1 Maritime Transport

MARITIME
TRANSPORT
MODULE 2
MARITIME TRANSPORT
Instructor: Endalakchew Bekele
Maritime Transport, Module 2. December 6-16,2017 Addis Ababa , Ethiopia

MARITIME TRANSPORT
MODULE 2
Module Contents
Chapter 1 Sea Port
• Major Sea Ports in the world
• Port Accessibility
• Feeder Services between Ports
• Port facility
Chapter 2 Types of Vessels Conventional ships Container ships Ro-Ro carriers

Bulk Carriers (dry bulk cargo vessels) Tankers (liquid bulk cargo vessels)
Heavy Lift Ships (equipped with cranes and derricks) Developments and
Specializations in Shipping
Chapter 3 International Organizations and Regulations in Sea

Transport IMO IMDG BIMCO
Module title and date

MARITIME TRANSPORT
MODULE 2
Chapter 4 Shipping Services

Liner Shipping
Charter/Tramp Shipping
Chapter 5 Documents in Shipping
Bill of Lading Charter Party etc
Chapter 6 Pricing of Ocean Freight

Liner Shipping
Charter Shipping

MARITIME TRANSPORT
MODULE 2
What is Maritime?
-connected with the sea
-synonyms: naval · marine · nautical · seafaring · seagoing · sea ·
oceangoing
-living or found in or near the sea
-bordering on the sea.
Maritime Industry
03-26What is the Maritime Industry-3.4K views · 10 months agoYouTube · Northeast Maritime Institute.htm

MARITIME TRANSPORT
MODULE 2
Maritime Transport
• is the transport of people (passengers) or goods (cargo) by water.
• Broad concept encompasssing vast business areas
• Multi deciplinary
• Highly ramified business sector
• Highly specialized
• In this Module we focus only on standard cargo transport sectors.

MARITIME TRANSPORT
MODULE 2
MODULE OBJECTIVE
• The student should be in a position to give information on the basic
regulations of Sea Shipments, services offered and most current types
of ships in use.
• He / She should be familiar with the documents used for sea carriage.
• He/she should be able to explain the pricing of Ocean Freight.

What is Shipping?
18/01/2010 Feseha Andualem 8

Chapter-1
SEA PORT
Objective Of the Chapter:-

• The student should be aware of the major sea ports in the world.
• The student should understand in general what refers to the transport
possibilities to and from sea ports, and the main types of loading and
unloading, and other facilities at the ports.
• The student should also understand what feeder service means.
Maritime Transport, Module 2. December 6-16,2017 Addis Ababa , Ethiopia

CONTINUED
Before discussing ports we must define three terms:-

• Harbour
• PORT
• Port authority &
• Terminal

CONTINUED
• A Port is a geographical area where ships are brought alongside land

to load and discharge cargo-usually a sheltered deep water area such
as a bay or river mouth.
• The Port authority is the organization responsible for providing the
various maritime services required to bring ships alongside land
• Terminal is a section of the port consisting of one or more berths
devoted to a particular type of cargo handling.

CONTINUED
WHAT IS PORT?
Definition of Ports:-
• Ports are places where ships can anchor, berth, load & Discharge
cargo
• The Interface between sea & Land Transport

CONTINUED
WHAT IS PORT?
Definition:-
• A port is a sheltered bay or place where ships can anchor or moor safely. When
it comes to commercial ports, the description alters as follows:
• “an area where land and water joins, that have the facilities and tools to
accommodate the loading, discharging and storing of cargo intended for sea-
going vessels, as well as the receiving and dispatching of this cargo to and via
means of transport on land, and where other sea related activities will take
place.”

Port

Port

CONTINUED
Playing preview11-44The Role of PORTS in the GLOBAL ECONOMY - KJ Vids6.4K views · 3 months agoYouTube · KJ Vids.htm
PORTS FUNCTION
• Two basic Functions on each ship & Cargo Side
• However, even loading & Discharging have long been widely
recognized as the major role of ports, But the most fundamental
function of a port is to provide ships with a safe anchoring &
berthing place. In other words, ports are first of all built to
accommodate ships.

1-1. Major sea Ports in the World
• There are more than 2,000 ports around the world,

• from single berth locations handling a few hundred tons a year, to
multipurpose facilities handling more than 300 million tons a year.
• For developing countries, according to the World Bank statistics,
more than 80 percent of the foreign trade in tonnage is carried out by
sea.

Continued

CONTINUED
Worldwide, the port traffic is made up by:

• 45% of liquid bulks (mainly oil, petroleum products, and
chemicals),
• 23% of dry bulks (coal, iron ore, grain, and phosphate), and
• 32% of general cargo.

CONTINUED
Ports can be compared in many different ways –

• By volume or value of trade,
• Number of calling vessels,
• Revenues,
• Storage capacity,
• Productivity or efficiency, as examples.
• The most frequently used comparisons are the total cargo tonnage handled, and the
total TEUs handled in the port.
• Because of the generally high value of the containerized cargo and the large investments
involved in ports for container traffic, the measurement of container TEUs are often used.

CONTINUED
• A major sea port can be also known for its specialization in container
traffic, bulk cargo, or both.
• In general, the trade volumes generated from or to the region largely
decide the potentiality of the sea port in competing for the top
ranking, and the trade patterns i.e. the types of cargo traded
determines then whether the port shall be specialized in handling
containers, general cargo or bulk cargo.

RO/RO Terminal

General Cargo Terminal

Bulk Terminal

World Sea Trade Lanes

PORT RANKING IN TONES
• Worldwide, the top ranking ports in terms of cargo tonnage handled

are as follows:

Port Ranking by Total Cargo Tonnage
Table 4.1 Global top 20 ports by cargo throughput, 2016–2017
(Million tons and annual percentage change)
Rank Port Cargo throughput Percentage change
2017 2016 2017 2017–2016
1 Ningbo-Zhoushan 918 1 007 9,7
2 Shanghai 700 706 0,8
3 Singapore 593 626 5,5
4 Suzhou 574 608 5,9
5 Guangzhou 522 566 8,5
6 Tangshan 516 565 9,6
7 Qingdao 501 508 1,4
8 Port Hedland 485 505 4,3
9 Tianjin 549 503 -8,4
10 Rotterdam 461 467 1,3
11 Dalian 429 451 5,2
12 Busan 362 401 10,5
13 Yingkou 347 363 4,4
14 Rizhao 351 360 2,7
15 South Louisiana 295 308 4,4
16 Gwangyang 283 292 3,1
17 Yantai 265 286 7,6
18 Hong Kong SAR 257 282 9,7
19 Zhanjiang 255 282 10,3
20 Huanghua 245 270 10,0
Total 8 907 9 354 5,0

PORT RANKING IN TEU
• Worldwide, the top ranking ports in terms of Container traffic
handling are as follows:
Container Traffic 2017

Review of Maritime Transport UNCTAD

Ranking of ports world wide
By Container Traffic (Million TEUs)
Table 4.4 Leading 20 global container ports, 2017
(Thousand 20-foot equivalent units, percentage annual change and rank)
Shanghai China 40 230 37 133 8,3 1
Singapore Singapore 33 670 30 904 9,0 2
Shenzhen China 25 210 23 979 5,1 3
Ningbo- China 24 610 21 560 14,1 4
Zhoushan
Busan Republic of 21 400 19 850 7,8 5
Korea
Hong Kong Hong Kong SAR 20 760 19 813 4,8 6
Guangzhou China 20 370 18 858 8,0 7
(Nansha)
Qingdao China 18 260 18 010 1,4 8
Dubai United Arab 15 440 14 772 4,5 9
Emirates
Tianjin China 15 210 14 490 5,0 10
Rotterdam Netherlands 13 600 12 385 9,8 11
Port Klang Malaysia 12 060 13 170 -8,4 12
Antwerp Belgium 10 450 10 037 4,1 13
Xiamen China 10 380 9 614 8,0 14
Kaohsiung Taiwan Province 10 240 10 465 -2,2 15
of China
Dalian China 9 710 9 614 1,0 16
Los Angeles United States 9 340 8 857 5,5 17
Hamburg Germany 9 600 8 910 7,7 18
Tanjung Pelepas Malaysia 8 330 8 281 0,6 19
Laem Chabang Thailand 7 760 7 227 7,4 20
Total 336 630 317 929 5,9

CONTINUED
• Since 2011, 16 of the world’s top 20 container terminals are Asian-based,

of which 9 ports located in China.
• In 2015, approximately 41% of the world sea borne traffic was attributed
to the Asian ports, whereby the top 9 Chinese ports represented 26.1%.
Europe had a share of 17% , Americas 22%,Oceania 12% and Africa 8%.
• The fast economic development in Asia and particularly in China resulted
in the dramatic increase of cargo throughputs in the Chinese ports as well
as the ports in the regions that share trade links with China. All these
developments have led to the adjustments in the world port ranking in
the past years. (Source:UNCTAD)

SEA PORTS IN THE REGION
North America:-
West coast: mainly pacific cargo from/to Asia Pacific.
• Los Angeles /Long Beach, San Francisco (U.S.): container
• Seattle, Oakland (U.S.)
• Vancouver (Canada)

CONTINUED
East coast: cargo from Europe, Mediterranean or Africa via the Atlantic,
and cargo from South America
• New York, Boston, Charleston (U.S.)
• Montreal (Canada)
South:
• Houston (U.S.): container
• Louisiana (U.S.): Bulk cargo

CONTINUED
South America
• Tubarao, Sepetiba (Brazil): dry bulk cargo
Europe
• Rotterdam (the Netherlands): container and bulk cargo
• Antwerp (Belgium): container and bulk cargo
• Hamburg, Bremen (Germany)
• Le Havre (France)
• St. Petersburg (Russia): dry bulk cargo
CONTINUED
Mediterranean Area
• Gioia Tauro, Genoa (Italy): container
• Algeciras, Valencia, Barcelona (Spain): container
Red Sea and Gulf Area (Near East)
• Dubai (UAE): Bulk cargo, container
• Khor Fakkan (UAE): container
• Salah (Oman)
• Jeddah (Saudi Arabia)
CONTINUED
Asia Pacific
• Shanghai (China): Container, bulk cargo
• Singapore (Singapore): Container, bulk cargo
• Hong Kong (China): Container, bulk cargo
• Shenzhen, Qingdao, Dalian, Ningbo, Tianjin, Xiamen, Guangzhou
(China)
• Nagoya (Japan): Container, bulk cargo
• Busan (Korea), Kaohsiung (Taiwan)
• Dampier, Headland (Australia): dry bulk cargo

CONTINUED
Rotterdam – A Major Sea Port in Europe
• Rotterdam is one of the most important ports in the world. This is
mainly due to its accessibility.
• There are no locks in the fairway and vessels with the deepest
draught can easily and quickly reach Rotterdam.
• Rotterdam offers an excellent connection to the hinterland. This
means that various destinations in Europe can be reached swiftly by
train, inland vessel, truck or coastal shipping
• There are many service companies available in Rotterdam, such as
banks, insurance companies and trading houses.

CONTINUED
• In 2015, more than 444 million tonnes of goods were transhipped
through Rotterdam.
• In terms of total weight, Rotterdam was the largest port in the world
before it was surpassed by Asian ports since 2003.
• Rotterdam is ranked 7th in terms of total cargo tonnage and 11th in
container TEUs.

Corridors of Ethiopia
Primary:
• Djibouti
• Assab
• Berbera
Secondary:
• Massawa & Mogadishu
Teritiary :
• Port Sudan & Mombassa

CONTINUED
• Being a land locked country; currently Ethiopia is using Djibouti as

home port for its import and export cargo movements.
• Over 90% of cargo handled in Djibouti is destined to Ethiopia.

Total IMP/EX volumes handled in Djibouti
From 2013-2016(TEU)
Year Import Export

2013 198118 40109
2014 215389 43423
2015 259375 37612
2016 311,358 52502

1-2. PORT ACCESSIBILITY
Port Accessibility
• Transport possibilities to and from the sea ports are largely subject to
two conditions:
• Limits of water depth
• Hinterland connections.
The conditions of water depth and hinterland connections further
determine the port’s possibility to function competitively as a node in
the intermodal transport.

CONTINUED
Water Depth:-
• Water depth is of utmost importance to a sea port, considering in
particular the possibility to accommodate the ever enlarging vessels.
• All the major sea ports in the world, without exception, either enjoy
natural deep water, or undertake the deepening of channels on a
regular basis by dredging or by constructing the locks.
• It is also obvious among the sea ports that water depth is becoming
the decisive element in the port competition.

CONTINUED
For example,
• the port of Rotterdam is a natural deep sea port. The 15
meters deep water allows it to accommodate the largest
container vessels to date.
• The port of Shanghai, limited by the water depth in the city
area, has invested billions of dollars in constructing a deep
sea port that is 33km away from the mainland, which is
connected only by a cross-ocean bridge.
CONTINUED
Hinterland connections
• Hinterland connection is another important element that
determines the competitiveness of a sea port.
• Hinterland connections mean the possibilities of sea
cargoes arriving from the sea-going vessels being further
transported to destinations by another mode of
transport, i.e. road, rail or inland waterway, or vice versa.

CONTINUED
• When speed and reliability is a major concern in the

competition among sea ports, and between sea
transport and other modes of transport, the
competitiveness of the port is often, and to a large
degree, subject to the availability and efficiency of the
hinterland connections.

CONTINUED
Europeans Examples
• The Hinterland connection Network in the European
ports by Road , Rail, Barge & Sea (feeders)

Hinterland connections
(Source: Port of Rotterdam)

CONTINUED
• In Europe, the European Union takes initiatives to improve the hinterland

connections of the sea ports with the Eastern European and Asian regions.
• Many projects towards this end have been carried out, concentrating on
institutional and transport infrastructure development.
• The main corridors that the European Union focuses on are such as the so
called TEN Corridors and TRACECA (Transport Corridor Europe Caucasus Asia).
• More information is available on http://www.traceca-org.org.

TRACECA Countries

European TEN Corridors

Continued
Djibouti Port and hinterland connectivity
• The Hinterland traffic is most dominated by trucks which cause most of the congestion in
and around port areas and also generates external costs.
• Even with strategic plans for a modal shift to hinterland traffic towards rail and water,
most of ports in the continent aren't connected to a well-developed system of inland
waterways or railway lines .
• The continent handles less than 1% of world container traffic.
• World Bank estimated in 2015 that African ports have an infrastructure deficit of more
than 60 billion dollars.
• There are landlocked countries like Congo, Ethiopia with huge potential markets .
• Absence or disruptions to intermodal connections creates serious impact in both the
serving sea ports and the economies of those in the hinterland.(Source:
http://www.port/)

Continued
Considerations in choosing the mode of transport for hinterland
connections in Europe
• When choosing a suitable transport modality, the relation between
transport costs and transport speed especially, should receive serious
consideration.
• From a European point of view, the goal is to reduce the road
transport congestion, for transport to become less polluting and to
have low energy consumption.

Continued
A few examples of modern transport types therefore are:
• large scale transportation (carrying) of containers by rail or by inland water
(shuttles); combination of Rhine ships, suitable for container transport –
trucks - railways
• container transhipment via inland terminals, for combined transport
• Ro/Ro operations over inland waters to transport motor vehicles, agricultural
vehicles and heavy loads; also in combination with ferry operations over sea
• carrying of trailers and so-called “swap-bodies” (freight unit, not to be piled)
via railway and combined transport
• launching of coastal trade liners for door to door carrying over sea and inland
waters.

Continued
Railway transport gets a whole new meaning in its connection with
the hinterland. As a result,
• a large number of railway junctions have been and will be erected at
factory installations
• inland terminals for railway and water connections have been and will
be erected for the benefit of combined transport
• shuttle trains are being employed regularly between fixed traffic jam
stations; or alternatively, block trains carrying much cargo from A to B.

Continued
Feeder connections within Europe are based on century long

experiences in maritime shipping. Currently, the maintenance of the
shipping routes, traffic control along the shipping routes and the
accessibility of the ports, requires constant attention.
Inland water transport at present is applied not only for the transport
of bulk cargo but also for containers.

Continued
Other developments are:
• push navigation has contributed extensively to the carrying of large
amounts of raw material; push navigation units of 4 barges are
sufficient for approximately 10,000 tons loading capacity
• the carrying of containers over water is a specialised type of transport
that has a high regularity and frequency
• special Rhine ships (Ro/Ro) are employed to carry motor vehicles
• Tanker shipping is concerned with the transport of liquid raw
materials in large quantities and has experienced a certain amount of
specialisation as well.

Continued
Port in Intermodal Transport
• Sea ports are an important node in intermodal transport that involves
sea voyage. With good hinterland connections the modal shift at port,
for the same shipment, becomes possible.
Intermodal Transport
• People refer to intermodal transport when several transport modes
are required. Transport is performed between the place of origin and
the place of destination, via a few transhipment points. At these
points, transport modalities are changed.

CONTINUED

Trucks & Trailers transported by rail

Continued
Multimodal Transport
• Multimodal transport is the type of transport where the carrier, who
organises the transport, accepts responsibility for the entire transport
operation, and issues the appropriate transport documents for this,
i.e. the Multimodal Transport Document.
• Unimodal transport: the transport of goods by one MODE of
TRANSPORT, by one or more carriers.

Continued
• If there is only one carrier, he issues his own transport document, e.g.
a bill of lading, an airway bill, a consignment note, etc.
• If there is more than one carrier, for example, carriage from one port
via another port to a third port with transhipment at the intermediate
port, one of the carriers may issue a "through bill of lading" covering
the entire transport.
• Depending on the back clauses of this through bill of lading the issuing
carrier may be responsible for the entire port-to-port transport, or
only for the part which takes place on board his own vessel.

Continued
Intermodal transport:
• The transport of goods by several MODES of TRANSPORT from one
point or port of origin via one or more interface points to a final port
or point where one of the carriers organizes the whole transport.

Continued
Depending on how the RESPONSIBILITY for the entire transport is

shared, different types of transport documents are issued:
• Segmented transport - If the carrier that organizes the transport takes
responsibility only for the portion he performs himself, he may issue
an Intermodal or Combined transport bill of lading.
• Combined/Multimodal transport - If the carrier organizing the
transport takes responsibility for the entire transport, he issues a
Combined or Multimodal Document.

1.3. FEEDER SERVICES BETWEEN PORTS
• As export and import traffic increases worldwide, the ships become

larger and larger. The daily cost associated with the vessel is also
increasing. In response to the increasing daily cost, there is the
tendency to reduce the waiting time that a large vessel, e.g. the
80,000 metric tons container vessels, spends in a port.
• The increasing size of the vessel also limits its possibilities to call at
sea ports of all sizes, but very few have sufficient water depth and
proper cargo handling facilities.

Continued
• In parallel with the trend of larger vessels with a limited number of calling
ports, smaller vessels operate even more frequently between the large sea
ports where the larger vessel call, and smaller ports (inland ports or small
coastal ports) where the cargoes are generated from or destined to.
Feeder services feed the deep sea vessel.
• In feeder services, ship size scarcely has any relevance. Large ships are
travelling, for example, to the Mediterranean ports more frequently in Europe,
even if it’s only for short trips.
• In Europe, shortsea transport shares a significant part of the transport market.
Shortsea operators perform almost 40% of all transport duties in Europe.

Continued
In terms of the types of vessels used for feedering services, there are a
variety of choices:
• Container ships
• RO/RO – ships
• Conventional ships
• Bulk ships

Continued
In terms of the types of vessels used for feedering services, there are a
variety of choices:
• Container ships
• RO/RO – ships
• Conventional ships
• Bulk ships

Continued
• many shortsea operators have specialised in door-to-door transport.

It usually happens in conjunction with road haulage. It is remarkable
how many shortsea vessels are able to penetrate deep into the
hinterland, mainly because of their low building up structure.
• The type of vessel that performs ocean-river shipping in Europe is
known as a coastal trade liner.


Continued
• A new carrier named Djibouti Shipping Lines (DSL) has launched a container shuttle
service in April 2017 connecting Djibouti to Berbera (Somaliland), according to
Alphaliner.
• The new service will act as a feeder for cargoes destined to or originating from
Berbera, which are transshipped to and from international long-haul services
calling at Djibouti.
• It will be operated with one chartered vessel of 1,000 TEU, whose name has not yet
been announced, Alphaliner said in its weekly report.

1-4. PORT FACILITY
Loading / Unloading facilities

• Loading and unloading is the major and main activity that a port
performs. In order to improve the port accessibility and enhance the
port efficiency, loading and unloading facilities are therefore, often a
major concern to the port, as well as the port users.

Continued
General Cargo
• General cargo was traditionally loaded and unloaded by cranes
mounted either on a ship or ashore.
• Transport to and in sheds are performed by forklift trucks and other
equipment for horizontal transport.

Conventional Handling of General Cargo

Continued
Containers
• A significant improvement in this field is the world wide
implementation of standardised containers, which introduced the
specialised equipment for the fast and efficient container handling in
ports. Examples are the rail mounted container cranes for loading
and unloading. The reach of these cranes has increased significantly
throughout the years in order to serve larger and larger container
vessels.

Containers

Continued
Bulk Cargo & Others

• In regard to dry and liquid bulk cargo, special equipment is often
needed in the loading / unloading, which can handle large volumes
with a minimum of labour.
• For dangerous goods special offshore berths have also been
implemented to increase safety.
• Offshore Jetty for Liquid bulk vessel

Bulk Cargo & Others

Continued
Horizontal transport facilities

• Horizontal transport facilities refer to those equipment and facilities
used for the transport and handling of cargo within the port, e.g. at
the container yard.
• The most often used equipment in container handling is:
• tug masters
• straddle carriers
• reach stackers.

TUG MASTER

Straddle carrier

Reach stacker

Yard gantry Crane

Continued
Other facilities in the port

• Apart from the loading/unloading facilities and those for horizontal
transport within the terminal, the port is also equipped with other
facilities in order to function properly. Such facilities include:
• For administration purposes, e.g. administration buildings, and
communication facilities, warehouses and container yards. In container
handling,
• there is also a control tower in the port where the coordination and
communication with regard to the container movement and storage in
the terminal is carried out.
Questions
• A. Ranking of sea ports in the world can be measured by:

• a. The total tonnage of cargo handled by the port
• b. The total TEUs of container traffic handled by the port
• c. The total volume of ships handled in the port
• d. All of the above
• B. The following are major world sea ports pairs except:

• a. Rotterdam, Antwerp
• b. Shanghai, Singapore
• c. Florence, Duisburg
• d. Los Angeles, Dubai

CONTINUED
A. True or False?
Port accessibility refers to the transport possibilities to and from the
sea ports. These days the port accessibility is largely subject to the
following conditions:
• Depth of the waterways in the port
• Hinterland connections
• Port accessibility determines the role a port can play in intermodal
transport

CONTINUED
A. Which of the descriptions below about feeder service is incorrect?
• a. Feeder service is the inland waterway transport
• b. Feeder service provides cargoes to the large sea vessels calling only
at large sea ports
• c. Feeder service helps to run the large sea vessels more economically
by reducing their time spent in a port
• d. Feeder service can be the sea voyage between two coastal ports, or
between a major sea port and an inland river port

CONTINUED
B. There are different types of vessels that operate feeder services.

Such vessels can be:
a. Container ships, and Conventional ships
b. RO/RO – ships
c. Bulk carriers
d. All of the above

CONTINUED
1. What kind of (un)loading equipment is this?

• Offshore Jetty for Liquid Bulk
• Conventional General Cargo Crane
• Gantry Crane
• Straddle Carrier

CHAPTER 2
TYPES OF VESSELS
Learning Objectives :
The student should be aware of the different types of vessels and
their respective applications in relation to the nature of the cargo.

CONTINUED
INTRODUCTION
The period after the Second World War showed
• a continuous increase in world trade and in sea trade.
• This increase in global commerce which lasts even to this day has
greatly influenced the development and types of ships.
• More and more ships have come since the beginning of global
commerce. Subsequently the ships became faster and larger and a lot
of small ships were taken out of service.

CONTINUED
. After the 1970’s, more and more universal ships were replaced by
specialized vessels that can carry only one type of cargo.
• In addition to the traditional general cargo vessel and bulk carriers,
new types of vessels were also developed such as oil and chemical
tankers, container ships, heavy-lift ships, Roll-on/Roll-off and so on.

CONTINUED
WHAT IS SHIP?
• A ship is a floating vessel used for transporting cargo across the
oceans & through rivers.
• Ships come in different sizes & arrangements to carry different types
of cargo.
• The Importance of Shipping & Ships can be appreciated from the fact
that ships transport more than 90% of world cargo.

Schematic layout of vessel types

World Fleet

2-1. CONVENTIONAL SHIPS
Objective :
• The student should be aware of the general features of conventional
vessels, and understand the types of goods that are usually carried
by conventional ships.

Continued
Conventional ships
• are used for transport of general cargo, or a combination of the
general cargo and cargoes of other types such as container or bulk
cargo.
• Three concepts are often being used interchangeably; “conventional
ships”, “general cargo vessels” and “multipurpose vessels”. Eg.
Vessels owned by Ethiopian Shipping and Logistics Services
Enterprise.

Continued
Conventional ships can be distinguished by:

• General cargo vessel: this vessel is employed in the carrying of
traditional general cargo and (partly) bulk cargo loads
• “Multi-purpose” vessel: one part of this vessel is employed to carry
general cargo, whilst another part of the loading capacity has been
prepared to carry containers.

Continued
General cargo vessel
• The general cargo vessel has one or more tweendecks, which allows the goods to
be stored in lots.
• In dividing the holds for storage of different cargoes, the following issues are
normally taken into account:
types of goods which might be loaded together or must be separate from each
other;
cargo destinations in order to ensure efficient discharging at the port of
destination;
equal distribution of the cargo on board, in order to achieve equilibrium (stability).

Continued

Continued

General Cargo Onboard a Conventional Cargo Vessel

Continued
Equipment
• General cargo vessels often have air-conditioned holds at their
disposal for the carrying of perishable goods, sometimes including
tanks that have been provided for the carrying of small portions of
liquid cargo.
• In order to function independently from the loading and discharging
possibilities at the quays, general cargo vessels are often with their
own loading and discharging gear at every hold.

Continued
• In modern vessels this equipment consists of on-board cranes. The

amount of cranes aboard a ship depends on the shipping area and on
the type of cargo that the vessel has been put in. The same applies to
the cranes’ capacity.
• On board modern general cargo vessels, you will also find large hatch
covers that can be opened quickly, as well as cranes on deck and a
variety of cooling and freezing options to choose from.

Continued
Loading/Unloading
• Ship management is directly involved with the loading and
discharging of a general cargo vessel.
• The captain is responsible for the stowage of goods, as well as the
condition of the separate shipments. He also has to supervise the
workforce and materials, as appointed by the stevedore.

Continued
• The loading, discharging and stowage of general cargo (crates, boxes, cases, packages,
barrels and drums, etc.) requires a large amount of labour. For that reason, these
• actions are performed explicitly by general cargo stevedores.
• Characteristic of the stevedoring companies for general cargoes is the fact that they
need many operational people to load, discharge and stow a vessel. On the other
hand, the number of administrative people is generally small.

Continued
Multi-Purpose Vessel
• Multi-purpose vessels are mainly operating in shipping areas where the
employment of full container vessels is not yet economically feasible. It also
concerns the infrastructure of some countries of origin and destination. Some
countries may have limited capabilities in respect to the rapid off and on
transport of containers.

Multi-Purpose Vessel

2-2. CONTAINER SHIPS
Objective :
• The student should understand the differences between a container
vessel and other types of vessels, and understand the development
trends as well as constraints of container vessels.

Continued
• General cargo had always been carried in the conventional ships.

However, with the introduction of the container, more and more
general cargo is now being shipped in containers.
• The arrival of the containerisation has replaced the conventional
general cargo vessels by more and more specially equipped container
vessels.

Continued
• The carrying of cargo in containers has become a very special way to

transport goods.
• Goods can also be shipped in bulk in the appropriate containers
• Nowadays container vessels mainly sail in the liner trade.
• The cellular container ships have the same outward appearance as
the boxes that they carry.
• These vessels have been designed to be as rectangular as possible
with regard to both width and length, in order to carry as many
containers as possible, on deck as well as below deck.
Continued
Development of containers
• The sharp increase in costs in the industrialised parts of the world during the
sixties had a major effect on conventional scheduled voyages.
• The transhipment of general goods was/is time consuming and very labour
intensive. This not only contributed to increasing costs, but also resulted in
low returns on the capital invested in ships.
• Only sailing ships earn money, so the shorter the time in port of the ship,
the better it was for the investors. In an effort to reduce port time larger
cargo units were employed.

Continued
• The first development step towards larger cargo units was from loose
general goods to pallets and other forms of transporting goods in
units.
• The real revolutionary breakthrough arrived with the introduction of
the container.

Continued
• The arrival of the container saw the end of the nostalgia and romance
associated with the aroma of spices and fresh fruit.
• There are hardly any ships to be seen any more with multiple derricks
and dockworkers loading or offloading packages, wooden chests and
boxes carried on their shoulders.

Continued
• Nowadays there are rows of neatly stacked containers in tidy rows

waiting to be loaded. And
• ships are only for one or sometimes two days at the quay.
• Crew hardly has any time to go ashore.
• Everything is about time and time is money.

Continued
CONTAINERIZATION
• Containerization is ultimately a transport system of which the extent
and scope are the primary features determined by the trade volumes
between countries and/or parts of the world.
Playing preview06-11Containerization- The Most Influential Invention That You'…556K views · 3 years agoYouTube · Wendover Productions.htm

Containerization

Continued
Consequences of Containerization
• Mechanisation of cargo handling and technological advancement in
construction and building of ships during the late 1950’s led to
expanded scale. The spectacular growth in world trade activities
further contributed to this.
• “Industrialisation” of transport: this yielded major savings in
transhipment costs as well as personnel costs.

Continued
• For example: 1 container ship replaced approximately 5 conventional

ships.
• The standard unit which the container eventually became, offered
intermodal transport possibilities: Goods en route from the factory to
the consumer required less handling, and transferring goods from one
type of transport method to another was also simplified to a great
extent.

Continued
Generation Of Container Ships
• With the development of technology, container ships become larger
and larger. As a result, people are starting to refer to the generation of
container ships.
• The size of the container vessel is expressed according to the
intended amount of TEU’s (Twenty feet Equivalent Unit) to be carried.
• TEU is the standard unit of measurement for containers. One 40 ft
container is equal to 2 TEU’s.

Generation Of Container Ships
total TEU’s
1st generation Up to appr. 1100

2nd generation Up to appr. 1800
3rd generation Up to appr. 3000
4th generation Up to appr. 4800
Panamax Up to appr. 6000
Suezmax Up to appr. 7500

Container Ships

Container Ship- 17 Containers Wide

Continued
• By the end of 2004, there were vessels carrying approximately 8000
TEUs and more.
• Current plans are underway to design vessels capable of carrying over
10,000 TEUs. These vessels will carry containers both on and below
deck.
• It is expected that in the near future, vessels with over 22,000 TEUs
may be deployed for long haul shipping.
• Every ship hold will be closed by means of a hatch cover, on top of
which containers could also be positioned, thus creating more
shipping space.

Continued
Constraints
• There are other constraints however, that limit the shipping
companies from using the largest container vessel.
• Panama Canal for example, is still a physical limitation for
the biggest container ships.

Container Ship in Panama Channel

Continued
• The construction of cellular vessels with open holds and cell

guides that leads past the upper deck (9 levels), the
“Ultimate Container Carrier”, is not in great demand. There
are only a few of these vessels that are operational at
present.

An “Ultimate Container Carrier”

Continued
Loading and Unloading
• Container ships are loaded and discharged at container
terminals. These terminals are concentrated on the loading
and discharging of container ships.
• That loading and discharging of containers has become
largely automated requires large investments in respect of
materials like cranes and internal transport at the terminal.
The number of operational people directly involved with the
task of loading or discharging is however small.

Continued
• The number of operational people directly involved with the
task of loading or discharging is however small.
• Compared to the general cargo stevedore, the amount of
operational people at a container stevedoring company is
smaller while the amount of administrative people is larger.
• In order to conduct the loading or discharging process along
the right way, an even greater work force is needed, in
proportion to this undertaking.

HISTORY OF CONTAINERIZATION

Continued
History of Containerization
• The first form of containerisation originated in America in 1932.
In that year Thoburn C. Brown, son of a tinsmith, designed and
manufactured the first aluminium container that could be
placed on a semi-trailer.
• Brown did business with the American army during the Second
World War. The army used 8ft containers for transporting army
supplies to the front in Europe.
• The commercial use of containers remained confined to America
then.
Continued
• Keith Tantlinger invented the spreader during that time. It is

a special piece of equipment a crane can use to pick a
container up for loading or unloading it onto or for a ship.
• Before spreaders came into use, the containers were
suspended from cranes with chains and a lot of manpower
was required to set them down in place.

Continued
• After the Second World War Malcolm McLean started up the

“Pan Atlantic Steamship Company” carrier company which
would later evolve into the present day MaerskSealand.
• He was convinced that there would be large cost savings
involved if cargo handling could be limited to a minimum.
Using containers would be a good solution to this problem.

Continued
• He ordered containers that would fit on board the tankers

that provided service to his business between Port Newark
and Houston.
• Despite the difficulty he had convinced the American Coast
Guard that the containers posed no risk to the ships or other
cargo. This initiative turned out to be a streak of genius.

Continued
• From 1956 onwards, Malcolm McLean designed special

container ships, container terminals and twist lock
receptacles with which the containers were anchored.
• At that point Brown was still the leading container builder,
but he was unable to meet the McLean Industries’ demands.
• This opened up the playing field to other companies also
specialising in container building, such as Fruehauf in
Massachusetts for example.
Continued
• By 1966, Sealand had 23 ships that had been specially

modified for the purpose of transporting containers.
• During that same year, the first container ship, the SS
Fairland, called at the port of Rotterdam.

Continued

2-3. RO-RO CARRIERS
Objective :
• The student should be aware of the general features of Ro-Ro vessel,
and understand the types of goods that are usually carried by Ro-Ro
ships.

CONTINUED
• Ro-Ro vessels are specially equipped for the transport of rolling

materials on board, that in most cases can be driven on board by
itself.
• Correspondingly, special arrangements have to be made to
accommodate this type of transport at the ports.
• For example, there has to be a proper connection between the ship
and the quay. One possible solution is to use a platform that can be
adjusted according to height – the ramp.

Ramp

CONTINUED
Different ramp types

• The ramp is lowered from the ship onto the quay, assuming that
provisions have also been made ashore.

CONTINUED
Ro/Ro Characteristics
• A Ro/Ro vessel has several decks, which facilitates the stowage of
vehicles or trailers.
• Compared with general cargo or container vessels, on Ro/Ro vessels
there is a loss of space above and beside the vehicles and trailers. This
loss of space (and therefore less revenue) is compensated for by a
quick “turnaround”. In other words, a Ro/Ro vessel is designed for
quick trips, as well as a minimum delay at the ports.

Schematic Lay-out of the decks on board a Ro/Ro
vessel

CONTINUED
• The number of people working at Ro-Ro terminals and Ro-Ro

stevedoring companies is small. The works consist mainly of the
skilled lashing/unlashing of the equipment, such as trailers and trucks.

2- 4. BULK CARRIER (DRY BULK CARGO VESSELS)
Objective :
• The student should understand the general features of dry bulk
carriers, the three classes of the vessel, and the types of goods that
are usually carried by them.

CONTINUED
• Bulk carriers are ships especially designed to carry loose cargo in bulk.
Distinguished from the tankers which are for the liquid bulk cargo,
bulk carriers pertain to the dry bulk cargo, e.g. coal, iron ore, grains
and derivatives.

CONTINUED
Types of Bulk Carriers

• There are three types of bulk carriers:
• Handy size, 30,000 tons dead weight (tdw), often with own cargo gear
(precious ore, sand, scrap, clay, grain and forest products)
• Panamax, 80,000 tdw, no cargo gear (grain and ore)
• Capsize, 160,000 tdw, no cargo gear (coal, ore)

Continued
Bulk carrier sizes
Size Typical
Terminology Ship No. of holds
(DWT) Cargo
Mini less than It has less than five holds Minor bulk,
10,000 General
cargo
ANNERDIEP (4,300 DWT)

Small between It has less than five holds Minor bulk,
10,000 Steel
and products
25,000
Handysize between It usually contain five holds Minor bulk,
25,000 Steel
and products
40,000
Lakesize between pass through St. Lawrence
20,000 to Seaway which calls for a
27,000 draught limit of 7.925 m
Handymax between It usually contain five holds Minor bulk,
40,000 Steel
and products,
60,000 Grain, Coal
SABRINA I(67,500 DWT)

Panamax between It usually containe seven Bauxite,
60,000 holds. These have max. Coal,
and breadth of about 32.2 m - that Grain, Ore,
100,000 can pass through the Panama Phosphate
tonnes Canal in present state. Once
the expansion is done,
scheduled to be completed in
2015, these locks will have
MV DOUBLE HARMONY chambers 427m (1,400') long
(88,000 DWT) by 55m (180') wide, and
18.3m (60') deep.

Continued

CONTINUED
Development
• In earlier times, besides the general cargo the conventional vessels used
to carry bulk cargo as well. Many adjustments had to be made to
accomplish this, for instance, the removal of the between-decks.
• Economic developments necessitated the shipment of larger amounts of
bulk cargo in one go. As a result, larger and more specialized vessels were
built to satisfy this demand.
• Whilst container shipping is prompted worldwide to enlarge the capacity
of container ships, specialisation according to product type is demanded
in the carrying of dry bulk loads.
Bulk Cargo Vessel

CONTINUED
Characteristics
• A bulk carrier can be described as a “smooth deck ship” without
loading and discharging gear.
• The machine room is situated at the back and the deckhouse in far
back, or in front.
• The loading and discharging operations are almost completely
mechanised: discharged by grabs or by suction pipes, and loading
through a shooter or via a conveyor belt.

CONTINUED
• As a result of the mechanisation of the loading and discharging

process and the automation, the bulk cargo handling requires very
few people to load or discharge the vessels.
• Bulk carriers as well as tankers are almost always active in tramp
shipping.

M/S Sealand 282450 DWT OBO-carrier

2-5. TANKER (LIQUID BULK CARGO VESSELS)
• Objective :
• The student should be aware of the general features of liquid bulk
vessels, and the division between tankers according to products
carried on board.

CONTINUED
• Tankers, also called liquid bulk cargo vessels, carry liquid bulk cargoes
such as crude oil and oil products, liquid chemicals and gas, and liquid
foodstuffs.

CONTINUED
• Types of Tankers
A further division can be made among tankers according to the type of goods
that the tanker is designed to transport. These are:
• Gas tankers
• Crude oil tankers
• Product tankers
• Chemical tankers
• Others
CONTINUED
Types of Tankers
A further division can be made among tankers according to the type of
goods that the tanker is designed to transport. These are:
• Gas tankers
• Crude oil tankers
• Product tankers
• Chemical tankers
• Others
(Source: Ship Knowledge, a modern encyclopaedia, Klaas van Dokkum, Dokmar, 2003)

CONTINUED
Gas Tankers
• Gas tankers are ships that are used to carry liquefied gas.
• In general there are two kinds of liquefied gases:
Liquefied Petroleum Gas (LPG) and
 Liquefied Natural Gas (LNG).

CONTINUED
Crude Oil Tankers
• Crude oil tankers are used to carry the crude oil from a loading port near an oil
field or from the end of the pipeline to a refinery.
• In general these vessels are very large. The carrying capacity has risen to as much
as 500,000 tons, which is very much stabilised these days.
• Crude oil tankers have a limited number of tanks, usually approximately 15 tanks
plus two slop tanks.
• Crude oil tankers receive their cargoes through pipes from on shore facilities or
from a single mooring buoy, via a hose or via a flexible pipeline arm mounted on
the jetty.
• Due to the large draught of the vessel, the sailing routes and the number of ports
that a large crude oil tanker can call at are often limited.

CONTINUED
Five classes of crude oil tankers:

• Ultra Large Crude Carrier (ULCC) > 300,000 dwt
• Very Large Crude Carrier (VLCC), 200,000-30,000 dwt
• Suez max (old max Suez draught), ca. 120,000-160,000 dwt
• AFRA max, ca. 70,000 – 100,000 dwt
• Costal tanker

Crude Oil tankers

CONTINUED
Product Tankers
• Product tankers are for the carriage of the “product”, which are the
products of refineries and the petrochemical industries instead of
crude-oil.
• Product tankers have a large number of tanks with a total carrying
capacity of approximately 50,000 tons. Normally every tank has its own
filling and discharge line to the manifold and its own cargo pump.
• The piping systems on a product tanker are different from the systems in
crude oil tankers.

CONTINUED
Chemical Tankers
• Chemical tankers are meant for the transport of chemical goods.
• Due to the toxicity and flammability of the typical chemical cargo,
there are very strict requirements and regulations for chemical
tankers, ensuring that in case of leakage from one of the tanks, the
crew and environment are not subjected to danger.
• Separation between tanks is of the utmost importance.
• The size of chemical tankers varies between 2500 and 23,000 gross
tons.
The Deck of a parcel tanker

2-6. HEAVY LIFT SHIPS (EQUIPPED WITH CRANES & DERRICKS)
Objective :
• The student should understand the main types and uses of the heavy
lift ships.

CONTINUED
• To this category belong pontoons that are either self-propelled or not

self-propelled, as well as vessels carrying heavy loading equipment
needed for offshore operations.

CONTINUED
Sea Towage and Salvage

• This concerns the carrying of floating equipment (for example, dry
docks, dredging materials), laden pontoons and lighters.
• Assistance is given at offshore operations and at the salvaging and
clearing of wrecks.

CONTINUED
Sea Towage and Salvage

• This concerns the carrying of floating equipment (for example, dry
docks, dredging materials), laden pontoons and lighters.
• Assistance is given at offshore operations and at the salvaging and
clearing of wrecks.

Sea towage of heavy loads for the oil industry

CONTINUED
Offshore Assistance
• These vessels are used to supply offshore drilling rigs . This also
includes vessels working in the offshore maintenance.

An offshore Vessel

2-7. DEVELOPMENTS & SPECIALIZATION IN SHIPPING
Objective :
• The student should understand the development trends of the main
types of vessels, and
• Be aware that there are other types of vessels for different purposes.

CONTINUED
• The last decade has clearly shown the existence of a pattern in

respect of vessel development.
• In tanker shipping the growth of the manufacturing of very large
tankers (till about 500.000 GT) has stabilized.
• Specialisation according to product type is demanded in the carrying
of dry bulk loads,
• whilst container shipping is prompted worldwide to enlarge the
capacity of container ships.
• The new generations of container ship are getting faster as well.
CONTINUED
Kangaroo and Lashing Vessels

• In certain areas vessels that are equipped for and able to transport
barges, or identical ships suitable for inland shipping are employed.
The last decade has clearly shown the existence of a pattern in
respect of vessel development.

Maneuvering lash-barges into the sea vessel

Lashing Vessel

CONTINUED
Offshore Vessel
• An offshore vessel is the collective name for a large variety of vessels
that are involved with the finding and exploration of oil and gas
fields under the seabed.

Offshore vessel

CONTINUED
• Supply ships belong to this category as well. They frequently put in at

ports along the coastlines of the North Sea and the Atlantic Ocean.

Supply Ship

CONTINUED
Smaller Sea-going Vessels

• These ships carry a large proportion of the transport between European
ports, both for dry bulk loads and containers.
• Characteristic of these ships is their smaller size. They have the advantage
though, of being able to service many (smaller) ports. Apart from this,
they also have access to the smaller (and therefore more) shipping routes.
• An interesting form of shipping is maintained by vessels known as coastal
trade liners. These vessels have the ability to carry freight without
transhipment far into the hinterland, due to their slight draught and low
air draught.

COASTER

CONTINUED
Feeder
• Containers are carried by smaller container vessels, which connect
the container main ports and the smaller ports in the area - the feeder
ports.
• This type of shipping is known as feedering, and the vessels are called
feeder ships.

Feeder

CONTINUED
Cooled and Refrigerated Shipping

• Cooled and refrigerated shipping carries bananas and other fruit, fish
and meat.

Cooled & Refrigerated Shipping

QUESTIONS
The characteristics of conventional ships are:

• a. Conventional ships are used for the transport of general cargo
• b. Conventional ships can be distinguished by general cargo vessel or
multi-purpose vessel
• c. They are often equipped with loading and discharging cranes on
board

QUESTIONS
A. What does TEU mean in container shipping?

a. Twenty feet Equivalent Unit
b. TEU is the standard unit of measurement for containers
c. The intended amount of TEUs to be carried on a ship is often used
to describe the size of the container vessel
d. All of the above are true

QUESTIONS
B. Which description of the container vessel is incorrect?

a. Up to date the largest container vessel can carry approximately 8,000 TEUs
b. The container vessel can become larger and larger; there is no limitation
of any kind to this trend
c. The loading and unloading of container ship demand less operational
people in
comparison to conventional vessels
d. Efficient operation of container vessels often entails large investments in
container terminal and terminal facilities

QUESTIONS
Judge whether the statement below is true or false:

• Ro-Ro means Roll on / Roll off.
• Ro-Ro vessels carry rolling materials on board, such as cars.
• Different from other types of vessels, the Ro-Ro ship must have a
proper connection between the ship and the quay, one example of
this is a ramp.
• Ro-Ro vessels are designed to carry more containers.

QUESTIONS
1. There are three types of bulk carriers. Which one below is incorrect?
a. Handy size, 30,000 tdw
b. Panamax, 80,000 tdw
c. Panamax, 70,000 tdw
d. Capsize, 160,000 tdw

QUESTIONS
1. There are three types of bulk carriers. Which one below is incorrect?
• a. Handy size, 30,000 tdw
• b. Panamax, 80,000 tdw
• c. Panamax, 70,000 tdw
• d. Capsize, 160,000 tdw
2. True or False?
• Bulk carriers and tankers are always active in tramp shipping
• The loading and discharging of bulk carriers is often automatic, thus
involving very few people
QUESTIONS
According to the type of goods that the tanker is designed for, further
division can be made among tankers. The following are the different
types of tankers:
a. Gas tankers
b. Crude oil tankers
c. Chemical tankers
d. All of the above

QUESTIONS
Heavy lift ships are used for:

a. carrying of floating equipment such as dry docks, dredging materials
b. supplying offshore drilling rigs and alike
c. either of the above
d. neither of the above

QUESTIONS
Which statement below is incorrect concerning the development of vessels in shipping?

a. In tanker shipping the growth of the manufacturing of very large tankers (till about
500.000 GT) has stabilized
b. The speed of the new generations of container ship remains the same
c. Container shipping is prompted worldwide to enlarge the capacity of container ships
d. Specialisation according to product type is demanded in the carrying of dry bulk
loads

CHAPTER 3
International Organizations & Regulations in Sea Transport
• The student should understand the objectives, organisation and main
activities of the international organisations such as IMO and BIMCO.
• The student should understand the meaning and scope of
international regulations IMDG Code, Hague / Hague-Visby Rules and
Hamburg Rules.
• The student should know the main issues in packing and labelling
regarding handling of dangerous goods at sea.

3-1. IMO
Objective :
• The student should understand what IMO stands for, the main
purpose, activities, organization and the major conventions drafted
by IMO.

Continued
• IMO is an abbreviation of International Maritime Organisation,

www.imo.org.
Missions:
• To provide machinery for co-operation among governments in the fields
of governmental regulation and practices relating to technical matters of
all kinds affecting shipping engaged in international trade
• To encourage and facilitate the general adoption of the highest
practicable standards in matters concerning maritime safety, efficiency
of navigation and prevention and control of marine pollution from ships.

Continued
Organisation:
• A General Assembly of all member states effectuates once per 2 years.
• A Council of 32 member states is appointed for 2 years.
• Five Committees are established: Maritime Safety, Maritime
Environment, Facilitation, Legal, and Technical Co-operation.
• The Assembly approves budget and work programs, and elects Council
members.
• The duties of the Council include such as appointments of the Secretary
General, work organisation and consultation with other organisations.
Continued
Facts:
• 1948: UN Maritime Conference adopts Convention on the Inter-
Governmental Maritime Consultative Organisation (IMCO), entered
into force in 1958
• 1982 Name changed into IMO; 160 member states
• IMO Budget is 34 Million UK Pounds per 2 years, 22 Million is for staff
funding; contribution of member states depends on their tonnage
• Tools: Conventions, Protocols, Codes, Recommendations, Technical
assistance
Continued
• Important Conventions so far:

• SOLAS - Safety of Life at Sea 1974
• MARPOL - Prevention of Marine Pollution 1973/78
• STCW - Standards for Training, Certification and Watchkeeping 1978
• LOADLINE - Prevention against overloading of ships 1966
• TONNAGE - Uniform system of tonnage measurement 1969Ratified
IMO regulations must be incorporated into the national law of the
member states
• Responsibility remains with the national authorities.

3-2. International Maritime Dangerous Goods Code (IMDG Code)
Objective :
• The student should be aware of the IMDG Code in sea transport of
dangerous goods, and understand how IMDG is applied as well as
the main subjects covered by the Code

Continued
Origin
• As a further step towards meeting the need for international rules
governing the carriage of dangerous goods in ships, the International
Conference on Safety of Life at Sea, held in 1960, laid down a general
framework of provisions in chapter VII of the Convention and invited
IMO to undertake a study with a view to establishing a unified
international code for the carriage of dangerous goods by sea.
• This study by IMO pursued in co-operation with the UN Committee of
Experts took account of existing maritime practices and procedures.

Continued
• In 1965 the first edition of the Code was completed by the working
group, then approved by the Maritime Safety Committee (MSC) and
adopted by the Assembly of IMO.
• The experts of the working group are drawn from those countries that
have considerable experience in the carriage of dangerous goods by
sea, whom are appointed by the MSC.
• MSC is also authorized by the Organization’s Assembly to adopt
amendments to the Code, thus enabling IMO to respond promptly to
developments in transport.

Continued
Content
Among other things, the IMDG Code covers the following subjects:
• classification
• identification (description)
• a list of dangerous goods
• labelling
• the shipping documents
• packing;
• container traffic; and
• stowage, with particular reference to the segregation of incompatible substances.

Continued
Application
• Contracting governments of the SOLAS Convention and the MARPOL
Convention should implement the regulations of the IMDG Code in
their national legislation in pursuance of their obligations under:
Chapter VII, regulation 1.4 of the 1974 SOLAS Convention, as
amended; and
Annex III, regulation 1 (3) of MARPOL 73/78, as amended.
• Observance of the IMDG Code ensures compliance with the
mandatory provisions of the SOLAS Convention and of Annex III of
MARPOL 73/78.

Continued
Amendments
• The IMDG Code has undergone many changes, both in layout and
content, in order to keep pace with the expansion and progress of the
industry and to achieve and maintain a level of harmonization among
the IMDG Code, the UN Recommendations on the Transport of
Dangerous Goods, and the regulations of the other transport modes
according to ADN, ADR, ICAO-TI’s and RID.
• Since the 1st of July 1992, the IMDG Code comprises regulations for
the carriage of harmful substances, referred to as MARINE
POLLUTANTS.

Continued
• These are based on the regulations of Annex III of the International
Convention for the Prevention of Pollution from Ships, 1973, as modified by
the Protocol of 1978 (MARPOL 73/78), which deals with the prevention of
pollution by harmful substances carried by sea in packaged form. Annex III
is referring to the IMDG Code.
• In 1996 the MSC agreed that the IMDG Code should be reformatted to be
consistent with the format of the UN Model Regulations.
• The MSC adopted on the 23rd of May 2000 Amendment 30-00 to the IMDG
Code, which comprises the first full revision in reformatted style. This
amendment entered into force on the 1st of January 2002. In May 2004 the
MSC adopted Amendment 32-04, which enters into force from the 1st of
January 2006.
3-3. Dangerous Goods Packaging & Labelling for Sea Transport
Objective :
• The student should understand the main points in terms of packing in
relation to dangerous goods, and the classification of dangerous
cargoes in IMDG Code. The student should also be able to recognize
the different labels corresponding to the classes of dangerous goods.

Continued
Packaging
IMDG Code Packing Provisions
• The International Maritime Dangerous Goods Code (IMDG Code)
comprises a number of provisions with regard to the packing
requirements. Examples are:
• packaging must bear normal transport actions
• no chemical reaction with contents
• well closed: leakage prevention
• no spill of contents.

Continued
Also regulations are given related to :

• consolidation of different commodities
• labelling
• information on documents
• requirements for transport equipment
• transport and handling procedures.

Continued
Labelling
9 Classes of Dangerous Goods
The IMDG Code distinguishes 9 Classes of dangerous goods:
1 Explosives
2 Compressed (Liquefied) Gases
3 Flammable liquids
4 Flammable solids
5 Oxidizing materials and organic peroxides
6 Poisons and infectious substances
7 Radioactive materials
8 Corrosive materials
9 Miscellaneous dangerous goods

Continued
• Classes 1, 2, 6 and 7 are so-called Closed classes: transport is only

allowed for goods named in a special list.
• Other classes are Open classes: only the relevant physical
characteristics are listed.
• All classes have specific labels. Additional labels exist to indicate
temperature, fumigation etc.
• The following pictures show the labels for each class as regulated in
IMDG Code.

labels for each class as regulated in IMDG Code

3- 4. Hague Rules/ Hague-Visby Rules/Hamburg Rules
Objectives :
• The student should be aware of the three important conventions
regulating the carriage of goods by sea, and their applicability.
• The student should also understand the main differences between the
three conventions.

Continued
• The most well-known international conventions that regulate the

commercial activity of the carriage of goods by sea are the Hague
Rules (1924), Hague-Visby Rules (1968) and the Hamburg Rules
(1978).
• They are of great importance in understanding the different rights and
liability regimes that apply to parties involved in the sea transport.

Continued
The Hague Rules

• When international shipping developed into the nineteenth century, the
dominant legal regime for the sea transport still followed the notions of freedom
of contract. As a result, the ocean carriers often insert into the bill of lading the
provisions to exclude their liabilities, even many of the basic liabilities that
would have been implied in common law.
• The perceived injustice created by carrier’s ocean bill of lading led a number of
cargo-importing countries to enact legislation creating basic minimum
obligations on the carrier and restricting its ability to exclude liabilities.
• In this respect, the US Harter Act 1893 is a good example which had also been
the most influential national legislation.

Continued
• The carriers, via the Maritime Law Committee of the International

Law Association (CMI), produced a model set of rules in The Hague in
1921 in reaction to the cargo interests’ initiatives, and in order to
reach a degree of international uniformity.
• This set of rules became The International Convention for the
Unification of Certain Rules Relating to Bills of Lading in 1924 (the
Hague Rules 1924).

Continued
• In the Hague Rules, the carrier was given obligations to take care of
cargo during the carriage and was not entitled to exclude liability.
• In return the carriers were given a number of protections. In addition,
the Hague Rules allowed carriers to limit their liability to £100 gold
value in respect of packaged goods with a high value.
• Legal suit has to be brought within the limit of one-year time.
• The Hague Rules are also mandatory and imply that any clause which
seeks to reduce the duties or liabilities set out in the Rules would be
null and void.

Continued
• The Hague Rules were strongly supported and acceded by many

countries representing the carriers’ interests, including most of the
West European countries and other large shipping countries. As of
2005 there are some 87 state parties to the Hague Rules (
http://www.comitemaritime.org/ratific/brus/bru05.html).

Continued
Hague-Visby Rules
• In 1968, a protocol designed to amend provisions that had been
generally recognised as causing particular problems in the Hague
Rules 1924 was agreed upon in Brussels.
• The Hague Rules as amended by this Protocol have been called since
then, the Hague-Visby Rules.

Continued
Hague-Visby Rules vs. Hague Rules
• The major change in the Hague-Visby Rules was the carrier’s
limitation of liability.
• The Hague-Visby Rules increased the package limit to around £500,
together with an alternative limit based on weight and a special
provision dealing with limitation in the case of containers.
• The special drawing right (SDR) introduced by the International
Monetary Fund (IMF) replaced the gold francs as the method of
calculating limits.

Continued
• In general, the Hague-Visby Rules retains the same form and structure
of the Hague Rules.
• It is therefore widely considered to represent the ship-owner’s
interests as well.
• As of 2005 there are 27 parties (including regions) to the 1968
Protocol. ( http://www.comitemaritime.org/ratific/brus/bru06.html )
From its member states the importance and influential power of the
Hague-Visby Rules are easily seen.

Continued
Application of Hague-Visby Rules
The Hague Visby Rules are mandatory in application to the carriage
under Bill of Lading, or similar documents of title relating to the
carriage of goods, if
• the Bill of Lading is issued in a Contracting Stateor
• the carriage is from a port in a Contracting State or
• the contract contained in or evidenced by the Bill of Lading provides
that these Rules, or legislation of any State giving effect to them, are
to govern the contract.

Continued
• The last point is known as choice of law, which in the bill of lading is often
incorporated in a special clause, known as the Paramount Clause.
• As in the Hague Rules, the mandatory application of the Hague-Visby Rules
means that the Rules must not be deviated from. Different arrangements by
parties, which according to the Hague-Visby Rules are to reduce or exclude the
carrier’s obligation, are therefore null and void. Such clauses can be disregarded.

Continued
For application of the Hague-Visby Rules the following is irrelevant:

• the nationality of the ship
• the nationality of the carrier
• the nationality of the shipper
• the nationality of the consignee
• or whoever is involved in the contract of carriage

Continued
What is regulated by the Hague Visby Rules?

In short, it may be said that the provisions cover the following matters:
•the obligations of the carrier
•the situations in which the carrier can invoke including discharge of
liability and the extent to which the carrier can limit his liability
•the period during which the carrier has direct responsibility for the
cargo to be carried.

Continued
Obligations of the Carrier
•According to the Hague-Visby Rules, the main obligation of the carrier is in fact: to deliver
goods in the same condition as in which the carrier received these goods.
•Furthermore, the carrier is under an obligation to provide a sea-worthy vessel and keep it in
good condition. In details, the following aspects are concerned:
Seaworthiness
crew, equipment and supply
the good condition of the holds, the refrigerating and cooling chambers.
In general, the carrier is confronted with a duty of due diligence, since he is obliged to:
‘…properly and carefully load, handle, stow, carry, keep, care for and discharge the goods
delivered.

Continued
Period of Responsibility
•The period of responsibility refers to the period over which the
carrier undertakes to deliver the goods in the same condition
as they were received.
•According to the Hague-Visby Rules, this covers the period
“…. from the time the goods are loaded on to the time they are
discharged from the ship” (from tackle to tackle).

Continued
•The parties to the contract of carriage (the shipper

and the carrier) are free to stipulate by agreement
that loading and/or discharging will happen at the
expense and risk of the cargo-interested party.
•A prevalent stipulation is e.g. F.I.O. (Free In and
Out).

Continued
Hamburg Rules
• The introduction of Hamburg Rules in 1978 was largely due to a
political scheme change in the arena of international trade and
transport.
• The Hague and Hague-Visby Rules were largely considered by many
developing countries to be the product of the developed
industrialised countries and therefore, the interests of the developing
states were there under represented.

Continued
• The whole scheme of the Hague and Hague-Visby Rules was also
considered outdated and legally defective.
• Under the political pressure for change, channelled through the UN
and in particular, the UN Conference on Trade and Development
(UNCITRAL), a set of rules was therefore drafted to replace the Hague
and Hague-Visby Rules and was agreed at a Diplomatic Conference in
Hamburg in 1978. This is known as the Hamburg Rules.

Continued
Hamburg Rules vs. Hague-Visby/Hague Rules

• The Hamburg Rules further increases the liability of carriers as such against
cargo owners.
• The period of the carrier’s responsibility is extended beyond the ship’s rail to
cover the period when it has the goods in its charge in a port.
• A uniform system of liability based upon the presumed fault of the carrier,
along with joint liability of the actual and contracting carrier, has been
introduced.

Continued
•The limits of liability of the carrier have been increased.
•The time bar has been extended from one year to two years.
•The Hamburg Rules also give a wide choice of jurisdiction to the cargo claimant.
The Hamburg Rules take for example a different approach to:
•deck cargo
•the period of responsibility for the cargo before and after the sea transport
•higher compensation for loss and damage
•longer limitation period.
In short, the differences between the Hague / Hague-Visby Rules and the Hamburg
Rules are that the Hamburg Rules apply to a much stricter liability regime for the
carrier than the other two.

Continued
the Hamburg Rules are more favourable for cargo-interested parties and less
favourable for carriers.
•Whether the Hamburg Rules have provided a better legal and commercial
solution to the international maritime transport still remains a question.
•It is perhaps also largely a political, rather than a legal, question as to whether
the Hamburg Rules will ultimately be more widely accepted.
•By 2005 the Hamburg Rules had 26 member states, the majority of which are in
Africa with little maritime interest.
(http://www.comitemaritime.org/ratific/uninat/uni02.html)

3-5. Baltic & International Maritime Council
(BIMCO)
Objective :
• The student should understand what BIMCO stands for, the main
purpose, organizational structure and activities undertaken by BIMCO.

Continued
• BIMCO is an abbreviation of The Baltic and International Maritime

Council, www.bimco.org.
• BIMCO is a major international organization in relation to
charter shipping in the freight market,
dealing with various matters of interest to international shipping.

Continued
Mission:
• To pursue all issues affecting members, seeking co-operation, and
providing input of a practical nature to ensure that economic impact
of new regulations on ship owners is fully appraised.
• BIMCO aims at reducing members’ exposure to disputes through
development of standardised documentation and uniform application
of shipping rules & regulations.

Continued
Organisation:
• The General Meeting is the governing body.
• A Board of Directors comprises owner members of 20 countries.
• BIMCO operates a Permanent Secretariat in handling of daily affairs.
• An Executive Committee is responsible for management.
• A Documentary Committee is responsible for documentary matters.

Continued
Facts:
• Established in 1905 for the shipping industry, headquartered in Copenhagen,
Denmark
• Representing ship owners, shipbrokers, agents, and P&I Clubs covering 61% of
the world’s ocean dry cargo and tanker fleet
• Members in 121 countries, covering all ocean trade worldwide
• Representing members at inter-governmental organisations, regional and
national authorities on shipping regulations and legislation
• Developing standardised documentation, based on agreed shipping rules &
regulations (Charter Parties, Bs/L etc.)
Continued
• The Documentary Committee at BIMCO deals with the design and

development of shipping documents.
• Many of the common printed charter party forms have in one way or
another been approved by BIMCO.
• BIMCO may also at any time be asked to provide information on, for
example, congestion in a certain port, port dues and charges, port
regulations and practices etc.
• If someone in shipping circles has been repeatedly and deliberately
violating the rules of the trade or otherwise has been acting improperly
he/she may be officially reported to BIMCO.
Questions
What is the main purpose of these organisations / rules? Please write an
explanati
• IMO
• Answer: Standards for maritime safety, navigation and environmental
protection
• BIMCO
• Answer: Standardised documentation and uniform application of shipping
rules & regulations
• IMDG
• Answer: Regulations for classification and treatment of dangerous goods
and harmful substances
Questions
IMO is:
a. International Maritime Organization
b. Main purpose is to encourage and facilitate highest practicable
standards for maritime safety, navigation and environmental
protection
c. Important conventions are such as SOLAS 1974, MARPOL 1973/78,
STCW 1978
d. All of the above

Questions
True or False?
• IMDG is the international regulation concerning the carriage of
dangerous goods by sea. ()
• IMDG has provisions as regards to the classification, labelling and
packing of dangerous goods. ( )

Questions
Which of the following statements is incorrect?

a. IMDG has classified dangerous goods into 9 classes
b. Some small amount of spill of the contents in dangerous goods
packing is allowed
c. Packaging of dangerous goods shall be ensured of no chemical
reaction with the contents
d. All classes of dangerous goods have specific labels

Questions
A. Among Hague Rules, Hague-Visby Rules and Hamburg Rules, which one is generally
considered to be more favourable to the shipper’s interests, thus also a stricter liability regime
for the carrier?
c. Hamburg Rules
b. Hague-Visby Rules
C . Hague Rules
d. All are the same
• B. Hague Rules or Hague-Visby Rules will apply as long as the following condition(s) is/are met:
a. The Bill of Lading is issued in a Contracting State
b. The carriage is from a port in a Contracting State
c. The Paramount Clause in Bill of Lading chooses the Rules to apply
d. Either of a, b, or c

Questions
C. True or False?
What is governed by the Hague Rules / Hague-Visby Rules?
a.The liabilities of the carrier ( )
b.Situations to which the carrier can refer, for exemption or limited liability ( )
c. Rules for packaging and labelling of dangerous goods in sea shipping ()
d. Rules concerning safety and security in sea shipping ()
e. The period during which the carrier is liable for the cargo to be carried ()

Questions
BIMCO is:
a. The Baltic and International Maritime Council, headquarter
in Denmark
b. BIMCO is concerned with charter shipping in the freight
market
c. BIMCO has developed many standardized charter parties
d. All of the above

Chapter -4
SHIPPING SERVICE
• The student should be aware of the two types of ocean traffic in
practice (liner shipping and Tramp shipping), and understand the
differences between them.
• The student should understand the different types of operations and
operators in liner shipping.
• The student should understand the different types of charters in
charter shipping, the basic charter terms used, and the essential
conditions for a charter contract.

Continued
• You can compare the difference between liner shipping and tramp shipping
with the difference between a tram and a taxi.
• The tram driver knows well ahead of time when he will be at which stop.
• The tram can almost give a minute-by-minute account of where he will be at
any given time of the day.
• The tram maintains a scheduled service and the tram, the mode of
transport, determines the route and time.
• A taxi driver, on the other hand, has no idea where he will be next. He goes
to the passenger (the cargo), wherever the passenger may be. In other
words: the passenger/cargo determines the route and time.
4-1. Liner Shipping
Objective :
• The student should understand the main features of liner shipping,
and the shipments that are carried by liner services.
• The student should have a clear picture of the different players as well
as organizations that may be engaged in liner shipping, e.g. liner
conference, consortia, outsiders and understand the purposes of, and
differences between them.

Continued
Liner Shipping
• In liner shipping the ship owner, either carrier or operator, runs a regular
service between more or less fixed ports and usually on a fixed time
schedule.
• The liner operator acts as a common carrier, accepting all general cargo
shipped between the ports covered by his service.
• In liner shipping, ships sail to and from specific ports according to fixed
schedules.
• Only by exception (emergencies) do scheduled ships deviate from this
schedule.
Continued
• Liner traffic is a firmly controlled activity where remuneration is

geared more to the long term rather than to single voyages.
• The freight rates in the tariff are by definition not subject to the large
variations that characterize the market in tramp shipping.
Nevertheless, liner traffic is susceptible to market variations,
depending on availability of cargo and load factors on each voyage.

Continued
• Liner vessels get the larger share of their cargo through contracted
liner agents.
• Forwarding agents and liner agents play an important role in creating
the contract of carriage between the ship owner and the cargo owner.
.

Continued
Liner shipments
• General cargo has always been carried in the liner trade. Since the introduction of the
container, however, more and more general cargo is shipped in containers.
• Since the early era of containerization, the market has seen a sharp drop of
conventional shipments, and instead, a continuous increase in container shipments.
• Consequently the conventional general cargo vessels are more and more frequently
replaced by specially equipped container vessels.
• Despite the fact that containers prevail over liner shipping, the containerization did
not completely knock out the conventional liners.
• Instead, they developed pure container trades parallel to conventional liner traffic.
.

Continued
• Container traffic requires large investments in specially equipped

vessels, port installations and terminal equipment.
• So it can be said that container line shipping is often operated by
international companies, for multi-national purposes, to meet the
larger customers’ demand.
• When it involves less investment in port, equipment, or vessel, and
with often less cargo quantity in supply or shorter transport distance,
we easily see that conventional shipments still prevail.
.

Continued
Liner Conferences / Consortia

Liner Conferences
• A liner conference is a voluntary organization of two or more vessel-operating
carriers, active in a certain sailing area on the basis of common contractual terms,
prices and timetables, whose main function is to set acceptable rates for vessels and
shippers.
• The goal of the conference is to maintain a stable market and fair competition among
carriers, also to reduce competition between ship owners calling at the same ports.
• Another important element is to administer operating rules that guarantee the
shipper a consistent level of service from participating lines.

Continued
•In short, the line conference can be characterized as a kind of cartel whereby
liner carriers offer their services at fixed rates.
•Conferences determine freight rates and coordinate ship capacities and
sailing schedules. Examples of conferences are FEFC (Far East Freight
Conference) and TACA (Trans Atlantic Conference Agreement).
•Due to emerging anti-trust legislation in the European Union, at present the
practices of the conferences in Europe are subject to discussion and there are
trends working towards its demise in recent reports…
• The advantage of the liner conference is the provision of the reliability in
time schedule and service. The disadvantage is that the high service may
always push up the prices.
.

Continued
•Liner conferences may be closed, which is normal, or open, which is a

requirement by national government such as in the United States. In an
open liner conference, anyone who wishes to operate within a liner
conference is entitled to do so.
•Liner operators are usually more involved than other ship owners in
the improvement of cargo handling techniques and they often
participate actively in developing those ports at which they call
regularly.
•The shippers are entitled to certain quantity rebates provided they only
use the service of the particular line.
.

Continued
Consortia
•Some lines belonging to a conference, or indeed all lines in a conference may join
together to form a freight pool or a consortium.
•The purpose of making a consortium is essentially operational, bringing together
the fleets of the companies concerned into a single fleet for providing the
service.
•Mostly, consortia have traded within conferences, combining the operating
activities of two or more of the conference lines.
•Consortia may have different degrees of integration, from loose arrangements of
a purely practical nature to tightly knit commercial combinations.
•The ships in a consortium are still owned by the individual liners.
.

Continued
•The liners within a consortium also remain legally separate, but the co-
operational relationship between them can extend into more
commercial activities such as joint marketing, the issue of joint bills of
lading and so on. Also it is the consortium that deals with the liner
operations in the trade.
•It is difficult to quantify the number of consortia in the world today.
Estimated is that about 40 are in the trades to and from Europe alone.

Continued
Non-conference lines (Outsiders)

•In many instances liner shipping is carried out within liner conferences.
•A line operator who has not yet been admitted into a closed liner conference, however, may also compete
with the conference members as an “outsider”.
•Liner traffic not carried out within liner conferences is often referred to as semi-liner. Because outsiders
generally cannot offer the frequency of departures or level of service that the conference can, they tend to
offer lower prices.
•Generally speaking, outsiders are cheaper but, due to revenue and demand factors, the outsiders may often
alternate travel schedules, and for this reason, the outsiders are not as reliable as the conference or pool
carriers.
•In certain sailing areas, e.g. North America, some cooperation exists between conferences and independent
lines in the field of capacity and tariffs.

Continued
Charter shipments
•Not always does the liner operator have sufficient cargo available from the liner conferences.
•Imbalance in cargo volumes between the outward and homeward legs of a round voyage often
forces the lines to compete in the open market.
•Therefore when the market is low or the cargo quantities available from liner services decrease, in
order to fill the empty space on board the liner, operators may charter the vessel on a time base or
trip base, i.e. time charter or trip charter.
•In case of time-chartered tonnage, it will be either expensive or cheap depending on the supply of
ships and employment terms, especially the point of re-delivery.

Continued
•In case of a trip charter, the availability of cargo for the scheduled sailing, which has to
be performed anyway, may not be very good. The vessel may be hired at a low daily rate.
•Often, during such low market conditions the competition from outsiders gets stronger.
The outsiders may enter a liner trade for only a number of trips, accepting freight rates
that are lower than the liner tariff rates just to keep the ships going until the open
market conditions improve again.

Continued
•In case of a trip charter, the availability of cargo for the scheduled sailing, which has to
be performed anyway, may not be very good. The vessel may be hired at a low daily rate.
•Often, during such low market conditions the competition from outsiders gets stronger.
The outsiders may enter a liner trade for only a number of trips, accepting freight rates
that are lower than the liner tariff rates just to keep the ships going until the open
market conditions improve again.

Continued
Ro-Ro traffic
•Another type of transport in liner shipping, due to its special cargo types that are often transported, is Ro-Ro traffic.
Ro-Ro traffic is often used for the transportation of such cargoes as vehicles, trucks and heavy lifts (unpacked).
•The Ro-Ro market, as a sector of its own, was established rather late in the 1970’s.
•Initially it was just a typical short trade between highly industrialized countries. But the increasing demand of the
movement overseas of industrial products, machinery, vehicles and building materials in the 1970’s, and the
congestions caused in most of the importing countries forced the liner operators to look for a possible new type of
ship, which could operate quickly and shorten the time spent in ports.

Continued
•The ocean going Ro-Ro ships require a minimum of port installations with a very fast
and flexible cargo handling system. The Ro-Ro ships are also able to accommodate a
mixture of commodities, not restricted only to rolling units but are also able to load
all goods movable by fork-lift trucks and of course containers.


4-2. Charter/Tramp Shipping
Objectives :
• The student should understand the main features of charter/tramp
shipping, the difference between chartering and liner shipping, and the
shipments that are usually carried in chartering.
• The student should have a clear picture of the affreightment process, the
parties involved in chartering, and their distinctive functions.
• The student should further understand the four types of charters, the
difference between them, the main charter terms used in voyage charter,
and the essential conditions in respect of voyage charter as well as time
charter.
Continued
Charter/tramp Shipping
• Charter shipping, also called tramp shipping, carries most of the cargo
in terms of quantity or volume in sea transport worldwide. In
charter/tramp shipping ship owners do not have their ships sailed
according to a fixed schedule. Depending on supply and demand they
let their ships tramp around the world seas.
• Charter/tramp shipping mainly deals with bulk cargo.
• In general, full ship loads of mostly a single type of goods, are carried
by tramp shipping. Examples are: Grain, Coal ,Ore, Mineral oils,
Chemicals, Juices, Edible oils.

Continued
• Charter shipping, also called tramp shipping, carries most of the cargo
in terms of quantity or volume in sea transport worldwide. In
charter/tramp shipping ship owners do not have their ships sailed
according to a fixed schedule. Depending on supply and demand they
let their ships tramp around the world seas.
• In general, full ship loads of mostly a single type of goods, are carried
by tramp shipping. Examples are: Grain, Coal ,Ore, Mineral oils,
Chemicals, Juices, Edible oils.

Continued
• Charter shipping, also called tramp shipping, carries most of the cargo in terms
of quantity or volume in sea transport worldwide. In charter/tramp shipping ship
owners do not have their ships sailed according to a fixed schedule. Depending
on supply and demand they let their ships tramp around the world seas.
• In general, full ship loads of mostly a single type of goods, are carried by tramp
shipping. Examples are: Grain, Coal ,Ore, Mineral oils, Chemicals, Juices, Edible
oils.
• Different from liner shipping where ships sail to and from specific ports
according to fixed schedules, in tramp shipping the ships go to the cargo,
wherever it may be. The cargo determines where the ship goes.

Continued
Chartering Centres of the World

• London is the largest chartering centre in the world, with the Baltic Exchange an
important meeting place. New York is the second.
Other charter centres in Europe are Hamburg and Genoa.
• Thanks to the current communication technologies, it is no longer necessary to
be physically present in any of these centres.
• In the charter business therefore you must always take into account that the time
differences between the various parts of the world may play an important role.

The Baltic Exchange

Continued
Parties involved in charter/tramp shipping
Ship Owner
• The ship owner is the owner of a ship. When the owner decides to use his ship for tramp shipping, he
himself constantly has to look for cargo. This takes a lot of time and also requires specific knowledge
and skills that the owner of the ship usually does not have himself. He therefore sub-contracts the
search for cargo to one or more brokers.
Charterer
• The charterer is the person who hires (charters) the ship for a previously agreed voyage or time period.
In principal, anyone who has cargo to carry may hire/charter a ship. In practice, however, it’s usually
the commercial houses or manufacturers and this often involves bulk shipments. Large shipments are
such as grain, oil, ore, fertilizer etc. However, even moving a factory can give cause to charter a ship.
Ship Broker
• Like forwarding agents or liner agents in liner shipping, it is the brokers who bring together the ship
owner and the charterer in chartering shipping.

Continued
The functions of shipbrokers

• Broadly speaking, the difference between ship’s agents specialising in liner
shipping and those offering tramp shipping can be described as follows:
• ship’s agents specialising in liner shipping look for clients on behalf of the
shipping line he represents and therefore have contact with the ‘line operator”
and the various parties involved with the cargo (liner agent or forwarding agent).
• ship’s agents specialising in tramp shipping have relatively more international
contacts, and look for clients for themselves, not as representatives of a shipping
line (shipbroker).

Continued
• The work area of a shipbroker is broad and international.

• For a shipbroker, canvassing means making and maintaining contact with as many
parties as possible. He therefore doesn’t necessarily keep himself busy acquiring cargo,
but rather with seeking out clients. In addition, visiting all these parties (his clients)
regularly is an absolute must. The clients may happen to determine whether and when
an agent should be appointed in a port and his/her position.
A shipbroker is in contact with the following parties:
• ship owners
• commercial houses
• manufacturers
• other charter brokers.

Continued
• To fare well in business, it is essential for the shipbroker to be continually well

informed of all developments in the market.
• Depending on these developments, his/her services may now be required by ship
owners and then again by cargo owners. For all concerned, it’s a matter of supply
and demand.

Continued
Types of Ship Brokers

• Though legally a broker should bring together two parties and act for both of
them, in shipping practices we find that a broker will always act for and on behalf
of one principal only, either an owner or a charter.
• The broker who acts on behalf of the ship owner is called the owner’s broker.
• The broker who acts on behalf of the charterer is the charterer’s broker.
• Due to development and specialization, brokers can be further distinguished in
many other types.

Continued
• Due to development and specialization, brokers can be further distinguished in

many other types.
• Confidential or exclusive broker is the one who the owner chooses to do his
business solely with. Differently, the owner may also prefer to work through a
large number of brokers, the latter will then have equal possibilities to do the
business.
• In a market with such widely differing sectors as the bulk market, one broker
cannot possibly cover all parts with his direct connections.
• A broker thus engaged in efforts to bring together an owner’s confidential broker
with the broker of a suitable charterer is called a competitive broker.

Continued
• Confidential or exclusive broker is the one who the owner chooses to do his
business solely with. Differently, the owner may also prefer to work through a
large number of brokers, the latter will then have equal possibilities to do the
business.
• In a market with such widely differing sectors as the bulk market, one broker
cannot possibly cover all parts with his direct connections. A broker thus engaged
in efforts to bring together an owner’s confidential broker with the broker of a
suitable charterer is called a competitive broker.
• Cable brokers are those brokers who mainly list orders circulated in one shipping
centre such as for example New York, and then distribute the lists to brokers in
other shipping centres such as London, Tokyo, Oslo or Hamburg.

Continued
• Based on the different work areas the brokers engage, we may also distinguish
between the shipbrokers in general and those concerned with sale and purchase,
port agency and liner or loading agency.
• Sale and Purchase broker is mainly engaged in the sale and purchase of vessels.
• Port agent represents the owner and assists the vessel for the owner’s account in
order that the vessel will have the best possible despatch. The port agent will
have contacts with all local authorities.

Continued
• Liner agent functions as a kind of general agent for the line within a geographical
area.
• Liner agents represent the owners in many different ways.
• Liner agents will have contact with possible shippers and forwarding agents within
the area and will also do all the work for the line otherwise carried out by a port
agent.
(Source: Shipbroking and Chartering Practice, Lars Gorton, Rolf Ihre, Arne Sandevarn, 5 th edition, LLP, 1999)
• Sometimes in the charter party the owner and the charterer will agree that the
charterer has the right to nominate the port agent in order to further his interests.
In this case, the owner may protect his interest to a certain extent by appointing a
husbandry agent or protective agent (protecting agent).

Continued
• Protecting agent is a trusted agent specially appointed by the ship owner to manage
his interests when for example he has to accept a charterer’s agent as stipulated by
the charter party.
• A protecting agent is usually nominated when the charterer’s agent nominates
someone who is unknown to the ship owner or when disputes are expected.
Nevertheless, nominating a protecting agent means that the ship owner has to pay
an additional agency fee.
• Husbandry agent is a trusted agent representing the shipping company when a ship
is chartered. The husbandry agent manages only ship and shipping company matters,
for example repairs to the ship and crew. The person fulfilling this role is usually not
involved in loading or discharging matters. His agency fee is paid by the ship owner.

Continued
• If all parties involved in a tramp vessel shipment appoint their own agents, the following
agents could be at work on the same ship. In the example we assume that the owners are
hiring out the ship to the time charterer who has, in turn, entered into a voyage charter
agreement.
first agent → charterer’s agent, in service of the voyage charterer
second agent → protecting agent for the time charterer
third agent→ husbandry agent for the ship owner
• In this case, the second agent ensures that the first agent doesn’t act contrary to the
interests of the time charterer. The third agent looks only after the ship owner’s interests.
• In practice, the agent can fulfil more than one of the abovementioned roles at the same
time.

Continued
Charter contracts
• In tramp shipping, there are different ways in which a ship can be hired, for
example for a specific voyage or for a specific time.
• Correspondingly there are three main types of charters, namely voyage charter,
time charter and bareboat charter. Often, the contract of affreightment, similar
to consecutive voyages which is a special type of voyage charter, is listed as a
different type of chartering.

Continued
1) Voyage Charters
• When the charterer and the owner agree that the ship will carry a certain cargo
from point A to point B, or will make several consecutive voyages between these
points, it is a voyage charter.
• A voyage charter is therefore for one or more voyages, for example ‘three
consecutive voyages”.
• The person who charters the ship is known as a voyage charterer, the payment is
called freight and the contract a voyage charter-party.

Continued
• The voyage charter is typical within charter shipping.

• The charterer may be the person owning the cargo but may also charter the
vessel for someone else’s account.
• The “owner” of the vessel from whom the actual voyage charterer charters the
ship may himself be a time charterer or even a voyage charterer who sub-
charters (sub-lets) the ship.
• In case the owner is not the registered owner of the ship, he is normally
described as “time chartered owner” or “disponent owner”.

Continued
• In a voyage charter, the freight is calculated for the voyage or the voyages to be
performed.
• It can be a fixed amount per ton of cargo to be carried or a lump sum. The level
of the freightage depends on the market, i.e. supply and demand.
• A fixed number of loading and discharging days are incorporated into the freight.
• If the charterer needs more loading and/or discharging days, an additional cost
will have to be paid for additional port time. This is called demurrage.
• If fewer days are required, the ship owner will usually repay a portion to the
charterer. This is called despatch.

Continued
• In Europe, despatch is very rare these days. The number of loading and
discharging days is stated in the charter party.
• The usual cost of operation, the port costs and the fuel costs are the
responsibility of the owner.

Continued
2). Time Charters

• If, the owner puts the ship at the disposal of the charterer for a certain period of
time, during which period the charterer, within the limits of the agreement, controls
the commercial operation of the vessel, this is a time charter.
• In a time charter the ship is rented for a specific period.
• The charter party determines which ship should be delivered to the charterer and
again returned to the owner.
• The charterer temporarily takes over the role of owner and becomes the replacement
owner, or the so-called “substitute owner”.
• It is often said that the charterer is responsible for the commercial operation,
whereas the owner remains responsible for the nautical operation.

Continued
• Under a time charter the crew is employed by the owner who is also responsible
for the maintenance of the vessel and the supervision of the cargo.
• The charterer, however, within the framework of the contract, has the right to
decide the voyages to be made and the cargoes to be carried.
• In a time charter, the freight is determined per time unit (for example per month
of 30 days) and is regularly paid in advance.
• The freight is largely influenced by the market.
• As in voyage charters, the usual costs involved in operating a ship are the
responsibilities of the owner. Contrary to voyage charters however, the fuel and
port costs incurred in a time charter are the responsibility of the time charterer.

Continued
3) Bareboat Charters
• Bareboat charter is also called demise charter, meaning that the vessel is put at the
disposal of the charterer for a certain period of time, but the charterer takes over
virtually the entire responsibility for the operation of the vessel and all the costs and
expenses except the capital costs.
• Under a bareboat charter, an empty ship, without crew, supplies, fuel etc. is therefore
made available to the charterer by the ship owner.
• Since the charterer takes over almost all of the owner’s functions except for the
payment of capital costs, the charterer will have the commercial as well as the
technical responsibility for the vessel and will pay for maintenance, crew costs and
insurance, etc. in a bareboat charter. In principle, the captain and crew are appointed
by the charterer.

Continued
• In practical terms a bareboat charter is used as a method of financing the acquisition of

newly constructed ships.
• Bareboat charters are the norm, for example, when a bank or a group of investors buys a
ship as an investment. They have no further knowledge of matters relating to the operation
of the ship. In such a case they can give the boat to an existing shipping company, via a
broker, as a bareboat charter. The ship owner therefore doesn’t have to buy a ship at a high
cost, he simply hires it.
• Bareboat charter usually covers a (very) long period of time, for example 10 years, and is
often hinged to a management agreement. In addition, the charterer often has the option to
buy the ship when paying the last term payment, or during the charter period.
• The bareboat charter has been a comparatively unusual type of charter but with changing
trading and investment patterns it has become more common. It is often described as a kind
of ship financing rather than a genuine charter agreement.

Continued
Management Agreement
• A management agreement is not a chartering agreement in its traditional sense
but rather a know-how and service agreement, where the manager may be
entrusted with the duty to man and supervise the ship, or also a much wider
duty, to operate and find employment for the vessel as if he were the owner and
for the account of the actual owner.
• The detailed responsibilities of the manager vary but principally the manager
concludes agreements with respect to the vessel in the name of the owner and
for the owner’s account.

Continued
• Correspondingly, recent years have also seen the establishment of so-called “ship
management” companies. The activities of those companies may be restricted to
commercial management, technical management or crew management. It is
important to realise that management companies only act on behalf of the ship
owners.

Continued
4) Contract of Affreightment / Volume Contract

• Contract of Affreightment, abbreviated to CoA, is a special type of charter
where a ship owner makes an agreement with a charterer to carry for the
charterer during a specified period of time, a large quantity of goods
between certain ports.
• The ship owner chooses the ship. Depending on the circumstances it may
also be called quantity contract or volume contract.
• A CoA can have different bases. Usually the CoA is also a contract that is
 for the carriage of a specified type and quantity of cargo
covering two or several shipments
running over a long period.
Continued
• Under CoA, the ship owner commits himself, usually in a direct relationship with
a manufacturer, to carry an agreed amount of cargo from point A to point B
within an agreed time.
• The shipping company has the freedom to determine for themselves which ship
(of the same type) to use and when.
• The ship owner may employ several of his vessels on an almost continuous basis.
• Contracts of affreightment also afford the shipping company the opportunity to
take on cargo for the return journey, for example, which may imply an efficiently
operated, advanced transportation system with a regular flow of cargo.
• Under the CoA or volume contract the individual vessel has less importance for
the charterer, but the important thing is that the owner performs his duty to
carry an agreed type of tonnage.

Continued
Bases to form CoA

The following are examples of the different bases where a CoA is formed.
• The owner undertakes to carry between X and Y tons of grain from A to B during
year xxxx.
• The owner undertakes to carry all cargo shipped by the charterer from loading port
A to the destination B during the period xxxx-xxxx (years).
• The owner has the right to carry all crude oil imported by the charterer during xxxx
and xxxx (years).
• The owner has the right and obligation to carry all vehicles exported by the
charterer during the period xxxx-xxxx (years), and the charterer is to guarantee that
he/she will have at least five shipments per year, each consisting of X-Y vehicles.
(Source: Shipbroking and Chartering Practice, Lars Gorton, Rolf Ihre, Arne Sandevarn, 5th edition, LLP, 1999)

Continued
Charter Terms
• Charter terms are often used in voyage charter to explain the detailed
agreements with regard to freight. In voyage charter there are three main
types of charter terms:
gross charter
net charter
FIO charter
• Charter rate is the freight rate of a charter contract in USD / ton or USD /
cbm. All charter rates include depreciation of the ship, cost for crew, bunker
and administration. Depending on the charter term, port related costs and
loading / unloading costs may or may not be included.
Continued
Gross Charter
• Gross charter includes all the voyage freight, including all port related
costs and loading/unloading costs. This is the most usual form.
Net Charter
• Net charter is the charter rate that does not include loading and
unloading costs, or port related costs which occur during the time
period of the presentation of Notice for Readiness for loading until the
end of loading.
• Net charter is advantageous for ship owners in case the port conditions
are not known (handling rate per day unknown, congestion etc.).

Continued
FIO
• FIO represents Free In and Out, or Free In/Out.
• FIO is the charter rate that does not include loading / unloading costs. The charterer is
then responsible for the costs of loading goods onto the vessel and discharging goods
from the vessel.
Different forms are possible:
• FIO = free in / free out; ship owner pays no loading and unloading costs
• FD = free discharge; ship owner pays no unloading cost
• FI = free in; ship owner pays no loading costs
• FIOT = free in and out / trimmed; ship owner pays no loading, unloading and trimming
costs
• FIOS = free in and out stowed; ship owner pays no loading, unloading and stowing costs

Continued
Affreightment process
• The chartering procedure can be practically divided into three stages, namely
the stage of investigation, the stage of negotiation and the follow-up stage.
1) Investigation stage
• The investigation stage starts when a charterer directly or through a broker
enters the market with an order.
• Before the charterer enters the market with the order he/she has to decide
whether he/she wants to commence firm freight negotiations immediately,
or whether he/she wishes primarily to collect suggestions and intends to
start negotiations only after the materials gathered have been sorted out and
evaluated.

Continued
• Depending on the status of the business deal, the order may therefore
open with the wording “FIRM ORDER…” or “PROSPECTIVE ORDER /
ORDER EXPECTED TO BECOME DEFINITE” or similar wording.
• Corresponding to the different types of order, the owner may give a firm
offer or an indication, which is a proposal accompanied by a freight idea.
• In case of proposals, the charterer may initiate discussions with a number
of owners until he/she finds a suitable one and asks for a firm offer.
• Once a firm offer is made, the parties can proceed to the second
negotiation stage.

Continued
2) Negotiation stage
• The negotiation stage can be divided into two parts. The first part is the
negotiation of the main terms, and the second is the negotiation of the details
and wording of the clauses.
• The main terms are those essential to the charter party, and breach of any of
them will not lead to an agreement.
• Both the ship owner and charterer or their respective brokers give offers and
counteroffers and will continue in this way until they reach a compromise.
• In practice, often a standard charter form will be referred to. At this stage the
charterer or its broker will then compile a full recapitulation of all terms and
details as so far agreed. The owner or his broker will carefully check this
“recap” without delay.
Continued
• The main negotiation of terms is usually done within narrow time

limits. The agreement on “main terms” is always stated to be “subject
to details”.
• The next step of negotiating the details is concerned with all the
additional points and terms which are not covered in the main terms,
but which have to be clarified before a charter can be completed. This
process might be laborious and long lasting.
• When both parties have agreed on each detail, then this means that
all parties have reached a “clean fixture”.

Continued
3) Follow-up stage
• Some additional matters that may remain as part of the chartering
work are dealt with during the follow-up stage.
Essential conditions of a charter contract
• Essential conditions of a charter contract are those of vital
importance to the engagement. In lieu of the essential conditions the
contract will be incomplete or the contract will not be considered to
be concluded. In most cases the main terms are essential conditions
of a charter party.

Continued
In both voyage charter and time charter, the following details will be considered as essential:
• the ship owner’s name
• the ship’s name and particulars
• laydays / cancelling day for the delivery
• charter – party form
• Commissions
Particular to voyage charter, the following details are also needed:
• cargo quantity and description of the commodity
• loading and discharging ports and berths
• loading and discharging rates and terms
• demurrage and despatch
• freight and payment conditions

Continued
Particular to time charter, the following details will be necessary too:

• place of delivery and redelivery
• intended trade with geographical limits and other trading limits
• bunkers on board on delivery and redelivery
• hire and conditions for hire payment.

Questions
A. Which description fits which Charter type?

• To rent the ship and crew for one year
• To transport fruit from Brazil to Romania
• To rent the ship without crew, fuel and etc. for ten years
B. Which statement below about the Charter Party is incorrect?

• a. It is a contract between the ship owner and charterer of a vessel
• b. A ship owner executes the Charter Shipping
• c. To form a charter party, there are many parties involved including ship owner,
charterer, and brokers
• d. Charter party usually takes a standard form which is recommended by The Baltic
Exchange and BIMCO

Questions
A. Which description fits which Charter type?

• To rent the ship and crew for one year
• To transport fruit from Brazil to Romania
• To rent the ship without crew, fuel and etc. for ten years
B. Which statement below about the Charter Party is incorrect?

• a. It is a contract between the ship owner and charterer of a vessel
• b. A ship owner executes the Charter Shipping
• c. To form a charter party, there are many parties involved including ship owner,
charterer, and brokers
• d. Charter party usually takes a standard form which is recommended by The Baltic
Exchange and BIMCO

Questions
C. If a ship owner has agreed to carry a large quantity of goods during a specified
period between certain ports, this is a contract of
• a. Contract of Affreightment
• b. Time charter
• c. Voyage charter
• d. Bareboat charter

D. The Charter Term FIOS means
• a. Free in / free out; ship owner pays no loading and unloading costs
• b. Free in and out / trimmed; ship owner pays no loading, unloading and trimming costs
• c. Free in and out / stowed; ship owner pays no loading, unloading and stowing costs
• d. The charter rate that does not include loading and unloading costs, or port related
costs

Questions
E. The following are essential conditions of a voyage charter contract,

except:
• a. The ship owner’s name, the ship’s name and particulars
• b. Bunkers on board on delivery and redelivery
• c. Lay days / cancelling days for the delivery; freight and payment
conditions
• d. Loading and discharging ports and berths

Chapter-5
Documents In Shipping
• The student should have knowledge on the main documents in sea
shipping (liner shipping and Tramp shipping).
• The student should be aware when and how the main documents are
applied.

5-1. Bill Of Lading
Objectives :
• The student should understand the three functions assumed by bill of
lading in liner services, and the information generally contained in a
bill of lading.
• The student should also understand the different types of bills of
lading in practice, and the legal implications associated with each. The
student should be able to explain in what circumstances which bills of
lading are used, and why.

Continued
Bill of Lading in General
B/L Development
• Among all the documents in relation to sea transport, the bill of
lading (B/L) is the central document in liner shipping.
• It is the main document for the regulation of the relationship
between the shipper, the carrier and the consignee.
• It is often filled in by the shipper or by a forwarding agent, and signed
by a representative of the carrier.

Continued
• In medieval times, the merchants travelled with their goods and did not need to
receive documentation from the carrier, or to give such documentation to the
buyer of the goods at a foreign port.
• The need for a B/L arose when merchants first decided not to accompany their
goods any more during maritime transport but, instead, put them in the custody
of the master and ship owner for transportation to overseas destinations.
• With the help of information and telecom services, during the long journey at sea
the goods may virtually go through a few sales and purchases before they reach
the destination market on shore.
• Such development in the economic needs and the ocean transport practice has
resulted in the B/L document, to which distinctive functions and legal rights have
accordingly been attached.

Continued
Functions of B/L
In recent and modern sea transport, the B/L is generally considered to have three
functions:
• As a receipt: the carrier acknowledges that he has received the goods, type, quality
and quantity as stated (either on board the ship or for shipment) and that they will
be delivered to the consignee.
• As evidence of the contract of carriage: between carrier and shipper (holder of the
B/L), stating clearly all conditions regarding transport and delivery of the goods.
• As a document of title: the B/L is a document enabling the seller, who has shipped
the goods for delivery to the buyer, to transfer the right to obtain delivery of the
goods, to the buyer. The holder of the B/L is entitled at the destination to demand
delivery of the goods carried.

Continued
Negotiable vs. Non-negotiable

• Depending on whether the B/L is transferable in terms of the rights
and obligations attached to it, the B/L may be regarded as
“negotiable”, “quasi-negotiable” or “non-negotiable”.
• In practice, the B/L then may be made out to a named person, to a
named person or order, to the holder, or to a named person “not to
order”.
• When a B/L is transferred, the holder will make this action clear by a
so called endorsement.

Continued
Endorsement
• Endorsement literally means: mention on the reverse side. This means
that the holder of the B/L transfers the rights and obligations in the B/L
to another person by mentioning the name of his company on the
reverse side, provided with an authorised signature.
• A blank endorsed B/L is a B/L to the bearer (to order). Anyone who
possesses it can claim the right to the goods as a lawful holder of the B/L.
• A B/L is fully endorsed when also the name of the beneficiary is
mentioned (to order of …). With a Letter of Credit the bank for example
can be mentioned in the B/L formally as the party at the receiving end (to
order of …Bank).

Continued
Layout of B/L
• The reverse side of the B/L mentions the transport conditions. Most times
these conditions are referred to as the Hague-Visby Rules, or whichever
rules have been incorporated.
• The front side of the B/L mentions data concerning the cargo, such as:
 Name of the carrier, in print
The B/L number
 Reference of the shipper
Name of the shipper
Name of the receiver

Continued
Notification address
 Name of the vessel
 Port of loading
Port of discharge
Where freight is due
Number of originals (e.g. 3)
Specification of the goods (marks, numbers, quantity, type of
packaging,
description of the goods, weight etc.)

Continued
Other Types of B/L :
Various types of B/L’s can be distinguished, such as:
• Liner B/L: the bill issued by a shipping line that usually offers a regular
service, with fixed loading dates at particular ports of call.
• Container B/L: for sea transport of containers.
• Sea waybill / Waybill: a non-negotiable receipt with a named person which
contains contractual terms. A waybill does not operate as a document of
title, but it still performs as that of a receipt and that of evidence of the
contract of carriage. A waybill is used when there is no need for a
negotiable B/L, e.g. the consignee does not want to resell the goods, or
when in-house transfer takes place within large multinational companies.

Continued
• Express B/L or Data Freight Receipt: this is electronic information between parties.
The outline of the form is identical to the Combined Transport B/L and gives the
opportunity to deliver the goods to the receiver, without requesting him/her to
present himself/herself as the owner with a signed and dated proof of ownership.
This mostly regards transactions between sister companies, which settle accounts by
current account and not via documentary bank credits.
• EDI and the electronic B/L: instead of the traditional paper B/L, this B/L is produced
and negotiated by electronic means or specifically, via EDI (Electronic Data
Interchange). But due to the ambiguity of legal implications of paperless shipping
transactions, such as the electronic signature, the EDI or electronic B/L is not yet
widely accepted or used in the shipping business. But note, banks have already been
applying electronic payments for a longer time and have the necessary infrastructure
available to do so. They also have built up vast experience in the fields of EDI.

Continued
• Printing of B/L at location: Since the introduction of the electronic B/L

is still pending, mainly for legal reasons, some larger carriers such as
Maersk have developed intermediate solutions. A shipper is e.g.
provided with blank B/L’s which can be printed at their location
provided the official signature is authorized by the carrier. It remains
to be seen whether such a development will prove to be ideal.

Continued
Ocean Bill of Lading

• Ocean bill of lading is a traditional expression, referring to a
document covering the carriage of goods by sea and not, for example,
inland carriage stages (e.g. by road, rail or barge).
• Ocean B/L is sometimes called “marine bill of lading”. It may be
referred to on the front of the bill as a “port to port bill of lading”,
indicating the general period of responsibility of the carrier.

Continued
Clean B/L
• A B/L that contains no remark with respect to the condition of the goods is
called a clean B/L.
• Due to the terms and conditions of the purchase agreement, the buyer is
generally under no duty to pay for an unclean B/L. Under payment by
documentary credit the UCP (article 32 in the UCP 500 revision) also prescribes
that the bill of lading must be clean.
• It is therefore clear that the seller/shipper has a great interest in having a clean
B/L issued by the carrier, since the buyer will otherwise refuse to pay for the
document, or under a documentary credit, the paying banks will refuse to pay
against such a document.

Continued
FIATA Multimodal Transport Bill of Lading (FIATA FBL)

• In contrast to the ocean B/L, if the shipping lines or carriers want to provide an
all-round service to their customers they will issue a “multimodal transport B/L”,
or the so called “combined transport B/L” or “intermodal B/L”, under which the
carrier assumes contractual responsibilities for the entire period of carriage and
not just responsibility for the sea leg. Under a multimodal transport B/L the
cargo will be transported by two or more modes of transport.
• FIATA Multimodal Transport B/L is such a multimodal B/L developed and
recommended by FIATA (International Federation of Freight Forwarders
Associations).

Continued
Freight Forwarders (House) Bill of Lading
•Usually, the B/L is issued by the ship owner or carrier. With the development of the
forwarding and logistics business, the service offered by some freight forwarders goes
deeper and extends along the entire transport chain. Some big freight forwarding
companies go a step further and have developed their own bill of lading, i.e. so called
house bill of lading.
•Literally the house bill of lading refers to the specific bill personal to a particular operator
but in practice, the house bill of lading is reserved for those freight forwarders who do not
operate ships themselves, but which group together cargos from different owners and
arrange for these to be sent with an actual carrier.
The freight forwarder issues transport documents to individual cargo owners, and then
procure a contract of carriage with a carrier covered by an ocean B/L or intermodal B/L.

Continued
Through B/L
•The through B/L usually refers to a document recording transport by more than one carrier. This type of bill of lading
has been in use since the nineteenth century.
•Through B/L is normally used where there is more than one sea carrier, but is sometimes also used where different
modes of transport are involved (for example, road, sea, or rail). When the through B/L is used for different modes of
transport, it may overlap with a combined transport B/L, or multimodal B/L or intermodal B/L.
Received B/L (Received for shipment)
•If the bill of lading is to be issued upon receipt of the cargo, which has not yet been loaded on board the vessel, the
carrier will issue a “received for shipment bill of lading” (Received B/L). Therefore a Received B/L is an
acknowledgement the carrier makes stating it has received goods from somewhere, e.g. at a container depot. It is
different from an “on board” or “shipped” B/L, which shows that the goods have actually been loaded on board the
vessel.
•Sometimes in the letter of credit it is seen that the banks only accept on board and clean B/L’s. In such a case the
Received B/L will be insufficient for the shipper to get the payment from the bank.

Continued
•The Received B/L has come to play a more and more important role where unity transports, particularly container transports
and Ro-Ro traffic, dominate the trade. Traditionally the shipped B/L has been the most common.
•A Received B/L may be overstamped with the words “shipped on board” along with a date, in order to convert it into a
shipped bill.
•Mate’s Receipt
•The mate’s receipt is drawn up by the carrier or his agent at the request of the owner of the goods. This document is issued
after the loading of the goods and serves at that moment as proof of receipt. The carrier will not submit a B/L before this
document has been returned.
•In practice the mate’s receipt is sometimes used when the supplier must supply an FOB.
Then the shipper can only dispose of the goods after having become the owner of the goods by transfer of the mate’s receipt
(mostly after payment). The shipper returns the mate’s receipt to the carrier and then the shipper can give the B/L
instructions to the carrier.

Continued
•The Received B/L has come to play a more and more important role where unity transports, particularly container transports
and Ro-Ro traffic, dominate the trade. Traditionally the shipped B/L has been the most common.
•A Received B/L may be overstamped with the words “shipped on board” along with a date, in order to convert it into a
shipped bill.
•Mate’s Receipt
•The mate’s receipt is drawn up by the carrier or his agent at the request of the owner of the goods. This document is issued
after the loading of the goods and serves at that moment as proof of receipt. The carrier will not submit a B/L before this
document has been returned.
•In practice the mate’s receipt is sometimes used when the supplier must supply an FOB.
Then the shipper can only dispose of the goods after having become the owner of the goods by transfer of the mate’s receipt
(mostly after payment). The shipper returns the mate’s receipt to the carrier and then the shipper can give the B/L
instructions to the carrier.

5-2. Charter Party
Objectives :
• The student should understand the importance of charter parties in
Tramp shipping, and the four types of contracts corresponding to four
types of charters.
• The student should have knowledge and be able to recognize a few
standard forms of charter parties. The student should also be aware
that there are other documents used in chartering, and when such
documents are used.
• The student should understand what general average refers to.

Continued
Charter Party
• Charter party is the written agreement between the owner and the charterer in
tramp shipping. Together with the bill of lading issued under a chartering, the
charter party is the most important document governing the commercial and legal
relationships between the parties.
• The charter party includes all stipulations relating to the carriage or rental
agreement between the owner and the charterer. For each type of charter a
different charter party is used, namely:
voyage charter parties
time charter parties
bareboat charter parties
contracts of affreightment.

Continued
Charter Party Standard Forms

• In the shipping business, charter parties are almost always made out
on standard forms. Large shipping companies and shippers may have
made their own charter parties as well, which they will normally
introduce as a basis for negotiations.
• The purpose of standard charter parties is to standardize a number of
clauses frequently used by varying parties in different trades, and to
help the parties in drafting the contract. They will only need to fill in
certain items, such as the names of the parties and the vessels, ports,
cargo, data about the ship, laytime, notice time, etc.

Continued
BIMCO (Baltic and International Maritime Conference), in Copenhagen, plays an

important role in the drafting of standard forms and has produced a large number
of approved documents. Below are a few exemplary standard forms produced by
BIMCO:
Voyage Charter Party: Gencon, Welcon, Baltcon, Polcoalvoy, Sovcoalvoy, Scancon,
and Nuvoy.
• To note, Gencon is intended to be used when there is no suitable special voyage
charter form available. Therefore, Gencon charter party contains comparatively
few standard clauses.
Time Charter Party: Baltime, Linertime, Gentime.
• The standard forms are often gradually revised and amended. It is therefore
important to agree and mention which edition of the standard form is to be used.

Continued
BALTIME 1939 Example

• Below is an example of a standard time charter party developed by BIMCO.
There are also a large number of standard forms that have been modified for
specific types of cargo and/or route. Often, the conditions stipulated in
these forms have evolved over time as a result of standard practice.
Company Standard Forms
• With respect to the tanker market, the charter party forms are dominated
by the large oil companies, which have all drafted their own forms. In
voyage charters the examples are such as BP-voy, STB-voy, Shellvoy, etc. In
time charter forms are as such: BP-time, Mobil-time, and Shelltime.

Continued
Other Standard Forms

• Some other well-known charter parties used in business practice are listed
below. In voyage charters:
• C (ore) 7, for ore shipments
• Baltimore Form C (CBF), for grain shipments from the United States and Canada
• North American Grain Charter Party (Norgrain), also applicable to grain
shipments
• American-Welsh (Amwelsh) Tankvessel Voyage Charter Party for tanker
shipments
In time charters:
• New York Produce Exchange, drafted by American broker interests (NYPE 93)

Continued
Charter Party Terminologies

Deadfreight
• When a charterer fails to ship the total amount of cargo as agreed in the charter
party, deadfreight is calculated for the part of the cargo that has not been shipped.
• Cancelling date
• The final date on which the ship must be ready for loading. If not, the charterer
has the right to cancel the charter.
Off hire
• Interruption of the hire in a time charter for a specific period when the ship cannot
be operated. This happens, for example, when there is engine damage, insufficient
crew, etc.

Continued
In geographical rotation
• This stipulation entails that when loading or discharging in various
ports in a specific area, for example the Antwerp-Hamburg range,
ships must call on these ports in geographic order to avoid detours
and therefore extra costs.
• Always safely afloat
• The ship must be assigned a loading/discharging location which it can
reach while loaded and where it can always berth safely afloat.

Continued
Free in and out stowed

• Abbreviated to f.i.o.s., this entails that the loading, discharging and
stowage costs are for risk and account of the shipper/consignee of the
cargo and not for the ship(owner),
Berth terms or Liner terms
• Loading and discharging takes place as is usual in liner shipping.
Demurrage
• Fixed compensation payable by the charterer to the ship owner, if
either the loading or discharging time agreed in the charter party is
exceeded.
Continued
Despatch Money
• Compensation payable by the ship owner to the charterer if the charterer does
not use all the port days agreed upon in the charter party.
Lay days/cancellation or lay/can
• The period in which the ship must be ready for loading, as stipulated in the
charter party. A ship is, for example, chartered with “lay/can 10/28 June”. The
charterer is under no obligation to start loading before the 10th of June, while the
28th of June is the final date (cancelling date) on which the ship must be ready for
loading.
Lay time
• The number of days that as per charter party is allowed for loading and
discharging

Continued
Reversible lay days

• When the allowed port days are different for loading and discharging,
then this clause allows days won or lost during loading to be
calculated when discharging. Demurrage and despatch money
calculations are only done once the cargo has been loaded and
discharged.
All purposes
• If the lay time clause refers to a number of days as “all purposes”,
then these days can be used for both loading and discharging.

Continued
Custom of the Port

The loading or discharging time is calculated according to what is custom
in that port. This clause usually leads to all sorts of disputes. When a
“custom of the port” clause is accepted, the clause must comply with
the following conditions:
 the custom of the port must be generally known
it must be definite
it must be reasonable
it may not conflict with the law
Continued
Other documents in chartering

1) Bill of Lading
• The bills of lading used in tramp shipping are more simplified in
contents and execution than those used in liner shipping.
• Only basic information, such as load port and discharging port,
shipper, consignee, nature and amount of cargo are listed. Apart from
that, reference is made to the stipulations of the charter party. These
stipulations are binding. The date of the charter party must, however,
also be given.

Continued
2) Other documents
• The bill of lading is a negotiable document and it often happens that during the
voyage the cargo changes owner more than once. It can therefore happen that
the original bills of lading cannot be presented at the time of discharging the
cargo. In such cases, a Letter of Indemnity or in some cases, a (bank) guarantee
is used.
• When releasing part shipments (e.g. grain shipments), Delivery Orders are used.
• There are also other documents related in charter shipping, such as Notice of
readiness, Statement of facts, Time sheet, Portlog, and Certificate of delivery, to
name a few.

Continued
Letter of Indemnity
• A “letter of indemnity” is used when the original bills of lading cannot
be produced. The last owner of the cargo usually hands the LOI
directly to the ship owner or time charterer. The agent seldom
receives the LOI. The agent will only allow the cargo to be discharged
once approval has been received from the ship owner. The LOI
indemnifies the captain for handing over the cargo.
• The “letter of indemnity” is used particularly in tanker services.

Continued
Delivery Order
• A “delivery order” is a document, which is issued on request by the
shipping company / agent, against turning in of a complete set of
B/L’s. So the D/O replaces the original B/L. This means that the
conditions mentioned in the B/L are also applicable to the D/O. The
reason why one would wish to receive a D/O against turning in the
B/L may be that the importer does not want to release the name of
the shipper, as mentioned in the B/L.
• This information is not mentioned on the D/O. Another reason could
be that cargo, which is carried on one B/L, is divided and sold in lots.

Continued
Notice of Readiness
• The “notice of readiness” is a written notice from, or on behalf of, the
captain to the charterer or his agent. Through the “notice of
readiness” the captain indicates that his ship is ready for
loading/discharging. This notice can be given at any time of night or
day and on Sundays and public holidays.
• The charter party determines between which hours this “notice of
readiness” can be accepted and when the laytime starts. A note on
the accepted “notice of readiness” often reads: “time to count as per
relevant charter party”.

Continued
A ship is ready for loading or discharging when the following conditions

have been fullfilled:
The ship must have arrived at the loading or discharging berth
stipulated in the charter party “or as near thereto as she can safely
get”.
The ship must be ready to load or discharge without any restrictions.
(The holds must be clean and dry and in the case of tankers, the tanks
must be clean and dry)
This document enumerates the facts and times regarding the arrival,
departure, loading and discharging of a ship. A time sheet is compiled,
based on the “statement of facts”.
Continued
Statement of Facts
• The “statement of facts” also mentions any possible delays. This
document must be signed by the captain and/or his/her agent as well
as the party involved with the cargo and/or his/her agent. The
terminal or installation often co-signs as well.
• The “statement of facts” contains only facts. No conditions of the
charter party are interpreted in this document, although the charter
party is referred to often. This document almost never leads to
disputes.

Continued
Time Sheet
• The “time sheet” is a document in which the facts provided in the
“statement of facts” are interpreted in terms of the conditions
stipulated in the charter party. The allowed laytime and when it starts is
determined. The actual laytime used is calculated up to the minute in a
detailed layout.
• The result of the “time sheet” is the number of days, hours and
minutes that the ship has been used for, respectively, loading and/or
discharging.
• This information forms the basis for calculating the “despatch money”
or “demurrage”, if applicable.
Continued
Port Log
• A “portlog” contains all the information regarding the total time the
ship stayed at port. Apart from this information, as stated in the
“statement of facts”, the amount of fuel on board at arrival and
departure, the amount of fuel and drinking water delivered, the
number of tug boats used and the draft of the ship etc. are also listed.
• The actual loading and or discharging times are not specified. This has
already been specified on the “statement of facts” and the “time
sheet”.

Continued
Certificate of (Re)delivery
• When a ship is delivered on a time charter, a “certificate of delivery” is
drawn up. This certificate is signed by the captain, the agent on behalf of the
owner and the charterer’s agent. The following are stated in this document:
date and time of delivery (this can, for example, be the dropping outward
pilot or all fast events.)
the amount of fuel on board (usually measured by an independent bunker
surveyor)
a possible reference to the survey report, compiled by an independent
bureau, describing the condition of the ship in detail.
• Upon redelivery of the ship a similar “certificate of redelivery” is drawn up.

Continued
General Average
• General average can be described as such an act, where any
extraordinary sacrifice or expenditure is voluntarily and reasonably
made or incurred in time of peril for the purpose of preserving the
property e.g. vessel and other goods, imperilled in the common
adventure. The extra cost of the loss is shared by the ship owner and
owners of the saved goods.

Continued
• With General Average there is an emergency situation at which expenses are

deliberately incurred to preserve the ship, cargo and crew. Examples of
extraordinary expenses are:
a vessel runs aground or has to call at a port of distress; tug assistance is
required
as a precaution against capsizing deck cargo must be jettisoned
at a port of distress extra expenses have to be incurred for the stevedore in
order to make the vessel seaworthy again
communication costs and administrative costs resulting from the emergency
situation.
Continued
• In case during a sea voyage an event has taken place involving great
risks for ship and cargo, the ship owner may – on the initiative of the
captain – declare General Average. Examples of such an event are
collision, storm damage with the risk of capsizing, fire or engine
failure.
• The actions the vessel has taken to reduce the risk must have been
completed successfully to declare General Average.

Fire

Continued
Settlement of General Average

• The costs incurred, i.e. the damage, will be apportioned among the various parties
involved in the transport, viz:
the owner of the vessel
the cargo-interested parties
the owners of containers
Before the damage can be apportioned among all cargo-interested parties, several things
have to be established, viz
• What (extraordinary) expenses qualify for compensation
• What is the value of the vessel, freight proceeds, containers, cargo and possibly the
bunkers, and consequently, how must the expenses be spread pro rata.

Continued
• For a correct and prompt settlement an average adjuster is appointed

by the P&I club to make the average adjustment and to settle the
General Average. An average adjuster is a sworn expert.
• The settlement of a General Average often implies a lot of legal
wrangling and may take many years. For the procedure to be followed
in cases of General Average international rules apply; the York-
Antwerp Rules 1974, which were amended in 1990. In most Bill of
Lading conditions these Rules are referred to.

Continued
• For a correct and prompt settlement an average adjuster is appointed

by the P&I club to make the average adjustment and to settle the
General Average. An average adjuster is a sworn expert.
• The settlement of a General Average often implies a lot of legal
wrangling and may take many years. For the procedure to be followed
in cases of General Average international rules apply; the York-
Antwerp Rules 1974, which were amended in 1990. In most Bill of
Lading conditions these Rules are referred to.

5-3. Accompanying Documents
Objective :
• The student should be aware what the other main documents are
that are involved in shipping, and be able to explain why and when
such documents are to be used in practice.

Continued
• The most important document governing the relationship between

the parties in liner shipping is the bill of lading, and in charter
shipping, the charter party together with the bill of lading. But other
documents such as mate’s receipt, delivery orders and booking notes
also play an important role. On top of these, there are documents
which may be required by various authorities, such as cargo
manifests, invoices, Customs declarations, certificates of origin etc.

Continued
Manifest
• The manifest is drawn up by the local representative of the line
operator. A manifest contains all necessary information, copied from
the B/L’s, completed with the freights and where the freights are
payable. The manifest also mentions the disbursements which should
be collected by the carrier on behalf of the shipper / forwarder.
• There is a simplified manifest, called loading manifest. On this
document the information regarding freight and disbursements is
omitted. The loading manifest is only used for administrative
purposes by customs, stevedores etc.

Continued
Consular Invoice
• A consular invoice is a document with detailed statement of goods,
certified by a consular official of the importing country, and used by the
customs officials to verify the value, quantity and nature of the
shipment shipped.
• The consular invoice describes the goods shipped, showing information
such as the consignor, consignee and value of the shipment. It has
spaces for showing marks, numbers, weights, goods value, origin, and a
declaration of the accuracy of the contents of the invoice. Often it is in
the language of the importing country. It may be required to be on a
special form and be subject to the payment of special fees.

Continued
• Consular invoices are required by certain nations and used to identify

goods. Forms can be purchased from the Consul of the importing
country, at the point of shipment. Usually other documents, such as a
commercial invoice, will also have to be presented to the Consul at
the time the consular invoice is legalized.

Continued
Customs Invoice
• The customs invoice is used in some importing countries for customs
purposes. The customs invoice varies in format but they contain essentially
the same data as in commercial invoices and packing lists.
• The customs invoice is usually available at local customs brokerages or
some forwarding companies. If the goods do not fall into a special category
such as hazardous goods, the invoice can be prepared by the exporter
himself/herself or his/her agent. It is therefore a self-certified document.
• Some importing countries may also even require the importer to provide
completed customs invoices for customs clearance.

Continued
Certificate of Origin
• A Certificate of Origin (CO) is a document certifying the country in
which the goods are manufactured, i.e. the origin of the shipment. It
is used by customs offices to determine the appropriate duties to be
assessed on the goods imported and, at times, to determine whether
the shipment may be legally imported at all.
• The CO may be required because of established treaty arrangements
between the countries, varying duty rates, and preferential duty
treatment dependent on the shipment’s origin. Some nations restrict
imports from certain countries; many countries limit the quantity of
goods that are allowed to be imported.
Continued
• In certain cases, the CO may also include information of the specific

regional content value, such as the local materials and labor content.
The CO may be required even though the commercial invoice already
contains the information. The descriptions and amounts on the CO
must be consistent with those entered on the invoice.
• The certificate of origin is prepared by the shipper or its agent.

Questions
A. A bill of lading usually assumes the following functions:

• a. A receipt of the carrier acknowledging that he has received the goods, type, quality
• and quantity as stated
• b. Evidence of the contract of carriage between carrier and shipper
• c. A document of title, representing the right to claim the delivery of the goods
B. Depending on the issuing party, the shipments covered, or the transferability, there
• are many types of bills of lading. The following groups are all bills of lading except:
• a. House bill of lading, through bill of lading
• b. Negotiable (“to order”) bill of lading, non-negotiable bill of lading, way bill
• c. Liner bill of lading, container bill of lading, clean ocean bill of lading
• d. Mate’s receipt, delivery order

Questions
C. A clean bill of lading is not:

• a. A bill of lading that contains no remark with respect to the
conditions of the goods loaded on board a vessel
• b. Issued by the carrier to the shipper
• c. Received for shipment bill of lading, where the carrier
acknowledges the receipt of goods which is not yet loaded on board
• d. Of much concern to the seller/shipper under a documentary
credit

Questions
D. Both the front side and back side of the bill of lading are printed with data and other
information. The following descriptions are correct except:
•a. The back side has the printing of transport conditions
•b. The bill of lading will include the information such as the name of the carrier, shipper, vessel and
the receiver
•c. The bill of lading will not specify the number of originals
•d. Specification of goods will be contained in the bill of lading such as cargo marks, quantity and
weight
E. True or False?
A sea waybill is:
•Non-negotiable
•A document of title
•A bill where the receiving party is named
•Used when there is no need to sell or resell the goods in transit.


Questions
D. Both the front side and back side of the bill of lading are printed with data and other
information. The following descriptions are correct except:
•a. The back side has the printing of transport conditions
•b. The bill of lading will include the information such as the name of the carrier, shipper, vessel and
the receiver
•c. The bill of lading will not specify the number of originals
•d. Specification of goods will be contained in the bill of lading such as cargo marks, quantity and
weight
E. True or False?
A sea waybill is:
•Non-negotiable
•A document of title
•A bill where the receiving party is named
•Used when there is no need to sell or resell the goods in transit.


Questions
A.There are many standard charter parties in use in practice. Examples of such
standard forms are:
•a. Gencon, Baltcon, BP-voy for voyage charter party
•b. Baltime, Linertime, NYPE 93 for time charter party
•c. (ore) 7, Baltimore Form C (CBF) for voyage charter party
•d. All of the above
B.Statements of charter party as follows are correct except
a. The written agreement between the owner and the charterer in tramp shipping
•b. There are standard forms of the charter party devised by international organizations
e.g. BIMCO, and by large oil companies in tanker chartering
•c. Charter party is the only document in charter shipping
•d Charter party is the most important document in chartering services


Questions
C. There are other documents involved in chartering. Examples are:

• a. Letter of indemnity
• b. Delivery order
• c. Notice of readiness

Questions
D. True or false?
General average is:
•The act taken voluntarily in time of peril, with extraordinary sacrifice or expenditure,
•for the purpose of preserving the vessel and other goods, imperilled in the common adventure
•The extra cost of the loss due to the general average is shared by the ship owner
and owners of the saved goods
• The extra cost is a reasonable cost, predictable at the beginning of the sea voyage
• General average can be a precaution against capsizing where deck cargo must be jettisoned
• General average can be declared by the ship owner at any time, no matter whether the actions
taken to reduce the risk are completed or not

Continued
Which description and which document belong to each other?
A document certifying the country in which the

goods are manufactured
A document with detailed statement of goods,
certified by a consular official of the importing
country
For customs purposes, the document varies in
format but contains essentially the same data as in
commercial invoices and packing lists

Chapter- 6
Pricing of Ocean Freight
• The student should understand the basic tariff structure in both liner
shipping and charter shipping.
• The student should be aware of the terminologies used in calculation
of the tariffs.

Continued
• As a practical rule of thumb the costs of sea transport amount to

approx. 10 – 12% of the goods value.
• In recent years it can be concluded that the sea transport costs have
rather decreased than increased. Some of the reasons are:
 the influence of many independent services,
the increased containerisation which resulted in a larger efficiency,
and the implementation of larger vessels.

6-1. Pricing In Liner Shipping
Objectives :
• The student should be aware of the three types of conference rates
and the basics in freight rate setting in liner shipping.
• The student should understand the basic principles and calculation
methods of tariffs in container and conventional cargo liner services,
and the liner shipping terms that apply.
• Apart from the basic sea tariff, the student should be aware of other
costs and surcharges, and have knowledge as to when which type of
surcharge may apply.

Continued
• The student should understand the difference between freight

forwarder commission and system rebates in liner shipping.
• The three functions assumed by bill of lading in liner services, and the
information generally contained in a bill of lading.
• The student should also understand the different types of bills of
lading in practice, and the legal implications associated with each. The
student should be able to explain in what circumstances which bills of
lading are used, and why

Continued
Basics in calculation of ocean freight

• Two basic factors that affect rate fixing in liner shipping are port and
distance related factors and cargo related factors.
• There are three types of conference rates, including commodity rates,
class rates, and commodity-class rates. Under the first category, rates
are quoted individually for several hundred commodities; under the
second category tariff specific commodities are grouped into a limited
number of classes. The third category represents tariffs which are a
combination of the two others.

Continued
Basics in calculation of ocean freight

• Two basic factors that affect rate fixing in liner shipping are port and
distance related factors and cargo related factors.
• There are three types of conference rates, including commodity rates,
class rates, and commodity-class rates. Under the first category, rates
are quoted individually for several hundred commodities; under the
second category tariff specific commodities are grouped into a limited
number of classes. The third category represents tariffs which are a
combination of the two others.

Continued
• Until recently, the liner shipping sector was largely controlled by

shipping conferences.
• The conferences draw up tariffs, scheduling freight rates at which
goods will be transported.
• A conference exists for each major trade route. However, since the
mid-1970s many independent carriers (outsiders) have entered the
liner shipping sector, and have fixed their rates on the basis of “what
the traffic will bear,” essentially applying market pricing techniques.

Continued
Influences of Available Cargo on Tariffs

• When an imbalance in transport occurs, then sometimes special price
agreements are closed. This happens for instance when there is too much
tonnage for too little cargo.
• Sometimes containers are accepted at or below the cost price level. The
reasons of doing so may be:
The container is back at the spot where cargo is available;
Sometimes it is cheaper than transporting empty containers. Full
containers may yield additional revenues, such as THC and demurrage.
Besides, the containers are returned to the right depot because of the
cargo.
Continued
LCL Cargo Charge

• In container shipping, different charges are applied to “less-than-
container-loads” (LCL) and “full-container-loads” (FCL). In the former
case, the rates are usually the same as those charged for conventional
shipments, i.e. the tariff will be calculated per ton or per m³
(weight/measurement).

Continued
• If goods are of very high value, they are charged irrespective of

weight and measurement, but value, i.e. on an ad valorem basis.
• Ad valorem rate is a percentage of the assessed value of the
imported goods - such as 20% ad valorem (adv).
• There may also be the so-called specific rate. A specific rate is a
specified amount per unit of weight or other quantity such as $6.60
per kilogram.

Continued
FCL Box Rate

• For FCL the carriers will charge the shipper / receiver a lump sum
tariff per container per destination (box rate).
• Price calculation per container per port of discharge, instead of per
load weight or load volume (box rates).

Continued
Multimodal Freight Rate

• In case of multimodal transport arrangements by one carrier under a
through document, a multimodal freight rate is charged. This rate is
the sum of charges in the port of loading, ocean freight rate, charges
in the port of discharge, and the road or rail haulage to the final
destination.
• Price calculation based on the entire multi modal transport track,
door-to-door (point / point traffic or multi modal freight).

Continued
Other Costs and Surcharges

• Apart from the basic rate, which is essentially the sea freight tariff, the line
operators also charge additional costs such as terminal handling costs, postage
costs, etc. Often, the liners in order to protect their profit interests will also
apply surcharges to the shipments at sea, without increasing the tariffs. Such
surcharges vary depending on the actual situations.
Other Costs
• The line operator or his agent will charge additional costs apart from the sea
freight tariff, such as terminal handling costs. These are the costs from delivery
at the terminal until hooked. If containers are shipped then they will charge
container handling charges or THC (Terminal Handling Charges). These costs
can vary per destination.
Continued
Other Costs and Surcharges

• Apart from the basic rate, which is essentially the sea freight tariff, the line operators
also charge additional costs such as terminal handling costs, postage costs, etc. Often,
the liners in order to protect their profit interests will also apply surcharges to the
shipments at sea, without increasing the tariffs. Such surcharges vary depending on the
actual situations.
Other Costs
• The line operator or his agent will charge additional costs apart from the sea freight
tariff, such as terminal handling costs. These are the costs from delivery at the terminal
until hooked. If containers are shipped then they will charge container handling charges
or THC (Terminal Handling Charges). These costs can vary per destination.
• The line operator or his/her agent may also charge an amount for the completion of the
B/L and for some administrative activities, such as postage and communication costs.

Continued
• Terminal Handling Charges (THC): These costs are charged for the
receipt and stacking of the full container and vice versa.
• Equipment Handover Charges (EHC): These costs arise when a
trucker picks up a container (full or empty) and the container must be
placed on a chassis. The same counts when a container is returned.
When the ship’s owner / agent organises the inland track, then these
costs are for the account of the vessel. When the forwarder arranges
the transport, then he/she must pay these costs, which are also called
Lo / Lo costs.

Continued
Currency Surcharge
• Currency surcharge is also often called Currency Adjustment Factor (CAF). This
surcharge is applied when the exchange rate of the currency, in which the tariff
is calculated, e.g. the US dollar, becomes too low in comparison to the local
currency which the ship owner uses in its bookkeeping, and as a consequence
the ship owners cash less freight. With the CAF the balance is compensated.
Bunker Surcharge
• Bunker surcharge is also called Bunker Adjustment Factor (BAF). This surcharge
is applied when the fuel costs are increased so much that this influences the
revenues of the ship owner. With BAF the balance is compensated.

Continued
Congestion Surcharge
• In the event of port congestion, extra cost occurs for the waiting of the cargo and
vessel. Surcharge levied in the event of port congestion is called congestion
surcharge.
Length Surcharge
• Excessive cargo dimensions often cause extra handling fees and a loss of space on
board. Length surcharge is the extra fees applied to the published tariffs on cargo
with excessive length, in order to compensate the loss of revenue on the carrier.
• Like length surcharge, if the cargo is of excessive weight, a heavy lift surcharge is
applied to the published tariff.

Continued
War Risk Surcharge

• For each route of liner service, there might be considerable spreads
from the published tariffs, which are usually the average costs. An
imminent risk of war or an existing war will entail the extra war risk
insurance. The war risk insurance premium charged by the carrier or
shipper is called war risk surcharge.
System Rebates on Ocean Freight
• Despite the existence of conferences and because of the increasing role
of independent carriers in the liner trades, the rates actually charged
vary widely and often deviate substantially from published tariffs.

Continued
• Carriers offer loyalty bonuses and apply rebates, different from the
conference agreements. As a way of customer relationship, formed
often when contracts in liner shipping were closed, to which directly a
discount (e.g. 9.5%) was granted. If there was no contract, then a
certain percentage of postponed discounts were paid once per year.
• At present many service contracts, time volume contracts and rate
agreements are used. In such cases it is agreed that a certain volume
of cargo will be shipped involving one or more ship owners in return
for specially discounted rates offered by the contracted carrier. This
must however comply with relevant legislation.

Continued
Liner shipping terms

• The tariffs in liner shipping generally are based on liner shipping terms,
under which the carrier assumes responsibility for loading and
discharging expenses, as well as the carriage of the goods by sea.
• The most basic liner terms is: from ship’s tackle to ship’s tackle (hooked
till unhooked, or from berth port of loading to berth port of discharge).
• Sometimes there are deviations, such as Liner In / Free Out. This means
that the discharge of the hold until unhooked is not included in the tariff.
The receiver will have to pay these discharge costs. This occurs
predominantly in ports where the authorities control the loading and
discharge operations. Some examples are: Piraeus and Alexandria.

Continued
Freight Forwarders Commission

• When the cargo is booked by forwarders the line operator grants them a
forwarders commission of 2.5 - 5% of the tariff. The commission is calculated
over the net freight.This is the commission received by the forwarder from the
shipping company / agent for the goods to be shipped. It is a compensation
for the costs which are made by the forwarder for cargo acquisition. These are
costs which are saved by the ship’s owner. Forwarders commission is however
not always granted. Some line conferences simply do not do it.
• When the shipping company / agent has contact with the shipper directly, the
forwarders commission may be applied improperly. The shipping company /
agent can surpass the forwarder and grant the shipper the commission as a
discount on the freight.

Continued
NVOCC
• The NVOCC generally calculates tariffs in the same way as the line operator.
However the NVOCC in most cases offers a house - house concept and
therefore charges one tariff for the entire transport. The separate costs for
sea transport and land transport are no longer visible.
Consolidators
• These carriers charge a certain tariff per ton or per m³. In most cases this is an
all-in tariff until arrival at the terminal of their agent in the port of discharge.
Sometimes shippers can be charged with additional costs, such as unloading
ex-truck and stowing into container, completion of Bill of Lading etc. Receivers
are charged with discharge ex-container and stowage on their truck.

6-2. Pricing In Charter Shipping
Objective :
• The student should be aware of the different factors that influence
freight in charter party negotiations.
• The student should know the two ways in which to calculate freight in
voyage charter.
• The student should have knowledge about the calculation of lay days
in chartering, and understand the different applications of demurrage
and despatch money.

Continued
Freight
• Freight is the money payable by the charterer as remuneration for
carrying the cargo on the named ship, to the owner.
• There is no fixed freight in tramp shipping. The freight to be paid by the
charterer is determined through negotiation. In general, the calculation
of freight is based on:
• the nature and volume of the cargo
• the distance over which the goods are to be carried
• the port costs in the loadport and discharging port
• the fuel prices.
Continued
• The level of freight charged in tramp shipping is also subject to the

supply and demand in the market. When a large number of ships are
available and there is little cargo available, the market favours the
charterers. In this case the owners will be prepared to accept a low
freight. Vice versa, freight will go up if a lot of cargo is being offered,
and relatively few ships are available.
• In tanker services, the “World scale” is used. This is a base freightage
determined by the parties which incorporates the port costs etc. of the
most important oil ports. The charter parties therefore often stipulate
the World scale instead of a freight figure, e.g. “World scale + 100”.
The chartering of tankers is a specialised field in the chartering world.
Continued
CALCULATION OF VOYAGE CHARTER FREIGHT

Freight in voyage charter is often calculated in one of the following
ways:
• (a) As a lump sum, i.e. a fixed figure regardless of the quantity of
cargo actually loaded. The whole sum is payable in full even if the
contracted quantity of cargo is not delivered in full.
• (b) On a per tonne of cargo basis. This could mean either on taken-in
quantity, i.e. at the time of loading, or delivered quantity, i.e. at the
termination of the voyage.

Continued
• Despatch money is the compensation payable by the ship owner to

the charterer if the charterer does not use all the port days agreed
upon in the charter part
• Despatch money is in a sense opposite to demurrage. It is reward
money paid to a charterer for completing loading/discharging earlier
than the expiry of laytime. By custom, the rate for despatch money is
one-half the agreed demurrage rate and this may not be specially
provided for in the charter party.

Continued
Time Sheet
• Time sheet is a document in which the facts provided in the “statement
of facts” are interpreted according to the conditions as stipulated in the
charter party.
• The allowed laytime as well as when it starts is determined in the charter
party. The laytime actually used is calculated up to the minute in a
detailed layout. The result of the time sheet is the number of days, hours
and minutes that the ship has been used for, respectively, loading and/or
discharging.
• This information forms the basis for calculating the “despatch money” or
“demurrage”, if applicable.
Continued
Statement of facts
• This document enumerates the facts and times regarding the arrival,
departure, loading and discharging of a ship. A time sheet is compiled,
based on the “statement of facts”.
• The “statement of facts” also mentions any possible delays. This
document must be signed by the captain and/or his agent as well as the
party involved with the cargo and/or his agent. The terminal or
installation often co-signs as well.
• The “statement of facts” contains only facts. No conditions of the charter
party are interpreted in this document, although the charter party is
referred to often. This document almost never leads to disputes.

Questions
A. There are three types of rates applying in liner conference. Such rates can be:
• a. Commodity rates
• b. Class rates
• c. Commodity-class rates
B. In container liner shipping, depending on the services the carrier offers to the cargo
owners, the carrier may charge the ocean freight based on:
• a. Box rate: a lump sum tariff per container per destination (FCL rate)
• b. Tariff calculated per ton or per cubic meter of the cargo (weight/measurement) (LCL rate)
• c. Price as the sum of charges based on the entire multi modal transport track, door to door
• d. Any of the above

Questions
C. Goods charged on an “ad valorem” basis are:

• a. Liner tariff rates for conventional breakbulk cargoes assessed on either
cargo weight (tons) or measurement (cubic meters), whichever is higher
• b. Liner tariff rate changed on basis of the cargo value irrespective of
weight and measurement of the cargo
• c. “Ad Valorem” rate is applicable to all kinds of cargo, of high or low
values
• d. “Ad Valorem” rate has minimum value, based either on one cubic
meter or one ton

Continued
D. Which type of Surcharge & Explain below
belong to each other
A surcharge which is applied if the exchange rate of

the freight tariff currency becomes too low,
reducing the revenue of the shipping company
A surcharge intended to compensate the carrier in

case of high fuel costs that have affected the
carrier’s revenue
Extra fees applied to the published tariffs in the

event of port congestion
A surcharge applied when the cargo is of excessive
length
A surcharge applied when the cargo is of excessive
weight
The insurance premium charged by the carrier on
shipper in the event of imminent risk of war

Questions
E. When the cargo is booked by forwarders, the line operator grants

the forwarders often a certain amount of money which is calculated
over the net freight. This type of money is called:
• a. System rebates on ocean freight
• b. Forwarder’s commission
• c. Rice difference calculated on different liner terms
• d. Any of the above

Questions
A. True or False?
Freight in voyage charter can be calculated in different ways. Which price can be agreed upon in a
voyage charter?
• A lump sum price ()
• A price per cargo tonne ()
• A price per day ()
B. There is no fixed freight in tramp shipping. The freight to be paid by the charterer is determined
through negotiation and is subject to different factors. The influencing factors to the freight may be:
• a. The nature and volume of the cargo, and the distance over which the goods are to
be carried
• b. The port costs in the loading port and discharging port, and the fuel prices
• c. The general supply and demand in the market

Questions
C. Which description below of “Demurrage” is incorrect?

• a. Demurrage is liquidated damages
• b. Demurrage calculation can be interrupted in very few
circumstances such as the Laytime exceptions
• c. Demurrage is a fixed compensation payable by the charterer to
the ship owner
• d. Demurrage is usually calculated on a daily basis, running
continuously after the time for loading or discharging in the charter
party expires

Questions
D. If the charterer does not use all the port days agreed upon in the
charter party, the ship owner usually will pay a certain amount of
money to the charterer. This payment is called:
• a. Despatch money
• b. Demurrage money
• c. System rebate
• d. Broker’s fee

Questions
E. True or false?
Time Sheet is:
• a. A document that enumerates the facts and times regarding the
arrival, departure, loading and discharging of a ship, but without
interpreting the conditions as stipulated in the charter party. ()
• b. The result of the time sheet is the number of days, hours and
minutes that the ship has used for loading and/or discharging
respectively. ()
• c. The time sheet forms the basis for calculating the “despatch
money” or “demurrage”, if applicable. ( )

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MARITIME

Instructor: Endalakchew Bekele

Maritime Transport, Module 2. December 6-16,2017 Addis Ababa , Ethiopia

Chapter 2 Types of Vessels Conventional ships Container ships Ro-Ro carriers

Chapter 3 International Organizations and Regulations in Sea

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Chapter 4 Shipping Services

Chapter 6 Pricing of Ocean Freight

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18/01/2010 Feseha Andualem 8

Objective Of the Chapter:-

Maritime Transport, Module 2. December 6-16,2017 Addis Ababa , Ethiopia

Before discussing ports we must define three terms:-

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• A Port is a geographical area where ships are brought alongside land

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• There are more than 2,000 ports around the world,

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Worldwide, the port traffic is made up by:

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Ports can be compared in many different ways –

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• Worldwide, the top ranking ports in terms of cargo tonnage handled

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Container Traffic 2017

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• Since 2011, 16 of the world’s top 20 container terminals are Asian-based,

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• Being a land locked country; currently Ethiopia is using Djibouti as

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Year Import Export

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• When speed and reliability is a major concern in the

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