Ocean Transportation Part One.

1
Ocean TransportationPart One.

• Marketing Logistics

2
Ocean Transportation
3
Ocean Transportation
4
Ocean Transportation
Somewhat like LTL motor carriers
5
Ocean Transportation
Somewhat like truckload motor carriers.
6
Ocean Transportation

• Liners

7
Ocean Transportation

• Liners
• Set schedules.

8
Port Southbound from Florida Southbound from Florida Southbound from Florida Northbound to Florida Northbound to Florida Northbound to Florida
Port Departure Arrival Days Departure Arrival Days
ANGUILLA Friday Wednesday 5 Wednesday Monday 5
ANTIGUA Wednesday Monday 5 Monday Monday 7
BARBADOS Thursday Tuesday 5 Tuesday Tuesday 7
CAYMAN ISLANDS Tuesday Thursday 2 Thursday Monday 4
9
Ocean Transportation

• Liners
• Set schedules.

10
Ocean Transportation

• Liners
• Set schedules.
• Published tariffs.

11
Ocean Transportation

• Liners
• Set schedules.
• Published tariffs.
• Container or break-bulk.

12
(No Transcript)
13
http//www.msc.navy.mil/inventory/ships.asp?shipa
mericanterntypeContainerShip
14
From http//www.scheepvaarthoek.nl/
15
Ocean Transportation

• Liners
• Set schedules.
• Published tariffs.
• Container or break-bulk.
• Lighter-aboard-ship.

16
Russian nuclear-powered lighter-aboard-ship
http//www.mdf.ru/english/exhibitions/moscow/north
ernsearoute70/
17
Ocean Transportation

• Liners
• Set schedules.
• Published tariffs.
• Container or break-bulk.
• Lighter-aboard-ship.
• Roll-on/Roll-off ship (RORO)

18
http//www.ship-world.de/photo-archive/roro.htm
19
http//home.t-online.de/home/shipflag.de/6.htm
http//home.t-online.de/home/shipflag.de/137.htm
20
Non-Vessel-Operating Common Carrier (NVOCC)
21
Non-Vessel-Operating Common Carrier (NVOCC)

• Consolidator.

22
Non-Vessel-Operating Common Carrier (NVOCC)

• Consolidator.

Containership
B
C
A
23
Non-Vessel-Operating Common Carrier (NVOCC)

• Consolidator.

Containership
B
C
A
24
Non-Vessel-Operating Common Carrier (NVOCC)

• Consolidator.

Containership
C
A
B
25
Non-Vessel-Operating Common Carrier (NVOCC)

• Consolidator.

Containership
C
A
B
26
Non-Vessel-Operating Common Carrier (NVOCC)

• Consolidator.

C
A
B
Containership
27
Non-Vessel-Operating Common Carrier (NVOCC)

• Consolidator.
• Handles all details of exporters
• shipping needs.
• Assumes all obligations of
• common carrier.

Containership
A
B
C

• Often serve freight forwarders (who are
• shippers agents, not carriers).

28

• Go to Part Two.

29
Ocean Transportation Part Two

• Marketing Logistics

30
Ships Brokers

• Liason between shippers and tramp ships.

31
Ship Agents

• Liason between shippers and tramp ships.
• Act for ship operator to execute
• Ship arrival.
• Clearance.
• Loading, unloading.
• Fee payments in port.
• Used when amount of business in port does not
  justify ship owner having their own people there.

32
Shipping Conferences

• Voluntary cartel of ship operators who agree on
  rates.
• Exempt from antitrust concerns.
• Previously carried quality image.

33
International Air

• Space and weight capacities on aircraft are at a
  premium.
• Products less than 10.4 pounds per cubic foot are
  assumed, for purposes of weight calculation, to
  be 10.4 pounds.
• Products more than 10.4 pounds per cubic foot are
  rated at actual weight.

34
International Air

• General cargo rate.
• Class rate for cargo grouped into classes.
• Commodity rate.
• Container rate.

35
Container Traffic

• 26 of world container movements in 2003 were
  intra-Asia.
• China is the fastest-growing market.
• 25 of the container ship fleet is post-panamax.

TDC Trade.com http//www.tdctrade.com/shippers/vol
26_4/vol26_4_seafreight05.htm
Lloyds Register http//www.lr.org/market_sector/m
arine/ulcs.htm
36
Liner Rates

• Liner costs are 80-90 fixed.
• Fixed costs of owning/operating large vessels.
• High management overhead for required sales
  efforts.
• Ship operating costs 60-70 of costs are for
  fuel.
• Ship scrapping.
• 95 of ship can be recycled especially steel.

Coyle, Bardi, Novack (2000) Transportation
http//www.wipro.com/insights/marinebunkering.htm
BIMCO http//www.bimco.dk/Corporate20Area/Seascap
es/Sea20View20/The20business20of 20ship20rec
ycling.aspx
37
Liner Rates

• Ships tend to be built for specific routes.
• Size.
• Panamax.
• Post-panamax.
• Dimensions.
• Ports.
• Cargoes.
• Rates tend to be based upon costs per cubic foot
  of space.
• Floor price must cover fixed costs.
• Prices are then based upon commodity values.
• The higher the landed cost, the higher the
  transportation charge that can be charged.
• Elasticities are factored in.

Coyle, Bardi, Novack (2000) Transportation
38
Tramp Ship Cost Factors

• Tramp ships must be flexible to carry varied
  cargoes.
• Tradeoff more flexibility, less economy.

Coyle, Bardi, Novack (2000) Transportation
39
Tramp Ship Rate-Making

• High fixed costs.
• Key is to minimize nonrevenue time and mileage.
• Three types of tramp ship charters.
• Voyage charter specific trip(s).
• Time charter ship, crew used for a specific
  time.
• Bareboat vessel is rented for a long period of
  time and charterer provides crew.

Coyle, Bardi, Novack (2000) Transportation
40
Ship Size and Economies of Scale

• Ship size previously had been limited by
• Abilities of ship builders.
• Materials from which to build ships.
• Ability of worlds ports to handle.
• By 1970s ports were basically the only
  limitation.

http//www.bimco.dk/Corporate20Area/Seascapes/Mar
itime20Matters/Scale20economies20and20giant20
ships.aspx
41
Ship Size and Economies of Scale
http//www.maersk.com/historyTemplate.asp?nav1su
bnav12id45decadecount31
42
Ship Size and Economies of Scale

• Ship size previously had been limited by
• Abilities of ship builders.
• Materials from which to build ships.
• Ability of worlds ports to handle.
• By 1970s ports were basically the only
  limitation.
• Economies of scale.
• Quadruple ship size, only double its building and
  operating costs.

http//www.bimco.dk/Corporate20Area/Seascapes/Mar
itime20Matters/Scale20economies20and20giant20
ships.aspx
43

• End of Program