Familiarisation to the Maritime Industry

Great Eastern Shipping

Marine Transportation and Logistics Sector

Shipping

Liner service Tramp service

Containers/Reefers
and others
Freight
Freight

Ferry Dry bulk Wet bulk

Passenger
Cruise
Cross -section of a cargo carrying ship
 Factors affecting tradeability of ships
..hull types..

Double Hull Single Hull

After Grounding After Grounding
 Factors affecting tradability of ships
INSURANCE/P CLASS OIL MAJOR
&I COVER APPROVALS

SPECIFICATIONS

FLAG
STATE

AGE/HULL
OWNER TYPE
CHARTERER
 ..global nature of industry..
USA India
UK UK

MEG
BANK

CHARTERER

UK

P& I CLUB
INDIA

KOREA
 Concepts
• Draft: Depth upto which the ship is immersed in water
• Load Line: The maximum draft to which the vessel may load
• Bunker: Fuel for vessels
• Deadweight Tonnage (DWT): The weight of cargo, water, bunkers and
accommodation that may be carried when a vessel is down to her load
line marks
• Net Registered Tonnage (NRT):The internal capacity of a vessel
measured in units of 100 cubic feet less the space occupied by boilers,
engines, shaft alleys, chain lockers, officer's and crew quarters and other
spaces not available for carrying passengers or freight

• Classification Society: The professional organizations which vet and

certify the strength and seaworthiness of vessel

• Flag of Convenience: A flag of convenience ship is one that flies the flag
of a country other than the country of ownership
 DWT based classification - Crude oil carriers

• Panamax - 50,001 DWT to 80,000 DWT

• Aframax - 80,001 DWT to 120,000 DWT
• Suezmax - 120,001 DWT to 200,000 DWT
• VLCC (Very Large Crude Carrier) - 200,001 DWT to 350,000 DWT
• ULCC (Ultra Large Crude Carrier) - 350,001 DWT and Larger
 DWT based classification - Product carriers

• Small - 3,001 DWT to 10,000 DWT

• Handy - 19,001 DWT to 25,000 DWT
• Medium Range - 25,001 DWT to 45,000 DWT
• Long Range One - 45,001 DWT to 70,000 DWT
• Long Range Two - 70,001 DWT to 100,000 DWT
 DWT based classification - Dry Bulk

• Handy Size - 10,000 DWT to 30,000 DWT

• Handy Max - 30,001 DWT to 50,000 DWT

• Panamax - 50,001 DWT to 80,000 DWT

• Capesize - 80,000 DWT and above

 Surveys and drydocking
• Class Survey
– Carried out by Classification Society
– Certifies the construction of Hull and Machinery of ships
• Statutory Survey
– Carried out by classification societies on behalf of Government/
Flag administration through their own surveyor’s
– Requires ship to be dry docked twice in five years with gap not
exceeding three years
– Without valid Statutory survey certificate a ship is not
considered seaworthy restricting sailing from port
 Deployment of ships
•Time Charter - employment for a fixed period

•Voyage Charter - employment for a voyage

Revenue Concepts: Shipping

• Baltic Dry Index: It is a combination of three induces: Baltic
Capesize Index, Baltic Panamax Index and Baltic Handymax
Index. The indices are based on assessments of the cost of
transporting various dry bulk cargoes (e.g. coal and iron ore), made
by leading shipbroking houses located around the world

• World scale : The standard to express market levels of freight for

tankers in terms of % of scale rates published annually
 Time Charter Yield (TCY)
Time charter Voyage charter
Fixed for a period of time Fixed for a route
Rate is $/day Rate is $/ton
Calculation of Time charter Yield

($/day) * No. of op. days Gross Income ($/ton) * Qty. of cargo

Less
Commission/brokerage Operating Commission, bunker cost,
Expenses lighthouse charges,canal
dues, port dues
Net Freight
Net Freight/No. of TCY $/day Net Freight/ No. of
op. days op. days
Oil field services

Seismic Studies

•Support Services:

Drilling: -Logistics Support

Exploratory & Development -Well Testing
-Casing
-Mud Engineering
-Well Logging
-Directional Drilling
-Cementing
Production
 Offshore Activities
Offshore activities include:
– carriage of passengers, goods and other materials

– supporting or performing activities like i) port related

services ii) oil field services

– dredging services, diving support, maintenance supports,

towage, anchor handling, cable laying, survey, pipe laying,
marine construction etc.
– all other services to which above mentioned functions are
subsidiary like production platforms, floating structures,
floating storage etc.
 Drilling Rig

Jack-up Floaters
 Drilling Rig

Jack-up

Independent leg Mat supported

Cantilever Slot
 Drilling Rig

Floaters

Drill Ships Semi submersibles Barges

 Offshore Support Vessels
• Offshore Support Vessels: Vessels that support offshore production
activities e.g.
– Offshore Supply Vessels: Vessels engaged in carrying fuel, fresh water and
other provisions between shore base and offshore installations.
– Platform Supply Vessel: Vessel specially designed for providing support
services viz. transporting fuel , fresh water and other materials such as
pipes, cement, tools and provisions to offshore oil and gas platforms and
drilling rigs.
– Anchor Handling Tug: A vessel specially designed to handle
anchoring/ mooring of offshore rigs and work barges.
Also used for maritime towage and salvage.
– Anchor Handling Tug Supply Vessel: A hybrid between
anchor handling tug and supply vessel.
This vessel is specially designed to supply
various cargo between shore-base and offshore
installations along with handling maritime
towage and anchor handling activities.
 Barge

A floating vessel , propelled or otherwise which is used for

storing purposes, offshore construction and pipe laying.

Barge

Flat top Construction Pipe laying

Jacket launching Offshore hook up Laying sub sea

and storage and maintenance pipeline and hook up
to sub sea plems
 Port/Terminal support services
Harbour Tug

A vessel available at a port/terminal to give assistance to

ships entering or departing from their berth or moorings.

Harbour tug

Azimuthal Cycloidal
 Revenue Concepts: Offshore

• Operating Day Rate: The daily charter rate paid for a vessel/ rig
operations.

• Non- operating Day rate: Rate payable when the vessel is on

charter but is not operating due to repairs, or breakdown or
maintenance within contractual terms or due to some fault of the
charterer.

• Moving day rate: Applicable to rigs when they move from one
location to another for further drilling within the same contract
Acts governing Indian Maritime Industry

• Coasting Vessels Act, 1838

• Inland Vessels Act, 1917

• Merchant Shipping Act, 1958

 Merchant Shipping Act, 1958
Some of the salient features of the Act
• Flag administration
• Registration of Ships
• Certification of officers & crew
• Liability related issues
• Investigation and Enforcement
• Cabotage Guidelines
• Penalties and Procedures
 Types of risk & coverage :

Following are the basic coverage requirements for ships

– H & M Risks ( asset coverage)

– Third party Risks ( liability coverage)

– War Risk
 Hull and Machinery Insurance
• Insures physical asset: hull of ship, machinery and equipment installed
in the ship
• Agreed Value Policy
• Governed by wording of Institute Time Clauses (ITC) Hull
• Covers asset against perils, new for old , pollution hazards, 3/4th
collision liability and others
• Indian shipping companies to insure H&M in India only
• 4 nationalised insurance companies write H&M risks in India
• The policy issued is identical to London market w.r.t. cover
• The insurance is taken for market value of the ship
• Premium rates is based on tariff devised by IRDA
• Policy deductibles
• In India underwriter is sovereign risk
• Generally issued in Indian Rupees however, policies can be issued in
USD if the borrowing is in USD
 Third Party Risks

• Covered by P&I Clubs, which are non profit making bodies

• Covers liability like cargo liability, liability towards employees on

ship, damage to fixed and floating objects, oil pollution etc.

• Covers 1/4th collision liability

• Limit of club cover

• Covers liability for oil pollution upto USD 1bn

 War Risk Insurance
• All Indian companies insure their ships against war risk with GOI

• It is a package policy covering H&M and Third Party liability

• Nationalised insurance companies act as agents

• Original cover is a peace time cover

• In case of war or war like situation “notice of termination of war

cover” in relation to excluded area but automatic “reinstatement” with
additional premium

• GOI scheme liberal on exclusions

• Any liability exceeding GOI war risk scheme is insured by P&I

insurance upto USD 400 mn
• Also covers terrorist attack