MARITIME TRANSPORTATION MANAGEMENT

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MARITIME TRANSPORTATION MANAGEMENT
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OVERVIEW

• There are over 140,000 ship and 170,000 ship
  owner and manager entries in maritime
  transportation industry.
• Ships are the least regulated mode of
  transportation.
• Ship represents a large capital investment that
  translates into a large cost per day.
• Port time is expensive and presents diseconomies
  of scale (port operations, the optimal size of
  ship).
• Generally, the longer a trade route is, the
  larger the share of sea-days in a voyage, and the
  larger the optimal ship size will be.

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OVERVIEW

• Factors effect the optimal ship size
• the utilization of ship capacity at sea (the
  trade balance),
• loading and unloading rates at the ports,
• the various costs associated with the ship.
• A ship is a long-term investment. The useful life
  of a ship spans 2030 years.
• During the life of a ship a lot of market
  volatility may be encountered (eg fluctation in
  freight rates
• In the short run the owner may
• reduce the daily variable operating cost by slow
  steaming (reduction in fuel consumption)
• the owner may lay up the ship till the market
  improves.

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OVERVIEW

• Lay up a ship significantly reduces its daily
  variable operating cost.
• When the market is depressed,owners scrap older
  ships.
• The value of a scrapped ship is determined by the
  weight of its steel (the lightweight of the
  ship)
• there is high supply of ships for scrap
• the price paid per ton of scrap drops.

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SHIP MANAGEMENT

• Ship management concerns all activities required
  to operate the ships effectively, except
  providing equity finance.
• The Baltic and International Maritime Council
  (BIMCO) SHIPMAN contract is often used between
  ship owner and manager.
• The contract defines the ship management
  services
• Crewing management
• Technical management
• Insurance arrangements for hull and machinery,
  and protection and indemnity (PI) insurance.
• Commercial management
• Other services

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SHIP MANAGEMENT

• The operational expenses are used to keep the
  ship in operation and vary per ship.
• Manning is the largest component of operational
  expenses OPEX. Expenses for ship finance and
  voyage operations are not OPEX.
• The ship manager is paid for its services with
  the annual management fee (roughly 5 of annual
  operational expenses).
• The ship owner is obliged to indemnify the ship
  manager against any third-party claims.

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SHIPPING INDUSTRY

• There are different classifications in the
  industry
• regularity of service
• cargo
• ship
• charter type

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SHIPPING INDUSTRY

• The type of merchant vessel employed on a trade
  route is
• determined basically by the traffic carried.
• There were 3 main divisions
• Liner
• Tramps
• Specialized vessels (tankers)
• A tramp may be put on a liner berth to compete
  for liner cargoes. Conversely liners may at times
  carry tramp cargoes.

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MARITIME TRANSPORTATION INDUSTRY DIVISION AS PER
TRAFFIC CARRIED
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INDUSTRY DIVISION ACCORDING TO SHIP TYPES

• Reason for the division all ships have specific
  routes and all routes has specific trade and
  economic issues.
• Ships mainly divided into 3 groups as
• Dry cargo ships (Bulk Ships,Containers,RO/RO etc)
• Tankers
• Others
• Dry bulk ships and tankers are operating in tramp
  trade.
• Container ships, MPV,Ro/Ro,Reefer operates in
  liner trade.

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History of Liners

• Scheduled trading began with the advent of steam
  power in 1820s.
• When ships became independent from the wind and
  were much vulnerable to adverse weather,
  timetabling of services began to be possible as
  steam power became more reliable and vessels
  larger
• In 1860s regular scheduled services were a
  feature of many main trade routes.
• Liner trade ships operating on fixed routes with
  a fixed schedule.
• Raw materials,manufactured goods mainly carried
  by container ships which offer
• very reliable,
• tightly scheduled and frequent services
• with a high level of cargo safety.

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LINERS

• Operate on fixed routes and fixed sailing
  schedules,serving a group of ports.
• Involves an adequately sized fleet and a fairly
  large shore establishment.
• Compose ¼ of seaborne trade.
• Generally, cargoes loaded in containers.
• Enables unitization and carry heterogenous
  products
• General Cargoes mainly consumption goods
  clothes, TVs,computers.

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Liners

• After 90s container trade developed rapidly.
• Decrease after global crisis in 2008.
• Vessels are not loaded with one shippers cargo
• Even vessels are not full, voyage is completed as
  per schedule.
• Supplied vessel capacity is important.
• Joint voyage planning, sharing vessel,common use
  of port equipments to keep in accordance with
  the voyage determined and rigth planning of
  capacity.

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SHIP TYPES IN LINER TRADE AND THEIR CAPACITIES
(2008)
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TRAMP

• Bulk unscheduled and irregular shipments
• Terms Common trader, general trader, free
  maritime transportation, unscheduled trader
• Ready to carry all types of dry bulk cargo from
  any origin port to destination port at any time
  and to provide the legacy and safety of the
  voyage.
• Cargo based.
• Low value cargoes coal,grain,ores, timber
  carried in complete shiploads.

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TRAMP

• Many of the cargoes are seasonal.
• Homogenous characteristic, handled and carried in
  bulk forms.
• ShipsMid sized, unequipped and unassigned for
  regular trade with two to six holds,sub-standard.
  
• Often family owned companies tend to merge.
• Engaged under a document called a charter party
  on a time or voyage basis.

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History of Tramps

• In the ancient times, Romans import grain from
  North Africa in bulk and threfore they built a
  special vessel fleet.
• Since 19th century the world trade volume
  increases parallel to this bulk cargo
  transportation increased in order to reach
  economies of scale.
• The trade almost doubled after 90s till today.
• Main reason economic growth of China, India and
  South East Asia at the end of 20th century.
• Today 80 of seaborne dry cargo trade is bulk.
• Mostly bulk ship carries only one commodity at a
  time and called bulk carrier.
• They vary in size a few hundred tonnes cargo
  carrying up to 300.000 tonnes

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General Factors Effect Dry Bulk Transportation
Demand

• International trade volume
• International trade structure
• Worldwide geographical distribution of raw
  materials,agricultural and industrial products,
  finished and semi-finished goods production and
  consumption places.
• Essentials that form the market are especially
  market of the cargo, transportation routes and
  vessels used in maritime transportation.
• Its important to understand the characterisrics
  of the cargo, its own market and specific routes
  of the transportation.

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FIGURES

• Dry bulk cargo compose 57 in tons, 47 in
  ton-miles basis of tramp trade volume.
• 33 of total maritime transportation in both tons
  and ton-miles basis.
• Only dry bulk vessels compose 34 of total world
  fleet.

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SPECIALIZED VESSELS

• Cargo ships designed for carrying a particular
  commodity as a result of demand.
• Ore carriers, sugar carriers and the tankers can
  be the samples.
• The worlds tanker fleet is divided between tramp
  operators (under a charter party) and those owned
  by oil companies eg BP VLGC).
• The larger proportion is owned and operated by
  oil companies and employed on regular routes
  operation in this respect similiar with liner
  operator.

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SPECIALIZED VESSELS

• Most independently owned tankers are on long-term
  charter to the oil companies.
• There is a worldwide network of tanker routes
• Crude oil is transported from the oilfields to
  refineries
• Petroleum and fuel oil from refineries to
  distribution centers (DCs) and bunkering ports

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TANKERS

• Cargo ships designed to carry crude oil,
  petroleum products,natural gas and chemical
  substances, liquefied natural gas (LNG),
  liquefied petroleum gas (LPG), vegoils,wines etc
• As a Tramp form, tankers have necessary
  technological infrastructure to carry such goods.
• Tankers cover 1/3 of world seaborne trade in tons
  carried.
• Oil crises,wars,political issues in world arena
  effects this industry more than the other
  maritime transportation industries.
• Therefore, compared to others tanker trade is
  fluctuating compared to others.

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TANKERS

• Countries that export and import are distinct
• Importers China, Japan and other Asian
  countries,European countries, US
• ExportersSaudi Arabia and other Middle East
  countries, Iran, Iraq, United Arab Emirates and
  Kuwait Latin America, North Sea countries like
  England and Norway.
• Routes are certain and long.
• Has a freight system WORLDSCALE.

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TANKERS

• The long distances between production and
  consumption areas effects the demand on
  transportation of the crude oil.
• Middle East countries with the 60 petroleum
  reserves are far from the consumption areas.
• From Cape of Good Hope to Europe 12.000 miles
  to Japan 6.000 miles
• Long routes, petroleum (as an important input)
  demand increase also increases the tanker trade
  in ton-miles.

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FIGURES

• Tankers compose 43 in tons, 53 in ton-miles
  basis of tramp trade.
• 38 of total maritime transportation in ton-miles
  basis.
• Considering dry bulk as 33 of total maritime
  transportation in ton miles basis tanker has the
  highest portion.
• Tanker fleet accounts for 36 of world fleet.

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LINER AND TRAMP COMPARISON
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DRY BULK SHIPS AND CAPACITIES
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DRY BULK SHIPS AND THEIR CARGOES
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• Vessels have their names according to their
  characteristics.
• Panamax the largest vessel that may pass Panama
  Canal safely.
• Capesize has the highest capacity and can not
  pass Suez Canal.
• Therefore trade route determined round Cape of
  Good Hope.

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TANKER CLASSIFICATION
AFRAMAX Average Freight Rate Assessment
Tanker freight tariff system.
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TANKERS AND THEIR CARGOES
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Types of Tankers