessels,
analyzes the commercial conditions of the charter voyage and the lease of vessels,
and describes the process of concluding the transactions for chartering a ship with
the participation of ship brokers.
6.1. Regula tio n o f th e in te rn a t i o n a l t r a d e
A Contract for the International Sale of Goods is the main contract that defines
the commercial terms of the contracts of chartering and sea transportation. The Vi-
enna Convention on the International Sale of Goods of 1980 (also known as the
CISG) specifies, in Article 32.2, that if the seller is bound to arrange for carriage of
the goods, he must make such contracts as are necessary for carriage to the place
fixed by means of transportation appropriate in the circumstances and according to
the usual terms for such transportation. In international trade, the process of promo-
tion of goods from the seller to the buyer is an important one, i.e. the interest is the
physical process of transportation. When concluding a Contract for the International
Sale of Goods, the seller and the buyer formulate in it the conditions associated with
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the transportation of the goods by use of trade term such as an iNCOTERMs: the
distribution of the obligations for the transportation of goods, the distribution of
costs of transporting the goods, as well as determining the exact moment when the
risk of loss or damage to the goods passes from the seller to the buyer.
6.1.1. i nter nationa l trade conditions iNC OT E R M
international regulations iNCOTERM defines the responsibilities of the seller

and the buyer, the distribution of transport costs between the seller and the buyer in
the delivery of goods, as well as the risks in the transportation of goods (incoterms,
2010). An international trade transaction requires not only a contract of sale but also
additional contracts. in the first place, the goods will have to be moved from the
seller’s location to the location selected by the buyer. Therefore, it is necessary to
arrange and pay for their transport. This means that three parties are now involved:
the seller, the buyer and the carrier (Ramberg, 2011). Depending on the chosen in-
coterm rule, the obligation to conclude the contract with the carrier is imposed on
the seller of the goods (C terms) or the buyer (F terms), but in the process of cargo
carriage, somehow or other, the party, that is not a participant to the charter contract,
will participate. The system of commercial relations is as follows (Fig. 6.1).
Goods
seller (shipper) Buyer (consignee)
Contract “C terms” Contract “F terms”
Carrier
Fig 6.1 Commercial relations system for maritime transport

Source: Ramberg, J. (2011). ICC Guide to Incoterms 2010. Understanding and practical use.
Paris, France: iCC services.
For CiF transactions on a voyage charter, it can be agreed in detail the order of
the vessel delivery for loading, the laytime calculation and the terms of payment
for dispatch and demurrage. However, there is no legal relationship between the
carrier and the buyer of the goods, and no one owes anything to anyone regarding
the reception and unloading of the goods. in FOB transactions is a similar situation.
in the case of CiF, the legal relations between the carrier and the cargo owner,
who is not the charterer, can be established only through the contract for the sale
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of goods. In the Contract for the International sale of goods, on the CIF term, the
buyer’s obligations for receiving and unloading the goods, the conditions for the
lay time calculation, the buyer’s duty to pay demurrage and the right to receive a
dispatch should be included. The buyer, upon signing the purchase agreement, un-
dertakes all duties and rights related to the acceptance and processing of the vessel.
The question is how to transfer the rights and obligations of the carrier from
the Incoterm term of the contract for sale of goods if the carrier is not a party to
the contract. The charterer (seller or buyer) must literally transfer to the charter
the traffic conditions agreed before. In terms of their content, transport conditions
are an “extract” from the future charter relative to the port of discharge (CIF) or
loading (FOB). In the negotiation of a voyage charter, the consignor can no longer
change the terms contained and agreed upon in the sales contract. The contract
for the international sale of goods is concluded before the voyage charter contract
and without the participation of the carrier. Then who can guarantee observation
of the ship owner’s interests? A potential voyage charterer is well that with favora-
ble and convenient handling conditions for the ship, it is possible to achieve low
freight rates, and if they are unfavorable - chartering will be expensive. Therefore,
the prospective voyage charterer, by concluding a contract for the sale of goods,
protects the potential carrier’s interests as his own.
6.1.2. Types and forms of c ha rter-pa rt y co n t ract s
All contracts connected with chartering a vessel can be divided into two groups:
1. Contracts of chartering a ship for the performance of specific transporta-
tion work ordered by the cargo owner - contracts for the carriage of goods.
2. Contracts of time chartering where vessels are hired for a specific period -
contracts of hire a vessel.
Under the contract for the carriage of goods, the carrier undertakes to deliver
the cargo entrusted to him by the consignor to the destination point and issue it to
the person (consignee) entitled to receive the goods, and the consignor undertakes
to pay the set fee for the carriage of the goods.
Under a chartering (leasing) contract, one party (carrier, freighter) undertakes
to provide to the other party (the charterer) for a fee all or part of the capacity
of one or more vessels for one or more voyages for the carriage of goods. As a
carrier, the ship owner or other legal entity that exercises the right to manage the
work of the ship during the entire term of the contract of carriage by sea may act.
The charterer may be the seller or buyer of the goods, the multimodal transport
operator, the broker or the forwarder.
The first group of contracts includes:
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1) voyage charter for a single voyage. Voyage chartering occurs when a vessel
is employed for a single trip, loading cargo from one or more ports for discharge at
one or more ports. Therefore, after the delivery of the goods to the consignee and
the completion of all payments on this voyage, both parties are free from mutual
obligations (Over, 2014).
2) charter for a series of consecutive voyages. Under this agreement, after the
completion of the first voyage, the Operator must immediately send the vessel to
the second, and so on until all the agreed number of voyages is completed. All the
voyages are covered by the same basic terms and conditions although it may be
agreed that the freight rate fluctuates over the period of the contract (Over, 2014).
3) contract of affreightment. It is an agreement on the carriage by regular voy-
ages of a certain amount of cargo of the charterer during the specified calendar
period. In order to fulfill his obligations, the carrier has the right to attract not
only his own, but also leased tonnage and to replace ships during the term of the
contract (Over, 2014).
In this group, a commercial charter is based on commercial relations, it is ex-
ecuted once, or several times in a row or it is executed repeatedly during the
agreed period.
Within the meaning of Maritime Code’s of Latvia, Chapters XXIII General
Provisions for Chartering of Ships: „ A voyage charter contract is a contract in ac-
cordance with which the freight for carriage is calculated per voyage”.
Voyage Charter is used in tramp shipping when transporting large quantities
of cargo. The contract is concluded on the basis of the proposal of the charterer,
in which all the main terms and conditions of the forthcoming voyage are deter-
mined: the kind and quantity of cargo, the ports of loading and unloading, the
period of the cargo’s readiness for carriage, freight rate, cargo operations costs,
laytime, demurrage rate, the requirements for the ship (Gencon Charter, as re-
vised 1994). In general, for shipments under charter voyages, the ship owner acts
as a contract carrier.
Under the Voyage Charter the charterer is presented the entire vessel or a cer-
tain part of the vessel’s capacity to accommodate the cargo. The carrier does not
have the right to use the chartered vessel or spaces for other, even passing cargoes,
unless agreed with the charterer. In the event that these goods have been loaded
onto the ship, the charterer may demand their unloading, and if the carriage has
already taken place, the compensation of his proved losses (due to delay in the de-
livery of his cargo, damage to the cargo, mixing of cargoes). The carrier is obliged
to present by the due date, a vessel fully prepared for the forthcoming voyage,
including adequate crew, equipment, cargo space, refrigerator compartment and
other parts of the vessel in which the cargo is loaded in accordance with the re-
quirements for the acceptance, transportation and storage of the cargo, as well as
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the timely arrival of the vessel at the time specified in the port and immediately
upon completion of loading assign it to the port of discharge in the conventional
way and at normal speed (Gencon Charter, as revised 1994).
Features particular for this group of freight contracts:
1. Operational control and management of the vessel’s operation remains with
the ship owner (operator). The ship master in all respects is a subordinate to the
ship owner. Ship owners (operators) make decisions on planning and correcting
the voyage in all cases when it is necessary to improve the efficiency of the vessel:
choosing the route, ordering works at the port (stevedores, tugboats, pilot), and
refusal to call at the port on the route.
2. The ship owner (operator) is liable to the voyage charterer for damage, loss
of the cargo or delay in cargo delivery.
3. The ship owner bears all commercial risks associated with the ship’s down-
time on the voyage, if they did not occur through the fault of the charterer (weather,
holidays), the risks of increasing port charges and prices for fuel and supplies (com-
pared to the estimated time of charter), the risks of shipwreck and damage to a ves-
sel, others than occurred through the fault of the charterer or his employees (steve-
dores), as well as liability in the event of violation by the vessel of the Conventions
on the safety of navigation and protection of the sea environment, for causing dam-
age to third parties. Therefore, the ship owner at his own expense insures the vessel
and enters it into one of the clubs P & I. The charterer pays only the freight amount
agreed upon by the contract, except for cases when the ship’s delays or ship owner’s
losses have occurred through the fault of the voyage charterer.
4. The party to the voyage charter is the ship owner and the Bill of lading is
signed on his behalf.
5. The ship owner’s income is proportional to the work performed. The ship
owner has a direct interest in the maximum loading of the vessel and the speedy
voyage completion.
Also, the first group includes Berth Note. Such a contract can be concluded
both in tramp and in line shipping. In tramp shipping, the Berth Note can be con-
cluded when, under the main charter the ship is chartered for part cargo, and the
ship owner reserves the right to load the vessel with a passing cargo, loaded in the
same port, at the same berth where the main cargo is received. The passing cargo
must be carried without damage to the main charter. In practice, loads under Berth
Note must be loaded before the vessel is presented for loading under the main
charter and unloaded after.
The conclusion of the contract of sea transportation in liner shipping is con-
firmed by a Liner Bill of Lading. The ship owner acts as a common carrier. He
independently determines the composition of the fleet on the line, ports of call,
frequency of voyages, timetable, develops commercial terms of the bill of lading,
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tariffs and offers the system of transport services organized by him to all consignors.
Separate consignments of cargo are placed by the carrier on the vessel at his discre-
tion, considering the general interests of the voyage. Only the cargo on the upper
deck should be agreed with the cargo owner, and in the bill of lading should be the
remark “on deck”. The carrier has the right after the acceptance of this consignment
to load or unload any other cargo in this or that port of the line, to perform various
auxiliary operations and repair work, and to deliver cargo with transshipment in
the intermediate port to another vessel or the other mode of transport. The terms of
transportation and tariffs are applied to all consignors for a long period before their
next change. In certain cases (a permanent consignor, a large lot size, underload of
a vessel or the presence of empty containers in the port), the line can agree with the
customer significant discounts from the set tariff rates.
Another form of the contract of sea transportation is the Booking Note, which
is a preliminary request of the cargo owner with a view to book a place on the ship
for a certain consignment. Usually used in liner shipping. After signing by the car-
rier or his agent, the Booking note obtains the nature of the contract for carriage
by sea. It stipulates the specific characteristics of the transaction: amount and type
of cargo, ports of loading and unloading, date of readiness of the cargo, name of
the vessel, the freight rates.
A Linear bill of lading and a voyage charter represent the full form of the
contract of carriage by sea, as they contain all the necessary commercial and legal
clauses defining the relationship of the parties to this transaction. Berth Note and
Booking Note are short forms of the contract, since the basic characteristics of the
transaction are agreed in it, and in respect of the other conditions the reference to
the charter party and the bill of lading is made.
The second group includes freight contracts for a time, which contain elements
of lease relations. These include the Time Charter and the Bareboat Charter. With-
in the meaning of Maritime Code’s of Latvia, Chapters XXIII General Provisions
for Chartering of Ships:
„A time charter contract is a contract in accordance with which the lease pay-
ments are calculated for a specified time period.”
Time charter provides for the transfer of the ship only in “use”, bareboat - char-
ter assumes the transfer of the vessel into possession, i.e. under the physical con-
trol of the charterer. In the Bareboat charter, the ship owner changes: the charterer
of the ship becomes the ship owner before any third party. His rights are based on
one of the legal bases of the ship’s property rights. In any case, time charter and
bareboat charter are maritime contracts since there present a very important ele-
ment - “hire for the purposes of navigation”(Over, 2014).
Features of the second group chartering contract:
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1) the control and operative management of the ship work pass to the charterer.
However, in the time-charter, the labor relations of the ship owner and crew remain,
and the ship owner remains responsible for maintaining the vessel in a seaworthy
state, i.e. this duty also includes technical operation of the vessel. The captain is in a
double subordination: in terms of technical operation of the ship and personnel man-
agement, he is subject to his ship owner, and in the part of commercial operation, i.e.
gaining profit of ship operation, he is a subordinate to the charterer;
2) commercial risks are attributed on the charterer’s account;
3) the carrier functions in the maritime contract is implemented by the char-
terer and a Bill of lading is signed on his behalf;
4) the charterer is responsible for the safe transportation of goods. However,
the carrier can be held responsible for the cargo due to the vessel’s inefficiency or
improper care of the cargo, since the technical condition of the cargo and the crew
of the vessel is in a time charter under the management of the ship owner.
5) The ship owner’s income is proportional to the time and does not depend on
the vessel’s work. The ship owner is not interested either in the maximum loading
of the vessel or in the speedy completion of the voyage.
The second group of contracts also includes Slot Charter and Space Charter.
These are fixed-volume ship hire contracts for a long period of time.
6 .1.3. Standard Ship C ha rtering C on t ract s
In the process of conclusion of a chartering contract, the parties to the agree-

ment - the ship owner (freight carrier) and the charterer (consignor) must agree all
the terms of the transaction in detail. For each position of the contract, it is necessary
to provide for various situations that may occur in the forthcoming voyage or for a
certain period of ship operation, as well as the liability of the parties for breach of
obligations. The wording of the provisions of the contract must guarantee their un-
ambiguous interpretation, taking into account arbitration and judicial practice. The
task is further complicated by the fact that negotiations on chartering are conducted
by phone, e-mail and often must be completed within a few days or even hours.
The complexity of the relations arising from the freight contract, the variety of
conditions in which sea freight flows occur, limited time available to the parties
for negotiations, makes it impossible to re-formulate all the terms of the contract
when concluding each specific transaction. Therefore, in the commercial navigation
the standard chartering contract - a uniform charter is used. These are the charter
standard terms, developed on the basis of a long international experience, which the
partners in the transaction can use as the starting base for the conclusion of the char-
ter party. Standard contract forms are developed by the international organizations
of ship owners and brokers or major charterers who involve specialists in the field
129
of maritime law. The use of standard contracts does not prevent contracting parties
from including their amendments in charter agreement, which are entered in the text
or made in the form of additions. The main task of the consignor and the freight
carrier is to resolve issues that determine the specific content of the charter contract:
ship, cargo, time limits, ports, rates, etc. Regarding commercial and legal conditions
of transportation, it is sufficient for the parties to choose a typical contract charter
form and agree on those changes and additions that should be included in its printed
text. In the international transportation market, several hundred standard contracts
are used to conclude charter agreements, which can be systematized according to
the principles of development, application, and structure.
According to the principles of development there are recommended and special
charter standard contracts. Recommended ones are standard chartering contracts
developed, advised and recognized by major international or national ship own-
ers and brokerage organizations such BIMCO – Baltic & International Maritime
Council, (FONASBA-Federation of National Associations of Ship Brokers and
Agents), the UK Chamber of Shipping or the Japan Shipping Exchange. The fact
that this standard charter contract has been recommended or recognized by one of
the ship owners’ organizations is certified by the text “recommended, adopted” on
the first page of the contract form.
Private ship chartering includes contracts forms developed unilaterally by ma-
jor shippers.
According to application, special and universal standard chartering contract
forms are distinguished. Special pro-forms are developed for all types of bulk
cargo. Each standard charter contract has its own code name for the conveni-
ence of its identification. Accordingly, there exist and are used liquid bulk cargo
(code name: Intertankvoy-76; Asbatankvoy 1977, Shelltime 4, BPVoy 3/BPTime
3), grain (code name: NORGRAIN 89, NIPPONGRAIN), coal (code name: COAL-
OREVOYBILL 2016), ore (code name: NI PPONORE), standard timber contracts,
etc. Each of these groups includes several specialized chartering contracts for ma-
jor export areas. Universal type contracts are for use in the transport of general
cargoes, bulk cargoes or timber, on those directions where there are no specialized
charters. The most common in use is the universal pro-forma of the voyage charter
“GENCON” and the temporary charter “GENTIME” or “BALTTIME” recom-
mended by the BIMCO organization. When hiring a vessel on a bareboat charter,
the pro-forma “BARECON” is used (Gorton, Hillenius, Ihre, Sandevarn, 2017).
By the arrangement of the material and the form of construction, there are char-
ters of the archaic type, in which the arrangement of the articles is not structured and
the charters of the modern type, which consists of two main parts. The first part of
the contract has a box form, consists of fields into which all the commercial condi-
tions of the concluded contract are entered. The second part consists of articles that
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detail the procedure for applying commercial terms of the transaction. When making
additions and adjustments to the printed text, the typical conditions of the standard
contract are crossed out, and new ones are inserted instead. All newly formulated
and additional articles of the contract are combined into the addendum or rider.
6.2. Comm e rc ia l te rms o f v o y ag e c h a r t e r c o n t r a c t
The charter articles below determine the conditions for the commercial opera-
tion of the vessel on the forthcoming voyage or voyages. They are elaborated and
agreed in detail by the partners in the negotiation process. The agreed conditions
are fixed in part 1 of the charter, in standard fields of the box form. In the second
part of the charter, articles of the contract are formulated, which determine the
procedure for the application of stated norms and rates.
6.2.1. Ship
Seaworthiness provision. Voyage chartering type contract Gencon states that the
ship must be durable, watertight and in all respects equipped to carry out forthcom-
ing voyage. It is the carrier’s responsibility to ensure the seaworthiness of the ship
prior to the tendering of the Notice of Readiness confirming that the vessel has
arrived at the agreed destination and that she is ready to load or discharge cargo.
This means that the vessel, its machinery and equipment, supplies and rigging, the
number and qualification of the crew, the grade and quantity of fuel must ensure
safe and without delay delivery of the agreed cargo under normal conditions of
navigation in the specified area and the season (Girvin, 2011). The concept of sea-
worthiness also includes the provision that the ship must have valid Ships Register
safety certificates. The charterer requires the ship and the company-operator also
to have ISM (International Management System) and ITF (International Transport
Workers’ Federation) certificates. Article III, rule 1 Hague-Visby Rules requires the
carrier to provide a seaworthy ship “before and at the beginning of the voyage”.
When necessary, a condition is introduced that the vessel must have watertight
cargo hold hatch covers. The charterer has the right not to accept the ship until it
is brought into a seaworthy state. If the seaworthiness of the vessel appeared on
the voyage and led to the loss or damage of the cargo, or the delay in its delivery,
the ship owner must prove that the defect of the ship equipment, that caused the
unseaworthiness, appeared after the vessel had left for the voyage (Girvin, 2011).
In confirmation of this, the certificates of the Register for the ship’s equipment
and devices, and the surveyor’s certificate of the test results of the hatch covers for
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watertightness, obtained before the start of loading, can be submitted. Any dam-
ages caused to the cargo due to bunker’s deficiency or low quality, or structural
defects and equipment of the vessel, if it occurs during the voyage, shall entitle
the charterer to claim compensation from the ship owner for the proved damage.
Besides, the ship’s operator is responsible for any damage caused to the cargo
due to poor quality stowage, separation, and fastening, violation of the rules for
ventilating the holds and fastening of the deck cargo during the voyage or failure
to follow the charterer’s instructions for securing the cargo.
In addition to the seaworthiness condition, three ship data groups are included
in the charter: vessel particulars that determine the size of the premium for cargo
insurance; characteristics that determine the possibility of implementing agreed
rates of cargo operations; characteristics that determine the possibility of mooring
the ship to a berth in the agreed ports of loading and discharge. The ship owner is
interested in stipulating in the charter the right to change the vessel (Girvin, 2011).
This condition can be formulated as a Substitute, which means the right of the ship
owner to replace the stated ship for another vessel, with similar particulars or a
Sistership - a vessel of the same series.
6.2.2. The vesse l’s date of rea dine ss fo r l o ad i n g
Before engaging in a charter in accordance with a voyage charter contract, a

seagoing vessel must complete a previous voyage or repair, provide cargo holds or
tanks for loading operations, and usually performs voyage in ballast to the place
specified in the contract (usually a loading harbour raid). The duration of such
operations cannot be accurately scheduled. Therefore, in the charter contract, the
ship’s readiness for loading is established by the ship owner not by a specific date,
but in the form of an interval between two calendar dates. All days of this interval
are called laydays. The earliest date range is known as the first arrival day, “first
laydays” (full text in the charter pro-forma “laydays no commenced before ...”). If
the ship arrived earlier than the first layday, in general, it does not impose any ob-
ligation on the charterer to accept the ship earlier than the first layday. The second
date is the cancelling date (final layday), which means if the ship has not arrived
at the specific location on the date specified in the contract as the cancelling date,
the voyage charterer has the right to cancel the charter contract and refuse to ac-
cept the ship by charter. Usually in a charter it is indicated that laydays begin with
the commencement of official working hours of the port, and the cancelling date
expires with the end of official working hours of the port. During the negotiation
process for concluding a voyage charter contract, the time interval is designated
as laycan (l/c) and is defined as a whole, for example, “L / C 5-8.06.” (Gorton,
Hillenius, Ihre, Sandevarn, 2017).
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The charterer, when choosing the dates of laycan, must take into account two
circumstances:
• the period of readiness of the cargo for loading, i.е. term, to which the
cargo will be delivered to the port and will pass customs clearance. If the
date of laydays comes earlier, and the ship owner submits the vessel, the
lay time will begin even when the ship is idle in anticipation of the readi-
ness of the cargo;
• the period when the time of free cargo storage in the port ends. If a later
date is set as a cancelling date and the ship owner submits by this date, the
charterer will incur additional costs to pay for the storage of the goods .
The carrier chooses the date of laydays based on the minimum necessary time
for the ship to be loaded, and if necessary, also taking into account the time for
bringing the vessel into a seaworthy state. The date of the cancelling is chosen
by the carrier taking into account the possible delays of the ship before it arrives
at the port of loading. In order to avoid disputes, the procedure for changing the
deadlines of laycan is stipulated in the charter. If the vessel arrived at the port
before the date of laydays and was delivered by the charterer for loading, the con-
tract may provide for one of the options:
• a condition in the interests of the ship owner: all the time, actually used for
loading up to the date of laydays, is included in the laytime;
• a condition in the interests of the charterer: the time before the date of
laydays is not taken into account, regardless of whether it was used or not;
• a compromise option: half the time, used before the beginning of the lay-
days, is included in laytime .
• If the ship is late by the cancelling date, then the contract may provide for
one of two solutions:
• optimal for the charterer: the carrier for a certain number of days before the
date of the chartering notifies the charterer of a new date of readiness of
the vessel for loading, and the charterer not later than a day after the expiry
of the cancelling date, must inform about the termination of the contract.
In the absence of such a notice is considered that the charterer has accepted
the terms of the ship owner;
• optimal for the carrier: the vessel shall promptly notify the charterer of a
new date of readiness of the vessel for loading, and the charterer within
a certain number of working hours shall notify of the contract cancelling.
Otherwise the charter remains valid.
If there is a reservation in the charter, the ship owner may, in the event of delay
of the vessel for loading, present to the charterer another ship for the same terms.
133
6.2.3. Cargo
In this charter article, the transport characteristics and quantities of cargo are
specified. Typically, a voyage charter is for carriage of a certain cargo. The ship
owner is interested that the full and precise name of the cargo, its transport char-
acteristics, i.e. the name of the cargo, physical and chemical properties of cargoes
that determine the possible loading, the duration and cost of cargo operations, the
risks associated with the transportation of this cargo in relation to the vessel, crew
or other cargoes, are indicated in the charter.
First of all, the way of transportation and the type of packaging are indicated:
in bulk, in separate units, in packages, big bags or containers. Particular attention
should be paid to the full description of the cargo when carrying dangerous goods.
Particular attention to the full description of the cargo should be given when trans-
porting dangerous goods. Sometimes in a charter it is stipulated that the sender has
the right to present to transportation any legal cargo. Under a legitimate cargo it is
understood that the cargo must pass customs control both at the port of departure
and at the port of destination. As a rule, a specific amount of cargo in the charter
is stipulated in metric tons, cubic meters or pieces. For general cargoes, the exact
mass is indicated, or the “about” clause is applied. In this case, the tolerance for
the deviation from the specified quantity is assumed to be ± 1-3%, depending on
the type of cargo (Gorton, Hillenius, Ihre, Sandevarn, 2017).
Large and long-term contracts are used to buy and sell mass cargoes. There-
fore, the charter usually specifies the “margin” - the permissible deviation from
the basic quantity of cargo agreed between the shipowner and the charterer for
this voyage. Usually the choice of the exact amount of cargo within the margin is
the right of the ship owner. This is fixed in the charter by abbreviation MOLOO
(more or less owner’s option). At the same time, it is advisable for the charterer to
set in the charter the deadline, before which the ship owner is to declare the exact
amount of cargo. It is in the interests of the ship owner to make such a statement
as late as possible, before the loading or before breaking bulk (Gorton, Hillenius,
Ihre, Sandevarn, 2017).
This allows you to preliminarily determine the condition of the goods in the
warehouse, the amount of received supplies for the voyage, and on the basis of
the information received, calculate the maximum possible load. The charterer is
interested in receiving from the ship owner the application for the quantity of the
cargo as early as possible, for example, with the submission of a preliminary no-
tice. In the process of negotiations, the parties can agree to a compromise solution,
for example, when filing a note on the readiness of the vessel for loading.
Sometimes the charter stipulates that the amount of cargo within the margin
chooses the charterer, is indicated by the condition MOLCHOPT (more or less
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charterer option). If the shipowner can not determine in advance how much of
the cargo he will place on the ship, he adds a “full and complete cargo (c + f)”
condition to the charter. This means that he undertakes to accept as much cargo as
is permissible by the ship’s deadweight or hold capacity of the vessel. If the char-
terer is interested in the guaranteed shipment of a certain quantity of cargo, the
addition of “min ... mt up to full & complete cargo CHOPT” should be included
in this wording (Gorton, Hillenius, Ihre, Sandevarn, 2017).
In the printed text of the majority of standard proforma charters, there is a reser-
vation that the ship should take the goods only in conventional cargo spaces. Thus it
is confirmed that the vessel does not have the right to place part of the agreed quan-
tity of cargo in unsuitable and inconvenient premises. Stowage of a part of the cargo
on the upper deck is allowed only with the consent of the charterer. The relevant
remark must be entered into the charter, which also took notes on the bill of lading.
The provision of the timber contract for the carriage of a part of a cargo on the upper
deck is included in the printed text of the standard proforma contract. In the charter
other conditions of cargo stowage different than the conventional maritime practice
can be agreed, for example, transportation of fruit on pallets with stacking height of
more than one tier or in cargo spaces without a cooling system. In this case, the ship
is made free from the risk of damage to the cargo.
In the event that the charterer has not presented all the cargo declared by the
master of the vessel within the margin, the ship owner is entitled to receive a dead
freight. It is calculated as freight at the rate agreed upon in the charter for all un-
derloaded cargo, less the costs that the ship owner would incur in such transporta-
tion. If the vessel has not been able to accept all quantities of cargo agreed upon
by charter or declared within the margin, the charterer is entitled to lodge a claim
in the amount of proved losses - vehicle downtime, additional transshipment and
storage of cargo, shipment of another cargo at a higher rate, decrease of the stock
exchange price of the goods and the like.
6.2.4. Por ts of loa ding a nd discharge
Ports of loading and discharge can be defined in the charter in one of four
ways:
1) Direct ports - specific ports;
2) Option of the port: the chartering contract specifies several possible ports of
loading and discharge; during the voyage, the charterer has the right to direct the
ship to any of them;
3) Range: the chartering contract specifies a section of the sea coast, bounded
by two ports or a sea basin. During the voyage, the charterer has the right to direct
the ship to any port in the section, including both bounding ports;
135
4) Broad c/p: range option. Charter contract specifies the number of ranges;
during the voyage, the charterer can take the ship to any port in any specified
range (Gorton, Hillenius, Ihre, Sandevarn, 2017).
If in the charter contract an option or a range is specified, then the ship owner
must clearly stipulate the order of port nomination. Usually in a charter the order
position is stipulated. As such, approaches to straits, canals and narrows that are
as close as possible to the region are usually assigned. With the approach to the
order position, the captain informs the charterer, who is obliged to order the ves-
sel within the agreed time, i.е. specify the port of destination. Also, if the specific
ports of loading and discharge are not specified, the ship owner identifies the
requirements for the port with the help of the remark “good, safe, always afloat,
always accessible port” (GSAAAAP). This means that the port specified by the
charterer must have transshipment equipment; be safe in military, navigational
and quarantine aspects; be available in any weather and at any time of the day; the
depths at the berth should allow cargo operations to be carried out always afloat,
safely enter the port of loading and safely go on voyage with cargo.
The charter specifies the number of berths that the charterer can use at the
ports of loading and discharge. If, according to the charter, the charterer has the
right to use two berths in this port, the time spent on one shifting is not included
in the laytime. The requirement to berth is specified, as well as for the port, using
GSAAAAB principle.
6.2.5. Laytime
Laytime is the time that, in accordance with the terms of the charter, is pro-
vided to the charterer to perform stevedoring operations in the ports of loading/
discharge, for which the shipowner receives no additional compensation, other
than the agreed freight rate. In the charter three basic conditions are set: the mo-
ment of the beginning of the counting of the laytime, the procedure for calculating
the duration of the laytime and the excluded periods (Over, 2014).
The first condition in order the counting of the laytime to commence in accord-
ance with the charter, the captain must submit to the port of loading / discharge the
preliminary notices about the expected date of arrival at the port. The number and
terms of these notices submition are stipulated in the contract. The obligation of
the captain to state the expected time of arrival of the vessel at the port (ETA) is
particularly stipulated in the charter. This notice must be submitted 24 or 48 hours
prior to the vessel approach. The second important condition for the beginning of
the laytime is the submission by the captain of the notice of the ship’s readiness
for cargo operations, which must be accepted by the charterer.
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Depending on the agreement and customs of the port, the charter provides for
the following conditions relative to the place where the notice is submitted:
• WIBON (Whether In Berth Or Not) - after receiving free pratique and
mooring the vessel to berth; regardless, whether the ship is at the berth or
not, i.e. from the anchorage in the port harbour;
• WIPON (Whether In Port Or Not) - regardless, whether the ship is in the port
or not, i.e. from an open roadstead within the visibility of the pilot station;
• WIFPON (Whether In Free Pratique Or Not) - regardless, whether got free
pratique or not;
• WCCON (Whether Customs Cleared Or Not) - regardless, whether passed
the customs clearance or not (Over, 2014).
Ship owners enter in the charter all the conditions together, which is denoted
by WWWW. According to the charter contract the charterer before the start of
loading has the right to check the readiness of holds for cargo operations. The
charterer (an independent inspector) can state the detected shortcomings and set
terms for their elimination. If these instructions of the surveyor are not met, the
notice of readiness is recognized as invalid and must be re-submitted.
Terms and conditions of the voyage charter contract provide that a voyage
charterer may be granted a certain period of grace from the moment the notice of
the ship’s readiness is received until the start of the laytime count; this is related to
the port practice of timely ordering of stevedore teams. Most often the condition
on the laytime commencement is formulated as follows: “if the notice of readi-
ness is received before noon, the count of the laytime begins at 13 (14) hours; if
the notice is received in the afternoon, the account of the time starts from 6 (8)
hours of the next working day, or 24 working hours after the acceptance of the
notice (Gencon, as revised 1994). The length of the laytime is determined by di-
viding the total amount of cargo by the rate of cargo works. Usually, only weather
working days (WWD) are taken into account as laytime counts, i.e. the charterer
is exempted from liability for a ship’s downtime on weekends, holidays and bad
weather days. The wording “weather permitting” is also used. When chartering
bulk carriers and tankers, laytime is calculated in the running days (Over, 2014).
From the laytime calculation, bad weather days are excluded, as well as week-
ends and holidays; such conditions as SHEX - Sundays, Holydays Excluded;
SSHEX - Saturdays, Sundays, Holydays Excluded; FHEX - Fridays / Holidays
Excluded. If under the contract, weekend and public holydays are included in lay-
time, the charter is made subject to the reservation SSHINC - Saturdays, Sundays,
Holidays Included; FHINC- Fridays / Holidays Included. When calculating the
lay time in working days, the charterer may, if necessary, carry out cargo works
on weekends and holidays. In these cases, the charter specifies whether the time
used for work is included in laytime (Over, 2014).
137
Conditions are interpreted as follows:
• Weekends and holidays are excluded from laytime regardless of whether
they were used for work or not;
• Weekends and holidays are excluded from laytime unless they were used
for work. In this case, if the charterer performed work on Sundays and
holidays, all the time used for work is included in laytime (Over, 2014).
In order to avoid disputes, an expanded version of the reservation UUIWC-
TAUTC – Unless Used In Which Case Time Actually Used To Count is usually
included in the charter contract.
If the vessel is delayed for loading or unloading over the agreed laytime, the
so-called counter-laytime (demurrage time) begins, for which the charterer pays
the demurrage to the shipowner, that is an additional payment for the agreed
freight for the vessel’s delay. The amount of demurrage is indicated in the charter
in the form of a certain amount per vessel per day, it is also possible to specify the
demurrage rate per hour. Counter-laytime is considered in the current days. From
the moment of the expiry of the laytime, demurrage is payable for all days, includ-
ing Sundays, holidays, bad weather days, etc. The only thing that is excluded from
the time record at the demurrage is the downtime due to the vessel’s fault. The
pro forma specifies the maximum number of counter-laydays during which the
charterer is entitled to detain the demurrage payment to the ship. After expiration
of the counter-laytime, the shipowner has the right, upon warning the charterer,
to ship the vessel from the loading port with the quantity of cargo that has already
been loaded, and to require the charterer to pay a deadfreight for the underloaded
cargo. Also there is a super-counter-laytime, for each day of which the payment
is planned at a rate exceeding the demurrage rate. Despatch money is a remunera-
tion paid by the shipowner to the charterer for the end of the loading or unloading
of the vessel before the expiration of the laytime stipulated by the charter, for so
called “saved time”(Over, 2014).
If handling of the vessel in the port of loading / discharge is agreed upon liner
conditions (lilo, filo, lifo), the laytime in the port is not counted, and demurrage
and dispatch is not paid. The detailed record of the time in the port is noted in the
Statement of Facts, based on which Time Sheet is compiled, where the laytime,
the size of the dispatch and demurrage are calculated.
6.2.6. Payme nt for c argo works
The costs of loading and unloading cargo are shared by the shipowner and
charterer can be six standard distribution schemes for voyage charter contracts
„(Over, 2014):
138
• The shipowner bears the costs for cargo operations both at the port of load-
ing and at the port of discharge (gross terms);
• The shipowner is free from the payment for loading, but bears the costs of
stowage of the cargo and its unloading (free in);
• The shipowner is free from payment for loading and stowage, but bears
costs of unloading (free in and stowed);
• The shipowner is free from payment for unloading, but pays for loading
and stowage of cargo (free out);
• The shipowner is free from payment for loading and unloading of cargo,
but pays for its stowage (free in and out - fio);
• The shipowner is free from payment for loading, unloading and stowage
(free in and out and stowed - fios).
Distribution of costs for separation, dunnage materials, fastening /unfastening
of the cargo is particularly stipulated in the charter. In most typical charter forms,
these costs are borne by the charterer (fios L / S / D). These options for the distri-
bution of costs for cargo operations between the shipowner and the charterer only
apply to the ship operation - loading from the berth to the vessel and unloading
from the vessel to the berth. Delivery of cargo to the berth at the port of loading
and from the berth in the port of discharge is in all cases carried out at the expense
of the charterer. Most proform charters have a winch clause stipulating that the
shipowner must provide the charterer with winches (cranes) for free use, power
supply for their work and winchmen from the ship crew, and also ensure the light-
ing of holds at night time (Gorton, Hillenius, Ihre, Sandevarn, 2017).
6.2.7. Fr eight
In case of a voyage chartering, the freight charge is denoted by agreement of the

parties mostly in the form of a rate of freight per unit of freight. The calculation freight
units are usually units of mass, volume or a cargo unit. Since for a number of reasons
the quantity of cargo accepted at the port of destination does not always exactly cor-
respond to the quantity of cargo from the delivered at the port of departure, the charter
specifies the cargo amount for which the freight is paid: for the loaded (intaken), i.e. for
the amount under the bill of lading, or for the unloaded (delivered) at the port of desti-
nation. In cases when it is impossible to define in advance how much cargo a ship can
take, or known in advance that it is impossible to use neither the deadweight nor cargo
capacity properly, the freight is established as the total amount for the voyage, which is
called “lumpsum”. It is also advisable for the shipowner to set a freight lumpsum, if the
charterer specifies the amount of cargo on the terms “min ... m tup to full & complete
cargo CHOPT”, i.e. with the right to load a larger quantity than agreed, up to the full
deadweight /cargo capacity of the vessel. If a ship is chartered for the carriage of un-
139
known cargo, the chartering contract shall set the freight rate per tonne of deadweight
or the volume unit of the vessel’s capacity, since the characteristics of the cargo remain
unchanged, but the method of determining the freight does not differ from the lumpsum
(Gorton, Hillenius, Ihre, Sandevarn, 2017).
The time for payment of freight in a charter can be stipulated in different ways.
The shipowner is interested in receiving freight payment at the port of departure
immediately after the signing of the bill of lading or after a certain number of days
after the signing of the bill of lading for the shipment. The usual wording used, is:
“payable within 3 (5) day after signing B/L but in any case BBB (before breaking
bulk)”, i.e. in any case before the start of the unloading. This enclosure entitles the
shipowner not to allow unloading until freight is paid, and the entire ship’s down-
time for this reason will be included in the laytime. It is advisable to supplement
that the BBB condition applies to the payment of dead freight and demurrage at the
port of loading. In the charter also applicable the condition that freight is paid only
for the goods, actually transported and paid for in destination, and it is not payable
for the goods not delivered due to its perish on the way. The moment of payment of
freight in these conditions is specified: upon arrival of the ship, after delivery of the
cargo, after checking the quantity of the delivered cargo. Payment by installments
in the process of unloading cargo at its various stages can also be assumed. In the
event that the freight is paid at the port of loading, the shipowners shall enter into the
charter the condition: “Freight is considered to be earned on cargo loading and will
not be subject to deduction and will not be refunded irrespective of whether the ship
or cargo perished or not.” (Gorton, Hillenius, Ihre, Sandevarn, 2017).
6.2.8. Other te rms of voyage charte r co n t ract
Agents serving ships in ports of loading and discharge. As a result of the nego-
tiations, any of these options can be introduced in the charter upon the agreement
of the parties:
• owners agent both ends – oabends;
• charterer’s agent both ends – chabends;
• shipowner’s agent at one of the ports (port of loading or discharge), char-
terer’s agent at the other port.
Taxes and dues. The chartering contract specifies a standard provision that all
vessel fees are paid by the shipowner, but all cargo and freight charges are paid by
the charterer (Gencon, as revised 1994).
Brokerage Commission. When signing a charter, the broker, through who the
deal is concluded is specified. The Brokerage Commission is set as a percentage
of all payments due to the shipowner - from freight, deadfreight and demurrage
fees (Gencon, as revised 1994).
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Liability of shipowners. Shipowners’ liability extends to loss of or damage to
cargo or delays in the delivery of cargo at the port of unloading only if the loss and
delay were caused by the lack of due care of the shipowners to ensure that the ship
is in any way seaworthy, properly equipped, provided with supplies, or if the loss
and delay were caused by the personal action or neglect of the shipowner or his
authorized person to ensure the preservation of the cargo (Gencon, as revised 1994).
Deviation from the voyage route. The vessel has the right to deviate from the
course of the voyage and call at the ports in any order, to navigate without pilots,
to tow or render other assistance to the ships, and also to deviate from the route for
the purpose of saving life or property (Gencon, as revised 1994).
Lien on cargo. The shipowner has the right of a lien on the cargo in order to
obtain the payment of freight, dead freight, demurrage, claims for damage to the
ship, including all costs of obtaining these payments. In order to exercise the lien,
the shipowner can either delay the unloading of all or part of the cargo, or deliver
such cargo at the port of discharge to the warehouses of the agent, stevedoring
company or port, with instructions not to deliver this cargo to the consignee before
the charterer pays the total amount of his debt (Gencon, as revised 1994).
Bills of lading. The bills of lading are drawn up on the basis of a typical pro for-
ma charter. They are signed by the captain of the vessel or by the shipowner’s agent.
In the latter case, the shipowner must issue to the agent a written power of attorney,
a copy of which the agent must present to the charterer (Gencon, as revised 1994).
Also, the other charter articles contain standard clauses on mutual responsibility in
the event of a collision, a general average clause, a strike, military risks, an ice clause
and a clause that describes the order of the proceedings in courts or arbitration.
6.3. Comm e rc ia l te rms o f a tim e c h a r t e r c o n t r a c t
The basic principles of the time charter determined the content of specific ar-
ticles of the contract and their difference from the corresponding conditions of a
voyage charter.
6.3.1. The vesse l
Besides the characteristics that determine the vessel‘s seaworthiness, the terms
of insurance of the vessel, its fitness for cargo operations and the vessel‘s overall
dimensions, when chartering in the time charter, deadweight, cargo capacity, reg-
ister tonnage, speed, bunker capacity, grade and fuel consumption per day under
way and at a stay are stipulated (NYPE2015 Appendix A. Vessel description).
141
These particulars are important for the charterer, since they determine the carrying
capacity of the vessel for the period of time charter and the charterer‘s costs for
the operation of the vessel (Girvin, 2011).
The time charter proforma contains the usual reservation about the seaworthi-
ness of the vessel: “The Vessel on delivery shall be seaworthy in every way fit
to be employed for the intended service, having water ballast and with sufficient
power to operate all cargo handling gear” (NYPE2015). In this case, if the area of
navigation and the type of cargo were not determined at the time of the conclusion
of the transaction, then the seaworthiness of the vessel is understood as the suit-
ability of the vessel for the carriage of ordinary goods under normal conditions.
All additional supplies and equipment associated with the performance of specific
voyages must be provided by the charterer at his own expense (Girvin, 2011).
The shipowner must indicate in the charter the speed that the ship can really
guarantee during the whole term of the contract, taking into account the condition
of the power plant, the fouling of the hull, the temperature of the seawater in the
prospective area of navigation. Failure to observe the speed indicated in the time
charter contract can lead to different claims to the shipowner and even considered
as a basis for termination of the charter. For example, Charter Party NYPE 2015
indicates, that the vessel shall be capable of speed and daily consumption rates
as stated in Vessel description in good weather on all sea passages with wind up
to and including Force four as per Beaufort Scale (NYPE2015). The time char-
ter contract specifies not one, but several speeds and fuel consumption for each
speed. The charterer selects the speed for each voyage and assigns it to the master
accordingly. During the period when the vessel is operating under the time charter
contract, the fuel is provided and paid by the charterer and its quality must corre-
spond the contract terms. The master of the ship is entitled to request a certificate
and to check the quality of the fuel, because low fuel quality can lead to faster
wear of the main engine and increase repair costs. The charterer is obliged to pay
the cost of the remainder of the bunker on board the ship at the time of delivery
to the time charter, and the shipowner is to pay the bunker left on the ship by the
time it returns from the time charter (Girvin, 2011).
6.3.2. Por ts
The ports of loading / discharge during chartering are not specified in the time
charter. A typical charter proforma contains a standard safety clause, i.e. ports
of call should be safe in navigational, military, political and sanitary/quarantine
aspects. A “safe port” is a port will not be safe unless, in the relevant period of
time, a particular ship can reach it, use it and return from it without, in the absence
of some abnormal occurrence, being exposed to danger which cannot be avoided
142
by good navigation and seamanship (the Eastern city 1958 2 lloyd’s rep 127). In
addition, when concluding a specific transaction, the shipowner may specify a list
of countries and regions where the charterer is not entitled to be bound for. For
example, beyond the geographical areas defined by Rules of Hull & Machinery
insurance policy, the terms of which do not cover the periods of stay of the vessel
in them; countries with which the flag country of the vessel does not have diplo-
matic relations; countries included in the “black list” of any country or group of
countries; countries and ports where an action was brought against the shipowner
for non-payment of bills and his vessel may be arrested; a ban on sailing in a cer-
tain area during the winter, especially if the ship does not have an ice class.
6.3.3. Cargo
When concluding the time-charter, the nature and quantity of cargo are not
specified. The conditions for the admissible freight for a time charter are a com-
promise between the interests of the charterer and the shipowner: the charterer
seeks to retain the right to transport any goods, and the shipowner seeks to exclude
goods the transportation of which will lead to the rapid deterioration of cargo
spaces of the ship or pose a danger to the ship and crew. The typical standard
pro-forma contains a standard clause that the charterer has the right to transport
only lawful goods on the ship, i.е. the goods allowed to be brought out of the port
of loading and allowed to be brought into the port of discharge (NYPE2015). In
addition, a list of cargoes that should not be carried on a chartered vessel is stip-
ulated. This list includes: livestock, arms, ammunition, explosives; nuclear and
radioactive materials (NYPE2015); the goods for the transportation of witch the
vessel is not suitable, or the carriage of which may cause damage to cargo spaces,
or require time-consuming stripping after unloading. With the prior consent of the
shipowner, the charterer may transport dangerous goods on board the ship in full
compliance with IMO requirements for the carriage of such goods (IMDG Code),
provided that dangerous goods do not refer to categories not covered by P & I
insurance (Girvin, 2011).
6.3.4. Time-charte r contra ct term, sh i p o n h i re an d o ff h i re
In the time charter, the following conditions relating to the hire and return of
the vessel (on/off hire) are agreed: the time, place, procedure and requirements for
the ship at the time of delivery and return, the distribution of costs associated with
these operations. The term of a time charter is determined by the calendar period
or the number of voyages. When chartering for a certain calendar period, a margin
may be set in the charter, for example, 6 months ± 20 days (Girvin, 2011).
143
The hire time (on-hire) of the ship in the time charter contract is usually set as
laycan period, as agreed in the voyage time charter contract. For an agreed number
of days, the shipowner must notify the charterer of the estimated time for the vessel
readiness for delivery for hire and inform him of any possible changes to this time.
The standard pro forma “BALTIME” stipulates that “if the Vessel cannot be deliv-
ered by the cancelling date, the Charterers, if required, shall declare within 48 hours
after receiving notice thereof whether they cancel or will take delivery of the Vessel”
(BALTIME, as revised 2001). Additional delivery for hire is possible only with the
additional written agreement of the parties. As a rule, vessel’s reception is carried
out by the charterer during official working hours of the port. The charterer is enti-
tled to hire a surveyor at his own expense to inspect the vessel (GENTIME 1999).
During the inspection period the following should be checked: the availability and
validity of ship documents, the condition of cargo spaces and cargo gears, the num-
ber and qualification of the crew in accordance with international standards. Based
on the results of the survey, a survey report is compiled. Also, during the survey, the
defects of the vessel and its equipment are documented. If defects prevent the op-
eration of the vessel, they must be eliminated at the shipowner’s expense and time,
if the defects are insignificant, they are fixed so that when the ship is returned, they
are not charged to the account of the charterer. In addition, the parties sign a ship ac-
ceptance act. It indicates the date and hour of the ship’s transition to a time-charter,
as well as the fuel reserves on board. The act is signed by the master of the ship or
the ship owner’s agent and the charterer’s agent (Karanassos, 2016).
When returning a vessel from a time-charter (off-hire), the charterer must no-
tify the ship owner in advance of the estimated time and place of return within
the agreed term of end of the time-charter. By this time, he must completely free
the ship from the obligations in regards of freight transport and prepare her for a
survey before hire.
If the vessel is delayed in a time charter, the charterer is to pay all additional time
at current market rates, but not lower than the initial contract rate. In some cases,
the charterer reserves the right to extend the contract for a certain additional period.
The transfer of the vessel to a time charter (on-hire) can be provided in a safe
port within the agreed range, or from the moment it leaves for the agreed geo-
graphical point. It is also specified where the ship is handed over at the port: on
the outer roadstead or at the berth.
The place for the return of the vessel from the time charter (off-hire) is usu-
ally stipulated in the contract by the range or the range option. “The Vessel shall
be re-delivered on the expiration of the Charter in the same good order as when
delivered to the Charterers (fair wear and tear excepted) at an ice-free port in the
Charterers’ option at the place or within the range”(BALTIME, as revised 2001,
Cl.7). For a certain period prior to the planned release of the vessel, the charterer
144
is to inform the ship owner of the exact date and place of the vessel return. The
vessel should be returned from the time charter in the same good condition as it
was accepted, taking into account its natural wear and tear.
6.3.5. Hir e
The rate for hire is set per vessel or ton of the ship‘s summer deadweight per
day and is paid in advance for the agreed period. The order of payments is the
following: the first payment must be made by the time the vessel is handed over
to the time charter, and until confirmation of receipt the ship owner may not com-
mence the voyages. Subsequent payments must done in due time specified in the
charter. If the payment is delayed, the carrier shall notify the charterer in writing.
Upon dispatch of the notice, the carrier may terminate the obligations of the time
charter contract, as well as refuse to load the cargo and issue bill of lading. For ex-
ample, the time charter contract, BALTIME sets forth that ship owners are entitled
to withdraw the ship off-hire without a protest and without submitting the claim
to the court, without losing their right to lodge any claims and actions to the char-
terer. The pro forma of the time charter “GENTIME 1999” specifies a more loyal
wording, stating that when the next payment is delayed, the ship owner must send
the charterer a notice and provide him with a certain, pre-agreed number of bank-
ing days for the payment, i.е. payment is made during the grace period. Measures
to withdraw a vessel from a time charter can be applied only after the grace period
has expired. The off-hire periods are also defined in the time charter agreement.
For example, the time charter “GENTIME 1999” lists three groups of reasons
that can interrupt time count of hire and payments:
1) if the ship is unsuitable for operation due to the defects, damage or fractures,
unavailability of complete and competent crew, lack of necessary equipment, i.e.
facts making the ship unseaworthy. The time and costs for repair of the vessel,
necessary for the return of the vessel to the operational state, shall be borne by the
ship owner. If the damage is caused by stevedores during cargo operations or as a
result of orders of the charterer, the elimination of these damages shall be carried
out at the expense of the charterer;
2) arrest or detention of a ship due to the debts or obligations of the ship owner
or claims arising in respect of the crew;
3) ship requisitioning by authorities.
6.3.6. Other te rms of time-charte r
After the transfer of the vessel, the owner of the ship is not entitled to use
the ship‘s space for the carriage of goods or passengers in his own interest. The
145
charterer, on the other hand, is not entitled to use the ship‘s service space (unless
it is specified in the contract, for example in the case of a supercargo), this is
only possible after agreement with the master and for a separate fee (GENTIME
1999).
The crew of the vessel should render the usual assistance to the charterer in
performing the voyages within the limits of his official duties (opening and clos-
ing of holds and ramps, mooring and shifting of the ship, preparation of cargo
gears for operations and for a voyage, control of cargo operations, work of crew-
members on cranes and winches, etc.) (GENTIME 1999).
The ship owner must ensure the validity of all documents confirming the class
and suitability for navigation during the entire time charter period. During the
period of time charter, the ship owner is liable for unsecured transportation of
cargo only if it was caused by the unseaworthiness of the vessel or the unjustified
deviation of the vessel from the set course. For damage to the cargo caused during
the cargo operations, i.e. due to poor quality of stowage, separation or fastening,
the responsibility is borne by the charterer, who hires stevedores and actually acts
as a carrier (GENTIME 1999).
The master must make voyages for the benefit of the charterer with normal
speed and proper conscientiousness in the navigation, loading and unloading of
the cargo. The master shall control the execution by the charterer of the condi-
tions of the time charter in the interests of the shipowner. Time-charter pro-forma
stipulates that loading and unloading is carried out by the charterer “under the
supervision of the master” (GENTIME 1999).
If the quality of the work of the stevedores does not meet the requirements
for the safe carriage of cargo, the captain should notify the charterer in writing,
which is a due care on the part of the captain and the ship’s administration about
the cargo (GENTIME 1999).
The charterer must provide the master with timely, clear and complete instruc-
tions on the execution of voyages and may require reporting according to the form
set by the charterer. The charterer has the right to demand from the shipowner the
replacement of the captain. For the organization of commercial operation of a
ship, such as the arrangement of cargo, ordering of stevedore gangs, the schedule
of handling in the port, order for the overtime, the charterer has the right to ap-
point his representative (super cargo) to the ship (NYPE 2015).
Other articles of the time charter pro forma contain the standard legal terms of
the contract: military reservation, conditions on arbitration, general average, pay-
ment by the shipowner of the brokerage commission.
146
6.4. Comm e rc ia l te rms o f c h a r t e r
6.4.1. Bar eboat c ha rter
According to the bareboat charter, the ship is handed over to possession and
under full control of the charterer; the owner of the ship loses control over the ship
in almost all respects and receives a rent for the use of the ship by the charterer,
regardless of the commercial result of his work. The bareboat charter implies two
options for the termination of the contract: the return of the vessel to the owner
or the redemption of the vessel by the charterer, with the subsequent fulfillment
of the contract of sale. The bareboat charter, unlike the voyage charter or time
charter, does not offer a detailed distribution of the obligations and expenses of
the parties for the maintenance and commercial operation of the vessel, as well as
for the execution of voyages, its commercial conditions are reduced to protecting
the rights of the owner of the ship, insurance of property and other risks and settle
accounts of the parties. (Davis, 2005).
Bareboat charter options:
1) taking the ship out of service for a fixed period with a subsequent return;
2) taking the vessel out of service for a period with subsequent redemption;
3) the contract of bareboat charter of the ship under construction for a certain
period from the moment of construction to the subsequent return of the vessel to
the owner;
4) bareboat charter of the vessel under construction from the moment of con-
struction for a certain period with the subsequent redemption of the vessel by the
charterer (Davis, 2005).
According to the bareboat charter, the charterer becomes a “shipowner”, since
the berboat contract gives the legal status of the owner: “a shipowner is a person
who operates a ship on his behalf, regardless of whether it is the owner of the ship
or uses her on another legal basis”. The bareboat charter is a “legal basis”. Only
in the framework of the bareboat charter agreement, the receiving party is called
the “charterer”, in relations with any third parties, including the state authorities,
it becomes a “shipowner” or an “bareboat shipowner” (Fig. 6.2.).
According to a bareboat charter of a ship under construction, a third party is
expected to participate - the buyer and the future owner of the ship. Any credit
institution can be such a buyer.
Classical scheme of commercial relations during bareboat chartering of a ship
under construction (Fig.6.3):
1 - coordination of the conditions of the upcoming bareboat-charter;
2 - coordination of technical conditions of the construction contract;
147
ship owner
Bareboat charter
Charterer
ship owner
Voyage, time charter

agreements, line transport
contract and other legal
relationships
Charterers,
shippers, and
other persons
Fig. 6.2 Parties to agreements in the system of bare-boats relations
3 - conclusion of the construction contract on terms agreed in the construction

contract;
4 - registration of purchase and sale of a constructed vessel;
5 - agreement of bareboat-charter;
6 - the charterer’s guarantee of the solvency for the bareboat-charter period.
Credit organisation
ship owner Bank
3; 4 1; 5
6
2 shipping company
shipyard
Charterer
Fig. 6.3 Commercial scheme of bareboat chartering
When concluding the contract, three pro forma “BARECON 89”, issued by
the BiMCO Documentation Board, are used. The bareboat charter forms consist
of parts:
148
Part 1 - “Box” part containing the variable terms of the contract;
Part 2 - Contract standard texts;
Part 3 - Provisions applicable only to ships under construction;
Part 4 - Terms of the Hire/Purchase agreement;
Part 5 - Provisions relating to vessels entered in the register of the bareboat fleet.
6.4.2. Comme rc ia l te rms of a slot chart er
Slot charter is used in liner shipping, the subject of the agreement is the lease by
the charterer of a certain number of container cells (slots) in a liner ship for a long
time. The owner receives a fixed agreed freight fee for a part of the vessel‘s capacity,
regardless of whether it is actually used or not, and the hirer of the slots is entitled to
act as a carrier before the shipper, despite the fact that he is neither the owner of the
ship nor his bareboat-charterer, or a time-charterer. As a result, the notion “non ves-
sel operator” (NVO) appears, i.e. the carrier, deprived of control over the operation
of the vessel, determines the essence and content of the slot-charter contract. The
slot charter is of interest to the following charterer groups (Over, 2014):
1) a slot charter for feeder carriages, in case the ocean carrier does not have its
own low-tonnage container carriers for feeder servicing of ports that are not in-
cluded in the route of the line. In this case, the ocean carrier concludes a slot charter
with local line operators for the required amount of capacity of sea liner vessels;
2) for the exchange of slots on ocean lines in which two or more line compa-
nies, servicing the same direction, conclude an agreement on mutual provision of
the slot capacity to each other on the conditions of a slot-charter. Mutual provision
of slot capacity allows the line operator to increase the frequency of consignments
without attracting additional tonnage;
3) large forwarding companies that concentrate container flow on certain
ocean or sea routes-the transportation of containers in a slot-chartered capacity is
cheaper than transportation at liner tariffs .
The main interests of the slot-charter parties are reflected in the articles of the
proforma “SLOTHIRE”, developed and recommended by BIMCO. Within the
framework of the contract, the term “container” means an ISO standard universal
20-foot container, and the term “slot” - the space on board the Vessel necessary to
accommodate one TEU (twenty foot equivalent unit) (Slothire, Definitions)).The
contract sets the number of slots that are hired by the charterer and the maximum
weight of the containers loaded. An excess weight of cargo in containers is paid
additionally. Slot-charterer commences his action from a certain date, coordinated
with the timetable of the vessel’s movement. It cannot be terminated before the expi-
ry of the agreed period, but is automatically renewed at the initiative of either party
after the submission of the preliminary notice from the date specified in the notice,
149
or after the completion of the next voyage and unloading the slot-charter containers.
The charterer under the contract can transport only legal cargoes and is responsible
for the correct name and description of the cargo in the documents, their packing
and fixing inside the container, and also for the total weight of the container. Freight
containers used for the transport of goods must comply with the requirements of the
Convention on Safe Containers (Slothire, Cl.3. Permitted Cargoes).
Ship owners may use the free slots of the charterer in their own interests, but
must provide them to the charterer at his request in any intermediate port of call.
The ship owner must inform the charterer of the timetable for the movement of
vessels for the agreed period, as well as of the changes made to the timetable
(Slothire, Cl.2. Period).
The rent is charged for the voyage, and not for the calendar time, so the shipown-
er has the right to take the vessels out of service for repair and docking at their own
discretion. (Slothire, Cl.10. Repairs). The shipowner has the right to open any con-
tainer of the charterer and check its contents, then the container must be sealed again
and the charterer must be notified accordingly (Slothire, Cl.7. Opening Container).
The shipowner must properly load and secure the containers, monitor their
condition en route and provide the necessary temperature mode for the refriger-
ated containers. (Slothire, Cl.11. Owner’s Obligations).
The charterer is obliged to provide all necessary information about the cargo in
containers and special requirements for its transportation (Slothire, Cl.12. Char-
terer’s Obligations).
One of the most difficult conditions of a slot-charter is the distribution of re-
sponsibility between the shipowner and the charterer in case the claims are lodged
by the cargo owner against the non-secure transportation of cargo. According to
the international conventions, governing the carrier’s liability (The Hague Rules
and The Hague-Visby Rules), the carrier responsible for the non-secure carriage
of goods is the carrier who issued the bill of lading. In the slot-charter relationship,
the carrier is a charterer of a slot-charter capacity that does not control the ship.
That is, according to the Hague Rules and the Rules of The Hague-Visby, the car-
rier must show the necessary care of the vessel to bring her in a seaworthy state
before and at the commencement of the voyage and all the necessary care of the
cargo at all stages of transportation from loading to unloading, and from the actual
reception of cargo from the consignor to the actual delivery to the consignee under
the Hamburg Rules, but the carrier-charterer is not able to influence the ship sea-
worthiness or take care of the cargo during the transportation.
The system of liability relations for the loss and damage of slot-charter cargo
is indicated in the Figure (Fig. 6.4).
150
ship owner
Regress claim it is not possible to make a direct

slot charter regarding breach claim for non-preservation of
of the terms of the cargo during the transport.
slot lease
agreement
slot charterer
Claims for failure to preserve

Contract of cargo carriage cargo during transportation
Cargo owner
Fig. 6.4 Liability for damage to cargo in the context of a container hire agreement
The ship owner must conscientiously perform the duties assigned to the char-
terer by the rules of The Hague-Visby and other conventions regarding slot-char-
ter containers. With respect to the sea carriage of slot-charter containers, the ship
owner acts as the charterer’s agent. Neither the cargo owner, nor any other person,
except the charterer, can lodge to the ship owner, his employees, agents or subcon-
tractors claims for unsaved carriage of the goods, even if this unsecurity is caused
by the actions of the ship owner or his agents, and subcontractors.
6.5. Br oke ra g e
6.5.1. Types of F re ight B rokers
Tonnage charter deals are made on the freight market. As a rule, large long-term
contracts are concluded as a result of direct negotiations between the ship owner and
the charterer or international bidding. However, most transactions are made through
special intermediary firms - ship brokers. in accordance with the area of activity,
the following are distinguished: freight brokers, booking agents in line shipping and
brokers for sale and purchase of ships (Gorton, Hillenius, ihre, sandevarn, 2017).
Freight brokers specialize in different types of fleet - tankers, bulk carriers,
refrigerator cargoes, timber transportation fleets, charter brokers for heavy lifts
151
transportation, etc. In relation to the principal - the owner the vessel or charterer,
an exclusive broker and a market broker are distinguished. An exclusive broker
has an arrangement with a principal who prioritizes deals with this broker in his
charter transactions, granting him an exclusive right to find a partner for a certain
period of time. Market broker acts on behalf of different principals (ship owners
and charterers) in one-off orders or works with offers received from other char-
terers. In each specific transaction, two brokers usually involved: on the part of
the charterer and on the part of the ship owner. Large ship owners and industrial
companies have freight departments, the so-called “house broker”, and enter the
market without intermediaries (Gorton, Hillenius, Ihre, Sandevarn, 2017).
6.5.2. Char tering proce ss
The broker receives from the principal two types of orders: the market quotation
and the freight order. Market quotation is usually requested 3-5 weeks in advance.
The principal-charterer asks the market quotation regarding the rates and terms of
transportation of a particular cargo to a particular country or several countries before
signing a trade contract or for choosing the optimal transport option. The principal
ship owner requests a quote for the purpose of determining the possibility and ef-
ficiency of chartering his vessel. To prepare a reply, the broker asks the ship owner
what cargo and in what directions are of the interest to him, as well as ship‘s data.
The freight order is a firm offer of a principal to broker to conclude a deal for
chartering a vessel on the conditions set out in the order. To enable the broker to
negotiate with a partner, the freight order must contain some mandatory informa-
tion (Panayides, 2016).
The charterer’s order: the type of cargo, its transport characteristics, quantity,
margin; whether the shipment is a one-off or a part of a long-term contract; ports
of loading and discharge; date of readiness of cargo for loading; norms of cargo
works; idea of the rate and terms of freight payment; special requirements to the
vessel (age, availability of cargo facilities, etc.) (Panayides, 2016).
The shipowner’s order: the vessel’s name, her technical and operational partic-
ulars, the flag and age of the ship; port or area of the ship’s release for the intended
voyage, the ship’s release date, the list of undesirable cargoes and directions of
transportation (Panayides, 2016).
Having received the freight order, the broker starts chartering the ship.
Such work can be divided in relative terms into three stages: preparation of
negotiations (prefixing), negotiations (fixing), transaction processing and execu-
tion control (postfixing).
In preparing for negotiations, it is necessary to obtain from the principal all the
additional information that may be required in the negotiation process; choose time
152
to enter the market; select potential partners and determine the form of the proposal
for each of them; determine the sequence of negotiations and information to be re-
ported in the initial proposal, and information to be obtained from the partner.
When chartering a vessel it is initially appropriate to offer goods to original ship
owners or ship operators; it allows to speed up the negotiation process and exclude
or reduce to a minimum the size of the broker’s commission, thus reducing the
freight rate. The next potential group of partners is the exclusive ship owners’ bro-
kers and, finally, the group of market brokers to turn to if there are no other options.
The proposal to each of the possible partners can be one of two types. A firm
offer is an obligation to conclude a deal if the partner reports on his due date about
his readiness to charter a ship on the proposed terms. In the firm offer, the broker
presents all information about the planned transportation, which he received from
the principal in the freight order and on an additional request, also indicates the size
of the brokerage and address commission (Panayides, 2016). However, the name of
the charterer’s company and any data about it are not given, so that the ship owner
could not conduct further negotiations directly, bypassing the broker. Instead, the
formula “first class charterer” (sometimes abbreviated FCC) is usually given. The
freight rate may not be indicated, and then the ship owner must propose it in its
reply. Either it is proposed as an “idea of a charterer’s rate”, in order to emphasize
his readiness to negotiate. Such a rate is usually indicated at 5-10% below that, for
which the charterer is actually ready to go. This is because the ship owner is always
convinced that the charterer’s initially named rate idea is downgraded and he will
try to raise it in the negotiation process (Panayides, 2016).
Having studied the firm offer of the charterer, the ship owner (or his broker) can
give one of three answers: the offer is accepted with the exception of ... (accept /
except); the ship owner enters his counter offer as a basis for negotiations; the char-
terer’s offer is not accepted without a counter offer (offer’s decline without counter),
i.e. the ship owner considers negotiating inexpedient. Only in very rare cases, the
proposal is accepted immediately, without any comments (clear) (Panayides, 2016).
Trading companies of medium size and with poor knowledge of the freight mar-
ket in their freight order stipulate for the broker only those terms of the charter that
flow from the contract of sale of goods: the type and amount of cargo, the terms of
its readiness for shipment, ports of loading and discharge, norms of cargo operations.
In response to such a firm offer, the ship owner sends, in due time, to the char-
terer a counteroffer stating all commercial terms and conditions of the charter agree-
ment: vessel owner, operator, ship’s name, type and technical particulars; quantity
of cargo; ports of loading/discharge; number of berths at each port that can be used
by the charterer; requirements for berths (e.g., gsaaaab); laydays/cancelling dates;
norms of cargo operations or length of laytime at ports of loading and discharge; the
procedure for NOR submission and accounting for lay time (sshex, shex, shinc); the
153
procedure of recording work in the excluded periods (for example, uu iuatutc); the
rates of demurrage and dispatch and the procedure for calculating them; freight rate
and basic conditions of payment for stevedoring operations (for example, FIOS L / S
/ D); terms and layout of freight payment - in full or after deduction of the brokerage
commission and / or expenses on the disbursement account and / or cash to captain
(cash to Master); payment of ship‘s taxes and dues, cargo and freight; agents in ports
of loading and discharge; the size of the brokerage commission and the pro forma
charter, in accordance with which all other conditions of carriage (chartering of the
vessel) are determined (Panayides, 2016). Rates of cargo operations are indicated
according to the offer of the charterer or the rates, offered by the ship owner. The
counter offer also states the full name of the charterer (if it was mentioned in a fix-
ture recap) or indicates that it should be reported.
The ship owner usually raises the freight rate by 5-10% in his counter offer.
However, if the ship is in the spot position but the market activity is low, such a
tactic is risky, as it may lead to the cargo „passing“ to another carrier.
The ship owner (his broker) also sets a deadline for responding: by a certain
hour of the specified date, according to the Greenwich Mean Time or another time
zone. With urgent transactions (prompt, spot-prompt) or in order to put pressure
on the partner, the response time can be set in hours after the receipt of the offer.
If the counter offer is sent by the shipowner‘s broker to the charterer or his broker,
he often does not indicate the name of the shipowner’s company to preserve his
commercial secret, confining himself to FSO (first class owner) abbreviation. For
the same reason, he also does not state the name of the vessel, notifying only the
type of vessel, or is limited to the TBN (to be nominated) abbreviation, i.e. will be
announced later (Panayides, 2016).
The charterer’s fixture recap and/or the shipowner’s counter-offer may contain
reservations (subject) or abbreviated sub. The most commonly used are the fol-
lowing: sub details - subject to the coordination of the charter details (addendum);
stem, i.e., subject to confirmation by the sender of the cargo readiness in the terms
of laycan; subject to board approval (BOD), that is, subject to confirmation by the
management of the company of the shipowner or charterer; the reservation “subject
to confirmation by the captain of the possibility of loading the goods.” Once stated,
“subject” must then be repeated by this partner throughout all negotiations, other-
wise it will be considered that they are “raised”, i.e., withdrawn (Panayides, 2016).
An exchange between the charterer and the shipowner with fixture recaps con-
cludes the first round of the negotiations. As a result, the partners clearly stated their
initial positions to each other and determined the discrepancies between them.
The next stage is the “bargaining” of the transaction, a joint search for a com-
promise that satisfies both sides. These negotiations can be quite lengthy and con-
ditionally called accept / except.
154
If the offer of the ship owner is in principle acceptable to the charterer, he sends
him a reply beginning with the words: “charterers accept owner’s offer except”.
The charterers’ notes may include:
• the requirement to specify or supplement the information provided in the
ship owner’s offer. For example, provide full details of the ship owner and/
or the ship’s operator; indicate the flag of the ship, age, expiry dates of the
Registry documents, where the hull and machinery of the ship are insured
and for what amount; indicate P&I club membership; size of the tanks,
and what cargo it carried in the last 2-3 voyages, the availability of slings
and other special equipment and devices;
• new wording for conditions, that are not acceptable to the charterer;
• new conditions not provided for in the ship owner’s offer, which the char-
terer considers necessary to enter into the contract.
Upon receipt of the charterer’s response, the ship-owner may in turn not ac-
cept some of his proposals and send his remarks, and such a cycle can be repeated
several times.
The subject of multiple discussions is: the freight rate; the form in which the
charter agreement specifies the quantity of cargo, the laycan date, rates of cargo
operations, etc. Each counter-proposal is given with an indication of the response
time, which at this stage, when reducing the controversial positions, gradually
decreases from 3 hours to 1 hour or even from 15 to 30 minutes (Panayides, 2016).
Each of the parties may refuse further negotiations at any stage. However, the
brokers’ ethics require the partner to be notified and indicate which of his conditions
are unacceptable. In this case, the partner may repeat his offer replacing the item
in it. In the event of a positive result of the negotiations, the party, who accepts the
partner’s latest offer without any corrections, notifies the partner, for example, as
follows: «Charterers confirm the fixture». Good brokerage practice assumes that
partner confirms the response by replying «reconfirm». After such an answer, the
negotiations are actually over and the vessel is “fixed” for the particular shipment.
During the final stage of the negotiation process, the charterer or his broker shall,
within a short period of time, draw up and send to the ship owner (his broker) the
full fixture recapitulation (i.e. fixed without the right to change), including all the
conditions agreed upon during the negotiation process. If some reservations are
saved (subject), then it needs to be specified in what period of time they need to be
“raised” (”fixture recap on main terms, subject to be lifted w/i 24 hrs.) C.O.B. (close
of business) LONDON… DD… MM…YY”). Only after raising all the “sabs” the fix-
ture is clear (clear fixture), and this date becomes the charter date (Panayides, 2016).
It is completely unacceptable if, in drawing up a “recap,” the broker changes
any conditions, adds or excludes them in comparison with the actual results of
the negotiations. In this case, the partner immediately will demand to correct the
155
recap, referring to the relevant negotiation documents (fax, e-mail) with the date
and number of each document.
Postfixing is a special set of operations performed by brokers after the conclusion
of a transaction. The charterer’s broker, in full accordance with the recap, prepares a
charter and an addendum to it; both partners sign two originals of the charter. With a
power of attorney, each broker can sign a charter contract on behalf of his principal.
The ship owner’s broker, on his behalf, at the appropriate stages of the ship’s
voyage makes an invoice for freight, calculates and forwards the bill to the charterer
for demurrage and dead freight, estimates the effectiveness of the voyage (calcula-
tion of the time-charter equivalent) (Gorton, Hillenius, Ihre, Sandevarn, 2017).
Calculation of the time-charter equivalent is made by the (6.1) formula.
(6.1)

In the formula:
E- time-charter equivalent, USD/day;
NF - net freight per voyage (freight minus brokerage commission), USD;
Rv - fuel expences for the voyage (under way and at the stay), USD;
Rp - shipowner’s expenses for payment of port charges, services, stevedoring
and other operations in ports of loading and discharge, USD;
Tv - is the total duration of the voyage, days.
Time-charter equivalent shows the income that the shipowner receives from
the vessel’s operation per day, minus variable expences (port and fuel). It allows
to compare the efficiency of chartering a ship on different voyages or on different
offers (Gorton, Hillenius, Ihre, Sandevarn, 2017).
Knowing the value of the time-charter equivalent on the main direction of work
of this type of a vessel, it is possible to calculate the freight rate, which will provide
the same efficiency of transportation in any other direction, Formula (6.2).
(6.2)

In the formula:
FR – a freight rate, USD/t
Eb - a time-charter equivalent for ship operations on the basic line of
transportation;
Tv, Rv, Rp, Q - respectively, the estimated duration of the voyage, fuel costs, port
expenses and the amount of cargo in the planned direction of transportation.
156
Such a calculation allows the shipowner to establish the initial idea of the
freight rate in the case when he is proposed an unusual freight for him by the type
of cargo or the direction of carriage.
1. How do INCOTERM terms of delivery of goods affect the obligations of

the parties to the contract of sale of the goods in the chartering of the ship
for the carriage of sea freight?
2. Which party is obliged to insure the cargo in the sales contract if the deliv-
ery takes place in accordance with the CIF Transaction rules?
3. Which party is obliged to insure the cargo in the sales contract if the deliv-
ery takes place in accordance with the FOB Transaction Rules?
4. In what groups are the contracts related to the ship chartering divided?
5. How are the voyage charterer’s and carrier’s obligations defined in the
voyage charter?
6. How are the charter and carrier obligations defined in time charter con-
tract?
7. What are the types of charter parties?
8. What are the characteristics of a voyage charter contract?
9. In which cases is a Berth Note contract concluded in maritime contracting?
10. What document confirms the maritime transport contract in liner shipping?
11. In which cases of marine shipping is the Booking Note prepared?
12. What are the common features of time charter contracts?
13. For what purpose the standard charter contracts are developed?
14. Which organizations develop standard chartering contracts?
15. According to what characteristics standard chartering contracts are clas-
sified?
16. What rules for a ship are found in a voyage charter contract?
17. How does a voyage charter contract determine the ship’s readiness date to
commence cargo operations?
18. What circumstances are considered by the shipowner when choosing the
interval for laycan?
19. What circumstances are considered by the voyage charterer when choos-
ing the interval for laycan?
20. What terms for cargo are contained in the voyage charter contract?
21. What terms of the voyage charter contract are fixed by the MOLOO ab-
breviation?
157
22. What terms of the voyage charter agreement are fixed by the MOLСHOPT
abbreviation?
23. In what case is the dead freight paid?
24. How are loading and unloading ports defined in the voyage charter contract?
25. What are the requirements for a port or berth covered by a voyage charter
contract?
26. What is laytime?
27. What is the meaning of the term on notification of ship readiness to cargo
operations WWWW?
28. What is the rule for the start of laytime counting formulated in the voyage
charter contract?
29. Which days are considered as laytime?
30. Which days are excluded from laytime calculation?
31. In which case the demurrage fee is paid?
32. What are the terms for cargo operation cost sharing options used for a voy-
age charter contract?
33. What is the term for a freight payment to be negotiated in a voyage charter
agreement?
34. What terms are specified for the ship in the time charter?
35. What does the reservation about the ship’s seaworthiness mean?
36. Why does the time charter contract specifically set the speed rule?
37. What are the conditions in the time charter stipulating the shipowner’s
right to replace the ship?
38. What time charter terms limit the choice of loading/unloading ports?
39. What provision for cargo is specified in the time charter contract?
40. What terms in the time charter contract relate to hire on and hire off of the ship?
41. How does the shipowner and charterer distribute the costs of hire on and
hire off of the ship?
42. What are the rules for hire payment arrangements in the time charter?
43. What are the main options for agreement between ship owner and char-
terer in bareboat relationships?
44. What are the parties to the contract in the bareboat relationship system?
45. What commercial relations in bareboat chartering present the subsequent
purchase of a ship:
a) Subject of the container slot charter?
b) What does the concept of “non-vessel operator” mean in maritime freight?
c) What charter groups are interested in concluding a container slot charter?
46. What does the concept of “container slot” mean?
47. What are the responsibilities of the ship owner in the carriage of cargo
under the Hague-Visby regulations?
158
48. What charterer’s liability is provided in the terms of container slot charter?
49. How is the responsibility for unsafe carriage of the goods in the container
under the slot charter divided?
50. How are ship/freight brokers differentiated in relation of a trustee?
51. What types of tasks given by the principal is carried out by a freight broker?
52. What purpose does the chartering order serve, what information does it
contain?
53. How do freight orders differ according to terms of their submission to the
broker?
54. What stages can the broker’s activity be divided into when chartering a
ship?
55. What information does a broker’s firm offer contain?
56. What does the time-charter equivalent show?
57. How is the time-charter equivalent calculated?
6.7. Ref eren c e s
1. “BALTIME 1939” Uniform Time Charter. Baltic and International Mari-

time Council. Retrieved 13/07/2018 from http://shipsforsale.su/upload/
materials/1612291321565991.pdf.
2. “BARECON 89” Standard Bareboat Charter. Baltic and International
Maritime Council. Retrieved 13/07/2018 from http://isaal.org/Docu-
ments/ BareCon2001.pdf.
3. “NYPE 2015” Uniform Time Charter. Baltic and International Mari-
time Council. Retrieved 20/12/2017 from http://isaal.org/Documents/
NYPE2015.pdf.
4. „GENTIME 1999” General Time Charter Party. Baltic and International
Maritime Council. Retrieved 13/07/2018 from http://shipsforsale.su/ up-
load/materials/ 1612291 32708 1333.pdf.
5. „SLOTHIRE” Standard Slot Charter. Baltic and International Maritime
Council. Retrieved 13/07/2018 from https://www.bimco.org/-/.../BIM-
CO/.../Sample-copy-SLOTHIRE.ashx.
6. Davis, M. (2005). Bareboat Charters. 2nd edition. New York, NY: Infor-
ma Law.
7. Gencon (1994). General uniform charter. Baltic and International Maritime
Council. Retrieved 20/12/2017 from https://gencon-charter.pdffiller.com.
8. Girvin, S. (2011). Carriage of Goods by Sea. 2nd edition. Oxford, UK:
Oxford University Press.
159
9. Gorton, L., Hillenius, P., Ihre, R., & Sandevarn, A. (2017). Shipbroking
and Chartering Practice. Lloyd’s Practical Shipping Guides (8th ed.).
New York: Informa Law from Routledge.
10. Hague-Visby Rules. (1968). Retrieved 13/07/2018 from https://www.jus.
uio.no/lm/sea.car riage.hague. visby.rules.1968/doc.html
11. Incoterms 2010: ICC rules for the use of domestic and international trade
terms. Paris, France: ICC Services.
12. Karanassos, H. (2016). Commercial Ship Surveying: On/Off Hire Condi-
tion Surveys and Bunker Surveys. 1st edition. Elsevier Ltd.
13. Maritime Code of Latvia (2003, amended 2017). Retrieved 20/12/2017
from https://likumi.lv/doc.php.
14. Over, P. C. (2014). Dry cargo chartering. London, UK: Institute of Char-
tered Shipbrokers.
15. Panayides, P. (2016). Principles of Chartering. 2nd edition. North Charles-
ton, South Carolina: CreateSpace Independent Publishing Platform.
16. Ramberg, J. (2011). ICC Guide to Incoterms 2010. Understanding and
practical use. Paris, France: ICC Services.
17. United Nations Convention on Contracts for the International Sale of
Goods.(2010). New York, NY: United Nations.
160
7.
THE CHANGE OF THE CONCEPT
O F S E A P O RT M A N A G E M E N T I N
MANAGEMENT RESEARCH
Elena Valionienė
In this section the modern port management system is analysed from a sys-
tematic and complex point of view, and the issues and development of the port
management research is presented.
7.1. The C o n c e p t o f S e a p o rt
The seaport and the fleet are elements of the maritime transport system that
ensure proper functioning of the logistic chain of any type of cargo (Belova,
Mickienė, 2012). However, due to different approaches to the definition of ports,
their tasks and functions in different countries, the interpretation of the concept
of seaport acquires a different context in different scientific fields and defines a
specific field of research of the issues.
A seaport is a place for the transfer of goods and/or passengers from one mode
of transport to another, e.g. from land to maritime transport or vice versa (Talley,
2009). From a technological point of view, a seaport is a closed or partially closed
water area with quays and berths for mooring of the vessels, for loading/unload-
ing of cargo, with adjacent buildings and other facilities (Law on Klaipėda State
Seaport of the Republic of Lithuania).
From a logistics point of view, a seaport is an international freight forwarding
transit node that is an integral part of the transport system of an entire country,
region, or continent, as it ensures the interconnectivity of water and land transport
systems (Operations and Supply Chain Terms, 2017).
161
From an economic point of view, a seaport is defined as an economic development
center that connects not only transport systems and ensures the continuity of cargo and/
or passenger movement, but also encourages the establishment of industry and service
enterprises in the port area or near the port area, which balance the flow of production
and raw materials by using the created connectivity (Mickienė, Belova, 2012).
W. K. Talley (2009) states that a seaport is an economic unit that provides cargo
handling services thus contributing to the production of gross domestic product.
The definition of the seaport from the economic point of view reveals the po-
tential of seaports to generate added value for the economy of the region and the
country, which can be verified by the following interpretation of the concept of
seaport: seaports are not only an integral part of the transport system, but they are
complex regional clusters of economic activities (de Langen, 2015).
In the field of management research, the concept of a seaport is interpreted in
the context of public administration and seaport is attributed to public sector enti-
ties group; therefore, the activities of a seaport must meet not only the strategic
objectives of the national economy development, but also ensure public interest,
and the management processes of such organizations or their networks are com-
plicated and complex (Verhoeven, 2010).
From a legal point of view, definitions may be different in different legal acts.
For example, in terms of maritime law, a seaport means “ a part of land and wa-
ter that is constructed and equipped in such a way that it can be used for receiv-
ing vessels, loading and unloading of ships, for the storage of cargo, for receiving
cargo from and transporting such cargo to the inland transport operators, and also
for providing for activities of the companies involved in the carriage of goods by
sea”. Meanwhile, Article 2 of the Law on Klaipėda State Seaport of the Republic of
Lithuania (1996) provides the following definition of the port: “<...> a territory (port
land and water area) intended for the entering/leaving, mooring, servicing/mainte-
nance of ships, loading and unloading of cargos, also for servicing of passengers”.
In general terms, a seaport is commonly referred to as a part of coast used for
the purposes of maritime trade. However, the simple term “uostas”, the English
equivalent of which is “port” is also quite often used in different sources. Most
often, the term “port” describes a particular section of the coastal area, but the
definition does not include the many river ports, through which a large part of in-
ternational cargoes are transported. Therefore, a more general interpretation of the
definition of the term “port” also includes parts of the coast of oceans and shores
of rivers that have a well-developed structure and technical equipment base neces-
sary for navigation (Roa at al., 2013). As stated in “Operations and Supply Chain
Terms” (2017), a port is an area of coast, be it ocean, river or land, where different
ways of transport interconnect and where cargo and passengers are transferred
from one mode of transport to another.
162
Due to such interpretation of the concept of seaport, I. Roa et al. (2013), K. W. Tal-
ley (2009) suggest the following classification of the ports into 8 main groups:
–– deepwater seaport - a seaport with a minimum distance of 13.72 m from
the surface of the water to the bottom. This group of ports also includes
non-coastal seaports, also known as outer deepwater seaports.
–– harbour - a seaport for the installation of which special structures are used
(e.g., dams). In this type of ports, the depth of water is regulated during the
handling operations, and most of these ports are installed on the coasts of
the seas or oceans.
–– dedicated port terminal – it is such a category that is not a separate seaport,
but most often includes specialized handling terminals (e.g., soy beans,
coal other minerals handling terminals) dedicated for the handling of one
type of cargo and equipped with technological equipment that is meant
for the handling of this specific type of cargo. Būtingė oil terminal is one
example of such terminal.
–– off-shore terminals – specialised terminals that are installed far away from
the shore, and whose main purpose is to distribute the incoming short-
sea cargo flows up to the hinterland transport systems or, vice versa, to
consolidate outgoing freight flows from hinterland to short-sea shipping
through the same project cargo flow channel.
–– piers, jetties, wharfs – a category of ports where one or several quays and/
or docks are installed; usually such facilities do not have any special pro-
tective partitions, such as piers or other special breakwater installations to
help reduce the waves;
–– river ports – are ports installed on the river shores;
–– canals – a category of ports situated not on the river shores, but on the
shores of canals, where special equipment is needed for the cargo handling
works. It should be noted that I. Roa et al. (2013) attribute neither Panama,
nor Suez Canal to this category, as they are considered to be artificial man-
made facilities serving the ship traffic, not cargo flows.
When assessing seaports and the peculiarities of their management, one often
requires various sets of statistical data, which is collected in specialized statistical
databases, which group data according to various classifications and attributes.
Therefore, various classifications are suggested and provided in scientific litera-
ture analysing the maritime sector. One of the simple classifications was recom-
mended by I. Roa and other researchers (2013), i.e. classification by size: very
small, small, medium size, large and very large ports. Such classification is useful
in cases, where it is aimed at comparing seaports that handle different cargo flows.
However, such classification is conditional without mutually comparable quanti-
tative estimates or classification by size is transformed into an integrated quantita-
163
tive classification. Therefore, when comparing the seaports, the following features
are distinguished most often in literature, which allow comparing them: annual
container (TEu) turnover; annual cargo (t) turnover; logistic interconnectivity,
expressed by the size of hinterland and significance coefficient: such indicator, as
the territory of port land, where commercial activities related to cargo flow pro-
cessing are and can be carried out. Another criterion is the territory covered by
companies engaging in cargo flow processing activities outside the territory of the
port. speaking about Klaipėda Port, for instance, these indicators could include
the territory of the port and the territory of the free economic zone.
When analysing the research results, it is possible to notice that there is no unified
and clear classification, but such relative distribution of ports provides preconditions
for specifying, in what cases which concept is used. Therefore, sticking to such clas-
sification, the canals, river ports and piers will not be analysed in this publication.
The interpretation of the concept of management of seaport is directly related
to the activities of the seaport as an entity and the seaport as an object. it should
be noted that the concepts of a seaport and its management are sufficiently wide
and, therefore, go beyond the limits of a company, organization or relevant specific
entity. Thus, they often become the subject of scientific discussions and research.
M. R. Burns (2015) suggests the following concept of seaport management: it is the
process of organizing and controlling of seaport activities under undefined external
conditions, but with the aim to strive for the achievement of the goals of an organi-
sation that are integral from the point of view of global, regional, national and local
logistic supply chain and that create added value to the region, country, district, etc.
(Burns, 2015). This concept of seaport implies that various economic entities are
operating in a seaport, and that the activities of such entities must be organised and
coordinated and enable striving for the achievement of national aims.
Fig. 7.1. The concept of seaport from the point of view of global logistic supply chain
Source: Dittmann, P. J. (2015). Distribution centre management: a best practices overview.
A report by the supply chain management faculty at the university of Tennessee.
164
By analysing the concepts of seaport and seaport management from different
approaches, it can be seen that in the global logistics supply chain, the concept of
a seaport becomes very complex and involves various activities of the entities of
public and private sector involved in the movement of goods in the global logistic
supply chain. The concept leads to the assumption that the activity of a seaport is
global naturally. (Burns, 2015) defines that a seaport may be defined according to
4 key activities relevant to the logistic supply chain:
–– management of assets,
–– management of agency services (agency, forwarding, etc.);
–– management of specialised supply services (spare parts, fresh water, tools
and devices, etc.);
–– management of production services (infrastructure development projects,
shipbuilding and repairs, power supply, etc.).
Therefore, when analysing seaport management issues, it should be empha-
sized that a seaport is not a single economic entity, where there are many eco-
nomic entities engaged in various economic activities, using a certain system of
resources and located in different geographical locations (Burns, 2015). In sum-
mary of the diversity of the concepts of seaport, it can be stated that, in principle,
a seaport is defined by at least two different aspects:
–– seaport as a subject (organization);
–– seaport as an object (territory, water area).
Based on the concept of a seaport as an object, it can be stated that all the ma-
terial elements which are attributed to the infrastructure and the superstructure of
the seaport become well-developed and adapted for the activities on the basis of
the objects operating at the seaport1. Hence, the analysis of the seaport manage-
ment problem is directly related to:
–– the management of material resources (land and water areas, structures,
roads, etc.) used by operators to carry out their activities;
–– control of use of material resources and ensuring safety;
–– local, regional, community, union and international legal regulation of use
of material resources.
Taking into account the national economic value of a seaport, this concept of
seaport management focuses on the efficient use of resources by increasing the syn-
ergies between public and private capital and increasing the created added value.
However, these management issues are also directly related to the importance of
shaping regional transport policy in terms of legal regulation of national and interna-
tional maritime transport activities and the possibilities for implementing the prin-
1
A detailed and comprehensive explanation of the concepts of infrastructure and su-
prastructure are provided in Seaport Management: Economic Aspect by Belova, J.,
Mickienė, R. (2012). Klaipėda: KU Publishing-house.
165
ciples of effective management of seaport activity in the framework of the interna-
tional policy for the development of the maritime transport sector. The latter trends
relate the seaport management issues to the problem of management of seaport as a
subject. Thus, in order to understand, how the concept of the seaport changed in the
development of scientific research, we provide a review of the change in the concept
of the port and port management in the 19th and 20th centuries.
7.2. The Ev o lu tio n o f S e a p o rt M a n a g e m e n t R e s e a r c h
The management of the seaport is regulated by legislation and is implemented

by selecting an appropriate organizational model, which justifies the problem of
managing a seaport as a problem in management science. However, the seaport
management problem is also an integral part of the transport economy, as navi-
gation and port management research are directly related to the development of
maritime transport economy. Since the activities of the seaport are directly related
to the development of trade relations and the related problems, their problems and
issues are as old as the maritime transport, and decision-making and problem-
solving methods are directly related to the development of management and eco-
nomic theories of a particular period. Having determined which decision-making
methods have been applied in seaport management during different developmen-
tal periods and what transformations they have underwent to this day, precondi-
tions are created for the expansion of the decision-making related problem field,
and for creation of variety of alternative solutions. The evolution of the field of
research of seaports management issues was analysed more widely by T. Heaver
(2006), R. Robinsson (2002), R. Baltazar and M. R. Brooks (2007). In order to
understand the seaport management mechanism, it is necessary to know the main
stages of the development of seaport management problem and their interrelation
with classical and modern management and economic theories.
7.2.1. The Issue s of Se aport Sec tor M an ag em en t
Transport sector was not a subject of research of any economist at the end of the
19th century. However, in his research “Principles of Political Economy” (1980),
Alfred Marshall argued that the factor of the revolution of the period affecting the
national economy is not the increase of the scope of production, but the distribution
of production, which means transport (Heaver, 2006). The said arguments were
confirmed by George Stigler in his publication “History of Economics” (1965)
(cited (Robinson, 2002), where he stated that the transportation of production is
166
the second most important factor in the planning of economics. Transportation has
never been viewed as a strategic factor of economics (Heaver, 2006).
Some economists paid attention to transport sector in early road and railway
development periods, but only from the aspect of tax collection to the budget
(Baltazar & Brooks, 2007). Railways, as one of the most modern high-geographic
coverage business and its development, have created new challenges for research-
ers in the field of economics, as significant investments in the development of
railway infrastructure resulted in the management of a large market share, the
risk and cost of monopoly. The development of railways in the transport sector
attracted particular attention in field of research after the Second World War be-
cause of the high demand for public investment (government funds) in upgrading
of road and rail infrastructure. Increasing competition in the land transport sector
has created new challenges, such as the ratio between transportation costs, public
and private sectors (Robinson, 2002).
Increasing attention to the transport sector also led to the development of ac-
tive communities, which, in the development of history, created preconditions for
the formation of national and international associations and organizations. For
instance, Transport Research Forum was established in the USA in 1958, and
the Canadian Transport Research Forum was founded as early as in 1965. The
founding of such organizations encouraged the researchers and scientists of both
public and private sector to meet at the conferences, and to share ideas, and at the
conferences of these organizations for the first time attention was also drawn to
the results of research in the maritime transport sector. The establishment of such
transport sector research forums eventually began to transform from the national
level to the international level by organizing conferences between these organiza-
tions, which were called North American Conferences, which determined the or-
ganization of 1972 International European College Conference in Bruges, which
later on transformed into The World Conference on Transport Research that was
held for the first time in Vancouver in 1986. The growing focus on the transport
sector and scientific discussions were started to be published in the scientific jour-
nal “Journal of Transport economics and policy” in 1967 (Heaver, 2006). This
year is the beginning of the intensive development of transport research.
In summary, it can be argued that the research of the transport sector has
been largely influenced by a major industrial revolution, as the transport fac-
tor has been identified as one of the main factors influencing the changes in the
national economy. Transport issues should be given special attention also be-
cause the price of the goods and services paid by the consumer of the goods
also includes the price of transport services, which makes up a relatively small
portion in the total price of the product, although the services are essential for
the movement of the goods. This issue is highly relevant to this day. The share of
167
the goods transportation price in the structure of income of logistic entities has
remained relatively unchanged. Another problem that emerged in the seventies of
the 20th century, is in that investment in the development of the transport sector is
always associated with significant public investment, so it is natural that issues of
efficient use of infrastructure have also gained a national significance and have
shaped the issues of public-private synergy that are relevant to the research to
date. Another important feature of the transport sector research of the seventies of
the 20th century is the joining of the researchers analysing the transport issues into
active communities, many of which later on were transformed into international
organizations. The results of the research and discussions were published in vari-
ous scientific publications.
When analysing the management of the maritime transport sector as assump-
tions for the formation of the problem field of science, it should be noted that the
first papers describing the problems of the maritime transport sector, nut not ana-
lysing them in detail, were already published in specialized books the first half of
the 20th century. Publications of this kind contain a wide description of navigation
conditions, business structures and practices. The activities of the seaport were
described for the first time in 1914, distinguishing internal and external environ-
ment and formulating one initial hypothetical assumption that the development
of seaports is hampered by the lack of knowledge of the principles of governance
and economy (Amr, Amr, 2009). The scientific insights of the prewar period in-
clude an interface between the importance of the logistic connectivity of seaports
between land and waterways with the subject matter of the difference between
land freight, sea transportation and combined transport costs (Heaver, 2006). It
also analyses the concept of maritime transport, presents the concept of a seaport,
the concept of cargo flow, the classification of seaports by geographical location,
territory, administrative structure (Heaver, 2006). Attention was also paid to the
resources of the seaport, which are necessary for the organization of cargo han-
dling. It should be emphasized that focus is laid not only on the infrastructure fa-
cilities (quays, piers, etc.), but also on the problems of the functionality of logistic
connectivity of the seaport. In the prewar period, D. Owen was the most popular
researcher of the maritime transport sector (1914). Later on, in 1924, B. O. Hough
(1924) noted that the congestions of cargo flows at the seaport are extreme be-
cause of the obvious imbalance between the development of maritime transport
and railways, which meant that insufficient logistic connectivity of seaports was
observed at that time, which determined the decrease of seaports’ throughput ca-
pacity and inflexibility from the environmental approach (cited Robinson, 2002).
In developing the concept of connectivity and analysing the problem of cargo
flows congestion in a seaport, there was a need to find solutions for the develop-
ment of a balanced infrastructure. This was the main premise for the formation
168
of the seaport authority, which was the first organizational unit (Heaver, 2006).
In 1912, the first association engaged in the activities of a seaport authority was
founded in the USA. It was named American Association of Port Authorities
(AAPA). It should be noted that the ports in the USA were public organization at
that time, and private capital was prevailing in the environment surrounding the
ports (Robinson, 2002).
In the second half of the 20th century, the development of trade relations and the
increasing size of vessels have created the conditions for the formation of problems
in the shipping companies and the port management sector, and the research of
problems was mostly confined to the research of organizations operating within
seaports. Though already in 1960, when the basic econometric methodology had
formed, T. Thorburn (1960) presented empirical examples of how the cost per ton
and one-mile freight transportation varies depending on the size and speed of the
vessel, and on loading/unloading time and costs of the cargo, but more attention for
the analysis of the interface was given only 50 years later (cited Notteboom, 2007).
Another reason for the development of the seaport management issues was the
intensive development of steamboats, which together led to the development of
liner shipping as the choice of size and type of vessel was the main challenge for
private companies whose main activity was liner shipping services, since the tech-
nological parameters of ships were improved faster than the seaport infrastructure
of the time. Therefore, this has affected the emergence of research in this field,
and not only researchers of that time, but also representatives of private shipping
lines, actively participated in the research of such issues (Heaver, 2006). Based
on these assumptions, it can be said that the development of steamboats was one
of the reasons that caused intensive development of research in the liner shipping
sector from an economic approach.
At the same time, the concepts of seaport and cargo flow are defined and the
classification of seaports is analysed according to geographical location, territory,
administrative-legal form in scientific literature for the first time. Attention is also
paid to the resources of the seaport, which are necessary for the organization of
cargo handling, focusing not only on infrastructure facilities (quays, piers, etc.),
but also on the functionality of logistic connectivity of the seaport. The Admin-
istration of the American Seaport Authority highlighted and emphasized the im-
portance of seaports in terms of public interest and national economic benefits,
and therefore the seaports were classified as a high-profile public sector, and in
order to achieve the goals set by the state, the association promoted professional
research in the field of seaport management, (Heaver, 2006).
To sum up, it can be stated that the rapid development of the manufacturing indus-
try induced by the second industrial revolution had an impact on the intensity of the
movement of raw materials and end products in the logistics chain, which created the
169
preconditions for disclosure of the functions of the maritime transport sector. In the
first half of the 19th century, a certain problem area of seaport management had formed
that revealed the issues of seaport’s throughput capacity and connectivity with land
transport, especially railway sector that was quite well-developed at that time. Upon
founding of the first association of seaport authorities, the issue of a seaport as a na-
tional strategic object was raised, the concepts of the seaport and seaport management
were explained, and the problem area of public and private capital synergy was for-
mulated. The formation of such problem field created preconditions for the solution of
the seaport management issues through the founding of a seaport authority, which, in
turn, speeded up the development of the research in field of maritime transport sector.
7.2.2. The Influe nc e of Interna tional Org an i zat i o n s

on the Development of Maritime Tran s p o rt S ect o r R es earch
The growth of international trade encouraged by the second industrial revolu-

tion influenced not only the search for solutions to the problem of seaports man-
agement, but also affected the changes in market competition in the maritime
transport sector. The growth of international trade rates has created preconditions
for the formation of a high intensity competition in the shipping companies’ sec-
tor. However, when analysing the research of this period, it can be noted that the
link between the competition of the shipping companies and the seaport manage-
ment as a powerful national economic instrument has not been thoroughly inves-
tigated, unlike the rail industry (Robinson, 2002).
Such situation may have been caused by the fact that seaport activity has been
and continues to be a business of not one organization, but the result of synergy
between diversified activities of different economic entities. Therefore, this field
did not attract systematic research, unlike other transport systems, where large
organizations and private capital were operating. It was in line with the current
trends, industrial development, and the desire to maximize automation of process-
es with the goal of increasing productivity levels (Heaver, 2006). It was namely
the scientists of the USA (Owen, 1914), who first identified the need to analyse
the issue of seaports in the sense that the efficient operation of the railway infra-
structure requires a permeable connection with seaports (cited Robinson, 2002).
In scientific literature, the situation where economic and managerial attention
was not given to seaports continued until almost 1960, and can be explained by
three main reasons:
1) many scientists, especially C. Winston (1985), mainly focused on the de-
velopment of private capital companies, growth of productivity and assurance of
growth, and the national economy has been left behind and given more attention
in the engineering analysis of technological processes;
170
2) the economists of that time, including the active researcher A. S. Svendsen
(1958), wrote and the macroeconomics itself was not yet widely and universally under-
stood and was the subject of the research carried out by the economists of the period;
3) the shipowners held strong position by hiding many indicators behind the
shield of commercial secret: commercial shipping was mainly developed based on
the capital of wealthier traders, who had their own ships and engaged in trade, and
thus created an environment, in which the confidentiality of their business was high-
ly appreciated. The whole private capital industry of that period was covered with
a certain cover of secrecy, which in the maritime transport sector could be based on
the assertion of Berglund (1931) that “there exist state-of-the-art business technolo-
gies with clearly expressed archaic features” in the shipping sector” (Heaver, 2006).
It can be argued that such assumptions led to the lack of statistics on the shipping
and seaport activity that became evident in the middle of the 20th century, which
could not be said about rail transport (Jansson, Shneerson, 1982). The availability
of statistical data on railway and air transport sectors was determined by the fact
that a legal regulation system was developed at the beginning of the 20th century,
which resulted in the development and maintenance of a publicly accessible statis-
tical database. Thus, according to the requirements of the valid legal instruments
of the time, economic entities had to submit the key performance indicators to the
system (Robinson, 2002). Such situation allows making a conclusion that railway
and air transport sectors were developed significantly more efficiently comparing
with the maritime transport sector in the middle of the 20th century, and this was
caused not only by connectivity issues, but also by restrictions to accessibility to
statistical data on activities, which resulted in low indicator of scientific research
in the field: there was simply no statistical data on the maritime transport sector
for the analysis of the situation and for the adoption of management decisions, and
the literature of the maritime transport sector was descriptive rather than analyti-
cal in nature for a long period of time (Heaver, 2006).
Only after the Second World War, i.e. after 1945, when the United Nations or-
ganization was established, the governments of several countries decided that, in
order to increase maritime safety and the efficiency of safety management, an in-
ternational organization must be founded that would coordinate safety issue man-
agement in the seaport water area and territory and in the territorial waters. The
Inter-governmental Maritime Consultative Organization (IMCO) was founded in
the international conference that took place in Geneva in 1948. The name of the
organization was changed in 1982, and it was named an International Maritime
Organization (IMO). This organization was the first international organization es-
tablished in the maritime transport sector.
Industrial development and the need for logistic services have also led to the
search for solution of other, not only safety, issues. There were still insufficient in-
171
vestments in the infrastructures of seaports in the post-war period, although much
of the seaports remained destroyed or damaged, and as a result, shipping did not
meet the requirements for the seaport connectivity criterion from the point of view
of the development of land transport systems, since, according to A.S. Svendsen
(1958), ships stayed in the ports longer than during the prewar period and shipping
costs were clearly too high (cited Heaver, 2006). This caused the establishment of
International Cargo Handling Co-ordination Association (ICHCA) in 1952. The
main goal of the association was to help the seaports to increase the throughput
capacity of the ports and to resolve problem-related investment issues. In 1955,
an International Association of Ports and Harbours (IAHP) was established. One
of the main goals of the association was to collect, analyse, compile and publish
information about the tendencies in the international trade, land and water, includ-
ing sea, transport and the changes in legal regulation thereof (Heaver, 2006).
In summary, it can be argued that the establishment of international organiza-
tions brought gradual changes in maritime transport sector, although the research
in the maritime transport sector still remained more of a descriptive nature. In-
deed, analytical research in the field of management and economics of the mari-
time transport sector, based on economic principles, appeared only in the 1980s,
when two Scandinavian economists, A.S. Svendsen (1958) and T. Thorburn
(1960), published their scientific work in the field of maritime market economy.
Although both scientists worked in the field of economics, the relevance of the
problem of seaports’ management could also be observed in their research.
7.2.3. The Developme nt of Sea port M an ag em en t

Res ear ch until 1973
Economists became more interested in the research of the maritime transport

sector only in the 1960s, when attention was drawn to the fact that state seaports
had to be of benefit to the whole country and this question arose in the context of
the analysis of regulatory documents, since such postulates were foreseen in US
shipping policies and in the British shipping regulatory documents. As stated in
the post-war research, while seaport policy is being developed, seaports and their
local problems need to be addressed promptly, since seaports serve the purpose of
providing maritime services and these services are related to the maintenance and
development of the infrastructure. Despite the fact that the interface between the
seaports and the shipping with increasing technical parameters of ships was criti-
cal due to the insufficiency of the infrastructure, the interface between the mari-
time transport and the land transport was even more critical, as the development
of railways was much more intensive and better developed onshore.
172
All this created preconditions for the economists of that time to turn to the
issue of seaport management from an economic point of view. Therefore, since
1960, research focuses on the assessment of shipping costs in seaports, for the per-
formance of which different methodologies based on econometric methods were
developed for calculation of target investments in infrastructure and their impact
on ship costs at the seaport, while the essential critical object of research of that
period was the length and cost of vessel’s stay in the port.
The issues of the ship’s time in the seaport and the costs of the ship were wide-
ly analysed in the work of scientists, the results of their research were published
in the reports of the established international organizations (Heaver, 2006). For in-
stance, the British National Seaport Council published the research of T. D. Heav-
er (1970), G. O. Goss and C. D. Jones (1970), where the issue of high ship’s costs
was analysed. In 1967, the United Nations published the results of the research on
the interface between the shipping and seaport from cost and transaction point of
view, also the results of the research carried out by T. D. Heaver and K. R. Studer
(1972), as well as by R. Robinson (1978) on the identification of the time of ship’s
service in the seaports and the key factors that can have a direct effect on the
length of ship’s service in the seaports.
However, in parallel with the development of dry-cargo ships, the cargo contain-
erization revolution also began, which formed preconditions for searching for solu-
tions of cargo consolidation issues. Container carriers and container handling tech-
nologies became another issue to the seaport infrastructure of that time. Of course,
the first major research works, such as McKinsey, Co, 1967; Johnson, Garnett,
1971, etc., focused on the economic justification of containerized cargo in terms of
costs, while the need for more extensive research field led to the establishment of
research centres. The first research centres were set up in the United Kingdom and
were called interdisciplinary research centres that were subordinate to the Research
Council. Various financial instruments facilitated the formation of the United King-
dom Maritime Transport Centre at Liverpool University (Heaver, 2006).
In 1971, several scientific publications referring to the field of seaport manage-
ment and economics were released. J. Bird (1971) was among the first to publish
the results of his research in the book Seaports and Seaport Terminals. The book
contained analysis of how changes in shipping and handling affect the changes in
integrated logistics systems through the establishment of specialized terminals:
specialized terminals are identified as one of the most important factors in the
attractiveness of the seaport, as well as one of the key factors in developing the at-
tractiveness of the hinterland in terms of international trade links (Heaver, 2006).
In the same year (1971), K. M. Johnson and H. C. Garnett (1971) published a
book, where they analysed the nature of containerisation and the containerised cargo
phenomenon, based on which the need for “door-to-door” service was identified for
173
the first time and its logistic concept was provided revealing the need for efficient
seaport management in terms of logistic supply chain to meet consumers’ interests.
In 1973, the first research magazine Maritime Studies and Management was
published. It addressed various issues of maritime transport sector. In 1976, the
magazine was renamed to Maritime Policy and Management, and the purpose of
the change of the title was related to the issues of the seaport management through
the synergy of public and private capital in the seaport. It can be assumed that
further research was focused on the connectivity of seaport.
Summarizing the research trends, that prevailed in the studies of the maritime
transport sector until 1973, it can be argued that the main problematic issues
related to the management of seaports were addressed from the point of view of
economic efficiency by analysing the interface between shipping and seaport in
terms of time and costs, while the trends of research were substantially affected
by the increase in the technological parameters of the ships, especially bulk cargo
and container carriers. The emergence of specialized journals can be identified
as one of the breakthroughs in the research of the maritime transport sector that
published scientific publications related to the problem research field of the mari-
time transport sector and the results of empirical research.
7.2.4. Res earch of Sea port Managemen t

and Economics Issue s afte r 1973
A significant increase in research on maritime transport management and eco-

nomics is observed since 1973. One of the more interesting publications is a book
“Port Economics” by J. O. Jansson and D. Shneerson (published in 1982). The
key focus of the research of the book is on optimal pricing and investments in
ports. The authors analysed various practices and principles of pricing formation
in seaports and terminals. In this publication, the theory of network economics
was used, the multi-functionality of the seaport was described and the alternative
solutions of the “bottleneck” issue of the seaport were substantiated, assuming
that the “bottleneck effect” originates from the problems of the terminals related
to the productivity of handling operations and maintenance of quays. These as-
sumptions were used much later in the research works of 2004, which confirmed
that the “bottleneck” issue originates from the absence of a balanced interface
between the terminal and the hinterland operations, which shows that the logistics
connectivity problem of the seaport is still developing.
When analysing scientific literature in the field of maritime transport research,
we can observe that all the scientific literature after 1973, compared with the
sources of scientific literature of the previous period, was characterized by the fact
that most findings of research carried out in the field of maritime transport sec-
174
tor were published in the International Journal of Maritime Economics that was
published since 1999. Later on, in 2003, the publication was renamed to Mari-
time Transport and Logistics. The emergence of this journal had an impact on
the development of scientific-practical conferences, which not only analysed the
issues of maritime transport economics and business, but also paid attention to
the importance of seaports in the international logistics. There occurred the need
to analyse the management models used in the maritime transport sector and the
possibilities for increasing their efficiency, as well as realistic implementation
measures (Heaver, 2006).
After 1973, one more journal, i.e. Maritime Transport and Policy, was re-
leased. Thus, comparing with the period from 1960 to 1987, the totality of the
issues of the maritime transport sector as logistics system made just 22% of the
total number of articles of the journal (various articles were published: fishery,
maritime law, etc.), the share of research devoted to the issues of the maritime
transport sector increased to 33% of the total number of articles in 1987–1991,
and later on made over 40% of the total number of articles in 1999-2005 (Heaver,
2006). Such facts support the relevance of the issue of port management and mari-
time transport economics and identify the issue of the globalization of the global
trade. The issues of the articles of that period could be divided into 6 subgroups:
the interface of seaport with shipping costs; optimisation of seaport pricing and
costs; assessment of the productivity of the port; assessment of interface between
manufacturing organizations and seaports; competition between seaports; special-
ised research in seaport and terminal productivity (Robinson, 2002).
The parameters of the dry-cargo ships and tankers changed significantly since
1973. Dry-cargo ships could be serviced only in specialised terminals. Therefore,
the issue of shipping costs was replaced by the issue of the costs for the development
of ports in the research. The emergence of containerization also contributed to this,
as it was related to the uncertainty of the ship size. Thus, it demanded for the devel-
opment of specialized terminals and caused the emergence of one or few seaports in
the routes of liner shipping, which includes short sea shipping and container lines.
It is obvious that the changes in the parameters of navigation and technical
parameters of the ships caused increase in the complexity of seaport management.
This was due to commencement of formation of specialization of seaport activi-
ties and seaport networks in the regions. That is why the researchers began to
focus on such model variables as time and efficiency in analysing the problems of
the relationship between the port and shipping costs and to look for interrelations
with seaport management models, emphasizing that seaports are becoming more
open in terms of global logistics.
Also, much attention was paid to the port dues charged for the use of port in-
frastructure and services during that period. In the research of this issue, the con-
175
cept of seaport management became evident, as more and more researchers and
practitioners began to look for interface between the efficient use of public and
private capital; various management models, qualitative changes in management
principles through the division of the fields of responsibility between business and
state enterprises were analysed, and there was a search for the port dues system
reformation solution (Goss & Stevens, 2001).
In 1973-2000 research, the importance of port economy and port management,
measured in different dimensions, has become a core dimension of logistics and
transport economics, as supply chain management practices have created a high
demand for time-oriented logistic systems. Time and duration are identified as the
key indicators that have a direct impact on the optimization of port and shipping
costs and, therefore, it is not surprising that research is dominated by chronometry,
statistical analysis, econometric research methods (Baird, 2000).
If the formation of the scientific problem of seaport management was largely
influenced by the increase of the technical parameters of bulk cargo ships and con-
tainer carriers, the development of liner shipping and the related issue of attracting
investment into infrastructure until 1973, after 1973 the relevance and complexity
of the seaport management problems were supplemented by changes in the strategic
objectives of industrial enterprises caused by changes in organizational structure
and organizational behaviour (Robinson, 2002). During this period, the logistics
sector began to expand rapidly the range of logistics services and to develop “door-
to-door” logistics concept, which was reflected in the context of the geographical
distribution of companies by shipowners and shipping companies. The expansion of
the geographical layout of the manufacturing companies in the logistics chain gave
rise to the need for cargo consolidation, and the port became a strategically signifi-
cant element in implementation of consolidation of cargo flows.
Another area of research has emerged when dealing with stevedoring termi-
nals operating in seaports, since the intensive transformation of terminal business
models, especially since 1990, affected the development of seaport infrastructure
and the legal regulation base, which led to economic research on the intensity of
freight traffic, which were eventually linked to searching for effective seaport
management models. During this period, there were active scientific discussions
on the impact of private and public capital on the national economy, which lead
to the search for management solutions through the multidimensional synergy of
public and private capital based on the principles of neo-classical synthesis and
neoliberal economic theories.
When summarising the field of maritime transport sector issues prevailing in
the research performed after 1973, it can be observed that the number of journals
publishing maritime transport sector research has increased, and not only the
number of research has increased, but the scope of subjects has expanded, too.
176
Although the main focus was on the solution of the financial efficiency issues in
the maritime transport sector, the issue of logistical connectivity of the seaport
remained relevant, but the methodological research direction was expanded to
search for solutions and the search for cost effective solutions was started through
the methodological principles of public administration management. It was as-
sumed that the efficiency of seaport management is dependent on the political
situation in the country and the changes in government and the development of
transport policy. A.J. Baird (2004) analysed the concept of public goods, its sig-
nificance for financing state seaports and the possible manifestations of informa-
tion asymmetry in the market. Special attention was given to the issue of the use of
state-owned land in state seaports during this period, since no fees were charged
for the use of the land in most of the state seaports during this period.
The results of the overview of research of the second half of the 20th century
showed that during this period most of the port management functions in the mari-
time transport sector were transferred to the port authorities that exercised the
powers granted by the state in developing the maritime transport sector. In order
to increase the productivity of cargo handling and logistics operations at seaports,
various seaport management models were implemented through the reorganiza-
tion of the seaport authorities. During this period, the theoretical principles of
traditional public administration were replaced by the new paradigm of public
management, bringing the public and private sector entities closer through the
result-oriented management principles. However, the processes of globalization
and economic liberalization, as well as the increasing tendency for the formation
of containerized cargo flows, have led to changes in the positions of state port
authorities in the global maritime transport market and the problem of seaport
management became complex and global at the beginning of the 21st century.
7.3. Over v ie w o f S e a p o rt M a na g e m e n t
in Moder n R e s e a rc h
In summarizing the development of research on the problem of seaport man-

agement, one can see the impact of management and economics theoretical as-
sumptions. The second industrial revolution led to an increase in the intensity of
industry and production. Thus, the owners of private manufacturing companies
began to look for measures for increasing the production capacity, which created
preconditions for the formation of the classical theory of work organization man-
agement (Table 7.1).
177
Table 7.1
The formation of the port management problem field
in the context of the development of management theories
Timescale
Management science‘s
Current
directions 1885 1930 1950 1960 1970 1980 2000 2010
period
Classical theory:
 
scientific management
Neoclassical theory:
 
human relations
New mathematical
theory: quantitative  
methods
Process approach school
 
of management thought
systemic approach of
 
management thought
situational approach of
 
management thought
Proffessional schools of
 
management thought
Participative theory  
Public administration
 
theory
New public management
 
paradigm
New public governance
 
theory
Formation of scientific
research area in the   
maritime governance
Source: Martinkus, B., stoškus, s., Beržinskienė, D. (2010). Vadybos pagrindai. Šiauliai: Šiaulių
universiteto leidykla.
The main direction of the research of seaport management problems during

this period was the low productivity of seaports due to underdeveloped seaport
infrastructure and, in general, the mismatch between the infrastructure and a high-
quality and technologically advanced railway network. The importance of produc-
tivity was obvious to the private business sector; therefore, the research of the sea-
port problematic field has gained the economic character of financial efficiency,
optimization research and the problem of the effective management of the seaport
began to emerge only in the second half of the 20th century, when the possibility
of applying quantitative mathematical methods became prevalent in the manage-
ment theories due to the intensive development of econometric methodology.
upon establishment of a systematic approach to a public sector institution in
the field of scientific research, including in the maritime transport sector research,
the need for reform has emerged, thus, the application of the principles of result-
178
oriented management and the new public administration management were start-
ed to be applied widely from 1970 (Table 7.1).
The equilibrium law was denied in 1980, and Newton’s or modern science
paradigm shuffled. Namely during this period the deterministic approach has di-
minished, and, first of all, the biological systems, sometime later the organizations
were viewed as dynamic systems in terms of dimension of changes in their state
and of the changes of the emerging environment, and special attention was started
to be paid to behavioural studies. in the development of management theories, as
the modernist science paradigm was being replaced by the postmodern science
paradigm, the methodology of adaptive complex systems research has developed
based on the theories such as the theory of complexity, adaptability and chaos.
Another major change was the third industrial revolution and the integration
of microcontrollers in business processes, which eventually led to the automa-
tion and robotization of routine business processes. The integration of computer
and microcontroller-based technologies into business processes has fundamen-
tally changed the principles of the management process. Therefore, the issues of
seaport management have become an integral part of the global logistics supply
chain management (Fig. 7.2).
Global supply logistics chain

industrial Conveyers Economical production
revolution economics
internet
supply logistics
1880 1900 1920 1940 1960 1980 2000 2020

Logistinės sistemos Cloud computing
First Microcontrollers
computers
Processes systems Networks
Fig. 7.2 Evolution of global supply logistics chain

Source: Dittmann, P. J. (2015). Distribution Centre Management: a best practices overview.
A report by the supply chain management faculty at the university of Tennessee.
it is very important that the entire evolution of supply logistics was based
on the fact that all the transportation logistics operations in the modern logistics
supply chain depend on the structures of the formed network organizations, the
formation of which was predetermined by the intensive development of comput-
erised systems, cloud computing solutions, including internet of things (ioT) and
industrial internet of things (iioT), as well as big data, improvement, which re-
sulted in globalisation of logistics supply chain, including integrated transport
systems that give assumptions for vertical integration of the principles of seaport
management (Fig. 7.3). The implementation of processes has changed, in its turn,
179
and most of companies operating and providing services in the port reviewed the
main business processes and optimised or renewed a certain part of those pro-
cesses (Dittmann, 2015).
solution of Vertical
local issues integration integration
increasing Establishment of of seaport of
of the port interface distribution into logistics ports into
between port centres supply logistics
services and users chain service
sector
Result-oriented management Added value-oriented management

1960 1970 1980 1990 2000 2010
Fig. 7.3. Evolution of the concept of seaport in the process of scientific research
Source: Pettit, s., J., Beresford, A., K. (2009). Port Development from Gateways to Logistic Hubs.
Maritime Policy and Management, 36(3), p. 253-267.
Namely this evolution of the surrounding environment and the technological

progress of the systems controlled by microcontrollers that triggered changes in
the field of management of seaports and the transformation of the seaport mis-
sion from orientation towards a result to orientation towards the creation of added
value - to the national economy, the region, the stakeholders - became important
elements of these changes. That is why huge diversity and abundance of trends,
wide range of approaches and dimensions are so characteristic of modern seaport
management problem research. Although efficient seaport management is stra-
tegically important for maritime regions, there is not much integrated research
focused on addressing the problems of improving the efficiency of management
of state seaport activities, and the research performed usually focus on economic
entities operating in the maritime sector or specialized areas of port activity.
Research on the efficiency of the port activity is based on the basic forecasting of
cargo flows, the economic impact of cargo flows on port activities and the develop-
ment of activities of terminals. sufficient research was carried out when analysing:
– the interface between the performance efficiency and management models
of seaports and business entities operating in the ports and the changes in
the port activities and competitiveness, investigating the significance of
regional and global integration of ports for both the changes in the com-
petitiveness of the ports and the attraction of cargo flows to regions (Baird,
2005; Notteboom, Rodrigue, 2007; Verhoeven, Vanoutrive, 2012),
– assessing the importance of the ports to the economic changes of the states
and regions (Belova, Mickienė, 2015; Belova, et al, 2016, Valionienė et
al., 2016, 2017).
180
The research also gives much attention to:
– solution of the issues of port as a strategic transport hub in the formation
of transport policy in the country and in the region (Brooks, Pallis, 2012;
Flitsch, et al, 2014);
– strategic management issues of the port, multi-criteria solution methods
are recommended (Verhoeven, Vanoutrive, 2012).
– interrelationship between port management and the attractiveness and
competitiveness of the maritime sector (Brooks, Pallis, 2008; Lam et al.,
2011; sanches et al., 2011; Mickienė, Valionienė, 2017).
There has not been much research performed on the performance efficiency of
a state port as the research object of public administration, as well as on how to
increase the attractiveness of the ports. Analysing the research carried out by for-
eign scientists, it can be noted that the largest part of the research is related to the
analysis of cases of implemented seaport management modernization, summaris-
ing the recent seaport reforms in the comparison study of many countries (Brooks
et al., 2017): detailed analysis of the case of the uK’s port management reform in
privatisation of the seaports (Baird, 2005) and further development prospects of
the sector (Monios, 2017); decentralization of port management in privatisation of
the ports was described comprehensively when describing Panama and usA ports
(Pagano et al., 2013); modernisation of Rotterdam Port management (Dooms, et
al, 2015) and the complexity of the solution of port management issues (Notte-
boom et al., 2015), as well as the reforms of the entire seaport sector in the Neth-
erlands (de Langen, van der Lugt, 2017); changes in Belgian maritime transport
sector (Van de Voorde, Verhoeven, 2016); assessment of the needs and possibili-
ties for modernization of italian ports (Ferrari, Musso, 2011; Parola et al., 2017);
overview of the Greek port management issues in the context of globalisation pro-
cesses (Pallis, Vaggelas, 2017); assessment of changes in seaport management in
Cyprus (Panayides et al., 2017); case study of Portuguese seaports (Caldeirinha et
al., 2016); case study of French seaport management reforms (Debrie et al., 2017).
The justification of the need for changes in the management of state seaport
emerges in the results of research in the field of public administration through the
analysis of weaknesses in the management of the state seaport as the object of the
public sector in comparison with the private sector. Those weaknesses include
insufficient flexibility, entrepreneurship, efficiency of operations, productivity, etc.
(Buškevičiūtė, Raipa, 2010; Guogis, Rakšnys, 2015; Patapas, Raipa, smalskys,
2014), and possible solutions of efficiency issues are analysed through the search
for management model modernisation opportunities. One of the methods used for
increasing of efficiency is development of partnership between public and private
sectors (hereinafter DPPPs) (Rainey, Chun, 2009), and its importance and effect is
highlighted in integrated management of the property of modern seaport feasibil-
181
ity study (Abouchakra, et al, 2008), although obvious uncertainties are identified
as to how these principles could be implemented in the management of seaports.
upon making an overview of modern maritime transport sector research, it can
be argued that modern research analysing problem areas of seaport management
can be grouped to the following sub-themes: port management, port economics
and port technologies (Fig. 7.3), which reveals the multifaceted nature of the sea-
port management problem.
such a classification of the problem area of the management of the seaport pre-
supposes that the seaport management research problems are rather fragmented and,
therefore, it is difficult to assess the links between the management of the seaport
and the relevant indicators of the attractiveness of maritime transport sector in the
global logistics supply chain. it is namely in this context that the concept of seaport
management and the attractiveness of the maritime transport sector has formed in
the research of the seaport management problems. The concept has also been ana-
lysed either in the sample of port management dimensions or only in the sample of
port technology or only in the sample of dimensions of the port economics. There is
no integrated analysis on how seaport management principles affect the attractive-
ness of the maritime transport sector in the region, although in research the concept
of attractiveness is used in the context of a global logistics supply chain (Fig. 7.4).
Assessment of port development prospects

Assessment of hinterland systems development prospects
Planning of development
strategic
Ensuring availability of handling process
management
Human resource and materials management
Management of relations with interested parties
Formation of pricing and marketing strategies
Assessment of economic efficiency
Port Tactical management Assessment of profitability
management Forecasting of marketing trends
Financial resource
ource management
investment management
implementation and management of innovative projects
Operational Management of stevedoring processes
management Planning of throughput capacity of port
Ensuring stevedoring process capacity
Planning and implementation of technological
Optimisation of stevedoring process
Fig. 7.4. sub-themes of research on seaport management

Sources: Lee, E., s., song, D., W. (2010). Knowledge Management for Maritime Logistics Value:
Discussing Conceptual issues. Maritime Policy and Management, No. 6 (37), p. 563-583; Thai, V.,
V. (2012). Competence Requirements for Professionals in Logistics and supply Chain Manage-
ment. international Journal of Logistics Research and Applications, No. 2 (15), p. 109-126.
182
According to the results of the analysis of scientific literature and research clas-
sification by R. Robinson (2002), K. Bichou and R. Gray (2004), as well as K. Ibra-
himi (2017), the issue of logistic connectivity in the context of the management
of seaports can be explained by the lack of interdisciplinary research. Therefore,
K. Ibrahimi (2017) observes that the lack of integrity in the research of the problem
field can be attributed to the fact that much attention is given to the principles of
port management and economic efficiency of the development of the port in the
studies of seaport management, leaving the terminals, which are an integral part of
the complex seaport system, behind. Logistic connectivity problem was analysed
to a greater extent by H. Jia et al. (2017), who provided a methodology used in
Norwegian maritime transport sector. On the other hand (Fig. 7.4) modern seaport
management research can be divided into several significant areas: spatial analysis
of seaport combining the designing of port and terminal operations; seaport policy-
making at the governmental level and seaport management at seaport authority and
terminal level. Such classification of scientific research makes it possible to identify
the national, regional and local peripheral functions of the seaport, which ensure the
integral functioning of the integrated transport system.
Summing up the evolution of the modern research, it can be stated that the
research of the management issues is divided into political, strategic and opera-
tional port management levels, which demonstrate the need for effective synergy
between the private and public capital. The main port management sub-themes
combining economic, managerial and technological management have been iden-
tified, but the research should achieve a higher interdisciplinary level, as the inter-
relation between seaport management efficiency and the attractiveness of mari-
time transport in terms of logistic supply chain remained revealed insufficiently.
1. What is the diversity of the concept of port?

2. How is the term of seaport management explained?
3. What economic, social, political and technological assumptions have led
to the formation of research on the management of the maritime transport
sector in the 20th century?
4. How is the evolution of the research of port management issue special over
the period until 1973?
5. What main differences can be identified in the research of the port man-
agement issue comparing the period until 1973 with the period after 1973?
183
6. How did the establishment of international organizations operating in the
international maritime transport sector affect the solution of port manage-
ment issues?
7. What journals publishing scientific research remained to this day?
8. What relationship can be identified between the port management problem
research field and the evolution of management theories?
9. What are the main trends prevailing in the port management scientific re-
search in the 90s of the 20th century and in the first decade of the 21st
century?
10. What key reasons of the evolution of scientific research caused changes in
the research of seaport management issues at the end of the 20th century?
11. What main features can define the scientific research of the port manage-
ment issues at the beginning of the 21st century?
12. Name the main authors, who conduct research in the field of seaport man-
agement.
7.5. Ref eren c e s
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188
8.
T H E P R I N C I P L E S O F P O RT M A N A G E M E N T
Elena Valionienė
This chapter presents an analysis of port management functions and the con-
tent of the management activities taking into account the legal status and manage-
ment models of the port and based on experiences of advanced European ports.
8.1. P or t M a n a g e me n t Fu n c tion s
Seaport management is a concept directly related to the form of ownership,

management, organizational structure and control functions in the activities of a
seaport (Burns, 2015). Based on the formation and evolution of the seaport scien-
tific research issue over the second half of the last century, it can be seen that the
entire evolution of the ports was based on search for effective management mod-
els and efficiency problem solutions by modelling private and public capital and
responsibility ratio using certain algorithms, strengthening cooperation between
public and private sectors developing new organizational models and developing
specific forms of management. In this manner, a certain hierarchy structure has
formed among state, seaport authority and port operators-terminals, shipowers’
associations and other economic entities operating in the port that, upon combin-
ing into one business formation during globalization process became a somewhat
separate quazi-private organization uniting public and private capital.
This approach leads to an assumption that port management issue is especially
relevant in modern global logistic supply chain, as the port management solu-
tions have a direct impact on the entire logistic supply chain or its major part.
Therefore, some researchers attribute the management problem to the set of fac-
tors forming the attractiveness of the maritime transport sector (Lam, et al, 2011;
Sanches, et al, 2011).
189
When analysing the port management functions, K. Ibrahim (2017) distin-
guishes three groups of management functions (Table 8.1): governance, adminis-
tration and management of the seaport.
Table 8.1
Port management functions
Port governance Port administration Port management
Port-related legal Fulfilment of legal functions Development, maintenance and
regulatory measures (signing of contracts, execu- use of marketing and communi-
tion of procurement, etc.) cation systems
Port development Preparation of financial and Development of research and
policies/strategies accounting reports innovations
Port stakeholders/ Human resource manage- Human resource management in
ownership ment workplace
Formation of compet- Preparation of annual reports
itiveness and attrac- and their presentation to the
tiveness of the port board
Monitoring the Distribution of material Management of transportation
compliance of enti- resources of the port services
ties engaged in port Planning and maintenance of Development and management
activities with port the construction and repair of logistics and value-added
rules works of the seaport services
Formation of seaport policy/ Management of manufacturing
rules services
Ensuring the security of the Commercial and touristic ser-
port vices
Constant control of Management of environmen- Agency services
port administration tal impacts of the port
and management ef- Other public services Other public non-profit services
ficiency
Source: Ibrahimi, K. (2017). A theoretical framework for conceptualizing seaports as institutional
and operational clusters. Transportation research procedia, 25, 261-278.
The seaport governance functions include such function that are formed at the
highest level - at the level of political governance - and that have a direct impact
on the formation of a seaport management policy, addressing the issues of com-
petitiveness and attractiveness of a seaport, and discovering and applying efficien-
cy enhancement solutions (Table 8.1). The functions of the seaport administration
include all the functions related to the implementation of governance decisions,
their control and supervision, which, according to the classical administration the-
ory in scientific management, corresponds to the operation of activity defined by
strict procedures. The third category of activity functions includes such activities
that are directly related to the operations carried out in the port, with technological
solutions, application of marketing measures and human resource management.
190
Such division of seaport operation activities allows summing up that seaport
management is specific, unusual to most organizations, because it covers a wide
range of management functions - from the implementation of local control mecha-
nisms and procedures to the formation of a comprehensive maritime port vision
and mission development policy.
8.2. P or t A u th o rity G o v e rn a n c e Ac t i v i t i e s
The principles of a unified organization management are often applied for the
analysis of seaport management issues. However, it’s worth noting that seaport
management is related not to the management of one particular organization, but
rather to the management of the network of organizations and their interactions.
As the interpretation of the concept of seaport in different contexts has shown,
seaport includes both objects and entities and their interrelationships. It is important
to remember that all seaport activities are carried out on the basis of seaport infra-
structure and this is the basic starting point for analysing the problematic research
field of seaport management. Namely infrastructure management and administra-
tion are one of the key points in the investigation of the problem of seaport manage-
ment. As the infrastructure first of all refers to the territory and water area of the port
that is usually owned fully or partially by the state, a special organization, named
port authority, usually operates for the management and control of these objects.
Port authority is an institution of the seaport administration, the main function of
which is the management of the seaport. The port authority is defined as a an eco-
nomic entity operating in accordance with the laws for the purpose of administering
the management of the seaport infrastructure, coordinating and controlling the activi-
ties of operators operating at the seaport (Verhoeven, 2010). The term “port author-
ity” implies a specific form of public management commonly used in a seaport, but is
usually used in the general sense, noting that the activities of the entity are regulated
by the laws, and that its activities are limited to the functions of the management of
water area and territory. However, taking into account property and management
practices, the port authority is an economic entity of a hybrid nature, which is subject
to the legal regulations applicable to both the public sector and the private sector.
Therefore, it can be stated that, in accordance with the law, the functions of a land-
owner, infrastructure regulation and operation are assigned to the port authority.
Port authority is constantly affected by the dynamic and constantly changing
environment of port activities through the changes in the needs of the stakehold-
ers. There are three main features of impact: the needs of the market players, the
needs of the government of the country, and the needs of the communities.
191
The market players are the shipowners, operators of the terminals, operators of ship-
ping lines, operators of logistic services, etc. the market players listed hereinabove per-
ceive the functions of the port authority as auxiliary governance functions empowering
the market players to achieve their goals (e.g., profit). However, the market players
also tend to see the functions of the port authority as bureaucratic obstacles to the per-
formance of their activities, which gives rise to such issues as providing and ensuring
equal conditions, prevention and restriction of monopolistic activities, etc.
Speaking about the impact of the national government it should be empha-
sised that port authorities are port governors authorised by the governments, so
their funding depends on the government that acts as the main shareholder or
owner and has strategic goals in terms of economics and regional development.
In this way, the port authority is in an intermediate position between the different
objectives of the government and business entities, and it is also affected by the
social environment, which often manifests through certain pressure due to the
negative impact on urbanized territories located near the port, although this may
not directly be the responsibility of the port authority. However, port authorities
have to operate the managerial activities in such a complex environment. There-
fore, scientists keep raising a question, whether port authority should maintain the
position of a controller and administrator in such a complex system, or should it
operate actively in a position of an equal market player in this (Verhoeven, 2010).
Table 8.2
Port authority challenges and potential solutions
Challenge Strategic solution
The development of dedicated infrastructure according to special-
ised ships
Active sponsorship and marketing policy formation
Development of market segments
Investments Development of diversity of service providers
Create added-value and facilitate operators’ obligation to ensure
the movement of cargos
Ensuring the cargo flows of the entire cluster
Cooperation, coordination and specialization
Commercial policy making in review of port fees and concession
fees, including minimum basic fees
Financial resources
Increasing revenue from auxiliary activities
Development of the partnership between the public and private sectors
Promote sustainable development policy
Competition for the
Development of improvement policy of relationship of urbanised
territory of the port
territories with the port
Source: Verhoeven, P. (2010). A review of port authority functions: towards a renaissance? Maritime
Policy & Management, 37(3), 247-270.
192
In fact, performing the functions of a landowner is the principal function of
the port authority in the modern global market, and these functions also include
activities such as management, support, development, implementation of legisla-
tion, control, etc. (Table 8.3). However, this function tends to change and such
tendency is determined by several reasons (Table 8.2).
One of the most important reasons is the need for permanent investment into the
infrastructure in order to ensure equal competition conditions for all business entities
operating in the port. Such need has increased in particular in attempt to increase com-
petitiveness and attract intensive containerized cargo flows, but large investments into
modernization of the infrastructure of container terminals without ensuring private in-
vestments into the suprastructure of the port does not give the desired result.
The cause for investment also determines another cause, i.e. attracting private
capital investments and its equal distribution for the performance of port activi-
ties. It was not very difficult to attract business capital investments before the
global financial crisis in 2008, so private shipping lines partly invested into the
modernization of the infrastructure and suprastructure of the ports. However, after
the global recession, as the shipping lines started merging into larger companies,
it became complicated to attract such investments and the need for investment was
once again compensated from the public sector funds.
The third reason is the use and development of the port area, causing social
dissatisfaction with pollution and other adverse effects on the environment, and
therefore seaport development activities were confronted with resistance from
urban areas. All the three closely-interrelated reasons create preconditions for re-
viewing the functionality of the port authority and analysing them from the point
of view of the challenges of the modern global logistics chain and functional re-
sponses to those challenges.
According to the legal basis, the regulatory function of the port authority (Ta-
ble 8.3) seems to be logical and includes a comprehensive set of obligations and
responsibilities, where the main functions of control, monitoring and policy-mak-
ing can be identified. It concerns the maintenance of safety and security system of
shipping and cargo handling operations in the seaport, compliance with national
and international laws not only in the field of shipping, but also in the field of oc-
cupational safety and environmental protection (Verhoeven, 2010).
Increased attention to environmental problems has led to the complementing
of the functions of the port authority with the functions of prevention and control
of pollution from ships and of dangerous and oversized cargo transportation, as
well as other functions. Some researchers complement the sets of functions of the
port authorities with the functions of control of the lawful execution of concession
agreements, which brings the activities of the port authority closer to the opera-
tor’s activities, and not to the governor’s activities (Verhoeven, 2010).
193
Table 8.3
The functions of a port authority in the governance of the port
Port regulatory Port activity governance Port operations management
functions functions functions
Ownership rights Operations
Licencing Management of water area Cargo transhipment/handling
Entering into agree- Development and mainte- Passenger transportation
ments nance of water area
Ensuring shipping Development of strategy Towage services
traffic safety
Customs and migra- Planning Services of pilots’ office
tion
Port monitoring Management of accessibility Facilities and their safety
of port services
Fist medical aid Preparation of promotion Repair works
materials of port services
Ensuring public Security of the territory of the Operations marketing
interest port
Port policy-making Management of port land Waste management
Environment protec- Implementation of investment
tion policy-making
Source: Ferrari, C., Parola, F., & Tei, A. (2015). Governance models and port concessions in Europe:
commonalities, critical issues and policy perspectives. Transport policy, 41, 60-67; Verhoeven, P.
(2010). A review of port authority functions: towards a renaissance? Maritime Policy & Manage-
ment, 37(3), 247-270.
In general, from all the three types of functions (Table 2.3), regulatory func-
tions are least acceptable to business. However, it should be emphasized that the
port authority implements a certain part of the regulatory functions with the in-
volvement of intermediate authorities and such cooperation increases the costs
of regulatory functions that are covered from the collected port dues. Local and
national authorities can also participate in the regulation in order to minimize the
risk of conflicts of interest, especially in cases, where the port authority holds the
position of an entrepreneur in the market and when then the issue of the need for
the territorial development arises (Ferrari et al., 2015).
The functions of the operator are usually the three main functions of the port
authority:
–– to ensure the physical movement of goods and passengers between mari-
time and land means of transport;
–– to provide and maintain technical shipping services (towing, mooring);
–– to provide auxiliary services.
194
The major changes of the European seaports involved the transfer of the de-
velopment and maintenance of stevedoring operations and suprastructure into
the hands of the private capital sector, where the function of the port authority
remained only as ancillary services’ provider and, therefore, the function of the
port authority as an operator in the field of cargo handling was put aside. Upon re-
fusal of technological operations and their transfer to the management by private
capital, there increased risks concerning a balanced development of infrastruc-
tural and supra-structural part of the ports due to the private sector’s authority
to increase productivity in line with infrastructure exploitation productivity and
investment size (Notteboom, 2007). On the other hand, the regulatory functions
were enhanced that enabled the port authority to look for flexible solutions for
increasing the regulation of the private sector operating in the port, the productiv-
ity and profitability of the port through the development of regional development
policy, increasing the attractiveness of the port not only in the region, but also in
the global market of the logistic chain (Ferrari et al., 2015).
According to P. Verhoeven (2010), the functionality of the port authority needs
to be reviewed and classified to a certain degree, as a vast majority of different
forms of management have formed in the maritime transport sector. In order to
use them as examples of good practice, it is possible to identify the comparison
features and criteria of the port authority by bringing them into the matrix of at-
tributes (Tables 8.4-8.6), which show a summary of the functions of ports authori-
ties in accordance with the geographic dimensions of activity.
Three main groups of activity models of port authorities are identified in port
management research according to the geography of functions and objectives:
Verhoeven (2010) and C. Ferrari with a group of other researchers (2015) define
those functions through their focus on solution of local objectives, i.e. regional
and global. And, depending on the scale of objectives and tasks, the management
models of the port authorities are defined as conservative, broker and entrepre-
neur’s models, where the port authority carries out the functions of a passive man-
ager, broker and entrepreneur, respectively. The manifestation of these models
is analysed through the cross-section of the main activities of the port authority
(Tables 8.4-8.6). These provisions are enshrined in the Regulation of the European
Parliament and of the Council on establishing a framework for the provision of
port services and common rules on the financial transparency of ports (2017).
The function of the port authority as a passive manager is not sufficient in a
modern port management model, as it transforms from the function of the mere
collector of fees to a wider area, i.e. attraction of financial investments into the
infrastructure of the port. Therefore, the functions of the port authority should
change according to the changes in the global logistic supply chain, and they
must be appropriate and to move dynamically from the functions of a passive
195
Table 8.4
Operational model of port authority in the field of property management
Global
Regional
Function
Local
Conservative Broker model Entrepreneur
model model
Passive manager Active broker Active developer
Continuity and sup- Continuity, support, im- Continuity, support, im-
port provement provement
Development Development project broker, Direct investor
depends on the co-investor
government and/or Performs the functions of a Develops urban territory
private sector broker between the city and and sustainable develop-
Property management
the surrounding environment ment projects

Financial income Financial income from pro- Financial income from
from port charges vided commercial services direct and indirect commer-
cial activities
Broker in a commercial B2B Negotiator with the users of
model between providers and the port
users of port services Active seeker for and as-
similator of niche markets
Strategical cooperation with Direct investor in onshore
onshore logistics service logistics sector
providers
Strategical cooperation with Direct investor in other
other ports ports
Sources: Ferrari, C., Parola, F., & Tei, A. (2015). Governance models and port concessions in
Europe: commonalities, critical issues and policy perspectives. Transport Policy, 41, 60-67;
Verhoeven, P. (2010). A review of port authority functions: towards a renaissance? Maritime Policy
& Management, 37(3), 247-270.
manager to the active developer (Table 2.4). P. W. de Langen (2015) questions, if
the functions of an administrator and developer attributed to the port authority are
compatible, and analyses a case, where the activities of the administrator would
be assigned to the port authorities, leaving the port authority to function only in
a capacity of a local passive manager or regional active broker. He suggests that
port authority investment and development institution could be established to per-
form the functions of a global developer. The context of geographical coverage
and significance is important for the analysis of the regulatory functions of a port
authority (Table 8.5).
196
Table 8.5
Operational model of port authority in fulfilment of regulatory functions
Global
Regional
Function
Local
Broker model
Conservative model Entrepreneur model
Passive application Active application and Active application and
and implementation implementation of legal implementation of legal
of legal regulatory regulatory norms and rules regulatory norms and rules
norms and rules through cooperation with through cooperation with
local, regional and national local, regional and national
authorities authorities
Preparation of rules and Preparation of rules and
regulations regulations
Providing assistance to port Providing assistance to port
users through implementa- users through implementa-
Regulatory
tion of legal regulatory tion of legal regulatory

norms norms
The organizer of expertise
and regulatory instruments
for external actors on a
regional and global scale
Financial income Financial income from Financial income from reg-
from regulatory regulatory activities based ulatory activities provided
activities based on on port charges on commercial bases
port charges Financial income from im-
plementation of sustainable
development projects
& Management, 37(3), 247-270.
The activities of the port authority are transforming from the function of im-
plementation of rules and regulations towards their preparation and counselling
of stakeholders on their implementation and financial fund attraction issues in
preparation of draft commercial expertise for stakeholders (Table 8.5).
When analysing the transformations of the functions of a port authority in
terms of market globalisation processes, one can also observe changes in the func-
tions of port authorities as operators (Table 8.6).
197
Table 8.6
Operational model of port authority in fulfilment of operator
and community manager’s functions
Global
Regional
Function
Local
Conservative Broker model Entrepreneur model
model
Mechanical Dynamic application of Dynamic application of conces-
application of concession policies for sion policies combining with the
concession policy advancement of broker- role of real estate developer
(licencing, certifi- age concerning increase
Operator’s functions
cation, etc.) of efficiency of the use of

infrastructure
Leader in dissatisfaction Shareholder of private service
with the private services providers of the port
or private service provid-
ers of the port
Provision of direct eco- Provision of direct economic
nomic value and special- value services for commercial
ised commercial services purposes
Does not fulfil Economic dimensions: Economic dimensions with big-
–– addresses hinterland ger commercial inclusion
connectivity and –– addresses hinterland connec-
throughput capacity tivity and throughput capacity
issues; issues;
–– provides training and –– provides training and educa-
Community manager
education services tion services

–– provides information –– provides information and
and communication communication technology
technology services services
–– support/maintenance –– support/maintenance
–– lobbying –– lobbying
Social dimension: Social dimension:
–– Coordination of con- –– Coordination of conflicting
flicting interests interests
–– Lobbying –– Lobbying
–– Promotion of positive –– Promotion of positive effect
effect
& Management, 37(3), 247-270.
198
If the port authority performs the function of licencing and certification at the
local level, at the regional level there emerges the issue of effective use of infra-
structure on the basis of concession agreements. At the global level, in attempt to
increase operational efficiency through increasing the indicators of infrastructure
productivity, port authorities can make decisions and invest in private capital pub-
lic limited liability companies in this manner creating opportunities to directly
increase the efficiency of business entities engaged in port activities (Table 8.6).
P. Verhoeven (2010) sees sufficiently significant benefits in increasing the effi-
ciency of seaport management through the involvement in the management of
stevedoring companies, and argues that this is a priority measure for improving
the efficiency of the activities of ports authorities.
When comparing conservative, broker and entrepreneur models in terms of
relationship with communities, it has been established that a port authority of
conservative model does not fulfil any activities related to the application of com-
munity interest in terms of both economic and social dimensions. Meanwhile, port
authorities operating according to broker and entrepreneur models and their activ-
ities highlight the search for solutions to the challenges of integration of the global
supply logistics chain through activities such as the development of connectiv-
ity of hinterland systems, which involves intensive cooperation with local and
national authorities, communities of urban territories and their self-government
institutions. The port authority also plays a role of an active lobbyist between sea-
port activities and decision-making authorities, representing the interests of both
the seaport and the stakeholders (Table 8.7).
In summary, it can be stated that port authority performs the port manage-
ment functions. Traditional management functions, such as property management,
regulation, increase of operational efficiency and the management of relationships
with stakeholders are transformed under the effect of globalization processes and
port management operational models used in practice can be divided into local,
regional and global-purpose conservative, broker and entrepreneur models defin-
ing the diversity of the management functions of port authorities. In order to im-
prove the functionality of the port authority in the context of the management of
the seaport, the movement from a conservative towards the entrepreneurial model
through development of programs for the attraction of additional financial re-
sources, port development and private capital attraction and effective operational
management measures by strengthening the interrelationship of the port not only
with directly interested parties, but also with other social communities related to
port activities through economic and social dimensions.
199
8.3. Legal sta tu s o f Po rt A u tho r i t y
When analysing the specifics of port management, the concept of the legal
status of a seaport should be addressed, first of all. The term “status” originates
from the Latin language and in Lithuanian it bears the meaning of a “position”.
Legal status is construed as a whole of the rights and obligations of a legal (and
natural) person. The legal status of a port means the legal status of an administra-
tion managing the port stemming from the organization of the port management
and formation of administration that manages the port, its rights and obligations,
the objectives of the port activity, the ownership of the port area (Kišonaitė, 2002).
in the global maritime transport market, seaports are divided into public, private
and hybrid ports by type of ownership, which are further divided into four types
according to the directness of governmental management (Debrie, 2010; which by
other authors (Kišonaitė, 2002) is called as geographic coverage of legal regulation
or (Notteboom, 2007) significance in terms of national economics): these are au-
tonomous (local, peripheral), regional, municipal, national ports (Fig. 8.1).
By ownership
National Municipal Regional Autonomous
Public capital Mixed Private capital

By legal form
state Public Public limited

Municipal
enterprises companies liability
enterprises
companies
Fig. 8.1 Division of management forms of the ports by ownership and legal form
Sources: Debrie, J. (2010). Different tiers of government in port governance: some general remarks
on the institutional geography of ports in Europe and Canada. World Conference on Transport
Research society, p.12. 12th World Conference on Transport Research, Jul 2010, Lisbon, Portugal;
Kišonaitė, G. (2002). Klaipėdos valstyvinio jūrų uosto teisinis statusas. Vilnius: Justitia.
200
The main structural element of the management system of state seaports (Figure 8.1)
is the port authority, which is established under the resolution of the government and is
managed by the government. The members of the board of the port authority and the
formation of the board depend on the legal form of the port governance applied. The
management functions at a lower, i.e. strategic, governance level are performed by
appointed executive staff that address daily strategic management issues (Kišonaitė,
2002; Fiedler, Flitsch, 2016). A private port is operated by a private owner, for instance,
by a specially established board or special administrative management unit established
by a private owner (e.g., shipping line, port terminal operators, investment group, etc.),
and daily management operations are performed by freelance employees hired by the
private owner. The control of port management operations (cargo handling, passenger
transportation issues) can be implemented by port owner, its representative or company
that rents port operations management activity (Kišonaitė, 2002; Talley, 2009).
Thus, according to the type of ownership, seaports can be both public, private
and mixed capital ports, while according to the functions performed by the port
authority ports operating on the global market can be divided as shown in Table 8.7.
Table 8.7
Port management models by type of ownership and management model
Port management The function of port authority
model Regulatory Ownership management Operations management
Public Public Public Public
Public/private Public Public Private
Private/public Public Private Private
Private Private Private Private
Sources: Cullinane, K., Song, D., W. (2012). The administrative and ownership structure of Asian
container ports. International Journal of Maritime Economics, 3(2), 175–197; Wang, G., W., Knox,
K., J., Lee, P., T.-W. (2013). A study relative efficiency between privatised and publicly operated US
ports. Maritime Policy & Management, 40(4), 351-366.
Unlike private sector companies, state-owned port authorities are public or-
ganizations (with the exception of some ports in the United Kingdom, New Zea-
land and Australia). Port authorities can be autonomous organizations run by gov-
ernment, but they are mostly municipal, regional or national public organizations
(van der Lught, 2013) operating in accordance with the sets of procedures appli-
cable to organization of specific legal status (Fig. 8.1).
Autonomous seaports are ports the administration whereof usually operates
independently from the national government. In this case, the port is governed by
the board, the members of which are appointed and/or elected from the representa-
tives of port users. The main goals of such seaports are usually to organize the
provision of port services without a strict focus on making profit.
201
Regional ports are seaports that have all the features of autonomous ports, but
the board of the port is formed not only from the representatives of port users, but
also representatives from municipal authorities of the regions. The strategic goals
of such ports are usually to provide port services and to balance them with logistic
needs of the region.
The main features of municipal seaports are as follows: they are governed and
their activities are controlled by local municipal corporations or boards, consisting
mainly from representatives of municipal institutions. Such ports usually collect
additional port charges based on the decisions of municipal authorities.
Nacional ports are usually directly subordinate to the government through a
specific ministry. The representatives of the government participate directly in the
governance of such port, and they make a majority of the members of the board.
However, other stakeholders (representatives of companies and/or associations
operating in the port) are also included into the board.
The legal-administrative organizational structure of the port authority is based
on the type of the company it is operating: state enterprise or municipal company,
public limited liability company or public institution.
State enterprises and municipal companies. All the assets of the state enter-
prises are owned by the Republic of Lithuania. All the assets of the municipal
companies are owned by municipalities (Ginevičius, Silickas, 2008).
Public limited liability company or private limited liability company is a com-
pany with limited liability that authorised capital of which (equity) is divided into
parts called shares. Shareholders are the members of the company, who have pur-
chased the shares of the company in accordance with the requirements of the laws.
Shareholders can be natural persons, legal persons or the state (local municipality)
represented by a certain state authority. This is the most often legal form of the
companies (Ginevičius, Silickas, 2008).
State and municipal companies are liable for their obligations only by way of
such assets of the company that can be subject to recovery. The company is not
liable for the obligations of the state or municipality (Ginevičius, Silickas, 2008).
The companies may be limited liability and unlimited liability companies. Lim-
ited liability companies are liable by way of their assets, and unlimited liability
companies are liable by way of company and owners’ assets. Thus, any AB (pub-
lic limited liability company), UAB (private limited liability company) or state
enterprise is a limited liability company. When comparing public institutions with
other non-profit organizations, it is obvious that the total amount of profit must be
allocated for updating of institution and increasing of quality, and not for payment
of dividends and salaries to the owners (Ginevičius, Silickas, 2008).
J. Debrie (2010) presents a structured classification of the diversity of Euro-
pean seaports by distinguishing the features discussed above: by direct subor-
202
Legal status Nacional
Regional
supervision of the port
Municipal
Autonomous
state enterprise
Municipal company
Legal form of port authority
Public limited liability company
Private limited liability company
Eu legal regulatory framework
The form of legal regulation of the port National legal regulatory framework
specific (local) legal regulatory framework
European financial support funds
state budget
infrastructure
Regional budget
Municipal budget
Funding sources of the port
Local funding sources
investments from private port companies

suprastructure
investments from stakeholders
Fig. 8.2 The diversity of the forms of governance of European state ports
Sources: Debrie, J. (2010). Different tiers of government in port governance: some general
remarks on the institutional geography of ports in Europe and Canada. World Conference on
Transport Research society, p.12. 12th World Conference on Transport Research, Jul 2010,
Lisbonne, Portugal.
dination, by the legal form of the port authority, by legal regulation, by funding
sources for infrastructure and suprainfrastructure projects (Fig. 8.2.). For instance,
port authorities in the Netherlands, Belgium, New Zealand, Australia and usA
operate as public limited liability companies that have decision-making autonomy
alongside with the obligation to pay dividends to the shareholders of the company
that are mostly governed by local or regional authorities or the national govern-
ment. The different port models by the type of ownership rights are determined by
the autonomy granted in decision-making process (van der Lught, 2013).
united Nations Conference on Trade and Development (uNCTAD) identifies
the functions of port authority of in decision-making process at the regional level
(Burns, 2015):
– monetary policy;
– taxation policy;
– investment policy;
203
– work policy;
– legal regulation policy;
– licencing policy;
– research and data analysis policy.
such a breakdown by the regional or national levels creates preconditions for
analysing the management system of large organizations, such as a state seaport,
as a four-level management system, in which each management level has an ap-
propriate management function (Fig. 8.3). using the comparison and benchmarking
methods, it can be assumed that, at the government level, there is a political level of
governance that defines the totality of conditions for the activities of the port.
strategy
Planning of Political Council,
Global
investment activities management Board,
logistics
Port engineering level incorporator
Financial sponsorship
strategical Chief executive

Finance management and officer, top
accounting management
level managers
Management of shares (administration)
Cash and bank account
Combined management
logistics Management of agreements
Tactical
Forecasting management Departments,
Market analysis level units
Risk assessment
Ensuring security
Operative
Terminal and its interface management management units,
Land logistics Management of port operations and flows level services
Management of intermodal cargo movement
Fig. 8.3 The concept of port governance in terms of global supply logistic chain
Sources: Burns, M., G. (2015). Port Management and Operations. New York: CRC Press;
Martinkus, B., stoškus, s., Beržinskienė, D. (2010). Vadybos pagrindai. Šiauliai: Šiauliai
university Publishing-house.
The board usually operates at the highest level of governance. in case of Klaipėda
state seaport, the Council of Klaipėda state seaport is established and its statutes are
approved by the order of the Minister of Transport and Communications of the Re-
public of Lithuania (Order on formation of the Council of Klaipėda state seaport and
approval of its statutes of the RL Minister of Transport and Communications, 2003).
The Council is formed from persons elected for the supervision and control of or-
ganizational activities. The members of the Council can participate directly themselves
in the planning processes or may delegate this function to the heads of administration.
204
When certain functions are delegated to the heads of administration, the council often
becomes a committee. The top management level addresses the issues of the mission of
organization, the compliance of organizational activities with the mission of the organi-
zation, plans investments, resolves development issues and engages in other manage-
rial activities within the context of the organizational mission (Martinkus et al., 2010).
The members of the Council of the State Seaport are appointed by the orders of the
Minister of Transport and Communications of the Republic of Lithuania (2017).
Heads of administrations are top managers that are subordinate to the chief execu-
tive officer or president in larger organizations. Chief executive officer is usually hired
by the council or the board for the performance of control functions of all areas of
organization and organization of its activities. In some cases, when the council partici-
pates actively in planning, the function of the chief executive officer is to cooperate di-
rectly with the council in preparation of plans and reports. However, if the council holds
a position of a supervisor, chief executive officer must assume full responsibility for
the planning process alongside other heads of administration (Martinkus et al., 2010).
Heads of units are persons, who manage a structural department or unit of
an organization. Managers, who are persons in charge of supervision of specific
works in the organization, are attributed to mid-level manager group. It is note-
worthy that bottom-level managers give about 80 percent of the total number of
working hours to operative management works (Martinkus et al., 2010).
The analysis of the seaport management system from the legal point of view is
important in that it is related with activities carried out in the port and with the deci-
sions made. Management is closely related to the decision-making process. When
analysing the decision-making process of seaport management, it can be noted that
it is carried out at both the political, institutional and operational levels (Fig. 8.4).
However, it is obvious that the decision taken at any governance level has a direct
impact on operations and activities carried out in the port. According to K. Ibrahimi
(2017), when analysing the specifics of the management of a seaport based on the
analysis of the decision-making process, it can be concluded that both institutional
and operational decision-making processes have one single starting point, i.e. op-
erations carried out in the port. Therefore, based on such assumption and proving
it, in his scientific research K. Ibrahimi (2017) justifies the direct interrelationship
between the operation of the management mechanism of the port and operational
and technical operations and activities in the port, which allows relating the port
management process to the attractiveness of the port in the global logistics chain.
However, the most sensitive issue of the governance of seaports is the search and
implementation of an efficient funding mechanism. When analysing the distribution
of the types of port authorities according to the managed financial resources and
funding of activities, it can be noted that the majority of ports authorities are also
funded by private capital. Most of the financial resources are collected from the
205
stakeholders
Decisions institutions
Governance Council
Administ- Manage- Executive

Actions Operations
ration ment managers
staff
Fig. 8.4 institutional and operational decision-making in a port

Source: ibrahimi, K. (2017). A theoretical framework for conceptualizing seaports as institutional
and operational clusters. Transportation Research Procedia, 25, 261-278.
port charges paid by shipping lines, shipowners, as well as from concession charges
and land lease charges paid by private companies operating in the port. These fi-
nancial measures bear the nature of the long-tern financial revenue. investments
into infrastructure are partially or fully funded by local, regional authorities or the
government. in some cases, funds are raised through public and private sector part-
nership agreements, and in some cases – through commercial loans covered from
cash flows of the port authority. if port authorities operate according to corporate
activity model, i.e. according to the law on companies, then funds for investment are
obtained from collected charges with high level of autonomy. in other cases, these
are investments with low level of autonomy (van der Lught, 2013).
social responsibility functions are ensured through the involvement of stakeholders
in the governance and the main functionality manifests itself through the coordina-
tion of public and private interests in the activities of the ports. social responsibility
functions are most often implemented through the composition of the council of port
authority depending on the legal form of the port authority. For example, such as a
limited liability company operating in the port of Rotterdam, where the shareholders of
the authority are the representatives of the private sector and the public sector, which
results in the representation of both public and private interests in the decision-making
process. For example, Antwerp port authority implements social responsibility func-
tions through the council of the authority consisting solely of elected representatives of
the municipality; therefore, all decisions made must be approved by the representatives
of the municipality in this manner ensuring the satisfaction of private interests.
in summary, it can be stated that ports can be public, private or mixed capital
ports, and the main differences are defined through distribution of responsibilities
in fulfilment of different types of activities in the port. According to the type of
subordination to the government, ports are classified as national, regional, munici-
206
Table 8.8
Trends in changes of port governance features and indicators
Feature Indicator Trends
Ownership Public/private In most cases - public capital, in individual cases –
capital private capital; the number of cases of decentraliza-
tion of management is increasing, transitioning from
state enterprises to public limited liability companies
Financial Public/Private Land lease taxes, port charges and concession fees are
resources collected from private capital companies
State subsidies are decreasing, although in some
countries port authorities are funded exclusively from
the subsidies
Social re- Political method Partially regulated markets (port users, stakeholders,
sponsibility Council etc.)
Market Partially regulated by forming a council from the
representatives of private and public sectors
Aims/inter- Common/indi- The aims of both the public and the private sectors
ests vidual are common, based on the principles of efficiency,
Equality/effi- related to immense complexity and environmental
ciency uncertainty
Complexity
Decision- Level of Multi-level decision-making consisting of many oper-
making pro- organizational ating individuals.
cesses and autonomy Strong interrelationship between public and private
structures Object of public sectors and need for coordination of various and dif-
control ferent interests.
Level of bureau- Intense networking between the organizations of the
cracy port
Object of public control, decreasing bureaucracy
Governance Organizational Organizational obligations increase along with the
value obligations increase of political independence
Focus on the Decision-making processes gain the features of gov-
values ernance focused on added-value
Increasing focus on the market
Involvement of stakeholders
Assessment Standardised The diversity of methodologies increases
of perfor- and non-stand- In addition to the competitiveness of the seaport, the
mance ardised proce- concept of attractiveness of the seaport and the mari-
dures time transport sector is developing
Performance is coordinated with both productivity
and efficiency, aiming for maximum efficacy
Source: van der Lught, L. (2013). Strategy making by hybrid organizations: the case of port authority.
Research in Transportation Business & Management, 8, 103-113.
207
pal and local (or autonomous, peripheral). Depending on the subordination of the
seaport, it is subject to a national or specific local legal regulation that complies
with the legal framework for international organizations and EU seaports. Also,
depending on the subordination of the seaport and the applicable legal regulation,
the institution of port authority is set up for performing the functions of the seaport
governance. Port authority may influence the legal form of state enterprises, pub-
lic enterprises, municipal enterprises or public limited liability companies, respec-
tively. Scientific research sources identify the interrelationship between logistic
supply chain and port governance system, which reveals and justifies the need for
efficient governance at all port governance levels, including political, strategical,
tactical and operational, as in terms of decision-making process, every decision
made at any governance level has a common starting point, i.e. performance of
operations and actions that have a direct impact on the changes in the indicators
of port performance, productivity, efficiency, competitiveness and attractiveness.
8.4. P or t G o v e rn a n c e M o d e ls
In the analysis of port reform opportunities (Port Reform Toolkit, 2007), the World
Bank identifies the main four port governance models: Service Port, Tool Port, Land-
lord Port and Private Service Port. These models differ in that each of them describes
the different distribution of capital and responsibilities between state-owned enterprises
and private companies by ownership rights (Notteboom, 2007).
The analysis of the port governance models in scientific sources (Baird, 2000;
2005; Brooks, 2007; Brooks et al., 2007; 2008; 2017; Notteboom et al., 2007;
Notteboom, 2007; 2010; Langen, 2013) is aimed at identifying those criteria of ef-
fective governance that not only create prerequisites for the efficient use of public
resources, but also create added-value and allow to increase the effectiveness of
the measures taken. In the development of the port, D. H. Brooks and K. Culli-
nane (2007), D. H. Brooks and D. Hummels (2009) identify the main governance
models by the type of ownership (Table 8.9). However, the authors also note that
these governance models depend on port development strategy, be it regional or
global seaport. The choice of the governance model depends to a large extent on
the strategic objectives of the state in the maritime transport and logistics sectors,
the implemented international policy, membership in regional associations and
international unions. Also, the choice of the management model is determined by
striving to use the state-owned resources to the maximum and the desire to create
added-value for the economics (Dooms et al., 2013).
208
Service Port models are mostly characteristic of the developing countries,
which makes it possible to see the interrelationship with characteristics of state-
company model link with the state of national economics identified in the theoret-
ical model. Therefore, service port models are early and growing state enterprises,
where the entire infrastructure, superstructure and port labour resources are the
owned by the state and the ownership of private business is observed only through
fulfilment of certain functions.
Table 8.9
Distribution of responsibilities in the ports
Area of respon- Governance models
sibilities Service port Tool port Landlord port Private service port
Infrastructure State State State Private
Superstructure State State Private Private
Port labour re-
State Private Private Private
sources
Other functions Mostly state Mixed (hybrid) Mixed Mostly private
Sources: Brooks, M. R. & Cullinane, K. (2007). Governance models defined, in devolution, port
governance and port performance. Research in Transportation Economics, 17,405–436; Port Re-
form Toolkit PPIAF, 2nd edition. World Bank Group, Washington, 2007; Wang, G., W., Knox, K., J.,
Lee, P., T.-W. (2013). A study relative efficiency between privatised and publicly operated US ports.
Maritime Policy & Management, 40(4), 351-366.
Service ports are fully owned by the state, including not only the territory and
water area of the port, the roads and other civil engineering networks, but also all
the buildings, cargo handling equipment, other mobile and fixed means necessary
for the operations of the port (Brooks et al., 2009). It should be noted that all cargo
handling operations and ship maintenance services are to a large extent controlled
by state-owned enterprises (Brooks et al., 2007). From the institutional point of
view, the state institution controlling the operation of a seaport is usually subor-
dinate to the ministry in charge of communication and transport sector. There are
cases, when private capital companies are involved in provision of services in case
of such port governance model; however, they are allowed to provide only certain
specific services (Port Reform Toolkit, 2007). A natural person, who is responsi-
ble for the administrative activities of the port and who is directly subordinate to
the ministry, is appointed to the position of the director of seaport authority, i.e. a
state enterprise controlling the port. In the context of this governance model, one
and the same state enterprise is in charge of operational level (development of
infrastructure and fulfilment of operations using the elements of superstructure),
as well as for the strategical level and regulatory functions (Bolevics et al., 2013).
In terms of management efficiency, the ports of such an organizational structure,
just like other state enterprises, are not potentially interested in economic growth and
209
development, as both technological and operational development are concentrated
within the limits of responsibility of one company, thus minimizing the competition
and creating a risk of offering services that are not on demand (Dooms et al., 2013).
Moreover, complete dependence of port authority on state funding creates a risk of inef-
ficient use of state resources or surplus investment. Therefore, L. Lught, M. Doom and
F. Parola (2013), as well as H. Meersman (2012) state that such governance model is in-
efficient, as its main goal is monopolisation of the sector, where creation of added-value
makes no sense, and the functioning of a state enterprise is focused on the operation
of the company in monopolistic conditions. H. Stevens (1999) and A. J. Baird (2000;
2005), who later on analysed the research findings of the first researcher, state that the
existence of a service port governance model in the sample of early or growing phase
of state enterprises in terms of long period is a prerequisite for efficiency changes: in-
frastructure and facilities are created and developed under the conditions of developing
economics, and search for opportunities to use the developed infrastructure efficiently
is started in the long run, which causes the changes of the governance model.
In Tool Port model, there already occurs a division of responsibilities between the
private and public sectors at the operational level in terms of the added value gener-
ated by the maritime transport sector for the economy of the state (Table 8.9). The port
authority (managing institution) performs the powers granted by the state and manages
and maintains the infrastructure and superstructure of the seaport, including stevedoring
technological equipment (Brooks et al., 2009). Seaport operations using the equipment
owned by the port authority are usually carried out using labour resources of the port
authority, while other handling operations can also be carried out by the companies of
the private sector using available labor resources and contract agreements (Notteboom
et al., 2009). Speaking about the private sector, it usually consists of small and medium
business entities, while fragmented and inconsistent distribution of responsibilities usu-
ally leads to various conflicts between private capital and state enterprises; thus, strong
regulation of port activities by the state usually results in the absence of large stevedoring
companies in the port (Chandan, 2012). Under this model, the efficiency of the govern-
ance is also not very noticeable and tangible (Brooks et al., 2007), as a state enterprise
managing the main resources of infrastructure and superstructure is interested in mo-
nopolization of the market. Therefore, private sector faces a fierce competition. Usually
it involves small business entities providing fragmented freight handling services, and
private business entities are usually involved in provision of port services (Table 2.10).
Landlord Port model. According to the World Bank (Port Reform Toolkit,
2007), landlord port model is the most widespread port governance model in the
world, as it defines the maturity of state enterprises and is very often seen in
developed countries. In this model, the elements of state and private ownership
interface and focus on the main goal, i.e. creation of added value. In landlord port
model, the responsibilities of port authority are distributed at the level of infra-
210
structure and through the rent of infrastructure the private sector creates super-
structure, including buildings and facilities (Table 8.10).
Private business entities invest in upgrading of equipment, labour force, etc. from
their own funds (Chandan, 2012). Under this model, the responsibilities of port author-
ity include the aspects of economically efficient management of infrastructure, long-
term infrastructure development issues, including laying the roads in the territory of the
port, and also regional development policy issues (Brooks et al., 2009).
In terms of governance efficiency, landlord port model is flexible to changes
and provides opportunities for striving for added value (Brooks et al., 2009). The
key issue of efficient use of resources is focused on efficient use of state funds for
the development of infrastructure, while the competition between stevedoring and
logistic service companies at the superstructure level causes constant investments
by private companies (Lee et al., 2011). Private business entities are obliged to
strive for economic performance efficiency and assume responsibility for attrac-
tion of cargo (Ha et al., 2011), which helps to increase the attractiveness of the
port in the region (Sanchez et al., 2011).
Table 8.10
Distribution of the functions of state and private sector in port governance
tion management
dredging services
Navigation infra-
Mooring services
Shipping/naviga-
Navigation canal
Handling opera-
Port infrastruc-
Other functions
Towing services
Superstructure
Superstructure
Port authority
(mechanisms)
Ship pilotage
(facilities)
structure
services
tions
ture
Port type
V V V V V
Service port V V V V V V V
P P P P P
V V V V V
Tool port V V V V V V P
P P P P P
V V V V V V
Landlord port V V V P P P
P P P P P P
V V V
Private port P P P P P P P P P
P P P
Sources: Brooks, M. R. & Cullinane, K. (2007). Governance models defined, in devolution, port
governance and port performance. Research in Transportation Economics, 17,405–436; Port Re-
form Toolkit PPIAF, 2nd edition. World Bank Group, Washington, 2007.
However, this management model also has some ineffective management risks. The
greatest risk exists in coordination between throughput capacity of the infrastructure and
the superstructure (Verhoeven, 2010). If there is no balance between throughput capacity
parameters of infrastructure and superstructure, for instance, the development of infra-
211
structure is too intensive or vice versa, this results in surplus (insufficient) investments
into one of the elements of the port, which results in a risk of inefficient use of resources
which, in turn, reduces performance and efficiency, and the governance measures ap-
plied become ineffective and do not create any added value to the national economy.
Another risk exists in overlapping between port service users: as the port authority
is striving to attract clients and the operators of the port have the same goal, the created
development strategy must be unified and not overlapping. Moreover, development
strategies should not be contradicting to one another (Lam, et al., 2012). Such major
risks suggest that under this port governance model it is necessary to continuously co-
ordinate the activities of the private and public sectors (Chandan, 2012), which would
help to avoid striving for every individual goal separately, but would focus on creation
of added value. It is stated in the report published by the World Bank (Port Reform
Toolkit, 2007) that, under landlord port model, it is necessary to encourage partner-
ship between the public and private sectors in order to increase the port management
efficiency, which would cause greater responsibility of private business for maximum
use of infrastructure through development of infrastructure of adequate throughput ca-
pacity and attraction of cargo flows. Meanwhile, the public sector should assume more
responsibility for regular analysis of cargo flows and assessment of the need for the de-
velopment of infrastructure, also through ensuring the connectivity of the ports with in-
ternational transport corridors through the national land and inland water infrastructure.
Private service port model defines withdrawal of the state from the involve-
ment in port activities. This model is usually created in search for more efficient
port governance model, so such models usually form in corporate update stages.
Such formation can also happen over periods of economic recession, when public
sector finds it hard to maintain and support large state enterprises, the activities of
which are loss-making, inefficient and not creating any added value to the national
economy (Brooks et al, 2009). Under this port management model, all the regu-
latory measures, investments and operational technical activities of the port are
transferred to private business entities, and port territory and water area are also
privatized. Such port models are quite usual in the United Kingdom (Baird, 2005).
In private service ports, investments in port activities are flexible and market-ori-
ented. However, within this model, the biggest risk is the formation of a monopoly, and
under such management model it is very difficult for the state to control the market and
to create proper conditions for equal competition (Brooks et al, 2009). As shown by
many cases in the UK, private capital companies often cause sustainable development
issues, especially in urban areas, which are difficult to deal with using public govern-
ance measures. Therefore, the issues of effective management of ports of this type are
not analysed from the state governance optimization approach in the scientific litera-
ture. In most cases, solutions are sought for reducing the risks of private business in
terms of integration and sustainable development of the port and the city (Baird, 2005).
212
When analysing the diversity of port governance models, P. Verhoeven (2010)
identified three main geographical position-related port governance forms, noting
that the need for maintenance of state ports was dominant in any period: the Han-
seatic cities (merchants), Latin, Anglo-Saxon management traditions (Table 8.11).
Table 8.11
Comparison of different port governance traditions
Govern- Governance
Ports Strengths Weaknesses
ance model tradition
Private port Anglo-Saxon New Zealand Market-oriented No vision from com-
Australia governance model munity and local de-
United King- Flexibility velopment approach
dom
Landlord Latin France, Spain, Community and Lack of flexibility,
port Italy local develop- much bureaucracy,
ment-oriented Risk of lack of
governance model involvement of port
Development of authority
partnership be-
tween public and
private sectors
Hanseatic Belgium, Community and Limited in terms of
(merchant) Germany, the local develop- local development
Netherlands ment-oriented vision
governance model
Very flexible
Development of
partnership be-
tween public and
private sectors
Tool port - South Africa Centralized plan- Lack of flexibility,
ning, lack of partnership
Involvement of between public and
private sector private sectors, pub-
lic funds
Service port - Ukraine, Israel Centralized plan- Lack of market-
ning, centralized orientation
governance of Lack of flexibility
national ports Much bureaucracy
Ignoring partnership
between public and
private sectors
Sources: Verhoeven, P. (2010). A review of port authority functions: towards a renaissance? Mari-
time Policy & Management, 37(3), 247-270; Ferrari, C., Parola, F., & Tei, A. (2015). Governance
models and port concessions in Europe: commonalities, critical issues and policy perspectives.
Transport Policy, 41, 60-67.
213
P. Verhoeven (2010) notes that, as Scandinavian type of seaports management
tradition is dominating, especially in Scandinavian countries, of course, ports are
usually managed by local authorities and attributed to self-governing institutions.
Strong centralised governance is characteristic of Latin tradition that is widespread
in France and Southern Europe, while Anglo-Saxon tradition so widespread in the
Great Britain is known for the variety of ports governed by the right of trust that
is dominated by independent state management manifesting in the principles of
cooperation between public and private sectors.
Summarising port governance models, it can be stated that changes in man-
agement efficiency are determined by selection of governance model adequate to
strategic objectives, while the classification of governance models is based on
the distribution of responsibilities for the port infrastructure and superstructure.
When analysing the problem of seaport management from the point of view of ef-
ficient management, the Tool Port and Landlord Port models, in which responsi-
bilities are distributed between the private and public sectors, becomes the object
of the research. Based on the recommendations of the World Bank, it can be con-
cluded that the Landlord Port model is particularly relevant, since such a model
is typical of regional ports. Moreover, the model results in a relatively rigorous
distribution of public and private enterprises in the management of appropriate
infrastructure and superstructure, while the provisions for effective management
focus on reducing the main risks of the management model, i.e. on the balanced
development of infrastructure and superstructure, creating added value for the
national economy.
8.5. Over v ie w o f th e G o v e rn a n c e P r i n c i p l e s P r e v a i l i n g
in European Po rts
When analysing the totality of the problems of state port governance, it can
be seen that this is a relevant and important area, and this provision is established
in the research performed by the European Sea Ports Organization (ESPO) in
2016, defining the trends in EU ports governance (Trends in EU ports governance,
2016).
It is stated in the research report that at the end of 2016 state-governed port au-
thorities made 87% of the total number of port authorities, where 59% were state
enterprises, 33% municipal companies and 8% - mixed type state and municipal
companies.
214
Peripheral
Mixed Private 3%
7% 6% Regional state-governed
5% 59%
state
87% Municipal
33%
a) b)
Fig. 8.12 Distribution of European ports by type of ownership (a) and governance model (b)
Source: Trends in EU ports governance. (2016). Project Portopia.
Brussels: European sea ports organization.
By highlighting the significance of the ports as state-owned entities for the

national economy, it is possible to analyse the main goals that have been set by the
port authorities operating in Europe:
–– 82% of port authorities have a strategically significant objective to support
the national trade activities and business;
–– 78% of port authorities have a strategically significant objective to ensure
sustainable development of port activities;
–– 76% of port authorities have a strategically significant objective to ensure
sustainable development of national and regional economy;
–– 62% of port authorities have a strategically significant objective to de-
velop the connectivity of hinterland systems, 58% of port authorities have
a strategic objective to increase employment in the region;
–– 34% of port authorities have a strategically significant objective to support
recreational, tourism, sports and other activities;
–– 22% of port authorities are a part of emergent supply chain.
The identified main objectives of port authorities operating in the European
ports lead to assumption that the totality of issues of the state port governance
is analysed in terms of the entire national and regional transport sector, and the
solutions of the problems create preconditions for improving the international,
political and economic positions of the maritime states in the region, which justi-
fies the importance of a state-owned port as an entity of a public sector and as
an effective management of a state-owned company for both the national and
regional economy.
215
Non economic public
body with general Profit
Region maximising
5% Private interest objectives
Private Other business
interests
sector 7% 15% 14%
9%
14%
Balance to
public and
Public interests private
Municipality interests
26% 28%
63%
state
Mission-driven
48%
entities
71%
a) b) c)
Fig. 8.13 Distribution of European port authorities

by: a) land ownership; b) strategic objectives; c) legal form
Source: Trends in EU ports governance. (2016). Project Portopia.
Brussels: European sea ports organization
Based on the role of Klaipėda State Seaport to the national economy, it should be
noted that the port generates about 6.2% of the national GDP and accounts for ap-
proximately 9.26% of the total amount of taxes paid in the country. The port activi-
ties make about 80% in the international global supply chain. The importance of the
search for effective port governance solutions is confirmed by the strategic objec-
tives of the transport policy of the European Union, declaring that effective manage-
ment of the activities of the maritime sector, which determines the productivity and
attractiveness of port activities, is the key prerequisite for the successful economic
development of the countries of the EU area (Integrated Maritime Policy, 2012).
In summary, it can be stated that most European ports are public and mixed
model ports, where the responsibilities are distributed between private and public
capital entities. However, result-oriented and added value-oriented governance is
dominating in roughly equal shares.
1. What main port governance functions are identified?

2. To which group of functions would you attribute port governance in an-
swering the following questions: is port governance universal or specific?;
is port governance global, regional or local?
3. What is a port authority? What functions does port authority carry out in
the field of port governance?
216
4. What features of port impact could you identify from the surrounding en-
vironment? What structures are attributed to the group of market players?
5. What causes changes in the activities of port authority?
6. What port authority governance models can be identified?
7. What key differences in port governance models can be identified in terms
of specifics of activities of port authority?
8. What are the types of ports according to their direct subordination?
9. What are the types of ports according to capital distribution?
10. What legal forms of legal entity are used for the implementation of port
governance process?
11. How is decision-making at political, strategical, tactical and operational
governance levels related to port activities and global supply logistic chain?
12. What are some authors, who analyse the diversity of port governance models?
13. What are the main port governance trends prevailing in scientific research
sources?
14. What main port governance models according to distribution of responsi-
bilities between private and public capital exist in practice?
15. What are the similarities and the differences between Klaipėda, Riga and
Tallinn port governance models?
8.7. Ref eren c e s
1. Baird, A. J. (2000). Port privatisation: Objectives, extent, process and the UK

experience. International Journal of Maritime Economics, 2(2), 177-194.
2. Baird, A. J. (2005). Maritime policy in Scotland. Maritime policy and
management, 32(4), 383-401.
3. Bolevics V., Sjoling, J., Volkova, T. (2013). Governance models of Baltic
port authorities. Baltic Works, BW 2. 29-32. Internet access [retrieved on:
01.12.2017]: http://balticworlds.com/governance-models-of-baltic-port-
authorities/
4. Brooks M. R., Hummels, D. (2009). Infrastructure’s role in lowering Asia’s
trade costs: building for trade. Cheltenham: Edward Elgar Publishing.
5. Brooks, M. R. (2007). Devolution, port governance and port performance:
governance models defined. Research in transportation economics, 17,
405-435.
6. Brooks, M. R., Cullinane, K. P., Pallis, A. A. (2017). Revisiting port gov-
ernance and port reform: A multi-country examination. Research in trans-
portation business & management, 22, 1-10.
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7. Brooks, M. R., Cullinane, K. (2007). Governance models defined, in devo-
lution, port governance and port performance. Research in Transportation
Economics, 17, p. 405–436.
8. Brooks, M. R., Pallis, A., A. (2008). Assessing port governance models:
process and performance components. Maritime policy & management,
35(4), 411-432.
9. Burns, M. G. (2015). Port management and operations. New York: CRC
Press.
10. Chandan, S. (2012). Determinants of PPP in infrastructure in developing
economies. Transforming government: people, process and policy, 6 (2),
149 – 166.
11. Cullinane, K., Song, D. W. (2012). The administrative and ownership
structure of Asian container ports. International Journal of Maritime Eco-
nomics, 3(2), 175–197.
12. De Langen P. W. (2013). Assuring hinterland access: the role of port authorities.
Port competition and hinterland connections. Paris: OECD publishing.
13. de Langen, P. W. (2015). Governance in seaport clusters. Port manage-
ment (ed. Haralambides, H. E.). New York: Palgrave Macmilan. 141-156.
14. Debrie, J. (2010). Different tiers of government in port governance: some
general remarks on the institutional geography of ports in Europe and Can-
ada. World Conference on Transport Research Society, p.12. 12th World
Conference on Transport Research, Jul 2010, Lisbonne, Portugal.
15. Directive of European Parliament and of the Council on market assess to port
services: joint text approved by the Conciliation committee provider for in
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9.
A P P L I C AT I O N O F T H E O R E T I C A L
A SSU M P T I O N S A N D P R I N C I P L E S O F
P U B L I C A D M I N IS T R AT I O N I N T H E
M A N A G E M E N T O F S T AT E A N D M I X E D
C A P I TA L S E A P O RT S
Elena Valionienė
This chapter deals with the theoretical assumptions of effective management

of state-owned companies in terms of changes in seaport management and the
interaction of public administration and complexity theory.
9.1. Theore tic a l A s s u mp tio n s f o r E ff e c t i v e

Managemen t o f S ta te En te rp ris e s f r o m t h e P o i n t
of View of C h a n g e s in th e M a n a g e m e n t o f S e a p o r t s
The conditions of the economic, political, social and historical development of

a country have a direct impact on the number of state-owned companies operating
in the market. Therefore, scientists (Ayub et al., 1987; Hillman, 2009; Naguyen,
2015; Rayney et al., 1999) presume that the number of state-owned companies
depends directly on the economic development of a country, and that the distribu-
tion of state-owned companies in different sectors is directly dependent on level
of development of a specific sector in the country. This has a direct impact on the
strategic goals of development of national economy: the concentration of state-
owned enterprises in the market is determined by the strategic goals of a country.
Such assumptions show that state-owned companies operate not only as non-pri-
vate capital entities in the market, but that the states implement strategically im-
222
portant national market regulation measures on the basis of the activities of such
companies in order to create significant additional value for the national economy.
From the perspective of the added value being generated in the whole coun-
try, the share of state-owned companies is significantly smaller than the share of
the investment. It can be explained by the fact that state-owned companies are
mainly large capital companies and that the amount of capital controlled by them
is considerably bigger than the amount of capital controlled by private companies
(Chandan, 2012). The need for and significance of state enterprises for the national
economy can also be estimated taking into account the fact that such strategically
significant areas for the country’s competitiveness as management of transport
infrastructure, oil industry, metallurgical industry, etc. require huge investments
into infrastructure, including promotion of technological progress and innovation.
Therefore, in many cases in a private sector they are related to especially large
investments and are not attractive financially, while they are strategically signifi-
cant to the state in terms of increase of competitiveness (Rodriguez et al., 2007,
2016). However, in most cases, with intervention of bureaucratic processes and
politicised decision-making factor, the management of such companies becomes
inefficient, i.e. investments from state budget become a heavy burden for the tax
payers of the country, although the investments do not generate any added value.
Therefore, state enterprises are often called least effective companies in the mar-
ket, which leads to efficient management issues and problems.
These problems are also reflected in the area of the management of seaport.
Accordingly, these issues are relevant for the efficient management methods of
seaports as state owned companies
9.1.1. The C onc ept of the Efficient M an ag em en t o f S eap o rt
The search for an effective management model has been going on for over five
decades in the scientific literature. However, (Wang et al., 2013) distinguishes three
main areas of search for efficient management, i.e. operational efficiency, efficiency
of use of financial resources and efficiency of managerial decision-making.
According to the authors, operational efficiency is attributed to the area of
technical capacity. When assessing the operational efficiency of the seaport man-
agement, much attention is given to the implementation of high productivity of
technological operations at the seaport. Usually, the indicators of this type of ef-
fectiveness are measured by such seaport indicators as throughput capacity, ef-
ficiency and capability, which are assessed at the tactical and operational man-
agement levels. Meanwhile, financial efficiency is usually expressed by cargo
flows and financial indicators ratio, including the search for optimum allocation
of resources solutions of handled cargo and costs, also income and profit ratio.
223
Efficiency of managerial decision-making is expressed through operational and
financial efficiency ratio (Wang et al., 2013).
The methodology of the theory of the efficient management of a state-owned
company is based on both the science of management and the methods of economic
science, also main theoretic paradigms and theories, which make it look quite com-
plicated. When analysing scientific literature sources (Rainey, 1999; Bruton, 2015;
Ayub et al., 1987), it can be noticed that, when analysing the management efficiency
of state enterprises, the most often problem issue raised is why state-controlled com-
panies are less efficient than private companies. Also, why state-owned companies
in one country operate more efficiently than state-controlled companies in another
country? (Brooks et al., 2009; Bruton et al., 2015). such variation in the efficiency
of state-owned companies among different countries regarding the formulation of
problematic issues is based on several possible sets of assessment methodologies.
One set of assessment methodology is based on specific characteristics of a
particular country, such as cultural, social, political, macroeconomic and institu-
tional system (Yang et al., 2011). This enables to distinguish the features of ef-
ficient management of state-owned companies and to compare their values from
the point of view of different countries (Fig.9.1). Another set of assessment meth-
odology is based on characteristics and peculiarities of state-controlled enterprises
of a specific type, such as the level of autonomy, local and international market
competitiveness, organizational culture and structure and principles of manage-
ment (Meier, O’Tolle, 2002). such a set leads to assumed explanation, why there
are differences in the efficiency of management of state-owned companies of dif-
ferent types or operating in different sectors in one country (Fig. 9.1) .
When analysing these methodology sets, it can be noticed that the issue of the ef-
ficiency of state-owned company management is related with the indicators of produc-
tivity and economic effectiveness in each one of them. The only difference in those
sets is their distribution into groups according to their type of influence, efficiency and
characteristics (Fig. 9.1). Therefore, the problem solution must be searched at the in-
tersection of distinguished methodology sets and conceptual sets of efficiency and pro-
ductivity, i.e. a set of features of effective management of state-owned company.
such methodological approach allows stating that some of the basic conceptions of
the theory of the efficient state company management are productivity of activity and
efficiency. Based on the theoretical assumptions and sets of methodology, the outcome
of the effective state-owned company management is described by two features, i.e.
high productivity and economic efficiency. it might be due to such approach in the
analysis of the scientific economic research on management of state companies (Ayub
et al., 1987; Rainey, et al., 1999) that the methodology of research of management
effectiveness is based on search for opportunities to increase productivity through ap-
plication of various organizational structures and management methods.
224
Economic efficiency
of activity
External Principles and

Effective
socioeconomic methods
management
environment of company
features
management
Productivity of activity
Fig. 9.1 The structure of state enterprise management efficiency methodology

Source: Dai, N., T., Tan, Z., s., Tang, G., Xiao, J., Z. (2016). iPOs, institutional complexity, and
management accounting in hybrid organisations: a field study in state-owned enterprise in China.
Management Accounting Research.
When analysing the works of scientists researching the problem of the effective
management of state enterprises (Rainey et al., 1999; Rodrigues et al., 2012; sil-
vestre, 2012), one can come across another concept used in research as a feature of
management effectiveness, i.e. the concept of performance. The main difference
between the concepts “performance” and “productivity” is that the concept “pro-
ductivity” contains the context of the product’s manufacturing process (Rainey
et al., 1999), i.e. a certain operational level, whereas the concept “performance”
defines productivity at a higher level and in its context bears the meaning of the
final outcome rather than the manufacturing process (Rodrigues et al., 2012).
such an interface between the concepts of performance and productivity, also
between effectiveness and efficiency allows assuming that the concept of effec-
tiveness is directly connected to the effectiveness and performance of state–owned
company’s management procedures and measures. Therefore, when summarizing
the meaning of the concepts used in the context of the state enterprise management,
the following features need to be identified: if the management of a company is
effective, it has high productivity (Ayub et al, 1987); if a company is managed ef-
ficiently, it generates significant added value for the economy (Rainey, et al, 1999).
Analysing the interpretation of concepts of efficiency and productivity in dictionar-
ies that interpret economic terms, it can be stated that high productivity of a company
will not necessarily be efficient; therefore, in designing an effective management model
and based on the concept of efficiency, the following assumption can be made: in order
225
Effectiveness
if Resources
Q
Q‘
Fig. 9.2 Productivity, efficiency and effectiveness functional correlation model

Source: Mickiene, R., Valioniene, E. (2017). Evaluation of the interaction between the state seaport
governance model and port performance indicators. Forum scientia Oeconomia, 5(3), 27-44.
to maximize the use of available resources in the two-dimensional model, with a certain
fixed amount of resources at the strategic management level, attempts are made to find
solutions and methods how to increase the quantity of products without increasing the
use of resources. in search for such a solution, the efficiency indicators are calculated
for the estimation of the current productivity, considering that the growth of productiv-
ity is the main objective of the operational management level (Fig. 9.2).
in order to duly address the issue of effective governance of state enterprises at
the highest level of management (governance), it is necessary to additionally assess
the correlation between operational processes and the process of creating added
value. it is especially relevant for the analysis of the activity of state companies.
At this level, the key issue of the effective management is to find an appropriate
management solution, so that the resources would be used more productively, i.e.
more efficiently, and that management measures applied would create proper con-
ditions for the increase in efficiency and productivity in terms of creation of the
added value. Therefore, when analysing the theory of the effective management of
state-owned company and economic theories dealing with certain levels of manage-
ment and processes within them, attempts are made to create a comprehensive set
of effective management features providing conditions for the modelling of various
management models, forecasting their impact on the creation of the added value.
In summary of methodological provisions of effective management of state-
owned enterprise, it may be stated that, in order to identify the key factors that
226
have an impact on governance effectiveness, the multifactor theoretical model-
ling can be applied providing opportunities for the comprehensive assessment of
changes in state-owned company management through the analysis of the chang-
es in productivity, efficiency, productivity and effectiveness.
9.1.2. Key Determina nts of the Effe ct i v e M an ag em en t

of a State- owne d C ompa ny
Recommended indicators for the assessment of efficient management that are

used for the measurement of all the performance results of the companies can be
found quite often in scientific literature. However, according to A. M. Ayub and
S. O. Hegstad (1987), any comparison of state-owned and private institutions must
be very focused and done for specific purposes, as it is sufficiently difficult to com-
pare state and private capital companies based only on financial efficiency indicators.
H. G. Rayney and P. Steinbauer (1999) state that it is necessary to take into
account the fact that state-owned companies are established for the purposes of
strategic economic promotion. Thus, the financial performance results in such
companies should be interpreted taking into account the said goals and focused on
creation of added value for the national economy.
In terms of financial profitability indicator, state-owned companies are loss-
making in many countries, which allows to assume that the objective of the ac-
tivities of such companies are mainly economic governmental reasons. Moreover,
state enterprises are dominating in low-economic growth sectors that are strategi-
cally significant for the economic growth of the country or that are related to the
country’s integrtion into the international markets (Radygin et al., 2015).
G. C. Rodriguez et al. (2016) suggest that the efficiency of state-owned enter-
prises should be viewed through the prism of activity productivity and that low
indicators of productivity of state enterprises are justified by the concentration of
the activities of state enterprises in economically underdeveloped or weakly devel-
oped sectors of economic activity, also in the sectors, the global growth whereof has
slowed down (reliance on international markets) or, on the contrary, in innovative
emerging industries that do not generate momentary profits, but they are strategi-
cally significant in terms of competitiveness and the added value of a country.
K. J. Mayer and L. R. O’Tolle (2002) note that measurement of the manage-
ment efficiency of a state-owned company using financial performance indicators
requires a more detailed interpretation in the context of management instruments,
as the financial results in the state-owned companies’ sector are different in differ-
ent economic sectors controlled by the state. However, they are also different in
different countries, as they depend on the strategic goals of the country and on the
country’ development level, economic situation and regulatory measures applied
227
by the state (Rainey et al., 1999). Moreover, state-owned companies are strongly
dependent on the macroeconomic situation of the country, but this connection is
mutual, so state-owned enterprises with low productivity are also responsible for
the high costs from the state budget and the growth of borrowing demand, espe-
cially in terms of the country’s external debt.
Different approach to the problem of the efficient management of a state-owned
company is presented by M. A. Ayub ir S. O Hegstad (1987), i.e. to evaluate the
efficiency of public administration based on the measurement of the efficiency of
activity and productivity. In the research, the interface between efficiency and pro-
ductivity was analysed through the key determinants of effective management of a
state enterprise: those are financial performance indicators (profitability, return on
capital, real added value) and indicators increasing the management productivity
(conditions of competition, financial autonomy and accountability and manage-
ment autonomy and accountability). The structure of this model is based on long-
term monitoring of changes in state-owned companies’ management in emerg-
ing economies and the application of methodological provisions of the theory
of efficient management of state enterprises in identifying the key changes that
have created preconditions for positive changes in the productivity of state enter-
prises (Fig. 9.3). M. A. Ayub and S. O. Hegstad (1987) incorporated the concept
of performance in the methodology of the theory of the effective management of
state-owned enterprises, which creates preconditions for assessing the impact of
management change on changes in productivity of state-owned companies.
9.3 pav. Determinants of state-owned enterprise‘s effective governance

Source: Rainey, H. G., Steinbauer, P. (1999). Galloping elephants: developing elements of a theory of
effective government organizations. Journal of Public Administration Research Theory, 9 (1), 1-32.
The classification of the above-mentioned effective management determinants

into the sufficient and necessary indicators of the effectiveness of the activity is also
found while analysing the scientific literature, stating that high productivity condi-
tions are necessary, i.e. competitive environment, financial autonomy and a man-
agement model that ensure target productive performance, the changes of which
can be measured by financial performance indicators identified as preconditions for
sufficiently effective management (Ayub et al., 1987). Sufficient conditions also in-
228
clude such attributes as mission, leadership and operations (Rainey et al., 1999). The
classification has a link between performance and productivity indicators, and this
is important in the context of the study of the efficiency of state-owned enterprise.
To sum up, it can be stated that the theory of the effective management of a
state-owned enterprise is based on the key determinants, which are relevant for
the efficiency of productivity: from the economic perspective, those are market
competition, financial and institutional autonomy; from the managerial perspec-
tive, those are mission, leadership, communication and operations. Such meth-
odological approach allows analysing not only management models, but also the
perspective of autonomy, both from the company’s external environment and from
the internal as well. The analysis of the key determinants of productivity and the
methodological model of the effective management theory of a state-owned en-
terprise make it possible not only to distinguish the main features of the effective
management. It also enables to evaluate their existence and their impact using
measurable quantitative indicators of company’s performance and financial re-
sults at the operational level. Meanwhile, the management result in case of a
state-owned enterprise can be measured by quantitative derivative indicators.
In most seaports of the world, the infrastructure or its elements are state-owned.
However, the management methods and their efficiency differ. After positioning the
elements of infrastructure and suprastructure into the effective state-owned company’s
management model formed in paragraph one (Fig. 9.4) and analysing it from the point
of view of management efficiency, it can be stated that the efficiency of infrastructure
management can be measured through the analysis of financial indicators and changes
in cargo flow rates calculated using financial and statistical analysis methods.
It is quite easy to assess the balance point of productivity and efficiency on a plane
supposing that the efficiency indicator is measured by changes in productivity in the
case of fixed resources used (Table 9.4). As the objectives of a state-owned company
are to create an economic added value, the evaluation of management effectiveness of
a state enterprise in terms of the added value acquires the form of a three-dimensional
model. The determination of the added value can be based on such effective manage-
ment features as total indicator of effectiveness and performance, real added value, etc.
This suggests that, when analysing administrative management models, a management
model is being sought that would provide sufficient preconditions for completing the
set of management methods and tools in such a way that the total added value generated
by the seaport would be maximal for the national economy.
While analysing the administrative models of seaport management in scien-
tific literature (Baird, 2005; Brooks et al., 2007; 2008; 2017; Notteboom et al.,
2007; 2009; 2013; 2017; Notteboom 2007; 2010; Langen 2013; 2015) attempts
are made to identify namely those effective management criteria that not only cre-
ate preconditions for efficient use of public resources, but also create added value
229
Added value
effectiveness+performance
Management efficiency=
suprastructure Resources
infrastructure
Fig. 9.4 The management efficiency model of the structure elements of the seaport
Source: Mickiene, R., Valioniene, E. (2017). Evaluation of the interaction between the state seaport
governance moel and port performance indicators. Forum Scientia Oeconomia, 5(3), 27-44.
and enhance the effectiveness of measures being taken. The choice of a manage-
ment model largely depends on the strategic objectives of the state in the maritime
transport and logistics sectors, international politics, membership in regional as-
sociations and international partnerships. in addition, the choice of a management
model is determined by striving to use to the maximum the state-owned resources
and the aim to create added value for the economy (Dooms et al., 2013).
9.2. i nterac tio n o f th e Th e o ry o f P u b l i c Ad m i n i s t r a t i o n

and Comple x ity
The concept of the efficiency and effectiveness of a state seaport was analysed
by M.R. Brooks and Athanasios A. Pallis (2008), who stated that the effectiveness
of the seaport management can be measured from the port performance approach.
They also highlighted the prospect of quasi-market formation and stated that the
quasi-market situation, demand and supply solutions are coordinated by the market-
based mechanisms, where only a part of the essential elements of the market are
applied and most often it happens gradually. This is due to the attempt to encourage
the institutions of the public sector to operate in line with market principles, thus
creating an internal market. state regulation and funding are becoming an important
coordination mechanism, while the elements of competition, rules for charges and
dues, individual responsibility and autonomy are implanted in such systems.
230
R. Baltazar and M. R. Brooks (2007) state that NPM reforms in the seaport man-
agement models were caused by the fact that NPM offers “one best way”, which
brings the paradigm closer to the principles of scientific management. Therefore,
considering that the management system is dependent on changes in the external en-
vironment, alternative and complex solutions are inevitable since changes in the ex-
ternal environment are always associated with a high degree of uncertainty. There-
fore, while analysing the port management reforms, they recommend relying on the
contingency theory, which is based on the concept of the environmental uncertainty.
The interrelationship between the paradigm of a new public management and
the environment of uncertainty is based on the formation of an appropriate organi-
zational structure which, according to R. Baltazar and M. R. Brooks (2007), should
correspond to the level and type of source of the environmental uncertainty that af-
fects the organization. When analysing the formation of a new paradigm of new pub-
lic management from the perspective of the theory of uncertainty, interrelationship
between strategic planning oriented on environmental changes and organizational
management efficiency is observed, which makes it possible to see the influence of
the configuration school. According to the configuration theory, alternative strate-
gies mean the choice of the operational environment and related characteristics.
Based on the principles of configuration school and the theory of uncertainty,
R. Baltazar and M. Brooks (2007) have formed an efficient seaport management model
incorporating the principles of a new public management called “The Matching Frame-
work”. The model was based on the following basic principles: economic return as a
result of high productivity and economic return as a result of high effectiveness.
The first principle is related to the positive economic return, which forms the
systems of requirements for an organization based on high productivity in deliv-
ering services and products, as well as high efficiency in meeting the needs of
service and product users. Another principle states that the pursuit for maximum
return among other similar organizations requires the highest efficiency and ef-
fectiveness and, at least, medium-level competencies and strategic planning that is
based on a set of strategic alternatives and readiness to react flexibly to unforeseen
changes in the environment (Baltazar & Brooks, 2007).
While analysing the problem of the efficient seaport management, T. Notte-
boom, P. de Langen, W. Jackobs (2013) also rejected the deterministic research
model and based the research methodology on a systematic complex approach,
i.e. they defined the importance of interrelationships between the players of the
system and the state of each one of them, bringing the methodology of modelling
of the seaport management reform closer to systematic self-regulation on the ba-
sis of the theory of economic evolution and the provisions of the economy of insti-
tutionalism and neo-institutionalism. The first provision of their research is based
on the long-term processes of the evolution of seaports, taking into account the
231
relation between the seaport and the port city. Another predominant provision in
their research is that there is a large, ever-evolving variety of seaport management
models that can be explained on the basis of the lock-in and path-dependence
concepts. The third approach is based on the provisions of the theory of complex-
ity and W. Jacobs’s (2007) arguments that seaports are complex structures that
depend not only on the geographical situation, but also on various players and
their interests and interactions in different territorial dimensions.
T. Hammervoll, L. Lillebrygfied, H. Per Engelseth (2014) investigated the
transformation of management models and their application in the maritime trans-
port sector from the perspective of the theory of learning organization. They stated
that increasing the efficiency of the seaport management in the maritime sector is
directly related to the exchange of services between geographically related partner
institutions. The results of the research showed that the competition of seaports
and stevedoring companies operating in one region results in the formation of a
certain cluster-type system, which is united by the accumulated knowledge. Such
an emergent system in the region becomes the centre of knowledge creation and
distribution in the global network of the added-value. The scientists based the
findings of the research on the fact that operating and competing companies of the
maritime transport sector of the region have the same global objective. Therefore,
by merging into the knowledge-cluster in terms of the global supply chain, those
companies can enhance the attractiveness of the entire maritime region.
Analysing the formation of a new paradigm of public administration in the
transformations of the new public management, G. R. Teisman and E. H. Klijn
(2008) emphasized the influence of the complexity theory on the change of public
administration paradigms. They highlighted the phenomenon of the public sector
and outlined the main principles of the theory of complexity for the study of this
phenomenon and for modelling of the scenario development. The first principle
distinguished by the scientists is the dynamics of the systems, which is used for
the investigation of the phenomenal changes that occur due to various effects.
This principle also defines management and decision-making processes not in
linear approaching equilibrium states, but in non-linear processes, wherein the
phenomenon undergoes various effects from the external environment.
Another principle that R. R. Teisman and E. H. Klijn (2008) singled out as
applicable in the science of public administration is the features of systems of
self-organization and self-regulation. Public administration units that are also re-
ferred to as players in the theory of complexity, such as processes or policies, are
not always characterized by behaviour described in the rules and principles or
standards. Those units also do not always seek the results that are foreseen in the
strategic plan; however, due to state synchronization or state desynchronization,
the totality of such units can lead to unpredictable system behaviour. Each of the
232
players in the complex system, based on the theory of public choice, is selfish and
has an algorithm for its operation. However, due to the existing feedback system
within the system and the influence of the external environment, the so-called
circumstances, it can unexpectedly change its operational strategies, which allows
for the formation of self-referential properties within the system. Systems with
such properties were identified as autopoietic social systems and the relationship
between the complex system and the external changing environment was identi-
fied as a key criterion for the efficient management of public sector.
The third principle is the circumstances that are modelled using one of the
most recent strategic planning methods in modern management theories, i.e. the
method of fitness landscape. It discursively implies the existence of the envi-
ronment and the changing behaviour, in which players make decisions that are
dependent on the changes in the environment, defining the effectiveness of their
behaviour in the interaction with other players in order to achieve an individually
set goal. G. R. Teisman and E. H. Klijn (2008) state that, while the players of the
public sector focus on the realization of their personal ambitions and their pos-
sibilities to change something, the players in the complex system are dependent
on the circumstances. This is a particularly important and significant feature in
finding effective management solutions in the public sector.
There are not many cases of the application of the complexity theory and the
methodology of complex systems in the field of the efficient management of the
public sector, especially of the state seaport. However, upon analysing of the con-
ducted research, it can be stated that the theory of complexity is purposefully
applied for the analysis of organizations as adaptive complex systems character-
ized by self-regulatory features (Koliba, Koopenjan, 2015), as well as learning or-
ganizations (Koliba, 2013; Reyes, 2012), analysing the complexity of leadership
transformations in order to improve management efficiency (Verhoeven, 2010).
The main feature of the complex system is functional integrity. Therefore, Ver-
hoeven (2010) presented the analysis of the problem of the seaport management
in the context of complexity. First of all, he expressed the evolution of the seaport
management by its functional process generations, on the basis of which it is
possible to highlight the consolidation and importance of the complexity theory
through the provisions and principles of the public management paradigm in the
maritime transport sector (Table 9.1).
As the systems are becoming more complex and becoming multi-national net-
work organizations under the effects of globalization processes (in the context of
integration of the theory of complexity into management science), it can be seen
that the tendency of the growing complexity in systems together with technologi-
cal progress created preconditions for seaports to engage in activities bearing the
features of a particular generation over different periods of time (Table 9.1). Re-
233
Table 9.1
Port generations from the evolution of system complexity approach
No. Generation Period Characteristic features
First Maritime transport research, cargo handling,
A Until 1950
generation temporary storage, delivery
All functions of the first generation are valid,
but commercial activity is added, which enabled
Second the creation of the added value for transship-
B Until 1980
generation ment. The sea port becomes the center of cargo
handling and services, and the management is
focused on the result
It is defined with features of the seaports of the
first and second generation. The port community
is structured. Relations between the seaport and
the users of the city and port services are being
Third
C Since 1980 strengthened. The spectrum and geography of the
generation
offered services related to cargo is expanded (ex-
panding localization). Systems of data processing,
data retrieval and data storage are implemented,
operations and use of data in decision-making.
Development of the network of physically remote
ports and terminals, providing a l connection on the
basis of a geographically independent service provid-
ers or on the basis of management forms. Manage-
Fourth
D Since 2000 ment focuses on creating added value for all stake-
generation
holders: network of private and public organizations
operating in the port, other users of port services, city
and regional community. Establishing the port as an
integrated centre of logistics.
Directly dependent on the fourth industrial revolu-
Fifth
E Emerging tion. Process management, complexity and adapt-
generation
ability, ecosystem management based on ecosystems
policy & management, 37(3), 247-270.
turning back to the evolution of the seaport management research, it can also be
seen in the evolution of seaport generations: transition from strictly deterministic
seaport management models (generation A) to elaborate complex systems based
on interactions and statuses of organizations operating with the goal of creating
an integral logistic centre (generation D). This means that the evolution of re-
search and methodology creates preconditions for the formation of new forms of
management of seaports that are applicable to the management of organizations
operating on the basis of the principles of ecosystems (Fig. 9.5).
234
Cooperation Integration
- interaction of - Activities
institutions - Policy
- Trust - stakeholders
- Leadership - Objectives of
- Communicative sustainable
competencies development
Ecosystem-based
- Harmony of vision
management
Principles of management
- Responsibilities
- Representativeness
- Transparency
- Accountability
- Legality
Fig. 9.5 Theoretical management model of the maritime transport sector

Source: Van Leeuwen, J. (2015). The regionalization of maritime governance:
Towards a polycentric governance system for sustainable shipping in the European union.
Ocean and Coastal Management, 117, 23-31.
Ecosystem-based management is characterized by the integration of complex

adaptive systems, and the management of a seaport can be analysed in three cross-
sections: cooperation, integration, accountability (Fig. 9.5). This approach allows
to perceive new management trends, when transition is made from the political,
strategic, tactical and operational management scheme in a seaport to the princi-
ples of accountability, representativeness, transparency, accountability and legal
regulation as a single dimension. Meanwhile, the other two dimensions are domi-
nated by the principles of public administration and the expression of complex
adaptive systems through the management of the stakeholders.
When analysing the changes in the management of different generations of sea-
ports and the evolution towards ecosystem-based management, it can be observed
that the actual situation differs from the theoretical situation. For example, third
generation seaports. P.Verhoeven (2010) observes that although the functions of
strengthening the interrelation between the port and the city community in the prin-
ciples of seaport management of the 3rd generation (Table 9.1), usually complete-
ly different trends are observed in real-life situations. As J. van Leeuwen (2015)
points out, due to networking, the 4th generation seaports should become struc-
tured, multi-terminal interconnection networks of locally remote terminals, where
the function of interaction is assigned to international line operators, but in practice
this is not the case. in addition, the emerging new seaport generation, which is
highly influenced by new technologies, the development of artificial intelligence
and the development of information systems and automated management require a
235
more complete description. Therefore, Verhoeven (2010) suggests the key features
of a modern seaport attributed to the group of the fourth generation to be depicted
in the 3D dimensional model (Table 9.2), to describe the fourth and emerging fifth
generation seaports using specific key features (Verhoeven, 2010).
Upon placing the functions in the three-dimensional model, it can be noticed that
the competitiveness of a seaport is not directly related to the implementation of tech-
nological operations, but depends on the integration of all the three dimensions. Verho-
even (2010) states, that the interaction between the underlying dimensions will never
lead to conflict situations between stakeholders. As his statements are confirmed by
J. van Leeuwen (2015), such a multidimensional approach to a seaport presupposes
the extension of the concept of a seaport to the concept of a complex adaptive system,
which covers multiple systems, but allows analysing the seaport as a network of inter-
action between many organizations that enables the cargo to move in the global supply
chain at optimal speed, thus giving benefit to the stakeholders.
Table 9.2
Port generations from the evolution of system complexity approach
Dimension Sub-dimension Key features
Operational Vessel - shore The main seaport functions: cargo handling
operations (unloading, loading, storage), technical shipping
services, additional services, strong orientation to
containerization.
Value-added services Expansion of the main seaport functions with ad-
ditional activities and functionality
Industrial activities Transition from traditional to sustainable develop-
ment technologies (LNG, biofuel, etc.)
Spatial Terminalisation Shipping line operators are developing their own
terminal networks in different ports according to
the corporate model. Competition prevails not only
between seaports, but moves to the terminal level
in the logistics supply chain
City - seaport The functional seaport area based on the principle
separation of networking is expanding not only in terms of
Regionalization physical area, but also in terms of the scope of
networking
Social Ecosystems Seaports are becoming part of a larger ecosystem
that includes a global logistics supply chain charac-
terized by a vast variety of external environmental
factors
Human factor Development of sustainable links with local com-
munities, reducing the negative impacts (pollution,
traffic jams, etc.) and increasing the positive impact
Policy & Management, 37(3), 247-270.
236
It should also be noted that the parties concerned exist at different levels: at
the internal seaport level, as operating companies, and at the external level - as
the stakeholders in the economy, social environment and public policy. The inclu-
sion and management of the stakeholders varies depending on the activities of
the seaport in routine operations, the implementation of development projects,
the preparation of business plans or long-term development strategies, etc. The
management of stakeholders (Verhoeven, 2010) is referred to as the management
of the seaport ecosystem. Thus, the concept of the ecosystem management system
evolves in the scientific research of the seaport management that essentially points
out to the need and evolution of the functions of the seaport authority, as the con-
cept of the seaport authority as a management tool transforms from the concept
of stationary centralized management to the networking-based system and the
management of the relations between its elements.
Based on such assumptions in the scientific literature (Robinson, 2002; Verho-
even, 2010; Ibrahimi, 2017), three major scenarios for the seaport authority’s trans-
formation are identified at the seaports of the 4th and the emerging 5th generations:
–– seaport authorities become full-fledged market players in the global lo-
gistics supply chain, operating based on the principle of adaptive complex
ecosystems (entrepreneur management model, global);
–– seaport authorities have strictly defined constrained activities (security,
land use, concession agreement policies, etc.) that are in line with the ac-
tive management model of an intermediary operating at the regional level;
–– seaport authorities disappear in the seaport business cluster, as the passive
manager’s role in the conservative management model no longer meets the
requirements of the modern market.
In this manner, the seaport management problem becomes complex, combin-
ing many interrelated fields of activity and can be depicted as shown in Figure 3.7.
Based on Robinson’s (2002) formulation of the concept of value-oriented man-
agement in the global logistics supply chain, provisions of systemic complexity
formulated by Verhoeven (2010), K. Ibrahim (2017) proposes to analyse the sea-
port management as a complex cluster management system. Upon application of
the basic theoretical assumptions of public administration and the principles of
complexity theory, it can be stated that the functions of the seaport management
correspond to the alternative perspective of the seaport authority identified by
P. Verhoeven (2010) as an active organization engaged in management activi-
ties. Seaport authority manages the processes under the entrepreneur model at the
micro and meso levels of the seaport, integrating into the global logistics supply
chain and creating a flexible link between land and water transport systems in the
seaport’s macro environment. In such a layout (Fig. 9.6), according to R. Robin-
son (2002), it is clear that competition between seaports as individual organiza-
237
Foreland Hinterland
PLT uPT
PA
V
PK
uK
uP
sTO
uO+
LiO+
uO+
uD
LA+
MT VOL VOL VT
DO
Vi
NO
M B
uPT
PTL
Foreland Hinterland
Fig. 9.6 Complex model of seaport management:

Explanation: uD- seaport authority; uP- port partners; PK- private companies; uK- port
competitors; DO- labour institutions; NO – non-profit institutions; Vi- public authorities; uO- port
operators; VOP- value-oriented services; sTO – land transport operators; VOL – value-oriented
logistics services; LA- ship agents; LiO – shipping line operators; E- forwarders; MTO - multi-
modal transport operators; MTC- customs broker; uPT- foreign trade and tourism interface;
PLT- industry, logistics and supply interface; MT- multi-modal transport interface; VT- maritime
and inland waterways interface; PA- development agencies and associations; V- local and global
management; B- communities; M – media
Source: ibrahimi, K. (2017). A theoretical framework for conceptualizing seaports as institutional
and operational clusters. Transportation Research Procedia, 25, 261-278.
tions disappears since the research of competition is transferred into research of

the competitiveness of logistics chains, which explains formation of the concept
of attractiveness of the maritime transport sector in the scientific literature.
As shown in Fig.9.6, seaport authority (uD) is a crucial, but not an essential
part of the whole integrated system. First of all, seaport authority must ensure
value-oriented services in the land and maritime sectors (Fig. 9.6 VOP) and value-
238
oriented logistics services (Fig. 9.6 VOL) at the micro-environmental level. This
determines the transformation of the seaport management concept from orienta-
tion to high productivity towards creation of the added value. Seaport authority
cooperates with organizations such as public authorities (VI), labour institutions,
trade unions (DO), port partners (UP) and port competitors, as well as provides a
direct functional interface between private capital (Fig. 9.6) and non-profit institu-
tions (Fig. 9.6 NO) operating in the same environment of the interface between
maritime and land transport. When analysing the seaport authority as a certain in-
terface between land and water transport systems, one of its functions is to ensure
interface between geographically positioned operators operating in the port (ter-
minals, companies, Fig. 9.6 UO), ships’ agents (Fig. 9.6 LA) and shipping lines
operators (Fig. 9.6 LIA), as well as port operators operating in the territory of the
hinterland (Fig. 9.6 UO) and land transport operators (Fig. 9.6 STO).
By ensuring an efficient interface between port operators, shipping companies
and land transport logistics providers, seaport authority can functionally ensure
the development of added-value services in both maritime and land transport sec-
tors. And, vice versa, by forming logistical added-value oriented management
policy, seaport authority creates a strong interface between the sea and land trans-
port operators (Fig. 9.6 VOL) in the seaport’s meso-environment. It can be stated
that ensuring efficient connection between freight forwarders and customs bro-
kers with other seaport elements (Fig. 9.6 MTC, E) is just as important for ensur-
ing efficient logistic connectivity, as the functionality of these port operators is as
if a direct link between maritime transport and land transport.
Operating in the global market together with the seaport, multi-modal trans-
port operators (MT), industrial logistics and supply market (PLT), foreign trade
and tourism market (UPT), inland water transport systems (VT) and also the sea-
port authority that becomes a connecting link between the all the said markets
using effective seaport management tools. As can be seen in Fig. 9.7, organiza-
tions of the said sectors operating in the global space also create organizational
networks, in the context of which development agencies and associations (PAs),
local and global governance bodies (V) are operating and there exists a permanent
link with communities (B), while media and other digital technologies (M) are ap-
plied in activity processes. Consequently, if seaport authority achieved maximum
connectivity in terms of management of the interface between all these elements
operating in the seaport environment, the maximum attractiveness of the maritime
transport sector could be achieved through the effectiveness of the efficient man-
agement measures in the maritime sector.
When summarizing the methodology of application of theoretical assumptions
of the effective management of state-owned enterprises in the context of increas-
ing the efficiency of seaport management, it should be noted that the activities
239
of a seaport in different micro, meso and macro environments consist of formed
inter-organizational ties and organizational conditions, and the resulting network
of interactions corresponds to the structure of an adaptive complex system. There-
fore, possibilities for application of the complexity methodology become possible
as the theoretical principles of the new public management are establishing in the
public sector. When analysing inter-organizational relationships in the theory of
complex systems, it is possible to evaluate not only quantitative indicators, but
also their interrelationships and impacts. Thus, by depicting the subjects of sea-
port authority management in a multi-complex maritime transport sector model
and analysing their management alternatives, a methodology for the assessment
of the impact of seaport management on the attractiveness of maritime sector can
be developed and the methodology for the multidimensional assessment of the
management efficiency can be used integrating quantitatively measurable indica-
tors of productivity, financial efficiency and performance.
1. What main elements of the efficient management are distinguished in the

state-owned company efficient management theory?
2. What main functions have to be ensured by seaport authority at micro,
macro and meso levels in order to assure the implementation of the princi-
ples of effective management?
3. What main elements does the seaport consist of from the point of view of
the integrated organizational network?
4. What main authors investigated the seaport management from an integrat-
ed approach?
9.4. Ref eren c e s
1. Ayub, M. A., Hegstad, S. O. (1987). Management of public industrial en-

terprises. The World Bank research observer, 2 (1), 79-101.
2. Baird, A., J. (2005). Maritime policy in Scotland. Maritime policy and
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3. Baltazar, R., Brooks, M., R. (2007). Port governance devolution and the
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240
4. Brooks, M., R., Hummels, D. (2009). Infrastructure‘s role in lowering
Asia‘s trade costs: building for trade. Cheltenham: Edward Elgar Publish-
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mance: governance models defined. Research in transportation econom-
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5. Brooks, M., R., Cullinane, K,. P., Pallis, A., A. (2017). Revisiting port gov-
ernance and port reform: A multi-country examination. Research in trans-
portation business & management, 22, 1-10.
6. Brooks, M., R., Cullinane, K. (2007). Governance models defined, in de-
volution, port governance and port performance. Research in Transporta-
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7. Brooks, M., R., Pallis, A., A. (2008). Assessing port governance models:
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8. Bruton, G., D., Peng, M., W., Ahlstrom, D., Stan, C., Xu, K. (2015). State-
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16. Koliba, C., Koopenjan, J. (2015). Managing networks as complex adaptive
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243
Lietuvos aukštoji jūreivystės mokykla
Elena Valionienė, Jelena Belova, Olga Belakova,

Rima Mickienė, Margarita Varnienė, Gintautas Kutka
MANAGEMENT OF SEAPORT TERMINAL OPERATION
Coursebook
Maketavo Karolis Saukantas

Viršelis Eglės Dučinskienės
Klaipėda, 2019
SL 1335. 2019 01 14. Apimtis 20 sąl. sp. l.

Klaipėdos universiteto leidykla, Herkaus Manto g. 84, 92294 Klaipėda
Tel. (8 46) 398 891, el. paštas: leidykla@ku.lt

Valionienė, E., Belova, J., Belakova, O., Mickienė, R., Varnienė, M., Kutka, G. (2019) - Management of Seaport Terminal Operation

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Elena Valionienė

Approved by Lithuanian Maritime Academy Publishing Committee on 12 November,

assoc. prof. dr. Genutė Kalvaitienė,

Translated to English by UAB ,,Eurolingvija“.

© Elena Valionienė, 2019

Liepaja Marine College (LP), J. Zalomova, kanceleja@ljk.lv; http://ljk.lv/projekti

Different publications indicate different number of seaports in the world, rang-

1.1. The Stru c tu re o f th e O p e r a t i o n o f t h e S e a p o r t

The maritime transport system that is a connective link between maritime

seaport activities are related to the development of countries as integral parts of

Port and Training

Fig. 1.2. The structure of the operation of maritime transport sector

1.2. Classific a tio n o f S e a p o rts

Different port classification systems are used in practice of economic activi-

Level 2 Open storage areas for packing-

Level 3 Open storage areas for packing-

with various partners in attempt to satisfy port maintenance needs is absolutely

1.3. The Te rrito ry o f S e a p o rt a n d I t s U s e r s

• Port entrance canal • Cargo handling terminals • Port administration

Fig. 1.4 Division of port’s elements

Port infrastructure is a complex of hydro-technical and engineering facilities

shipping Cargo terminals Cargo sea and road

ship tugs Mooring Port Port Customs Veterinary shipping

Fig. 1.5 Key port activity operators and port users

Fig. 1.6. Distribution of stevedoring companies

The nature of the activities of seaports is determined by a certain stage of the

Downtowns, 1a Terminal facilities (1, 2, 3, 4) Water ……. Rail Reconversion, 5

Fig. 1.7 Bird Anyport model (1963) of port area evolution

1.5. Self -te s t q u e s tio n s

1.6. Ref eren c e s

1. Belova, J., Mickienė, R. (2012). Uosto veiklos valdymas: ekonominis as-

This chapter provides a description of the concept of a port terminal, analyses

2.1.1. The F unc tions of the Port Ter m i n al

In transportation of cargo and goods, a certain node is needed, where vehicles

2.1.2. The Struc ture of the P ort Te rmi n al

The terminal has a corresponding complex of terminal elements, operating ac-

The seaport terminals can be classified by the following features:

2.3.1. General C a rgo Termina ls

2.3.2. Conta iner Termina ls

–– gantry cranes and straddle carriers;

a) Ro-Ro ship at the terminal b) Con-Ro ship at the terminal

2.3 pav. Ro-Ro terminal

2.3.4. Bulk Ca rgo Termina ls

2.3.5. Liquid C argo Te rminals

Different types of cargo are attributed to liquid cargo group:

Railway wagon - tank

Fig. 2.7 Technological scheme of oil product handling operations

Fig. 2.8 Liquefied natural gas terminal „Independence“

The LNG supply chain is presented in Fig. 2.9.

An important activity of the LNG distribution station is receiving LNG from

Fig. 2.9 LNG supply chain in Klaipėda

2.3.6. Compa rison of the Maintenance o f Tech n o l o g i cal

In order to achieve productivity at the seaport terminals, it is necessary to per-

Distance from the quay

Fig. 2.10 Distances of positioning of terminals and cargo at the quay

2.4.1. Dis tr ibution of the P arameter s o f t h e Term i n al

The main parameters of the terminal are the following:

2.4.2. Settin g of Pa ra me te rs of the P o rt Term i n al

Setting of the throughput capacity of a quay. The throughput capacity of a

720 ∙ 𝐷𝐷1 ∙ 𝛼𝛼 ∙ 𝑘𝑘𝑚𝑚𝑚𝑚𝑚𝑚. ∙ 𝑘𝑘𝑢𝑢ž.

Annual throughput of a quay Qm. is calculated using the following formula

Throughput capacity of railways. This indicator characterizes the amount of

Capacity of a storage place is calculated using the following formula (2.5)