UNIT-6: SHIPPING PRACTITIONERS & THEIR ORGANISATIONS 1) Ship Owners 2) Ship Operators 3) Ship Agents 4) Ship Brokers 5) Ship

Financiers 6) Ship Chandlers 7) Ship Insurers 8) Maritime Administrators 9) Ship Classification Societies 10) Ship Builders 11) Freight Forwarders 12) NVOCC 1) SHIP OWNERS
SHIP OWNER

LINER

TRAMP

LINER SHIP OWNERS Liner Companies Own And Operate A Number Of Ships Serving One Or More Established Trade Routes Between Specific Ports In Two Geographic Areas. Liner cargoes generally consist of several hundred different lots and types of commodities Liner trade cargo is of higher value than bulk homogeneous commodities carried in TRAMP vessels Trade routes are often competitive between two or more liner companies TRAMP SHIP OWNER The Tramp Ship owner is a contract carrier where the liner operator is a common carrier. Tramps are built to carry one or more types of homogeneous bulk commodities of low intrinsic value between two ports under one contract with one shipper. The Tramp vessels wander the oceans in search of cargoes, the vessels are built to have flesibility to carry commodities that are shipped in bulk such as coal, ores, sugar, salt, cement, scrap, grain, etc. A tramp vessel traveling in ballast, without cargo, is losing money. The tramp vessel operation does not require a large staff to run the company. Five people functioning effectively can handle the crewing, bunker supply, claims, accounting, insurance, chartering and other matters. Shipowners, whether they own a single ship (a "singleton") or a number of vessels (a "fleet"), are exposed to several risks, some of which arise from their contractual obligations such as a bill of lading, a charter party or articles of agreement (for employment of crew members). Basic issues facing the ship owner: High fixed costs to operate a regularly scheduled service Relatively inelastic demand for services Significant mismatches in demand arising from chronic trade imbalaances Inelastic supply "Lumpy" supply (capacity must be added or withdrawn in large units -namely entire strings of vessels, unlike a railroad which can add or subtract cars from a train based on variations in demand). No barriers to new entry or capacity expansion Distortive government subsidization of shipping and shipbuilding 1

2) SHIP OPERATORS
SHIP OPERATORS

LINER SHIP OPERATOR

TRAMP SHIP OPERATOR

LINER SHIP OPERATOR Liner operator will operate the ship on behalf of the owner Liner operators set the time and place of sailing and the destination, and offer to carry any cargoes The liner ship schedules are published many months in advance. Schedule designing and advertising the service may have to be done after consulting the shippers and receivers who are relatively fewer in number compared to container traffic. Freight rates are published as tariff Functions of Liner Operator a) Common Carrier b) Set time and place of sailing c) Set destination d) Carry any cargoes in Containers e) Operate vessels in fixed trade routes f) Arrival and departure dates advertised between two ports well in advance g) Offer only container load of space and not hire the entire vessel. h) Full Container Load (FCL) or Lessthan Container Load (LCL) are carried on. LCL charges will be on the higher side as compared to FCL charges per ton. i) Standard Liner Bill of Lading will be issued j) Trade routes are competitive k) The service frequency, fleet size and port calls l) Fully owned sub offices in the major ports they serve. Types of Liner Operators 1) Freight Forwarders 2) NVOCC 3) MTO 4) CHA TRAMP SHIP OPERATOR Tramp ship operator operates the vessel on behalf of the Tramp ship owner. Tramp ship operator is Contract Carrier Freight rates are NOT published as tariff Supply and Demand controls the tramp fright market Tramp vessels wander the oceans in search of cargoes The Tramp ship operator cannot have a branch office in every port its ship may use. No-one knows where the ship will go next voyage. The function of the Tramp ship operator is to provide ships for hire or charter. Types of employment for Tramp Vessels The Ship owners or Ship operators can employ vessels in three general ways; Demise or Bareboat Carter Time Charter Voyage Charter 2

DEMISE (BAREBOAT) CHARTER: The owners of the vessel must completely relinquish (give up) possession, command and navigation to the charterers. Here the owner only supplies the vessel and covers the cost of depreciation on the vessel, insurance unless otherwise agreed, survey of vessel for delivery on hire and the shipbrokers fee. The demise charters pay for the hiring of master and crew, wages, provisions and stores, maintenance and repairs, fuel, water and lubrication oils, all port charges, brokerage commissions on cargoes and cargo claims. TIME CHARTER: Here the owners allow the charterers the use of the cargo-carrying capacity of the ship for a specific period of time. The owner maintains control of the navigation, crew, master, hull and P & I insurance and in general all matters connected with the operation of the vessel. The charterers seek cargo employment of the vessel. The charterers pay the owners a monthly hire rate. Charterer can order the vessel to proceed anywhere as agreed in the trading limits clause of the time charter-party. Charterers are responsible for the fuel, port charges, repairs caused by cargo damages, payment of the monthly hire and the appointment of the load and discharge port agents. VOYAGE CHARTER: The Voyage charter is the most common charter in tramp shipping. The owner puts the vessels cargo-carrying capacity at the charterers disposal for full or part cargo from one named port to another. The time consumed for the voyage is not a major consideration but the time used to load and discharge the vessel is. The revenue earned by the shipowners is called FREIGHT. Here the ship owner must present the vessel at the load port within the dates stipulated in the charterparty. The range of dates is called the lay days. The last date of arrival at load port is called the lay days cancellation date or LAYCAN. The charterers responsibility is to provide a specified cargo, of a specific weight or volume at the port stated in the charterparty. The charterers pay for the loading and discharge costs. All the vessel operations and expenses are for the owners account. 3) SHIP AGENTS
SHIP AGENTS

LINER AGENTS

TRAMP SHIP AGENTS

LINER AGENTS The liner company employs a general agent, capable of covering a range of ports within the geographical range served by the line. The general agent's responsibilities are outlined in the 'standard liner agency contract' detailing the agent's responsibility and authority to act on behalf of the liner company. The agent will have an office staff organized to mirror the liner company principal. 3

 The marketing department of the agent would consist of sales people soliciting shippers and freight forwarders to put traffic on the trade route of the line. Additionally, the agent arranges advertising of sailing dates, represents the owner in the conference, and to government authorities that oversee the tariffs and the conduct of the lines within the conference. General agents have departments for traffic documentation, freight cashier, booking department, manifesting, container control and agency. Remuneration for general agents is based on a commission percentage of the freight booked through the agent, plus a container control fee and the recovery of certain communication expenses. As agents and lines are forced to work more closely by the need to share common computer systems, remuneration terms are changing, and may include a variety of contractual fees. In the long term, liner agents are threatened by increased computerization of lines, and few of the major liner operators now use agents, preferring instead to set up owned offices with compatible computer systems and a common marketing identity. TRAMP SHIP AGENTS The size of the agency firm depends upon the number of tramp vessels serviced per year. Within the tramp agency operation, the staff will include an operations manager, boarding agents, secretarial and accounting staff. Remuneration is based on the revenue gained from the agency fee, expenses and special services. The operations manager is the coordinator of the three facets of tramp agency: pre-arrival, port call, and after sailing service. 4) SHIP BROKERS Shipbrokers act as intermediaries and have proved themselves the most economical method by which shipowners and potential ship charterers can be brought together for the negotiation of contracts of carriage. A shipbroker can be found in almost every port of commercial importance. The major centres of shipbroking are London, New York, Oslo and Hong Kong. Shipbrokers can be individuals acting on their own or a large company with hundreds of brokers covering a variety of commodities moving in bulk. Situated in London, the Baltic Exchange is the spiritual home of shipbroking. It used to be a place, providing a meeting place for brokers representing both shippers with cargoes requiring ships, and brokers representing shipowners seeking employment. In general, shipbroking provides a service joining those seeking ships to carry their cargoes and shipowners seeking cargoes to employ their vessels. This service is provided by a system of worldwide intelligence of cargoes being moved and the location and availability of ships throughout the world seeking employment. TYPES OF SHIP BROKERS Owner's brokers Shipowners appoint brokers to represent them in seeking advice and information as to the location of cargoes to be moved. Charterer's brokers Shippers seeking a vessel to move cargo from one port to another will inform brokers of the cargo movement schedule and volume of cargo to be moved and the amount of freight on offer. 4

Tanker brokers These shipbrokers specialize in liquid bulk cargoes and ships. In the tanker branch of shipping, one broker acts as the intermediary between the charterers and owner. Cable brokers This is a slightly dated term for large broking houses with offices in a number of major centres. The name is a hangover from the days when cables were used for communication. 5) SHIP FINANCIERS Ship finance is a specialist sector of banking and has four salient features: a) Capital Intensity b) Mobility of Assets c) Volatility of Market d) Limited Information Types of Financial structures used in Ship finance: (i) Equity finance: This entitles the investor to share in the risks and rewards of the business (ii) Debt finance: It is a legally enforceable loan agreement in which the lender receives interest at predetermined intervals with the repayment of the principal after a specified period (iii)Mezzanine finance: It involves an intermediary form of financial structure which contains elements of both debt and equity (iv) Leasing: It is a hire-purchasing arrangement in which the borrower bareboat charters the vessel from its owner. 6) SHIP CHANDLERS A ship chandler is a retail dealer in special supplies or equipment for ships. For traditional sailing ships items that could be found in a chandler might include: turpentine, edible oil, varnish, rope, tools, brooms, mops, galley supplies, leather goods and paper. Today's chandlers deal more in goods typical for fuel-powered commercial ships, such as oil tankers, container ships, bulk carriers. They supply the crew's food, ships maintenance supplies, cleaning compounds, paint, rope, etc. Their specialty is the high level of service available and the short time required to fill and deliver their special orders. Because commercial ships discharge and turn around quickly today, delay is expensive and the services of a dependable ship chandler are urgent. 7) SHIP INSURERS Ship insurers are intimately involved in the shipping industry, since they are the "risk carriers" of both shipowners as well as of cargo interests. Hull and machinery insurers cover losses arising from physical damage to the ship. They also cover certain liabilities (to a limited extent), under tort, arising from collision due to negligent navigation. Protection and Indemnity clubs Protection and Indemnity (P&I) clubs are mutual associations of shipowners. Like ship insurers, these clubs are "risk carriers" in respect of liability risks associated with the operations of ships. 5

8) MARITIME ADMINISTRATORS ROLE & PURPOSE: The Maritime Administrator is the head of the Maritime Administration and advises and assists the Secretary of Transportation on commercial maritime matters, the Indian Maritime Industry, and strategic sealift. The Maritime Administrator also maintains liaison with public and private organizations concerned with the indian maritime industry. MAJOR ACTIVITIES of DG SHIPPING: Merchant Shipping Act Its intent and purpose Administrative Framework Summary of Provisions under Merchant Shipping Act, 1958 Institutions established under the Act Registrations of Indian Ships Manning of Ships Certificates of Competency & Examinations for Certificates of Competency Sailing Vessels Fishing Boats International Legislation Technical Aspects Control of Indian Ships Statutory and Executive Order Port State Control Investigation and enquiries Wreck & Salvage Search & Rescue Safety of Life at Sea Maintenance of Ships Pollution of Sea by Oil Training Specific Provisions relating to Seamen & Apprentices Seamen's Employment Offices Seafarers' Welfare Society Coastal Shipping Multi-modal Transportation of Goods 9) SHIP CLASSIFICATION SOCIETIES Samuel Plimsoll said The ability of shipowners to insure themselves against the risks they take not only with their property, but with other peoples lives, is itself the greatest threat to the safe operation of ships Classification societies are organizations that establish and apply technical standards in relation to the design, construction and survey of ships and offshore structure. Classification rules are developed to assess the structural strength and integrity of ships hull and its appendages, the reliability of propulsion, power generation. A vessel that has been designed and built to the appropriate rules of a society may apply for a certificate of classification from that society 6

 Classification societies certificate is an attestation only that the vessel is in compliance with the standards that have been developed and published by the society. There are more than 50 classification societies available worldwide Ten classification societies form the International Association of Classification Societies (IACS) The role of classification and classification societies has been recognized by SOLAS Classification society has no commercial interests related to ship design, ship building, ship ownership, ship operation, ship maintenance, insurance and chartering For ships in service, the society carries out surveys to ascertain that the ship remains in compliance with those rules. WHY IS IT CALLED CLASSIFICATION? The condition of the hull was classified A, E, I, O or U, according to the state of its construction and its adjudged continuing soundness (or lack thereof). Equipment was G, M, or B: Good, Middling or Bad. In time, G, M and B were replaced by 1, 2 and 3. 'A1' means 'First or Highest class'. The purpose of this system was not to assess safety, fitness for purpose or seaworthiness of the ship. It was to evaluate risk. LIST OF CLASSIFICATION SOCIETIES (IACS) Name Abbr Date Head office Lloyd's Register of Shipping Bureau Veritas Registro Italiano Navale American Bureau of Shipping Det Norske Veritas Germanischer Lloyd Nippon Kaiji Kyokai LR BV 1760 London 1828 Paris

RINA 1861 Genova ABS 1862 Houston

DNV 1864 Oslo GL 1867 Hamburg

NKK 1899 Tokyo 1913 Sankt Petersburg 1956 Beijing 1960 Daejeon 1975 Mumbai

Russian Maritime Register of Shipping RS China Classification Society Korean Register of Shipping Indian Register of Shipping 10) SHIP BUILDERS CCS KR IRS

Shipbuilders are the source of maritime activity, for it is at shipyards that marine vehicles are built. Shipbuilders normally have a contractual relationship with the respective shipowners arising out of the shipbuilding contracts. The nature and extent of hazards of building ships are different from those associated with their operation.

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FREIGHT FORWARDERS The freight forwarders advise clients of the best rates, routings and modes of transporting goods to or from any area in the world. Freight forwarders find the right match of services available so that products are moved by the most timely and cost-effective means. Freight forwarders coordinate arrangements for storage, pick-and-pack operations, consolidations or Full Container movements as well as inland transportation to provide clients with true door-to-door service. Services of Freight Forwarders 1) Complete air and sea shipping services worldwide 2) Transportation cost analysis before cargo moves 3) Export documentation 4) Letter of credit compliance and documentation preparation 5) Inland delivery coordination at destination 6) Air and ocean freight negotiations 7) Carrier recommendations 8) Destination customs requirements

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NVOCC Non-Vessel Operating Common Carrier is referred to as the SHIPLESS SHIP LINE. The NVOCC does not actually operate the vessel to move the cargo NVOCC negotiates for space on existing vessels and using the aggregate volume from all the clients The shipping line does not have any direct responsibility to the individual shippers as his legal relationship is with the CONSOLIDATORS namely NVOCC. NVOCCs offer regular volumes of consolidation boxes, called CONSOLS. The revenue for the NVOCC is the sum of all freights earned from LCL shipments The services offered by NVOCCs include 1. Booking of cargo 2. Providing the Container 3. Organizing the pick-up 4. Deliver the cargoes 5. Consolidation such as LCL 6. Selling the ships space at a retail price 7. Issues house Bill of Lading 8. Documentation procedure 9. Arrangement of Multimodal (Air/Rail) 10. Arrangement for CFS/ICD 11. Customs operations 12. Issues Arrival Notice END OF UNIT - 6