MA RITIME TRANSPORTATION

1. MARITIME TRANSPORTATION

2. MARITIME TRANSPORTATION • The first modern energy conversion in marine transportation was the shift from sail to combustion (Shift of human labor (oars) to wind-driven sail). • The conversion of fleet tonnage to the preferred technology; ships powered by coal-fired boilers that provided steam first to reciprocating steam engines and later to high-speed steam turbines that drove the propeller(s). • Later, the first alternative fuel – petroleum oil – enabled the introduction of modern marine engines.

3. MARITIME TRANSPORTATION • Globalization motivations to reduce the per-unit cost of shipping were the primary purpose for this conversion to “alternative fuel” in the early 1900s, rather than energy conservation or even fuel cost savings. • Oil-powered commercial ships required fewer crew and enjoyed a greater range of operations between fueling. • Oil powered ships also accelerated more quickly than coal-powered systems, and could achieve higher speeds.

4. Development of marine transport technology 5000 BC tothepresent

5. MaritimeTransportationandthe Global Economy • The core of global freight distribution in terms of its unparallel physical capacity • Ability to carry freight over long distances and at low costs. • An industry that was always international in its character. • Become a truly global entity with routes that spans across hemispheres, forwarding raw materials, parts and finished goods.

6. “A Greek owned vessel, built in Korea, may be chartered to a Danish operator, who employs Philippine seafarers via a Cypriot crewing agent, is registered in Panama, insured in the UK, and transports German made cargo in the name of a Swiss freight forwarder from a Dutch port to Argentina, through terminals that are concessioned to port operators from Hong Kong and Australia” (Kumar and Hoffmann, 2002, p. 36)

7. TheContainerization of MaritimeTransportation • Themaritimeindustry has beentransformedbymorethan 50 years of containerization. • Firstcontainerizedmaritimeshipment set sailfromPortNewark, New Jersey in 1956. • Maritimetransportationwasthefirstmodetopursuecontainerization. • Containerizationpermitsthemechanizedhandling of cargoes of diversetypesanddimensionsthatareplacedintoboxes of standard size. • Laborintensivetransshipmentactivitiesbecomesstandardizedwith time consumingandcostlystevedoringreduced.

8. TheContainerization of MaritimeTransportation • Containerization has been brought about in part by technology and has substantially impacted maritime design with the creation of the containership. • While the first containerships were converted cargo vessels, by the late 1960s the containerized market has grown enough to justify the creation of ships entirely designed for such a purpose. • The construction of containerships has followed incremental improvements in design with economies of scale being the main rationale; the larger the ship, the cheaper the transport costs per TEU.

9. The Containerization of Maritime Transportation • In a globalized economy, containerization offers the advantage of integrated freight transportation across all modes. • Standardized the shipping package, reducing the per-unit cost of transporting most finished goods. • Container shipping represents significant increase in global transport of finished and semi-finished products from regions with inexpensive skilled labor to consumer markets.

10. Intermodal transport has become a global phenomenon as mechanized handling and containerization have reduced handling costs between modes and promoted their efficiency. • Ports have become elements in global commodity chains controlled by logistics companies, maritime shipping lines, freight forwarders and transport operators. • Ports strategies and the allocation of their assets have shaped the structure of maritime transport networks in terms of ports of call, hierarchy and frequency of services. • Post-Panamax container ships encourage pendulum services and the setting of high capacity inland corridors.

11. BASIC TERMS & DEFINITIONS • Aframax. All vessels designed for the carriage of liquid bulk cargoes 80,000 - 119,999 dwt, including oil and products, chemical and other specialised. • ALONGSIDE. A phrase referring to the side of a ship. • Anchor Handling Tug (AHT). Tug designed for offshore rig anchor-handling. • AIR DRAFT This term has various meanings the most common being: The maximum height from the water line to the top-most point of a ship. • Bareboat charter. A bareboat charter involves the use of a vessel usually over longer periods of time ranging over several years. In this case, all voyage related costs, mainly vessel fuel and port dues, as well as all vessel-operating expenses, such as day-to-day operations, maintenance, crewing and insurance, are for the charterer’s account. The owner of the vessel receives monthly charter hire payments on a U.S. dollar per day basis and is responsible only for the payment of capital costs related to the vessel. A bareboat charter is also known as a “demise charter” or a “time charter by demise.”

12. BASIC TERMS & DEFINITIONS • BACK FREIGHT freight charged for the return of goods which have not been accepted at the port of destination. Also applied to goods discharged at another convenient port. • BALE CAPACITY The cubic capacity of a ship's holds below deck, expressed in cubic feet or cubic metres, available for the carriage of breakbulk type of cargoes, e.g.., packages, bales, cartons, cartons, drums, pallets, etc., which are not capable of filling the space between the ship's frames. • BALLAST Heavy weight, often sea water, necessary for the stability and safety of a ship which is not carrying cargo. • BALLAST BONUS Sum of money paid by a time charterer to a shipowner (in a good market) to compensate him for not finding a cargo near the place of re- delivery of the ship at the end of the charter. The bonus serves as an incentive for the ballast (empty) trip to cover up the cost of fuel and time. At times a shipowner pay pat the charterer a ballast bonus when the vessel is being re- delivered at the end of time charter, specially when market is not good for the shipowner.

13. BASIC TERMS & DEFINITIONS • BAR DRAFT This relates to the maximum draft enabling a vessel to pass over a bar, e.g., Martin Garcia bar in the River Plate. In case the vessel has too great a draft, it will have to discharge part of the cargo into barges and then reload it after passing the bar. A similar situation exists at Yangon (formerly Rangoon). Such ports are called bar-ports. • BEFORE BREAKING BULK Refers to the time when freight is paid. In this case freight is to be paid any time before commencement of discharge. • BELOW BRIDGES If a ship has to pass under a bridge across a canal to reach the port or berth it has to ensure that its draft permits the vessel to have sufficient clearance above its highest point to pass under the bridge with ease. • BENEFICIARY BERTH The person in whose favor a draft is issued or a letter of credit opened. The specific place where ships are anchored for loading and/or discharging at the docks in a port.

14. BASIC TERMS & DEFINITIONS • BERTH CHARTER If a vessel chartered for loading on a particular berth, the contract is called berth charter. The term berth charter implies that notice of readiness cannot be given until the vessel is in the designated berth as required by the charterers. • BERTH TERMS Also referred to as quot;liner termsquot;. The Shipowner pays for loading and discharging subject to the custom of the port or as fast as the ship can handle the cargo or under customary dispatch. • BILL OF LADING The document issued on behalf of the carrier describing the kind and quantity of goods being shipped, the shipper, the consignee, the ports of loading and discharge and the carrying vessel. It serves as a document of title, a contract of carriage, and a receipt for goods. • BIMCO (The Baltic and International Maritime Council).The largest of the international shipping associations representing shipowners; it controls around 65 percent of the world’s tonnage and it has members in more than 120 countries, including managers, brokers and agents.

15. BASIC TERMS & DEFINITIONS • BLACK LIST List of countries published by a government which will not allow ships to trade at its ports if they have traded at ports in the countries on that list. • BOTH ENDS The term means that the arrangements agreed upon hold true both at loading and discharging ports, e.g., rate of loading and discharging; appointment of agents, etc. • Boxship. Containership. • BREAK BULK Loose cargo, such as cartons, stowed directly in the ship's hold as opposed to containerized or bulk cargo. See quot;Containerization.quot; • BREAKBULK Describes loose cargo, such as cartons, bales, boxes, packages, etc stowed directly in the ship's hold as opposed to containerised or bulk cargo. • BREAKING BULK The expression means quot;to start the discharge.quot; • BROKEN STOWAGE The space wasted in a ship's holds when stowing general cargo which is uneven and packed.

16. BASIC TERMS & DEFINITIONS • BROKER (SHIP).A shipbroker acts as a middleman between the shipowner and the charterer and negotiates the terms of a C/P. He represents one party (say, shipowner) and negotiates with the other party (charterer) directly or with another broker who represents the charterer. (A sale and purchase broker negotiates for the sale of a ship and represents the shipowner). • BROKERAGE.Brokerage is a commission paid to the shipbroker by the shipowner for the broker's time, effort and expenses in concluding a (successful) fixture, normally a certain percentage of the hire of freight earned by the shipowner. • Bulk cargo. Oil and products tanker, bulkcarrierm combined ore/oil or bulk/oil carrier. • BULK SHIPMENTS Shipments which are not packaged, but are loaded directly into the vessel's holds. Examples of commodities that can be shipped in bulk are ores, coal, scrap, iron, grain, rice, vegetable oil, tallow, fuel oil, fertilizers, and similar commodities.

17. BASIC TERMS & DEFINITIONS • BUNDLING. This is the assembly of pieces of cargo, secured into one manageable unit. This is relevant to items such as Structural Steel, Handrails, Stairways etc. Whilst this is a very flexible description, a rule of thumb is to present cargo at a size easily handled by a large (20 tonne) fork lift truck. • BUNKER ADJUSTMENT FACTOR(BAF). A Fuel Surcharge expressed as a percentage added or subtracted from the freight amount, reflecting the movement in the market place price for bunkers. • Bunkers. Fuel, consisting of fuel oil and diesel, burned in a vessel’s engines. (Originates from coal bunkers) • Capesize. A drybulk carrier with a cargo-carrying capacity exceeding 100,000 dwt. These vessels generally operate along long-haul iron ore and coal trade routes. • CARGO. Goods, merchandise or commodities of every description which may be carried aboard a vessel, in consideration of the freight charged; does not include provisions and stores for use on board.

18. BASIC TERMS & DEFINITIONS • CERTIFICATE OF INSPECTION: A document often required with shipments of perishable or other goods, when certification notes the good condition of the merchandise immediately prior to shipment. • CERTIFICATE OF MANUFACTURE: A statement sometimes notarized by a producer, usually also the seller, or merchandiser that indicates the goods have been manufactured and are at the disposal of the buyer. • CERTIFICATE OF ORIGIN: A specified document, required by certain foreign countries for tariff purposes, certifying the country of origin of the merchandise. Sometimes requires the signature of the consul of the country to which it is destined. • CHART DATUM: Water level calculated on the lowest tide that can ever occur and used as a basis for chart measurements. • Charter. The hire of a vessel for the transportation of a cargo. The contract for a charter is commonly called a “charterparty”(c/p). • Charterer. The party that hires a vessel under the charterparty.

19. BASIC TERMS & DEFINITIONS • Charter-in. A lease of a vessel by which the owners of a vessel sublet or let the entire vessel, or some principal part of the vessel, to another party that uses the vessel for its own account under its charge. • Charter owner. Owners of containerships that charter vessels to shipping service operators, known as liner companies, rather than directly operating container shipping services for shippers. • CHARTER PARTY(C/P): A written contract between the owner of a vessel and the one (the charterer) desiring to empty the vessel, setting forth the terms of the arrangement, i.e., freight rate and ports involved in the contemplated trip. • Classification society. An independent society that certifies that a vessel has been built and maintained according to the society’s rules for that type of vessel and complies with the applicable rules and regulations of the country of the vessel’s registry and the international conventions of which that country is a signatory. A vessel that receives its certification is referred to as being “in-class.” A vessel may be classified by more than one class at any one time.

20. BASIC TERMS & DEFINITIONS • Combined carrier. Combined carriers, also known as Combos, are vessel which can carry either a full load of dry or liquid bulk (usually oil). Some Combos have reinforced hulls so that they are able to carry extremely dense iron ore. Theoretically, this ability to carry both liquid and dry cargoes enables owners to switch between the dry and wet markets, optimising profits when one market is poor. • Compensated Gross Tonnage (CGT). This measures the level of shipbuilding output, taking account of the work content of the ship. Shipbuilding output was based solely on the carrying capacity a vessel, and therefore output was seen to be higher on a large tanker than a smaller passenger ferry. They had become unreliable, and so the Compensated Gross Tonnage unit was devised, a formula that was more accurate and reliable than the old, and takes into account the influence of both the ship type and size, as well as the ships' Gross Tonnage.

21. BASIC TERMS & DEFINITIONS • Cubic Feet (Cu. Ft). Cubic feet is the older version of cubic metres, and because of precedence, it is only really used in long established reefer market. The largest cargo for the reefer market is food, particularly fruit such as bananas. Such cargo has a light density, and therefore uses a measurement of size rather than weight in describing the carrying capacity of the vessel. • Cubic Meters (CBM,Cu.M). Cubic metres are another measure of the amount of cargo that a vessel can carry, but in terms of the cargo’s volume rather than weight. CBM is mostly used for vessels carrying light density material including LPG and LNG, where size rather than carrying capacity will become the limiting factor on how much cargo can be carried.

22. BASIC TERMS & DEFINITIONS • Deadweight ton or “dwt.” A unit of a vessel’s carrying capacity, including cargo, fuel, oil, water, stores and crew; measured in metric tons of 1,000 kilograms. • Dredgers. A vessel equipped for the removal of sand or sediment from the seabed. The main types of specialised dredgers are backhoe/dipper/grab, cutter suction/bucket wheel and trailing suction hopper. • Drill Ship As semi-sub, but greater capacity and mobility makes drillships well suited to offshore drilling in remote areas (operates in depths up to 3,650 metres). • Drybulk. Non-liquid cargoes of commodities shipped in an unpackaged state, such as coal, iron ore and grain, etc. that is loaded in bulk and not in bags, packages or containers.

23. BASIC TERMS & DEFINITIONS • Drybulk carriers. Vessels designed and built to carry large volume bulk cargo. • Feeder. A vessel which is part of a cargo network in which the larger, faster vessels only call at the major ports at both ends of the area being covered and the smaller ports are served by the smaller feeder vessels which transfer the cargo to and from the major port terminals. This process keeps the larger vessels filled closer to capacity and spares them the expense and loss of time loading and unloading cargo in the smaller ports. • FEU.Fourty-foot Equivalent Unit • Fixture. A shipping industry term used to denote the agreement of a new charter. • Flag state. The country where a vessel is registered.

24. BASIC TERMS & DEFINITIONS • Freight. A sum of money paid to the shipowner by the charterer under a voyage charter, usually calculated either per ton loaded or as a lump-sum amount. • Fully cellular containership. A vessel specifically designed to carry ISO standard containers, with cell-guides under deck and necessary fittings and equipment on deck. • Gear. On-board equipment used to load and unload vessels, a vessel can be geared or gearless. • General cargo ship. This older type of cargo ship generally has tween decks for mixed general cargo, tanks for liquid cargo, and maybe some refrigerated capacity. Also has deep holds for bulk cargo. Usually the hatch openings are too small for below deck container stowage, but containers can be stacked on the deck. The general cargo ship often has its own cranes and derricks for loading and discharging cargo.

25. BASIC TERMS & DEFINITIONS • Gross ton. A unit of measurement of the volume of all ship's enclosed spaces measured to the outside of the hull framing. One gross ton is equal to 100 cubic feet or 2.831 cubic meters. • Handy. An “Intermediate” fully cellular containership with a TEU capacity between 1,000 TEU and 1,999 TEU. • Handymax. Handymax vessels are drybulk vessels that have a cargo carrying capacity of approximately 40,000 to 59,999 dwt. These vessels operate on a large number of geographically dispersed global trade routes, carrying primarily grains and minor bulks. Vessels below 60,000 dwt are usually built with on-board cranes enabling them to load and discharge cargo in countries and ports with limited infrastructure.

26. BASIC TERMS & DEFINITIONS • Handysize. Handysize (drybulk) vesselshave a cargocarryingcapacity of approximately 10,000 to 39,999 dwt. Thesevesselscarrygenerallyminorbulkcargo. Handysizevesselsarewellsuitedforsmallportswithlengthanddraftrestrictionsthatmaylacktheinfrastructureforcargoloadingandunloading. • Handysize. (Tanker) Allvesselsdesignedforthecarriage of liquidbulkcargoes 30,000 - 59,999 dwt, includingoilandproducts, chemicalandotherspecialised. • Hull. Shellor body of a ship. • IMAREX.InternationalMaritime Exchange • IMO. InternationalMaritimeOrganization, a U.N. agencythatestablishesinternationalstandardsforshipping.

27. BASIC TERMS & DEFINITIONS • IMO (I,II or III) chemical tanker. Vesselsdesignedto IMO Class I, II or III specificationsrespectively. • Intermediate. Containershipcategory of vesselsbetween 1,000 TEU and 2,999 TEU, generallyservingintermediate, northsouthand in somecasesinter-regionaltrades. • JackUp. A self-elevatingdrilling platform whoselegs rest on theseabedwhendrilling. Thesearelimitedtoshallowwaters (operates in depthsupto 150 metres). • Layup: Temporarycessation of trading of a shipby a shipowner, usuallyduring a periodwhenthere is a surplus of ships in relationtothelevel of availablecargoes. • Lightweight ton or “LWT.” Theactualweight of a vesselwithoutcargo, fuelorstores. A vessel’slightweight is thephysicalweight of thevesselandrepresentstheamount of steelrecoverable in thevessel. Thevalue of a vesselto a breaker is determinedbymultiplyingthevessel’slightweightbytheprice of scrapsteel.

28. BASIC TERMS & DEFINITIONS • Liner company. A company that operates ocean carriers that carry many different cargoes on the same voyage on regular schedules (generally in containers). • Liquefied Natural Gas (LNG). Methane cooled to –162 0C, at which temperature it can then be stored and transported in cryogenic tanks. • Liquefied Petroleum Gas (LPG). The liquid form of the commercial gases propane and butane. • MARPOL. The International Convention for the Prevention of Pollution from Ships.

29. BASIC TERMS & DEFINITIONS • Multipurposeship/vesselorMPV. A newerversion of general cargoshipwithholdsdesignedforcontainerstowage. Theholdsgenerallyhavetweendecksandcontainers can be stackedandlashedontothehatchcovers. The MPV is stillcapable of carryingbreakbulkcargoes, andbulkcargoes. Somearealsoequippedwithtanksforliquidcargoes. Itgenerallyalso has itsowncranesandderricks, sometimeswithheavy lift capability. • Newbuilding. A newvesselunderconstructionorjustcompleted. • Non-delivery. Non-deliveriesarethevesselsthatwerescheduledto be deliveredaccordingtothe start of yearorderbook, but duetodelays, cancellation, re-negotiations of contractsandnew market informationhave not yet enteredthefleet. • OpenHatchBulker. Bulkers > 10,000 dwthaving a hatchwidthwhich is 75% orgreaterthantheextremebreadth of theship.

30. BASIC TERMS & DEFINITIONS • Orderbook. A referencetooutstandingordersfortheconstruction of vessels. • Panamax (Containership). A vessel 3,000 TEU andabove, capable of transitingthe Panama Canal. • Panamax (Drybulk). Panamaxvesselshave a cargocarryingcapacity of approximately 60,000 to 99,999 dwt, and do not exceedthemaximumlength, depthanddraftcapable of passingfullyloadedthroughthe Panama Canal. Panamaxdrybulkcarrierscarrycoal, grains, and, to a lesserextent, minorbulks, includingsteelproducts, forestproductsandfertilizers. • Panamax (Tankers). Allvesselsdesignedforthecarriage of liquidbulkcargoes 60,000 - 79,999 dwt, includingoilandproducts, chemicalandotherspecialisedcargoes.

31. BASIC TERMS & DEFINITIONS • Platform SupplyVesselor PSV. Offshoresupplyvesseland/orpipecarriergenerally of North Seadesign. • Post-Panamax. A vesselwith a beam of morethan 32.3 metersthatcannot transit the Panama Canal. • Products Tanker. Pure Car CarrierorTankerssuitableforproductstrades 60,000 - 199,999 dwt, inlcudingdesignatedchemicaltankerswithhighest IMO Grade 3 andcoatedproducttankers. • Pure Car Carrieror PCC. A vesselspecificallydesignedforthetransportation of vehicles. • Ro-Ro (Roll-On Roll-Offvessels). Thesevesselsaredesignedforwheeledortrackedcargothat can loaditselfonboard. Cargogenerallydrivesontothevesselthroughdecksviaramps, ratherthanbeingliftedthroughhatches. • Scrapping. Thesale of a vessel as scrap metal.

32. BASIC TERMS & DEFINITIONS • ShuttleTankers. Specialisedshipsdesignedto transport crudeoilandcondensatesfromoffshoreoilfieldinstallationstoonshoreterminalsandrefineries. Theyareequippedwithsophisticatedloadingsystemsanddynamicpositioningsystems. • Spot charter. Generallyrefersto a voyage charter or a trip charter, whichgenerallylastfrom 10 daystothreemonths. Underbothtypes of spot charters, theshipownerwould pay forvesseloperatingexpenses, whichincludecrewcosts, provisions, deckand engine stores, lubricatingoil, insurance, maintenanceandrepairs, andforcommissions on grossrevenues. Theshipownerwouldalso be responsibleforeachvessel’sintermediateandspecialsurveycosts. • Spot market. The market for a vesselforsinglevoyages. • Sub-Panamax. An “Intermediate” fullycellularcontainershipwith a TEU capacitybetween 2,000 TEU and 2,999 TEU.

33. BASIC TERMS & DEFINITIONS • Suexmax. Allvesselsdesignedforthecarriage of liquidbulkcargoes 120,000 - 199,999 dwt, includingoilandproducts, chemicalandotherspecialised. • TEU. Twenty-footequivalentunit, theinternationalstandardmeasureforcontainersandcontainershipcapacity. • Time charter equivalent rate (“TCE”). A shippingindustryperformancemeasureusedprimarilytocomparedailyearningsgeneratedbyvessels on time charterswithdailyearningsgeneratedbyvessels on voyagecharters, because charter hireratesforvessels on voyagechartersaregenerally not expressed in perdayamountswhile charter hireratesforvessels on time chartersgenerallyareexpressed in suchamounts. TCE is expressed as pershipperday rate and is calculated as voyageand time charter revenueslessvoyageexpensesduring a perioddividedbythenumber of ouroperatingdaysduringtheperiod, which is consistentwithindustrystandards

34. BASIC TERMS & DEFINITIONS • Time charter. A charter under which the vessel owner is paid charter hire on a per-day basis for a specified period of time. Typically, the shipowner receives semi-monthly charter hire payments on a U.S. dollar per day basis and is responsible for providing the crew and paying vessel operating expenses while the charterer is responsible for paying the voyage expenses and additional voyage insurance. Under time charters, including trip time charters, the charterer pays voyage expenses such as port, canal and fuel costs and bunkers. • Trip charter or short time charter. A time charter for a trip to carry a specific cargo from a delivery point via load and discharge ports to a redelivery point at a set daily rate. • ULCC(Ultra Large Crude Carrier). Tankers above 320,000 tonnes dwt. • UNCTAD.United Nations Conference on Trade and Development

35. BASIC TERMS & DEFINITIONS • VLCC (Very Large Crude Carrier). All vessels designed for the carriage of liquid bulk cargoes >200,000 dwt, including oil and products, chemical and other specialised cargoes. • VLGC (Very Large Gas Carrier). LPG Carriers of 60,000cbm and above. A significant number of LPG carriers are also able to transport ammonia and petrochemical gas cargoes, such as ethylene, propylene and butadiene. • VLOC (Very Large Ore Carrier). Bulkcarriers with a capacity of > 220,000dwt, specifically designed to carry very dense iron ore on the long haul voyages of Brazil and Australia to China.

36. BASIC TERMS & DEFINITIONS • Voyage charter. A voyage charter involvesthecarriage of a specificamountandtype of cargo on a loadport-to-dischargeportbasis, subjecttovariouscargohandlingterms. Most of thesechartersare of a singlevoyagenature, as tradingpatterns do not encourageroundvoyagetrading. Theowner of thevesselreceivesonepaymentderivedbymultiplyingthetonnage of cargoloaded on board bytheagreeduponfreight rate expressed on a U.S. dollarper ton basis. Theowner is responsibleforthepayment of allvoyageandoperatingexpenses, as well as thecapitalcosts of thevessel. • VLGC (VeryLargeGasCarrier). LPG Carriers of 60,000cbm andabove. A significantnumber of LPG carriersarealsoableto transport ammoniaandpetrochemicalgascargoes, such as ethylene, propyleneandbutadiene. • VLOC (VeryLargeOreCarrier). Bulkcarrierswith a capacity of > 220,000dwt, specificallydesignedtocarryvery dense ironore on thelonghaulvoyages of BrazilandAustraliatoChina.

37. BASIC TERMS & DEFINITIONS • WAR RISKS.Those risks related to two (or more) belligerents engaging in hostilities, whether or not there has been a formal declaration of war. Such risks are excluded by the F.C.&S. (Free of Capture and Seizure) Warranty, but may be covered by a separate War Risk Policy, at an additional premium. • WHARFAGE.A charge assessed by a pier or dock owner for handling incoming or outgoing cargo. • WORLDSCALE.Scale by which tanker freight rates are quoted.