GENERAL STRUCTURE

OF SHIPPING

WORLD SEA-BORNE TRADE
 It has been calculated that more than 90% of world trade, in
tonnage terms, goes by ship.
 Despite the technical innovations that have transformed
transport in the last two centuries, ships remain the most
economical means of moving large quantities of goods from
one place to another.
 They are cheaper to build and run than other forms of
transport, such as road and railways, and they can carry
huge amounts of cargo – some modern oil tankers can carry
more than half a million tons of oil at a time.
 In tonnage terms, most seaborne trade consists of goods
carried in bulk.

World Seaborne Trade Volume
Development 1996-2006 (in million tonnes) - Growth rate in 2006
Major trades

Total World Trade

2,900

+6%
Crude oil and oil products

7,000

+5%

The 4 main Dry Bulk Cargoes (Iron Ore, Coal, Grain, Bauxite/Alumina)
Other Cargoes
Total World Trade

2,400

+2%

6,000

1,900
+7%

5,000
1,400

4,000

900
1996

1997

1998

1999

2000

2001

2002

2003

Source: Indicators issued from various sources such as ISL Bremen for World fleet and trading figures
and Clarkson Research Studies for shipbuilding and scrapped vessels.

2004

2005

2006 (*)

estimates

(*)

INTERNATIONAL SHIPPING .CHARACTERISTICS AND STRUCTURE .

LINER AND TRAMP OPERATIONS FORMS OF SHIPPINGS .

.  Shipping services are provided regularly at specified ports irrespective of quantity of cargo available.  Such services are useful for small exporters. An accumulation of small loads belonging to many shippers.  Such shipping lines are not committed to any discipline in terms of service schedule and the freight rates.LINER SHIPPING  Merchandise is carried by regular shipping lines.  Ships usually carry general cargo ie.

.  Such ships work on inducement basis and ply indiscriminately between the ports of the world depending upon the laws of demand and supply in the market which also determine the rates. wheat etc.  The shipping lines operating as tramps can operate on any route for which the freight cargo is available. coal. Grain.TRAMP SHIPPING  Ships used for transportation of homogeneous cargo which is moved in bulk quantities eg.

LINER FREIGHTING  The liner shipping companies provide commitment of regular service on specified sea routes at specified freight rates.  Costs fairly fixed in nature. low variable costs  Ships designed for a specific trade route  Price according to value of service to maximize profitability  Charges based on a “weight or measure” (W/M) basis  Different commodities would have different W/M charges .

CHARTERING .

 Chartering in short refers to hiring of ships.Ships can be hired on Time basis or Voyage basis .CHARTERING  Chartering is an activity within the shipping industry.

shipping dept asked to charter ship. feasibility.  Shipping dept controls voyage  At the end of the voyage –laytime calculations & voyage accounting . etc  When trading deal is finalized.CHARTERING – THE TRADITIONAL METHOD  Trade enquiry  Shipping dept to give feedback on freight rates.

Chartering – A Working Model Pre-fixing Fixture negotiations Voyage management Post-fixture .

tonnage availability Trader negotiates Finalises deal Feedback to trader . Feasibility.Pre-Fixing Trade Enquiry given to charterer Charterer asked to fix ship Charterer checks Ports condition.

Fixture Negotiations Charterer enters market Evaluates available ships Negotiates and Finalises best tonnage Nominates vessel to shipper/ Receiver Gets approval Commencment of voyage .

Regular monitoring of voyage Completion of voyage Control of documentation .Voyage Management Instructions of master Appointment of agents. arranging bunkers etc.

Post-Fixture Charterer prepares laytime calculations Prepares final voyage accounts End of process Follow up with shipper/receiver Prepares final voyage accounts .

TYPES OF CHARTERING  In some cases a charterer may own cargo and employs a shipbroker to find a ship to deliver the cargo for a certain freight rate.S. dollars per day for the agreed duration of the charter.  A charterer may also be a party without their own cargoes who takes a vessel on charter for a specified period from the owner and then trades the ship to carry cargoes at a profit to the hire rate.g. Freight rates may be on a per-ton basis over a certain route (e. . for iron ore between Brazil and China) or alternatively may be expressed in terms of a total sum .normally in U. or even makes a profit in a rising market by re-letting the ship out to other charterers.

. normally a standard contract form called a charter agreement is used to record the exact rate.PARTY AGREEMENT  Depending on the type of ship and the type of charter. duration and terms agreed between the shipowner and the charterer.

DEVELOPMENT IN SEA TRANSPORTATION .

 A unit load combines packages or items into a single "unit" of a few thousand kilograms that can be moved easily with simple equipment. . usually a distribution center. pallet) or divided into smaller sub-units (e. retail store.g. Several units can be combined to one larger unit (e. trucks. wholesaler. yet can be easily broken apart at a distribution point. etc. A unit load packs tightly into warehouse racks. consumer packages). containers.g.UNITIZATION  The art of packaging cargo into unit loads.  A unit is a certain quantity or volume chosen as a standard. and railcars.

 The containers are carried by train or road to the sea ports where they are loaded on the ships for onward transportation to their destination.MEANING  A method of distribution of goods using containers.CONTAINERISATION. .  The use of containers has facilitated as well as revolutionized the carriage of goods.

CONTAINERISATION- PROCEDURE
 The exporters do not need to carry the cargo to the
seaports and can directly approach the container freight
station or the inland container depot to book the cargo
there for transportation to the destination.
 The custom clearance of cargo is provided at the inland
container depots, and in the process, the exporters are
able to save a lot of time.
 The packing of cargo in a container is either done at the
depot or in the factory of exporter.

TYPES OF CONTAINERS








General purpose containers
Refrigerated containers
Fruit containers
Bulk containers
Ventilated containers
Open top containers
Open sided containers
Hanger containers
Bin containers

Stuffing of cargo in the container
 Different types of packages should be packed separately.
 Container should be lined with paper or foil in case of
specially sensitive goods.
 Packing in the boxes should be carefully checked.
 Exporter should not pack together:
– Wet goods with dry goods
– Goods with sharp edges or corners with goods in soft packaging
– Dusty goods with dust sensitive goods
– Placing heavy packets on light packets
– Odour emitting goods with odour sensitive goods

Precautions for Packing the Containers  The container should be thoroughly checked to ensure that:  There are no holes or cracks in walls or roofs.  Container is odourless.  Container is water proof.  Container is absolutely dry from inside.  The doors can be easily operated.  Locking doors and handles function properly. .  There are no labels pasted of the previous cargo.  Container is clean and free of dust.

Packing costs are reduced substantially. Delivery of goods is done in a good condition.Advantages of using Containers     Risk of damage is reduced substantially. No mishandling of cargo. .

INTER AND MULTI-MODAL TRANSPORT .

and truck). without any handling of the freight itself when changing modes.  Mostly associated with “piggyback” or container shipments.INTER-MODAL TRANSPORT  Intermodal freight transport involves the transportation of freight in a container or vehicle. ship. using multiple modes of transportation (rail. .

 Reduced cost  Combines advantages (and disadvantages) of each mode used  Reduces risk of theft and loss  Shortens customer order cycle time  Promotes “seamless” product movement  Eliminates unnecessary handling .BENEFITS OF INTER-MODAL TRANSPORT  Allow freight to be transported faster.

.  Multimodal Transport is also a legal concept strictly defined in the United Nations Convention on the International Transport of Goods and other international instruments.MULTI-MODAL TRANSPORT  Multimodal Transport is commonly known as referring to a transport operation that is carried out using different modes of transport and organised by a single operator. where the specified liability regime of the operator differs from those applicable in modal operations.

rather than having to deal with each and every modal specialist of the transport chain.  Multimodal Transport allows to combine in one voyage the specific advantages of each mode. the larger capacity of railways and the lower costs of water transport in the best possible fashion. .  Multimodal Transport also offers the shipper the possibility to rely on a single counterpart. the multimodal transport operator (MTO) who is the architect of the entire journey and only responsible party from pickup to delivery.Benefits of Multi-Modal Transport  Multimodal Transport is generally considered as the most efficient way of handling an international door to door transport operation. such as the flexibility of road haulage.

 Loss of time and risk of loss.  The through rates offered by MTO make it easier for the exporter to negotiate sales contracts with foreign buyers on the basis of delivered prices.Benefits of Multi-Modal Transport  The burden of documentation and other formalities connected with segmented transport is reduced.  The resultant cost savings tend to reduce the through freight rates and the cost of cargo insurance. pilferage and damage to the conventional segmented transport are eliminated. .

.  MTD constitutes the title to the goods and is transferable by endorsement.  Involves transshipment.  May be issued by an operator who does not necessarily owns the ships used to carry out any sea transport involved.  Confirms that the goods have been “taken in charge”.Multi-Modal Transport Document  Mentions the place of acceptance and place of delivery.

including multiple storage and handling stages. . more cost effective.Multi-Modal Transport. most of time.The Challenge  Multimodal Transport requires a thorough control over all the steps involved in international transport.  This means extensive use of information technologies and carriers networks and regulatory frameworks that can provide freedom to plan and operate to carriers and reliable liablity regimes to customers.  Multimodal transport needs to be competitive in markets where unimodal operations not only have been there for a long time but also are simpler to handle and.

goods that are landed at ports need to be evacuated straightaway without any loss of time.CFS. space.  With the growing volume of international trade.Container Freight Stations  CFS is a place where containers are stuffed. the need for expeditious clearance of goods at the port within the minimum possible time has been gaining importance. for optimal utilization of existing infrastructure. equipment. This is more so when the ports are facing congestion at their premises.  Further.  Accordingly the concept of Container Freight Stations(CFS) has grown in importance along with the development and growth of ports. de-stuffed and aggregation/ segregation of export/import cargo takes place. .

 The imported goods can be immediately shifted from the port to CFS which also helps in the reduction of port congestion. . temporary storage for onward transit and outright export and transshipments take place from such stations. re-export.  All the activities related to clearance of goods for home consumption.CFS  A CFS is an extended arm of Port/ ICD/Air cargo Complex. where import/ export goods are kept till completion of their examination and clearance. temporary admissions. clearance of goods from CFS is an important point of consideration for trade in respect of export/ import Cargo as it is the final Customs contact point.  Therefore. warehousing.

dispatch and clearance of Containerized Cargo. . up-to-date inventory control and tracking system to locate containers/cargo.Main function of CFS  Receipt.

CFS in case of imports  In respect of import consignment. Thereafter.After obtaining the permission. . the Steamer Agents/liners/Importers desiring to take the consignment to CFS. file Import General Manifests in the port. The importer files the Bill of Entry at Customs House and then Customs formalities of assessment. Customs gives“Out of Charge” and the Custodian releases the goods from CFS by issuing a Gate-Pass. The CFS allow de-stuffing of the goods. examination and payment of duty are completed.the Container moves to CFS under Customs escort or under bond and bank guarantee.

CFS in case of exports  In respect of exports.After stuffing of the goods. . The export cargo in Less than Container Load(LCL)/ Full container Load (FCL) is received by the Custodian of CFS for safe custody. the goods are brought directly to CFS under a Shipping Bill. Container/ Customs Bonded Truck (CBT) is sealed by the Custom Officer and the same is removed from CFS for export through the desired Port.

 It is equipped with fixed installations and offering services for handling and temporary storage of import/export laden and empty containers carried under Customs control and with Customs and other agencies competent to clear goods for home use. .  It has all the loading and non.ICD  The Inland Container Depot (ICD) is a common user facility with Public Authority status. re-export.loading equipments needed to handle container cargo. temporary storage for onward transit and outright export. warehousing. temporary admissions.

.  Assist in decongesting the seaports and make them more userfriendly.  Help revive and modernize the railway as a primary mode for the long distance haulage of cargo.  Assist in the reduction of overall cost of cargo.  Cargo consolation point and custom clearance establishment close to areas of production and consumption.  A comprehensive cargo sorting centre and a temporary cargo facility.  Transit cargo to Landlocked neighbouring countries  Integration of surface transportation of containers.Objectives of ICD  Bring shipping services to the doorstep of shippers across the nation.

Improved turn around time of ships thereby reducing demurrage and avoiding pilferage. Optimal use of surface transport and the decongestion of the sea ports.Benefits of ICD 1. 3. Improved container usage and reduction in the movement of empty containers. 5. Issuance of “Through Bill of Lading” by Shipping lines and thereby assuming liability from dispatch to destination ports. 2. 4. . 6. Establishment of customs clearance facility close to production and consumption centers. Lower freight to increase trade flows.

Reduction in marine pollution activities around the seaport.Benefits of ICD 7. 9. . Revitalization of export agriculture leading to multiproduct economy and the avoidance of employment opportunities stemming urban-rural drift and increase in revenue to the government 10. Rehabilitation of the surface transport system and enhanced usage of containers. Easy and safe access to international shipping facilities in the hinterland giving a boost to inland trading. 11. 8. Reducing the pressure on the roads and avoiding the carriage on the road.

POLICY AND PROBLEMS .INDIAN SHIPPING – GROWTH.

Cochin. on the east coast – Goa.000.eEnterprises Lab Overview of the Indian container shipping industry • India is a peninsular country and there are dozens of large and several smaller ports along its coastline.000 – 300. Mangalore. . Kolkatta (Calcutta). are currently being done manually. – Chennai (Madras). • Most of the business transactions among partners. Mumbai (Bombay) on the west coast • The typical volume of containers handled by a medium sized port is in the range of 250. Tuticorin. Vizag.

St.g. Johns Freight systems) Multinational companies (examples: OCS-NYK line.Types of companies eEnterprises Lab Local. small and medium sized companies –Lower volumes –Very minimal information systems capabilities Domestic Large –Elaborate infrastructure for operation –Reasonably good enterprise information systems but almost non-existent business integration (e. but not yet deployed in India . Container Corporation of India.. etc) – Access to larger clientele because of their international presence – Sophisticated systems at their foreign operations.

computing facilities and connectivity • Systems/software costs – Varies widely and is significant • Processes – By and large well documented Remarks:  The underlying infrastructure has become affordable for most companies  The move from manual processes is not only a technological one.eEnterprises Lab Challenges • Infrastructure – Power. . but cultural as well.

PORTS AND PORT TRUST .

river.Port  A port is a facility for receiving ships and transferring cargo.  They are usually situated at the edge of an ocean.  Ports which handle international traffic will have customs facilities. sea. which may be provided by private interests or public bodies. barges and tugboats are often used to safely maneuver large ships in tight quarters as they approach and leave the docks. Ports often have cargo-handling equipment such as cranes and forklifts for use in loading/unloading of ships. or lake.  Harbour pilots . .

or canal have access to a sea or ocean.  A "port of call" is an intermediate stop. etc.  A "fishing port" is a type of port or harbor facility particularly suitable for landing and distributing fish.  A "dry port" is a term sometimes used to describe a yard used to place containers or conventional bulk cargo. where a ship picks up supplies.Types of Ports  Some ports on a lake. river. they are sometimes called "inland ports". usually connected to a seaport by rail or road. fuel. .

.Port trust  An association or body consisting of chairman and other trustees for governing and regulating the operations of the port.

iron ore. from single berth locations handling a few hundreds tons a year to multipurpose facilities handling up to 300 million tons a year  More than 80 percent of trade with origins or destinations in developing countries. and chemicals). in tonnage.000 ports around the world. and for 32% of general cargo. petroleum products. for 23% of dry bulks (coal. and phosphate).PORTS SECTOR – GLOBAL OVERVIEW  There are more than 2. is waterborne  World port traffic is made for 45% of liquid bulks (mainly oil.  Containerization of general cargo traffic has progressed steadily over the last 20 years Source : World Bank / UNCTAD . grain.

For the developing world.  As a consequence of both liberalization of maritime transport and corporate restructure in the shipping industry. the corresponding figures were 10. and still 11. storage for a fifth. storage. have decreased from 6.  Total logistics costs (packaging. while freight costs alone (transport and insurance) can make up to 40% of values of exports for several African landlocked countries. international freight rates have significantly decreased in real terms over the last 10 years.24% in 1997. often by more than 40%  Maritime freight costs. and inventories for a sixth.PORTS SECTOR – GLOBAL OVERVIEW  Transport usually accounts for a quarter of total logistics costs in OECD countries. administration and management) are estimated to reach up to 20% of total production costs in OECD countries.64% on average for the whole world in 1980 to 5.04% in 1997.53% for Africa. as a percentage of import values.4% in 1980. 8. inventories. transport.60% in 1990 and 8. Source : World Bank / UNCTAD .

seaports have emerged as a critical part of the Global value Chain  The past decade has witnessed relocation of industrial manufacturing resulting in shifts in global trade flow  Falling barriers to international trade have allowed businesses to locate different parts of their production processes across the globe  This is done to take advantage of the fine differences in cost. in their search for competitive advantage .EMERGING ROLE OF PORTS IN WORLD TRADE  The role of ports have changed from “patronizer” to “facilitator and service provider”  From a mere landing station for ships to load and unload cargo. logistics and markets. resources.

000 TEU’s) requiring deeper draught ports  Efficient modes of cargo discharge are required to minimize detention time and thus costs  Deep draught berths and efficient modern container handling equipment have become essential to attract mainline vessels . 6000.EMERGING ROLE OF PORTS IN WORLD TRADE  The trends in global shipping has tended to increasingly favour deployment of large sized vessels (ULCCs.VLCCs. Cape size. 10. Super cape size.

commissioned in June 2001  Over 95% of the overseas cargo volumes are routed through these ports .INDIAN PORTS SECTOR  The 6000 Km coastline of India is dotted with 12 major ports and around 180 minor and intermediate ports  History of organized major ports in India dates back to the 19th Century. with the commissioning of the Kolkota port in the year 1870 followed by Mumbai Port in 1875 and Chennai Port in 1881  Ennore Port is the youngest and the first corporate port.

now subject to growing competitive pressures. has become critical in establishing competitiveness of products . the globalization of exchanges and the resulting international restructuring have forced businesses. in the right quantity at the right time  Logistics interfaces between producers and distributors. to seek greater competitiveness and differentiation  Subsequently logistics has become an important strategic procedure in the improvement of competitiveness  A structured and powerful logistic service represents a guarantee of efficiency and reliability. the supplier having to deliver the right product.PORTS AND THE COMPETITIVE EDGE  The rise of competition.

which becomes the essential link in this competitiveness approach .PORTS AND THE COMPETITIVE EDGE  The concentration of the production units and their relocation far from their destination market implies an increasing recourse to logistic services.

the Indian ports may not exactly be ready to meet the challenges of free trade and economic globalization In fact Indian ports remain a bottleneck in the supply distribution chain .WHAT AILS THE INDIAN PORT SECTOR Evolved as state monopolies.

 Public investment in port infrastructure was insufficient or inadequate. because it relied heavily on state budget. limited responsiveness to market demand.and the command structures.  Centralized government control slowed down the pace of planning. .WHAT AILS THE INDIAN PORT SECTOR  Monopoly and inadequate investments in technology have resulted in inefficient operations and high cost of services  Bottlenecks in the form of poor Road and rail Connectivity to hinterland have substantially impeded the growth of ports  Labor unions impeded and obstructed the reduction of the labor force and up gradation of skills which is possible only through modernization of port-handling equipment.

THE ROAD TO REFORM  Globally. Privatization of port facilities has proved to improve efficiency of port operations as well as bring about cost efficiency  Private sector has also proved its ability to bear the financial burden of port expansion and modernization  Private sector is better at planning. financial management and risk management  They are subject to less political interference .

OBJECTIVE FOR INDIAN PORTS OF THE FUTURE Thus Ports of the future need to achieve a high degree of operational efficiency and Cost Efficiency to be able to provide the much needed competitive edge to Indian Exports .