ECSA - The Tramp Shipping Market Mar 2015

ECSA
The Tramp Shipping Market
14.4 Pool arrangements
One of the most common arrangements for working together in the shipping industry is the
"Pool". Shipping pools are currently used in almost all segments of the tramp/non-liner shipping
market including products tanker business, the chemical tanker business, the LPG business, the
bulk carrier business and the crude tanker business. Recently established pools include a capesize
bulker pool of over a hundred vessels, while in the tanker sector, at least 20% of VLCCs are
understood to be in a pool, and almost a third of all long and mid-range product tankers (this
includes all product tankers larger than 45,000 dwt in size).
A shipping pool can be defined as “a collection of similar vessel types under various ownerships
placed in the care of a central administration” 17 . Areas of potential co-operation are shown in
table 5. Pools are generally developed for 2 reasons. Firstly to allow participants to provide the
service levels required by their major customers. Secondly, to improve transport efficiency by
special investment and increased ship utilisation e.g. by arranging backhaul cargoes more
effectively than a small group of ships could do.
14.5 Space Charter Agreements
In the breakbulk era liner companies operated freight pools, particularly in thin trades, in order to
spread operational costs. Containerisation saw the introduction of consortia (sharing
administrative and operating costs and revenue) and alliances (sharing vessel operating costs) as
carriers sought to drive down operating costs and increase vessel size to access scale. Vessel
sharing agreements, today’s most common format, operate on the basis of slot swaps between
participating carriers with inequalities of provision and usage settled by cash cross-payments at
pre-determined prices. In addition, carriers sell slots to third parties, to competing lines without
sufficient market support to start their own services, and to lines seeking to supplement their own
service capacity as well as to container leasing companies seeking to reposition empty containers.
Slot charters are generally on the basis of long term inter-line contractual arrangements, with slot
prices set for a fixed duration, but the slot prices for spot arrangements are fixed ad hoc. Needless
to say, carriers prefer to restrict slot sales to capacity that they cannot themselves make profitable
use of. Instances in which space is subcontracted to cargo interests are extremely rare or nonexistent.
Space charter arrangements also exist in some of the specialised sectors. Considering the
customer structure and the service requirements they place on the carriers it is a need to optimise
capacity utilisation, sailing frequencies and port coverage to the benefit of the customers. Carriers
use both irregular ad hoc space charter arrangements mainly to cover short term fluctuations as
well as more regular fixed positioning space charters.
17 William V. Packard 1989 Shipping Pools, Lloyds of London Press Ltd, London p 5
Clarkson Research Services Limited 33 March 2015