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OPERATING SHIPS Prepared by Mrs.M.Janani Department of Commerce (International Business) Government Arts College, Coimbatore – 18

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OPERATING SHIPS Prepared by Mrs.M.Janani Department of Commerce (International Business) Government Arts College, Coimbatore – 18 OPERATING SHIPS Prepared by Mrs.M.Janani Department of Commerce (International Business) Government Arts College, Coimbatore – 18. Reference: Logistics Management and World Seaborne Trade Author: Krishnaveni Muthiah OPERATING SHIPS The type of merchant vessel employed on a trade route is determined basically by the traffic carried. There are different ways in which a ship can be operated. They are : (1) Tramp Vessels (2) Liner Vessels Special type of tramp vessels are the Tramp Tanker Vessels. Liner Vessels can be operated as Independent lines or as Conference lines. Tramp vessels Tramp vessels or general trader, does not operate on a fixed sailing schedule, but merely trades in all parts of the world in search of cargo, primarily bulk shipments. It is a chartered ship prepared to carry anything anywhere. It’s cargoes include coal, grain, timber, sugar, ores, fertilisers, copra and the like which are carried in complete shiploads. Many of the cargoes are seasonal. Tramp vessels are engaged under a document called a charter party on a time or voyage basis. Such negotiations usually are conducted by shipbrokers on behalf of their principals. Tramp vessels The freight rate is determined by the economic forces of demand and supply in so far as cargoes seeking shipping space and the availability of vessels is concerned. The cost of hire fluctuates following the basic laws of supply and demand. Tramp Tankers are specialised vessels. They may be under charter or be operated by an industrial company, that is, oil company, motor manufacturer, etc., to suit their own individual / market needs. Tramp vessels Oil Companies are large organisations which need to move vast quantities of their own products by sea. They therefore own and operate their own ships. Large oil companies like British Petroleum and shell own and operate their own ships (oil tankers) and are amongst the largest shipping companies in the world. Yet even so they own only about 40 per cent of their shipping requirements and charter – in the other 60 per cent from independent tramp tanker owners. liner vessels Liner vessels operate on a fixed route between two ports or two series of ports. They operate on a regular scheduled service. They sail on scheduled dates / times whether they are full or not. The cost of using the service (freight) can be quoted from a fixed tariff. The Bill of Lading features very prominently as the consignment note used in the liner cargo service. Container vessels in deep sea trades and Ro/Ro vessels in the short sea trades feature prominently in this field. Liner Vessels can be operated as independent liners or as member of a conference line. CONFERENCE LINE An ocean freight conference line is an association of ocean carriers who have joined together and have consensus with regard to freight rates and shipping conditions. They establish common rules of operation and hence operators in the group charge identical rates. Again in that, they generally adopt dual rate system, in the sense that, they provide preferential treatment to contract exporters. Contract exporter is one who agrees to ship all or a large portion of the firms cargo on a regular basis on vessels of the conference member lines. So contract exporters are charged at a lower rate than charged for non contract shipper. In case, when no conference service is available within a reasonable time, then after obtaining permission from the conference, the particular shipper (contract exporter) can make use of any other vessel. Development of liner and tramp trade Liner companies, by the very nature of their function, need a larger organisation structure than a tramp company. One of the oldest liner companies is the P and O started in 1837, followed by Samuel Cunard in 1840. The opening of the Suez canal which facilitated development of trade routes to the east caused tremendous expansion of the liner trade. In the years following the first world war there was another era of expansion and after the second world war the traditional liner companies have consolidated and merged. More new growth has been in the developing countries. For example, the P and O group now constitutes some hundred member companies and is one of the largest shipping groups in the world. It owns a very large fleet of ships. INDEPENDENT LINES They operate independently and individually and quote freight rates without the use of a dual-rate contact. They may sometimes lower their rates when they compete with conference lines to attract the non-contract shippers. Development of liner and tramp trade In the mid-sixties, containerisation gained momentum and huge capital investment was necessary to introduce containerisation. So many rival groups formed consortia, for example, The Atlantic Container Line (ACL) (formed by Cunard,) Holland-America Line, Swedish America Line, Swedish Trans Atlantic and French Line. Individual members who own ships, chartered their ships to large players like ACL, to operate. Tramp shipping also has benefited from such co-ordination. Consortia such as Seabridge have been organised to operate a large fleet chartered to it by its member companies. Further development has been in diversification strategies. Even very large shipping companies like P & O operate in every conceivable type of ship in every possible trade. THANK YOU .
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