CHAPTER 2:

INTERNATIONAL SHIPPING
1. Introduction
2. Shipping facilities
3. Linners
4. Bills of Lading (B/L)
5. Chartering (Voyage Charter,
Bareboat charter, Time Charter)
6. Charter Parties (C/P)
• Carriage of goods by container are
suitable for using these terms of Incoterms
2010
• FOB,CFR, CIF
• DAT, FAS, FOB
• FCA, CPT, CIP
• None of the above
• Based on Incoterms 2010, which terms
are suitable for transportation of goods by
sea
• FOB, FAS, CFR, CIF, DES, DEQ
• FAS, FCA, CIF, DDU, DDP
• FOB, FAS, FCA, CIF, CFR, CIP, CPT
• None of the above
1. Introduction of Int’ shipping
1.1. Why ship?
1.2. The theory of trade
1.3. The different shipping market
1.4. Who trades?
 1.1. Why ship?

• The sea road is not too costly to invest

• Sea transport is suitable for almost
commodities in international trade
• The capability of carrying is large
• The sea freight is relatively low
• Sea transport is not speedy
• High risk when transporting by sea
 1.2. The theory of trade

• Exporter (consignor, shipper) sells commodities

to importer (consignee, receiver): trade
• Distribution of resources is uneven: absolute
advantage and comparative advantage
• Factor of production: Land, Labour, Capital,
Enterprise.
• Economies of scale
• Globalisation
 The Demand
• World Economy
– Industrial Production and Raw Material and Energy
Consumptions
• Seaborne Commodity Trades
– Seasonal Fluctuations, Harvests, Winter in Northern
Hemisphere,
Stock Building, Structural Changes, Energy Intensity
• Average Hauls
– Iron Ore shifts from Australia to Brazil or Wheat from Australia to
North and South America
• Transport Costs
– Prices CFR China for bulk fertilizers Ex-USA versus Ex-Jordan
• Political Events
– Korean War, Suez Crisis in 1956, Six Days war in 1967, Iraq-
Kuwait war in 1991, Closure of 17 Nuclear Power Plants in
Japan
 The Supply
• World Fleet
– Average Economical Life Time (25 years)
• Shipbuilding Output
– Very important industries in The Far East
• Scrapping and Losses
– The Age of the Fleet, Technical Obsolence, Scrap Prices,
Expectations for Earnings
• Fleet Productivity
– Operating Speed, Deadweight Utilization, Port Congestions
• Freight Rates
– The freight has a direct impact on Ship Owners cash flow and
this in turn influences the supply for triggering the activity for
New Buildings or Scrapping.
 1.3. The different shipping market

• Liner trade
- Consignment from number of different
shippers
- Almost now carried in containers
• Tramp trades
- Bulk dry cargo
- Bulk liquids
 1.4. Who trades?

• Shipowner
• Ship managers
• Charterer
• COA: contract of affreightment
• Shipbroker
• Charter’s agent
• Forwarding agent
• Freight forwarder
• Container transportation is usually
operated under:
• Voyage charter
• Time charter
• Liner
• None of the above
•  
 Owners
• Selling Transport Capacity
– Ship Owners
– Pools
– Operators
– Management Companies
– Cargo Owners
– Financial Institutions
– Yards
 Charterers
• Buying Transport Capacity
– Cargo Owners
• Selling CIF or C&F
• Buying FOB
– Traders
– Operators
– Shipowners
 Brokers
• Exchange of information
– Positions/Cargoes/Fixtures/Analyses
• Extensive contact network
– Owners/Cargo Owners/Traders/Brokers
• Intermediary
– Negotiating skills
– General knowledge about trades/cargoes/players/markets
– General knowledge about charterparties
• Drawing up original charterparties in accordance with agreed terms
and conditions
• Follow up/Operations
– Not fix and forget
 2. Shipping facilities
• 2.1. Vessel
• 2.2. Types of vessel
• 2.3. Ship market
• 2.4. Sea port
 Vessel
• Loadlines (draft): distance between the bottom
of the ship to the level of water on the ship side
(water line)
- Samuel Plimsoll: 6 marks
TF: Tropical Zone, Fresh water
F: Fresh Water
T: Tropical Zone (salt water)
W: Winter S: Summer ( in other zones)
WNA: Winter North Alantic
 Vessel
• Date of birth
• Flag of ship
• Register of ship
• Tonnage: GRT, NRT
• Displacement : light displacement, loaded
displacement
• Deadweight (DWT): DWAT, DWCC
• Stowage
2. Vessel
Vietnamese Maritime Code- Article 11:
“Vessel is floating object operating in the sea”
2.1. Characteristics of merchant ship
 (Name of Ship): Titanic, Hoa sen, Cần Giờ, SG1029
 (Shipowner): Shipping company
- Actual Shipowner
- Norminal Shipowner
 (Flag of Ship)
- Normal Flag
- Flag of Convenience
Open register system
 (Dimensions of ship)
LOA: m, ft (1foot = 0,3048m)
- Lenght over All
- Lenght Between Perpendicular
(Beam): m, ft
 Draft: m, ft
- Light draught  TF- Tropical Fresh Water Load Line
- Loaded draught  F: Fresh Water Load Line
- Plimsoll mark  T: Tropical Load Line
 S: Summer Load Line
 W: Winter Load Line
 WNA: Winter North Atlantic Load Line
 (Displacement): LT

M (C.ft)
D = ---------------
35

- Light Displacement:
+ Equipment, boiler, ..
+ Crew members and luggage
- Heavy Displacement:
+ LD
+ Supply
+ Cargo on board
 (Carring Capacity):
+ Deadweight Capacity – DWC:
DWC = HD – LD
+ Deadweight Cargo Capacity – DWCC:

(Register Tonnage): m3, C.ft, RT

(1 RT = 100 C.ft = 2,83 m3)
+ Gross Register Tonnage – GRT
+ Net Register Tonnage – NRT
 (Cargo Space – CS): C.ft, m3.
+ Bale Space, Bale Capacity – BS
BS = (length x width x height) hold
+ Grain Space, Grain Capacity: 105-110% BS
 (Coefficient of Loading - CL):

CS (m3/Cf)
CL = -------------------------
DWCC
: + CL for grain
+ CL for bale
 (Stowage Factor – SF): volume and weight

C (C.ft)
SF = -----------------------------
S

+ SF < 40 C.ft - (Deadweight Cargo).

+ SF> 40 C.ft - (Measurement Cargo):
+ SF > 70 C.ft – Big Cargo
+ SF < CL: not take advantage of GRT
+ SF > CL: not take advantage of DWCC
 (Class of Ship):
+ Lloyd’s Register of Shipping, London - Anh;

+ American Bureau of Shipping, New York - Mỹ;

+ Bureau Viritas, Paris - Pháp;
+ Norske Veritas, Oslo - Nauy;
+ Germanischer Lloyd, Berlin - Đức;
+ Korean Register of Shipping...
Vessel Types
 Shipping markets Shipping markets

Cruise
Crude oil / products

Dry Cargo
Car carriers

Chemical
P it c h .p p t

E ir i k E id e 2 2 . 1 1 . 2 0 0 1 C h e m ic a l & O il C a r r ie r ” H i l d a K n u ts e n , 1 5 , 0 0 0 d w t .

Livestock
Container

LNG/LPG Heavy lift

 Offshore markets

Rig

Seismic

Supply

Subsea
Tanker for oil * Container Vessel
• ULCC • Post Panamax
• VLCC • Panamax
• Suezmax • Sub Panamax
• Aframax • Handy
• Panamax • Feedermax
• Product (LR1/LR2/MR) • Feeder

Bulk Carrier Luiqid Natural Gas (LNG)

• UltraLrgOreCarrier
• Cape Size
• Panamax
• Handymax
• Handysize

Tanker for chemicals Liquid Petroleum Gas (LPG)

• Fully refrigerated
• Semi refridgerated
Rig / Subsea Offshore Vessel
• Fixed platform • Seismic
• Jackup rig • Drilling
• Semi-submersible • Supply
• Drill ship • Anchor Handling Supply Vsl
• Tension leg platform • Production / FPSO

Reefer vessel Cruise / Passenger vessel

• Refridgerated cargo

RoRo / PCTC / PCC

• Roll on / Roll off
• Pure Car Truck Carrier
• Pure Car Carrier
Tank Dwt Cargo
ULCC Above 320.000 dwt Crude
VLCC 200-320.000 dwt Crude
Suezmax 120-200.000 dwt Crude
Aframax 80-120.000 dwt Crude/products
Panamax 60-80.000 dwt Crude/products
Product tankers 10-60.000 dwt Products
Bulk
Capesize Above 80.000 dwt Coal, ore
Panamax 60-80.000 dwt Coal, ore, grain
Handymax 40-60.000 dwt Grain, bauxitt, general goods
Handysize 10-60.000 dwt General goods
LPG
Fully Refridgerated approx. 27-78.000 Cbm Prophane, butan, ISO
Semi Refridgerated Less than above Ehtylene ++
Chemicals
Deep Sea 10-40.000 dwt All chemicals
Short Sea below 10.000 dwt All chemicals
Container
Post Panamax Above 4.000 TEU All types
Panamax 3.000-3.999 TEU All types
Sub Panamax 2.000-2.999 TEU All types
Handy 1.000-1.999 TEU All types
Feedermax 500-999 TEU All types
Feeder 100-499 TEU All types
Tankers – The refining
process

Afra/Pana/Product/
Chemical/LPG
(coated tanks/stainless steel)

ULCC/VLCC/Suez
(uncoated tanks)
Chemical Tanker Market
 PCTC / PCC / RoRo

PCTC Deep-sea vessels Capacity 3500 - 6200 cars

 The ship Markets
– Gas (LNG & LPG)
– Chemical
– Car
– Reefer
– Container
– Liner Services
– Parcel Services
– Tugs and Offshore Supply
– Cruise
– Fishing
 LNG = Liquified Natural Gas
– - 160 degrees celcius
– Few players
• Gas Majors, Bergesen, Exmar, Golar LNG, Qatar, Japanese
– Newbuilding abt USD 200/250 million per ship
– Present fleet about 240 ships
– Abt 35 ships delivered in 2007, a further 100 before end 2009
– Strong demand from USA and Japan
– Long term contracts
– Export projects in Qatar, Nigeria and Australia
– Import terminals in USA, UK, Italy and Mexico
LPG = Liquified Petroleum Gas
– VLGC > 60.000 cbm
– LGC - 40/60.000 cbm
– MGC – 20/40.000 cbm
– Handy – 12.000 cbm (NH3, VCM, PPL, Butane, Propane, Ethylen (-104)
– Present fleet about 1,050 ships
– 58 ships on order

– More players
• 10-55.000 cbm (Skaugen, Unigas, Greeks,)
• 60-80.000 cbm (Bergesen, Exmar, AP Møller, Japanese
– Main trades AG/East (Japan-China) and AG/West
– 1-2 years contracts, renewals
– T/C market 2-3 years, used to be 5-10 years
 Chemical
• The Chemical Tanker Market
– Odfjell (23%), Stolt (22%), Jo Tankers (9%), Others
(46%)
– 2,690 vessels/1,000-60.000 dwt/10-52 tanks/545 diff
products
• Chemical Logistics
– Established routes/services
– Offering multi modular transportation arrangements
– Aquiring assets (terminal) and systems
• Commodities
– Chemicals/Lubricants/Vegoil/CPP
 Car
• Total of about 622 pure car carriers (PCC) world wide
• 221 new vessels on order
• Average fleet age 15 years
• Average vehicle capacity is 4,222 cars (largest over 8000 cars)
• No asset play
• Firm market over the last years
• Strong performance of Japanese and Korean auto
manufactures
• Up to 9 million cars being moved overseas per year
• Contracts of 1-2 years (50-100.000 cars/year)
• 7-8 major players (HUAL and EUKOR Car Carriers) + Japanese
• RORO ships moving into the car market – upto 3000 cars
 Reefer
• 1235 reefer ships world wide (small & big)
• Limited newbuilding – average age 24 years
• Max age often 25 years, vessels being scrapped – soon
balance?
• Few operators (Cool Lauritzen, Sea Trade, Star Reefers)
• Few charterers (Chiquita, Dole, Del Monte, Noba)
• Southern Hemisphere to US and Continent
• Poor market last years - Strong competition from reefer
containers
• Seasonal trade an advantage for dedicated reefers over
containerships
 Container Ships/Cargoes
– TEU/FEU = 20/40 Equivalent Units (8ft x 8ft or 8,5ft x 20 or 40ft)
– ISO = Internal Standardisation Organisation
– Carrying Capacity
• Feeder - 100 - 400 TEU
• 1st generation - 400 - 1000 TEU
• 2nd generation - 1000 - 1600 TEU
• 3rd generation - 1600 - 3500 TEU
• 4th generation - 3500 - 6000 TEU
• 5th generation ->6000 teu – ships up to 110.000 dwt
• Post-panamax > 8000 TEU
– Type of Containers
• General cargo
• Tank (liquid, often dangerous cargoes)
• Reefer (cooled or frozen cargoes)
– 4,208 fully cellular ships, 60% of excisting capacity is on order
 Parcel Services
• Established routes/services
• Commitment to serve an industry
• Specialized tonnage – holds/open hatch/cranes
• Long term freight contracts – 1-3 years
• Owned or long term agreements with terminals
– Have port captains and technical staff attending in
port in order to secure effective handling
• Integrated transportation systems
– From mill to receiver
 Liner Services/General Cargo
Ships
• General Cargo Ships (upto 30.000 dwt)
• Established routes (”Lines”) calling same ports
• Have their own agents in the different
ports/countries booking up cargoes
• Main marketing/sales office at the headquarter
• Moving general, bagged, palletized, bulk cargoes
• RO-RO Vessels
– Cars and lorries
– Trains
– Containers
 The Liquid Markets
– CRUDE OIL TANKERS (Jan 2004)

– ULCC Ultra Large Crude Carrier 320.000+ 12

– VLCC Very Large Crude Carrier 200/320.000 508

– SuezmaxMax loaded through Suez 120/200.000 361

– Aframax Average Freight Rate Assessment

80/120.000 738
 The Dry Markets
– DRY BULK CARRIERS (Sept 2007)

– Handysize 10/40.000 2796

– Handymax 40/60.000 1558
– Panamax 60/80.000 1307
– Large Bulk Carriers 80/120.000 158
– Capesize 120/200.000 646
– Very Large Bulk Carriers 200.000+ 92
Iron Ore Seaborne Trade 789 mill
tons
– THE LARGEST IRON ORE EXPORTERS
• Australia/New Z
• S. America (Atlantic coast)
• India
• Africa
• Sweden

– THE LARGEST IRON ORE IMPORTERS (mill mt)

• China 385
• Japan 140
• Europe 127
• USA 5
 Coal Seaborne Trade 761 mill mt
– THE LARGEST COAL EXPORTERS
• Australia/New Z
• China
• Indonesia
• South Africa

– THE LARGEST COAL IMPORTERS (Mill Tons)

• Japan 139
• Korea + Taiwan 100
• Europe 191
• USA 30
Grain Seaborne Trade 220 mill
tons
– THE LARGETS GRAIN EXPORTERS (Mill tons)
• USA 89
• Argentina 24
• Australia 24
• Canada 19

– THE LARGEST GRAIN IMPORTERS

• Other Far East
• Americas
• Africa
• Japan
Minor Bulk – Seaborne Trade
(2007)
– Bauxite/Alumina 82 Mill mt
– Phosphates 84
– Cement 142
– Sugar 46
– Soyabeans 71
– Steel products 270
– Forest products 175
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