ICS Examiners Report

Liner Trades May 2022

There were some good papers in the May exam; however, some questions, notably around the fast-changing
landscape of liner shipping, highlight how students should keep up to date via media sources [and there are many
platforms such as Hellenic shipping news] and questions 3, 4, 5 and 6 are good examples of this. We would urge
students to revise for the latest developments in the industry as good knowledge of these can often gain extra marks
and be the difference between a pass or fail.

Q1. Describe the main characteristics of FOUR of the following container types, identifying at least TWO main
commodities for which each type may be used and the characteristics of those cargoes.

i. Tank Container
ii. Refrigerated Container
iii. 40ft High Cube Container
iv. 20ft ventilated container
v. Flat Rack Container
vi. Open Top Container
vii. Standard 20ft General Purpose Container

This was well answered by most students and had high level of attempts. A good way to approach this type of
question is thinking first about commodities and then attach to a container type. This is well covered in textbooks
and cargo and container types are often a common question style as an important part of the business.

Q2. Answer ALL parts of the question.

a) Describe the characteristics including dimensions, tonnages, cargo gear of ONE of the following types of vessels.

i. A 4200 Teu old style Panamax Containership

ii. A Specialised reefer ship
iii. A 9000 Teu Containership
b) Draw a profile and cross section of the vessel.

c) Label the significant parts of the vessel.

d) Give details of ONE trade the vessel operates in, where it will load carry and discharge its cargo.

Use the world map provided to support your answer.

Reasonably well answered although many marks lost due to poor ship drawings and inability to clearly label ad
describe characteristics of the vessel. Our only advice here is to please study the textbook which provides good
advice and direction on this subject. It is standard across a number or exam subjects.
Q3. Use a trade of your choice to explain the container imbalance between the dominant leg / non-dominant leg
and the challenges this presents. Describe how carriers can minimise the effects of the imbalance.

This question on a subject that is extremely important for liner carriers in contribution management. Profit and loss
of a service can often be greatly improved if carriers manage this well. Often an empty container can add more value
than a full container on some trades.

To answer this well a good knowledge of a typical trade with imbalance should be used which demonstrates the
problem well and highlights the sort of challenges due to vastly different factors. For example, a trade like Asia –
ECSA has 1.2 million dominant FMCG etc. and a growing 600,000 non-dominant base cargo. The non-dominant has a
high number of reefer containers moving.

In answering this, students so look at:

- Ship system and good trade size with good understanding

- Seasonality
- Box type differences/challenges
- Cargo Weight challenges
- Off hire / on hire
- Match back of empty equipment
- Cost involved

Ways which carriers can deal with the problem and minimise cost:

- Cargo selection changes [both ways for container type and cargo weights]
- Marginal pricing non-dominant
- Off Hire / On hire
- Negative Yield vs. Empty
- Ship System change
- Non-operating reefers etc.

Q4. E-Commerce and Shipping Lines Websites have become a very important platform for carriers and their
customers in recent years. Describe from both carrier and cargo owner’s perspective why E-Commerce is so
important in today’s commercial world and explain its widening use in the various areas it is used outlining
benefits and

In today’s liner trade world this platform is advancing rapidly and will continue to develop. Why it is important in
today’s commercial world – size of business to cover volume of transactions, scale efficiency and need to use back
offices to get down head count. Carriers are using increasingly sophisticated platforms to process so many
transactions [customer, ports, agents, vessel planning etc, yield management, booking and allocation control,
container management]. Expansive summary. Customers require this also for documentation accuracy and single
platforms like intra. This is a vast area and open question, but students should be able to highlight a wide range of
areas.

In this respect those students who attempted this question did well.
Q5. The recent rising cost of bunker fuel presents increasing challenges to carriers with new concerns in terms of
voyage costs. Explain the background to the rise in fuel costs and using TWO separate trades and using a world
map provided to support your answer, illustrate the full detail of these trades and where you would bunker your
vessels also describing the benefits of these locations.

This was not well answered in what is not a well understood area of liner shipping and yet bunker planning is very
important. A good Clear world map showing both selected trades fully labelling all ports of call and options for
bunker calls is a good starting point to set the framework of the answer. Also, a good background to the cost
increases which link back to recovering world economy earlier in the year but also the Ukraine – Russia war which
impacted fuel supply and cost.

The narrative on each selected trade should clearly illustrate reasons for the call for bunkers but noting many liner
routes today have large consumption due to vessel size and this can impact cargo carrying capacity as well as draft
and canal considerations. There is also a wide range of prices and structures globally. Students mentioning low
sulphur fuels and restricted areas would gain extra marks on this question.

Q6. There is shortage of container vessels which has increased the cost of chartering. Using examples to support
your answer describe the reasons for this and discuss with examples of what carriers are doing to reduce this
problem.

Several students attempted this question but pass rates were low.

This was classed as a relatively open question, but it has been a massive problem for liner companies over the last 18
months affecting services and the ability to cover demands on certain trade lanes.

The reasons are a combination of the recovering market and enormous delays in the ports globally with notable
examples in USWC across Asia but generally in most ports to lesser or greater degree. It accounted for 17% of global
capacity missing in 2021 and a further 15% in 2022. New builds in 2023 might reduce the impact. Other factors are
labour shortages both in ports and landside operations. This has led to void sailings on many routes and re-
deployment of capacity across networks [normally southern trades to supplement East – West trades].

Owners of tonnage have seen the opportunity and offered longer charter periods for higher rates with short term
charters more than US$ 100k per day. Several carriers bought up large amounts of 2nd hand tonnage which soaked
up a lot of spare capacity initially

Carriers are making the hard decision between leaving gaps in the schedule [tightening supply] and deployment of
existing capacity to the right trades = for example best paying. Chartering [if tonnage is available] is an evaluation
exercise based on the high cost. The real answer is in the short-term carrier’s decision is made for them by the
shortage of available charter tonnage the hard decision comes vs. renewal of existing charter tonnage and whether
to renew or not depending on the deal offered. A multitude of different options.

Q7. Choose any TWO of the following cargoes. Identify two major trades for each cargo chosen on which they are
shipped: detailing the main ports of loading and discharge. Explain the types of container equipment used and any
special requirements or precautions that need to be taken to protect the cargo.

i) Soya Beans
ii) Coffee
iii) Wine
iv) Clothing
v) Apples

This can be classed as a reversal of Q1 and therefore approach the same way thinking about two commodities on
which you have a good knowledge and attaching this to the right container type and the reasons for this. As with Q1
this was well answered but ironically had a low number of attempts made
Q8. Using the world map provided to support your answer choose TWO of the container trade routes listed below
and identify the most important ports of call and main commodities carried in both directions. Discuss how
services are structured and whether they are ‘end to end’, ‘hub and spoke’ or ‘pendulum’ style services and the
vessel capacities used.

a) Europe to South Africa

b) Europe to US East Coast
c) Asia to West Africa
d) Asia to US East Coast

Although this had a high number of attempts, and it is a common style question the pass mark for this was relatively
low. A common error from students is to spend to much time on one trade leaving little or no time for the second
trade costing a lot of marks. There is a lot of data in the textbooks and it worth taking time to revise and learn the
key details on a selection of 10 or so global trades which then provides sufficient background to cover this and of
course other questions which ask for specific trade route knowledge.