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GENERAL INFORMATION:
Because of great expense entailed in the
purchase and maintenance of sea ships, exporting manufacturers do not always have a fleet
of their own. Instead, they have to charter (hire) vessels, as a rule, on the long-term
basis from independent companies. In certain cases, companies with a fleet of their own
will solicit services of shipping companies.
To optimize the search for a
ship, exporters resort to services of a charter broker
, who knows the ins and outs of the charter market and can promptly
find vessels meeting the needs of the exporter.
Shipping operations offered can be,
depending on the service rendered to the consigner, of two kinds: linear
and tramp.
Linear shipping
is carried out between a number of given ports, with the times of vessels entering
them known well in advance. Relatively small batches of various goods are accepted
from all kinds of consigners, who pay at fixed rates. Should those rates be changed,
the linear company will usually make this known beforehand. Compared to the tariffs
of tramp shipping, the rates fluctuate more seldom and within a smaller range. Linear
shipping is largely used for transporting various container cargos.
Tramp delivery is based,
as a rule, on dispatching homogeneous cargos. Here, it is the charter conditions that
dictates the timing of shipments, the ports of loading/unloading and charter rates.
Deliveries where volumes differ from voyage to voyage are normally done in this way.
Maritime transportation markets are shaped
by the needs for such services. Demand itself is as varied as goods, navigation areas, etc.
As linear shipments call for certain conditions
to be fulfilled, and for a new route to be opened, formalities must be settled with the
Department of Maritime and River Transport, we will focus here on tramp deliveries.
The owners of tramp vessels can see
their services fulfilled in every direction of maritime navigation, i.e. in all markets.
Apart from consigners and manufacturers, linear shipment companies turn to such services
as well. This happens when extra needs are expected to those for linear deliveries.
Thus, in a way, tramp fleet is backup to intraproduction and linear shipment.
The world charter market as a
realm of maritime transportation consists of a large number of constituent markets,
which could be classified by the following criteria:
- geographical areas;
- kinds of fleet;
- ship tonnage.
Hence, a large vessel is no competitor to a small one, which can call at
shallow-water ports, or a tanker is no rival to a refrigerator, bulker and so on.
Therefore, the world charter
market is an aggregate of a multitude of local charter markets, which are often
in all practicality independent of each other.
The form of service rendered by
a ship-owner is determined by the charter type. The most common type is scheduled
, usually on the free-in-and-out basis, and trip charter (for the duration of one trip only).
Time charter (reserving a ship for a certain period of time)
is also used. When arranging for bare boat charter, the charterer
will be provided with a crewless ship, in time charter or trip charter deals they
will get a vessel with a crew to operate it in a scheduled charter deal, the ship-owner
will also run the ship commercially for the charterer.
In Table 1 " X "
represents services rendered by ship-owners with a view to the charter types.
Table 1
| Charter type |
Service |
| ship provision |
technical maintenance and navigation |
commercial running |
arranging for (un)loading |
| Bare boat charter |
X |
— |
— |
— |
| Time charter |
X |
X |
— |
— |
| Scheduled free-in-and-out charter |
X |
X |
X |
— |
| Scheduled linear charter |
X |
X |
X |
X |
In Table 2 " F " and " S "
stand for the charterer and the ship-owner respectively depending on who, as envisaged
by the conditions of the charter, will bear the costs, responsibilities and risks stemming
from the shipment of goods and involved in maritime transportation.
Table 2
| Costs, risks and responsibilities |
Charter type |
| bare boat charter |
time charter |
cheduled free-in-and-out charter |
scheduled linear charter |
| Loading/unloading |
F |
F |
F |
S |
| Waiting in queues, unfavorable weather and idle time |
F |
F |
FS |
S |
| Fuel and bunkerage costs |
F |
F |
S |
S |
| Port and channel charges |
F |
F |
S |
S |
| Hold-ups on the way |
F |
F |
S |
S |
| Pay to crew, running costs, etc. |
F |
S |
S |
S |
Here is a look at the
constituents of the price of maritime transportation. The cost and duration of
loading/unloading is to a substantial degree determined
by the arrangements and the technology used. Not only do they vary from region
to region, from country to country, from port to port, but even from pier to
pier of the same port. The cost of loading/unloading directly makes a part of
the price of maritime transportation and will be born directly or indirectly
by the charterer when it is included in the tariff or chart.
P
ort and channel charges including pilots' fees, paying for tugs and
other costs to do with the ship's calling at ports differ depending on the
region, country, and port. The charterer either covers them directly (in time
charter) or indirectly (in scheduled charter) when they are included in the charter rate.
Differences in prices for
loading/unloading and charges of particular ports are factors conditioning a
variety of charter rates.
The absolute and relative value of the
fuel constituent of the price of maritime transportation
depends on the length of the route, the ship's speed and the market price of
fuel. The charterer bears these costs directly in time charter and indirectly
in scheduled charter when they are included in the charter rate.
Prices for maritime services
and transportation are of individual character as they are linked to particular
deliveries of cargos. Thus, in the strict sense, it is impossible to talk about
the world prices for maritime transportation and charter tariffs without
mentioning the specifics of what is required.
Moreover, charter tariffs
also depend on the amount of cargo transported. Generally, charter tariffs
for 1 ton of cargo and rent for 1 ton of dead weight per month (time charter)
vary for ships of markedly different tonnage. The bigger the ship is the lower
these tariffs are. However, in different periods of time this pattern may
change essentially.
The world market price for
ship lease is determined by the tariff rate of time
charter per voyage for major ships of this segment of the market, their
specific characteristics affecting the charterer's expenses. However, it
should be mentioned that there are certain periods when this charter market
does not have one common ship leasing tariff, for instance, one common dead
weight if their other characteristics differ. Thus, the time charter tariff
will be higher for ships which consume more fuel.
Consequently, the market
charter tariff rate reflects socially necessary costs (SNC)
for maritime transportation services, their quality and consumer properties
as well as the correlation of supply and demand.
The distinction of SNC in
navigation lies in the fact that when demand for transportation declines, ships
with bigger consumption per product unit fall into disuse. Apart from that, any
ship can cut the SNC of transportation by speed increase. It is this factor
that conditions the dependence of ships' operating speed on the charter rates
and fuel prices at the world market.
In conclusion, it should be
noted that each charter transaction is individual, and charter tariffs are
interconnected with other charter conditions. Some of them do not appear in
transaction publications (reference books, releases, etc): for example, payment
currency, demurrage tariff, the kind of charter, etc. Therefore, even though
such publications are issued for a short period of time, as a rule, the quoted
charter tariffs are in a certain state of disorder. This is a cause of a great
variety in ship lease market prices, which, in turn, entails a complex
procedure of charter tariff evaluation.
Harsh conditions of today's
market call for additional factors to be taken into account, which often
determines the choice of a carrier (even when charter tariffs are higher).
These additional factors are put on record in data banks for marketing and
advertisement or international networks of scientific and technical information
available to all professional users through telecommunication channels. This
excludes the possibility of this information getting into the hands of amateurs and idlers.
Before appearing at the
charter market the exporter has to evaluate all the constituents of this market,
consider their influence on the process of cargo transportation and choose the
most appropriate kind of ship according to its tonnage, age, speed, etc or
according to its serviceability for the above-mentioned job.
Below is the list of
information that an exporter has to give to a broker:
- Name of goods, their brief description and characteristics (stowage
factor, length, weight of a product unit, danger factors).
- Quantity of goods.
- Port of loading/unloading.
- Summary of transport conditions of the sale-purchase contract.
- Loading/unloading rates.
- Time of bringing the ship to (L/C).
- Estimate of charter tariffs (if any).
- Charterer's details (company's name, full address, telex, e-mail, telephones).
- Previous ship charters.
You can fill in the form and send your application
HERE.
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George Ryndin
Deputy Director, Chartering Broker |
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Phones: |
+38 (06153) 7-15-11, 7-20-80 |
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Fax: |
+38 (06153) 7-05-48 |
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E-mail: |
Chart@uniship.com.ua |
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