Transport
• A logistics supply chain is a chain
of transport of materials with added backwards and forwards information and
payment flows
• These lectures will be looking at
the economics of transporting goods
• They are rooted in theory and
practice
– Economic theories of demand and
supply, costs, prices and market structure
– Practice of voyage estimating,
buying and selling ships, running networks, etc
Transport Mode
• Refers to any of the following
transportation methods: rail, road, air or water
• Water transport includes
transoceanic shipping, coastal shipping and inland waterways
• Plymouth University has a particular
strength in transportation by sea
– Over 90% of world trade by
volume/weight goes by sea
– The falling cost of sea transport in
real terms is an important factor in the rise in world trade and the
improvement of the global economy
Sea and Air
A mixture
of sea and air freight to provide a compromise between the low cost of sea and
the speed of air
Shipping Markets: Major Freight markets
• Bulk Shipping: mainly tramp shipping
– Dry bulk
– Wet bulk (tanker)
• General shipping or break bulk:
mainly liner shipping
– Unitised (trailer, container,
pallet)
– Packaged (box, bale, bag, barrel)
Minor shipping markets include:
• Ferry or Ro-Ro
• Cruise liner
• Yacht etc.
Bulk Shipping
• The whole ship may carry a single
cargo, or there may be different types of cargo in different holds/tanks
• Big companies may own their own
fleet of ships to service their needs
• More commonly, ships are hired
(chartered) as and when needed, for a voyage or a period of time
• By carrying heavy, low-value cargoes
(e.g. coal, iron ore) in very big ships, transport costs per tonne are kept
down
• Chartering is arranged though
shipbrokers in specialised markets (Baltic Exchange)
• The largest dry bulk ships: Very
Large Ore Carriers (VLOC) now reach 400,000 deadweight (dwt) – and are often
called a “Chinamax” type
Tanker Shipping
• Bulk liquid shipping
• Cargo is pumped into the ship
through pipelines
• The ship has her own pumps to discharge
the cargo
– No stevedores
• The biggest market is crude
oil carried in Very Large Crude Carriers (VLCCs) but the largest ship
size is ULCC (>320,000 dwt)
– Dirty tanker market
• Oil products (refined crude oil),
liquid gas and chemicals are carried in specialised ships
– Clean tanker market, gas
tankers or parcel tankers
• Some molasses, beer, wine, lard,
fruit juices, etc., are carried in liquid bulk form but only in much smaller
ships
• Safety is king – charterers demand
quality shipping
Payment
• Payment for time charter is known as
hire, in $ per day. It is paid by the charterer to the shipowner and
includes the daily cost of hire plus the cost of bunkers for the period of the
contract and the port costs for the duration.
• Payment for voyage charter is known
as freight, in $ per ton. It is a single payment from the charterer to
the shipowner out of which the owner has to pay for everything.
– Tanker payments use the Worldscale
system or lump sum payments
Liner Shipping
• Cargoes that are too small to fill a
ship need to be grouped together
• Liner shipping offers a regular
advertised service between ports
• Prices are fixed on a tariff
– They may vary with the value of the
goods or be Freight All Kinds (FAK) per box
– Big shippers are offered volume
discounts
– Regular shippers are offered rebates
– Tariffs can be changed e.g. Bunker
Adjustment Factor (BAF)
• Liner shipping is a complex
administrative task
• Each consignment of cargo needs a
Bill of Lading or other shipping document
• Ships have to be loaded so that they
are stable and in ‘trim’, and the cargo can be reached at the discharge port
• A “loop” or “pendulum” string has to
be run with enough ships to keep to the schedule: this is very capital
intensive
• A network of agents is needed to
book new cargoes
General Cargo ships
These carry
all types of “general” cargo – sacks, packaged, palletised. Sometimes
containers and heavy lift items such as rail engines are carried on deck.
Car Carrier mv “Faust
• The LCTC (Large Car Truck Carrier)
m/v FAUST has a capacity of 8,000 cars or a combination of 3,484 cars and 468
buses. With her 227.8 metres this capacity makes her one of the largest car
carriers in the world.
• The vessel is built to the highest
class of Lloyd’s Register of Shipping with the following designations: +100 A1
Vehicle Carrier, Movable decks, “deck no. 1, 3, 5 and 8 strengthened for Roll
on Roll off cargo”.
• Length over all 227.8 m Beam,
moulded 32.26 m Air draft 51.98 m Height
to upperdeck 34.7 m Draft, design/max 9.5/11.3 m Deadweight at maximum draft
30,383 MT
• Gross Tonnage 71,583 GT Net Tonnage
33,546 NT
• Stern ramp width 9.5 m Stern opening
height 6.5 m Stern ramp capacity 240 t
• Number of car decks 13 (of which 5
are movable)
• Capacity deck area 67,300 m2
Capacity of car units* 8,000 Capacity of cars/buses 3,484/468
• Basic complement 15, Built 2007,
Daewoo Shipbuilding, DSME, Korea IMO Number 9332925
• Flag Swedish Owner Wallenius Lines
AB, Sweden Operator Wallenius Wilhelmsen Logistics
Markets in Shipping
• Freight market
• Freight derivatives market
• Ship markets:
– Sale and Purchase market (S&P)
– Newbuilding market
– Demolition market
• Markets for shipping-related
services
– Repairs
– Equipment
– Legal
– Shipbroking
– Managing
– Crewing
– Agency
– Bunkering (re-fuelling)
Markets in Shipping
• Freight market
• Freight derivatives market
• Ship markets:
– Sale and Purchase market (S&P)
– Newbuilding market
– Demolition market
• Markets for shipping-related services
– Repairs
– Equipment
– Legal
– Shipbroking
– Managing
– Crewing
– Agency
– Bunkering (re-fuelling)
Freight Markets
• Dry bulk, wet bulk and container
markets are segmented by size
• Each size segment has a name and
generally recognised range - see extract from:
• Within each size range the market is
segmented by route or area of the world
• But note that these size definitions
of ships e.g., Panamax, Capesize have evolved over time and are not fixed. As
UNCTAD states they are defined “according to generally used shipping
terminology” other players may have different definitions.
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