ECSA - The Tramp Shipping Market Mar 2015

ECSA
The Tramp Shipping Market
iron ore imports. In such cases, the contract is generally placed before the vessel is
actually built. Shorter-term time charters for twelve months or three to five years
would be obtained on the charter market.
3. Voyage and trip charter (Spot Charter): shippers e and traders with cargo can
contract for freight on the spot market, often using a shipbroker to act on their behalf
and negotiate a rate. A “voyage charter” is a contract to deliver the cargo for a
negotiated price per tonne, whilst a “trip charter” hires the ship for a voyage, leaving
the shipper to deal with the details and expense of loading and discharging cargo. . For
example in agricultural trades such as grain and sugar seasonal factors and the
volatility of the market make it difficult to plan shipping requirements in advance. Or
the cargo could be a consignment of prefabricated buildings for the Middle East or
some heavy plant. In such cases, bulk or multi-deck tonnage is chartered for a single
voyage via some market such as the Baltic Exchange or broker network, where the
shipper can hire a shipon a voyage or trip basis. A trip charter hires the vessel on a
per day basis for the period of a specific voyage and for the carriage of a specific
cargo. The shipowner earns “hire” per day for the period determined by the voyage.
4. Contract of Affreightment: the shipper may, normally through an open tendering
procedure, enter into a long-term arrangement with a shipowner who specializes in a
particular area of bulk shipping, supported by suitable tonnage. For example,
Scandinavian shipowners are involved in the carriage of forest products from West
Coast North America to Europe and run fleets of specialist ships designed to optimize
the bulk transportation of forest products. Similarly, the transportation of motor cars is
serviced by companies, which run fleets of pure vehicle carriers and Ro Ros servicing
the Japanese car export trade. COAs are also used in other trades such as coal,
fertilizer, grain, ore and oil.
7. The companies involved in the shipping business
7.1 Shipping Companies and support services
There are five categories 10 of company involved in the transport chain, two directly and three
indirectly. The relevant companies are
1. Cargo owners
2. Traders
3. Shipowners (shipping companies/operators),
4. Ship managers
5. Ship brokers
Each has a different perspective on the business.
An important group of the past twenty years, cargo owners have cargo to be moved by sea. They
may be primary producers such as oil companies or iron ore mines. Or they may be manufacturers
or wholesalers importing raw materials or equipment. A third important group in last 20 years has
been traders who purchase commodities on a speculative basis with a view to reselling them,
often in a different location, so they become involved in the transport process. Some cargo
owners have a very short term approach to the business, and just want to purchase transport when
they need it. Others take a more long term perspective, and may become deeply involved in the
10 Some companies will combine two or more of the listed functions.
Clarkson Research Services Limited 23 March 2015