Shipping 101 Formatted

INTERNAL USE ONLY
Shipping 101
An Overview of the Industry
2
Shipping & Ports Group Shipping 101 | An overview of the Industry
INTERNAL USE ONLY
Table of Contents
1. Introduction to Shipping Industry 1

Commodities Traded by Sea 2
Major Shipping Routes, Chokepoints and Ports 3
Stages in a Shipping Cycle 4
Factors Affecting the Demand for Sea Transport 5
Factors Affecting the Supply of Sea Transport 7
Freight and Charter Rates 9
Freight Derivatives 14
2. Vessel Operations 15
Types of Vessel Employments 16
Voyage Charter 16
Contract of Affreightment 17
Time Charter 17
Bareboat Charter 19
Vessel Pools 20
Vessel Costs 21
Voyage Costs 22
Fuel Costs 22
Port Costs 22
Canal Dues 22
Cargo Handling Costs 23
Commission 23
Vessel Operating Costs 24
Crew Costs 24
Stores 25
Repairs and Maintenance 25
Administration and General Costs 25
Marine Insurance 26
Ship Management 28
Safety and Environmental Regulations Governing the Vessel Trade 30
3. Vessels Types Sales and Purchases, Shipbuilding

and Financing 32
Vessel Types 33
Introduction - Vessel Measurements 33
Drybulk Carriers 34
Tankers 36
Containerships or liners 43
LNG and LPG Vessels 46
Oil Exploration (Drilling Rigs and Drillships) 50
Offshore Support Vessels 52
Shuttle Tanker 52
FPSO, Oil 53
FSO, Oil 54
FSRU, Gas 54
Offshore Support Vessel 55
Diving Support Vessel 55
Pipe Carriers Vessel 56
Pipe Layer 56
Pipe Burying Vessel 57
Bunkering Vessel 57
Other Types of Vessels 58
Ro-Ro Shipping 58
Barges 58
3
Shipping 101 | An overview of the Industry
INTERNAL USE ONLY
Accommodation Ship 59
Anchor Handling Tug Supply 59
Crew/Supply Vessel 60
Fishing Trawler 60
Reefership 61
World Fleet size by Principal Vessel Types, 2009-2010 62
Vessel Sale & Purchase Activity 63
Role of Ship Management Companies in Sale and Purchase of Vessels 64
Flag of Convenience 64
Shipyards 65
Shipbuilding 65
Vessel’s Useful Economic Life 66
Dry-Docking 66
Vessel Financing 68
4. Appendix - Shipping Glossary Containing Shipping Terms 69

5. References – Useful Links 88
4
INTERNAL USE ONLY
1. Introduction to Shipping
Industry
5
INTERNAL USE ONLY
Commodities Traded by Sea

As shown in the figures below, the main commodities traded by sea are: energy,
agricultural, metal, industry trades and other products.
Figures 1-2: Commodities traded by sea- 2009 preliminary figures

Source: UNCTAD (United Nations Conference on Trade and Development)
secretariat on the basis of data supplied by reporting countries as published on the
relevant government and port industry websites, and by specialist sources
Millions of tons (1000 kg) loaded
Containerized cargo 1190
Other dry cargo 1040
Minor bulks (manufactures, agribulks,

851
metals, and minerals)
Major dry bulks (iron ore, coal, grain,

2113
bauxite/alumina and phosphate rock)
Crude oil, petroleum products and gas 2649
0 500 1000 1500 2000 2500 3000
Share (%) of millions of tons (1000 kg) loaded
Containerized
cargo
Crude oil,
15.17%
petroleum
33.78 %
products and
gas
Other dry cargo
13.26%
10.85%
Minor bulks 26.94% Major dry bulks

(manufactures, (iron ore, coal,
agribulks, grain,
metals, and bauxite/alumina
minerals) and phosphate
rock)
2
INTERNAL USE ONLY
Major Shipping Routes and Chokepoints
Map 1: Major shipping routes and chokepoints
A chokepoint is a geographical restriction—such as a narrow strait or channel—

that has the potential to block vessel movement in the event of a shipping accident,
political action, act of war, piracy or other such circumstance. Chokepoints are
located along all major maritime routes.
Factoring in both the volume of ships and the number of other ports each is
connected to, these are the top ports in the world 1:
1 Panama Canal, Panama

2 Suez Canal, Egypt
3 Shanghai, China
4 Singapore
5 Antwerp, Belgium
6 Piraeus, Greece
7 Terneuzen, Netherlands
8 Plaquemines, Louisiana
9 Houston, Texas, USA
10 Ijmuiden, Netherlands
11 Santos, Brazil
12 Tianjin, China
13 New York and New Jersey, USA
14 Europoort, Netherlands
15 Hamburg, Germany
16 Le Havre, France
17 St Petersburg, Russia
18 Bremerhaven, Germany
19 Las Palmas, Gran Canarias
20 Barcelona, Spain
1
Bernd Blasius of the University of Oldenburg analyzed itineraries from 16,693 cargo ships for the entire year of 2009
3
INTERNAL USE ONLY
Stages in a Shipping Cycle 2

Stage 1: Trough- In a trough there is evidence of surplus shipping capacity. Ships
queue up at loading points and vessels sail at slow steam to save fuel and delay
arrival. Secondly freight rates fall to the operating cost of the least efficient ships in
the fleet which move into layup. Thirdly, sustained low freight rates and tight credit
create a negative net cash flow which becomes progressively greater. Shipping
companies short of cash are forced to sell ships at distress prices, since there are
few buyers. The price of old ships falls to the scrap price, leading to active
demolition market.
Stage 2: Recovery- As supply and demand move towards balance, the first
positive sign of a recovery is positive increase in freight rates above operating
costs, followed by a fall in laid up tonnage. Market sentiment remains uncertain
and unpredictable. Spells of optimism alternate with profound doubts about
whether a recovery is really happening. As liquidity improves second hand prices
raise and sentiment firms.
Stage 3: Peak/Plateau- When all the surplus has been absorbed the market
enters a phase where supply and demand are in tight balance. Freight rates are
high, often two to three times operating costs. The peak may last a few weeks or
several years, depending on the balance of supply/demand pressures. Only
untradeable ships are laid up; the fleet operates at full speed; ship-owners become
very liquid; banks are keen to lend; the press report the prosperous shipping
business there are public flotations of shipping companies. Secondhand prices
move above “book value” and prompt modern ships may sell for more than the
newbuilding price. The shipbuilding orderbook expands, slowly at first, then more
rapidly.
Stage 4: Collapse- When supply overtakes demand the market moves into the
collapse phase. Although the downturn is generally caused by fundamental factors
such as the business cycle, the clearing of port congestion and the delivery of
vessels ordered at the top of the market, all of which take time, sentiment can
accelerate the collapse into a few weeks. Spot ships build up on key ports. Freight
rates fall, ships reduce operating speed and the least attractive vessels have to
wait for cargo. Liquidity remains high. Sentiment is confused, changing with each
rally in rates.
2
Martin Stopford (1997), “Maritime Economics”, Edition 2
4
INTERNAL USE ONLY
Factors Affecting the Demand for Sea Transport 3
1. The World Economy

The business cycle lays the foundation for freight cycles. Fluctuations in the rate of
economic growth work through into seaborne trade, creating a cyclical pattern of
demand for ships. The recent history of these trade cycles is evident which shows
the close relationship between the growth rate of sea trade and industrial
production. Invariably the cycles in the OECD economy were mirrored by cycles in
sea.
Nowadays most economists accept that these economic cycles arise from a
combination of external and internal factors. The external factors include events
such as wars or sudden changes in commodity prices such as crude oil, which
cause a sudden change in demand. Internal factors refer to the dynamic structure
of the world economy itself. Five of the more commonly quoted causes of business
cycles are:
• The multiplier and accelerator. The main internal mechanism which creates
cycles is the interplay between consumption and investment. Income (GNP)
may be spent on investment goods or consumption goods. An increase in
investment (creates new consumer demand. As the extra consumer
expenditure trickles through the economy, growth picks up (the income
accelerator), and generating demand for even more investment goods.
• Time lags. The delays between economic decisions and their implementation
can make cyclical fluctuations more extreme. The shipping market provides an
excellent example. During a shipping market boom, ship-owners order ships
that are not delivered until the market has gone into recession, when the arrival
of the new ships at a time when there is already a surplus further discourages
new ordering just at the time when shipbuilders are running out of work. The
result of these time-lags is to make booms and recessions more extreme and
cyclical.
• Stockbuilding has the opposite short-term effect. It produces sudden bursts of
demand as industries adjust their stocks during the business cycle. The typical
stock cycle, if such a thing exists, goes something like this. During recessions
financially hard pressed manufacturers run down stocks, intensifying the
downturn in demand for sea transport. When the economy recovers, there is a
sudden rush to rebuild stocks, leading to a sudden burst of demand which takes
the shipping industry by surprise. Fear of supply shortages or rising commodity
prices during the recovery may encourage high stock levels, reinforcing the
process.
• Some economists argue that cycles are intensified by mass psychology
Periods of optimism or pessimism become self-fulfilling through the medium of
stock exchanges, financial booms and the behavior of investors.
• Random shocks which upset the stability of the economic system may
contribute to the cyclical process. Weather changes, wars, new resources,
commodity price changes, are all candidates. These differ from cycles because
they are unique, often very severe.
3
5
INTERNAL USE ONLY
2. The Trade Elasticity of the World Economy

The trade elasticity is the percentage growth of sea trade divided by the
percentage growth in industrial production.
3. Seaborne Commodity Trades

An important cause of short-term volatility is the seasonality of some trades. Many
agricultural commodities are subject to seasonal variations caused by harvests,
notably grain, sugar and citrus fruits. Grain exports from the US Gulf reach a
trough in the summer then build up in September as the crop is harvested. In the
oil business there is also a cycle that reflects the seasonal fluctuation in energy
consumption in the northern hemisphere, with the result that more oil is shipped
during the autumn and early winter than during the spring and summer.
Long-term trends in commodity trade are best identified by studying the economic
characteristics of the industries which produce and consume the traded
commodities. Although every business is different, there are four types of change
to look out for; changes in the demand for that particular commodity; changes in
the source from which supplies of the commodity are obtained; changes due to a
relocation of processing plant which changes the trade pattern; and finally changes
in the shipper’s transport policy.
4. Average Haul and Ton Miles

The demand for sea transport depends upon the distance over which the cargo is
shipped. A ton of oil transported from the Middle East to Western Europe via the
Cape generates two or three times as much demand for sea transport as the same
tonnage of oil shipped from Libya to Marseilles. This distance effect is generally
referred to as the “average haul” of the trade. To take account of average haul, it is
usual to measure sea transport demand in terms of “ton miles”, which can be
defined as the tonnage of cargo shipped, multiplied by the average distance over
which it is transported.
The effect on ship demand of changing the average haul has been dramatically
illustrated several times in the past by the closure of the Suez Canal, which
increased the average distance by sea from the Arabian Gulf to Europe from 6,000
miles to 11,000 miles. As a result of the sudden increase in ship demand there
was a freight market boom on each occasion.
5. Political Disturbances and Ship Demand

The singular feature of political developments as far as the shipping market is
concerned is that when they occur they are inclined to bring about a sudden and
unexpected change in demand. The term “political event” is used here to refer to
such occurrences as a localized war, a revolution, the political nationalization of
foreign assets or even strikes.
Events of this type do not necessarily impact directly on ship demand; it is
generally their indirect consequences that are significant. The various wars
between Israel and Egypt had important repercussions, owing to the proximity of
the Suez Canal and its strategic importance as a shipping route between the
Mediterranean and the Indian Ocean.
Tanker demand typically—but not necessarily—correlates with oil demand. For
example, following Iraq’s invasion of Kuwait in 1990, the United States shifted
some of its oil imports from the Middle East to Latin America, West Africa and the
North Sea, all of which were closer geographically. Although the net amount of oil
shipped to the US did not change significantly during this time, the distance that
the oil had to travel decreased. The result was a net decrease in tanker demand for
the shipments into the USA. On the other hand the invasion of Kuwait by Iraq in
1990 created a short tanker boom because speculators started to use tankers for
oil storage.
6
INTERNAL USE ONLY
6. Transport Costs and the Long Run Demand Function

Over the last century, improved efficiency, bigger ships and more effective
organization of the shipping operation have brought about a steady reduction in
transport costs and higher quality of service. There can be little doubt that this has
contributed materially to the growth of international trade
Factors Affecting the Supply of Sea Transport 4

We start with the decision-makers. The supply of ships controlled, or influenced, by
four groups of decision-makers: ship-owners, shippers/charterers, the bankers who
finance shipping and the various regulatory authorities who make rules for safety.
Ship-owners are the primary decision-makers, ordering new ships, scrapping old
ones and deciding when to lay up tonnage. Shippers may become ship-owners
themselves or influence ship-owners by issuing time charters. Bank lending
influences investment and it is often bankers who exert the financial pressure that
leads to scrapping in a weak market. Regulators affect supply through safety or
environmental legislation which affects the transport capacity of the fleet.
1. The Merchant Fleet

The starting point for a discussion of the supply of sea transport is the merchant
fleet.
In the long run scrapping and deliveries determine the rate of fleet growth. Since
the average economic life of a ship is about 25 years, only a small proportion of the
fleet is scrapped each year, so the pace of adjustment to changes in the market is
measured in years not months. A key feature of the shipping market model is the
mechanism by which supply adjusts when ship demand does not turn out as
expected. The adjustment process involved changes in the type of ship within the
fleet.
2. Fleet Productivity
The nature of these productivity changes becomes more apparent when we look in
detail at what merchant ships actually do. Carrying cargo is just one small part of
the story. Ballast time and non-trading activities include incidents (i.e. accidents),
repair, lay-up, waiting, short-term storage and long-term storage.
The productivity (P) of a fleet of ships measured in ton miles per DWT depends
upon four main factors, speed, port time, deadweight utilization and loaded days at
sea.
First, speed determines the time a vessel takes on a voyage. The speed of the
fleet will change with time. If new ships are delivered with a lower design speed,
this will progressively reduce the transport capacity of the fleet. Similarly, as ships
age, unless exceptionally well maintained, hull fouling will gradually reduce the
maximum operating speed.
Second, port time plays an important part in the productivity equation. The
physical performance of the ships and terminals sets the upper limit. For example,
the introduction of containerization dramatically reduced port time for liners.
Organization of the transport operation also plays a part. Congestion produces
temporary reductions in performance.
Third, deadweight utilization (DWU) refers to the cargo capacity lost owing to
bunkers stores, etc. which prevent a full load from being carried.
Finally, a vessel’s time is divided between loaded days at sea and “unproductive”
days (in ballast, port, or off hire). A reduction in unproductive time allows an
increase in loaded days at sea, and one can interpret changes in this variable in
terms of changes in port time, etc. Vessels designed for cargo flexibility can
4
7
INTERNAL USE ONLY
improve their loaded time at sea because they are able to switch cargoes for
backhauls.
The fleet’s operating performance changes in response to market conditions, as is
clearly demonstrated by the changes in tanker productivity. Faced with a
depressed freight market, the first response of the merchant fleet is generally to
reduce its pace of operation. To save bunker costs, ship-owners reduce the
operating speed and, since cargoes are less readily available, waiting times
increase. Eventually ships that are too expensive to operate are laid up. Tankers
are frequently used for oil storage, either in port or in offshore installations.
Bulk carriers may be used to store coal or grain. Some tankers in storage are on
contracts lasting only a few months, after which they will become available for
trading. Others used in offshore oil production may be employed on long contracts,
so for practical purposes they are no longer part of the trading fleet.
3. Shipbuilding Production
The shipbuilding industry plays an active part in the fleet adjustment process
described in the previous paragraphs.
Form the point of view of the shipping industry, the type of ship build is important
because peaks and troughs in the deliveries of specific ship types have an impact
on their market prospects.
4. Scrapping and Losses

Whilst it is clear that scrapping has a significant part to play in removing ships from
the market, explaining or predicting the age at which a ship will actually be
scrapped is an extremely complex subject, and one that causes considerable
difficulties in judging the development of shipping capacity. The reason is that
scrapping depends on the balance of a number of factors that can interact in many
different ways. The main ones are age, technical obsolescence, scrap prices,
current earnings and market expectations.
Age is the primary factor determining the tonnage of vessels scrapped. Ships
deteriorate as they grow older and the cost of routine repairs and maintenance
increases; thus the owners of elderly vessels face the combination of heavier costs
and more time off hire for planned and unplanned maintenance.
Technical obsolescence may reduce the age at which a particular type of vessel
is scrapped because it is superseded by a more efficient ship type. Obsolescence
also extends to the ship’s machinery and gear tankers fitted with inefficient stream
turbines were among the first to go to the scrapyard when prices rose in the 1970s.
The decision to scrap is also influenced by the scrap prices. Scrap ships are sold
to ship breakers, who demolish them and sell the scrap to the steel industry. Scrap
prices fluctuate widely, depending upon the state of supply and demand in the
steel industry and the availability of scrap metal from sources such as ship
breaking or the demolition of vehicles, which form the largest sources of supply. A
period of extensive ship scrapping may even depress prices of scrap metal – a
process that is accentuated by the fact that shipping surpluses often occur
simultaneously with trade cycle downswings in the industrialized regions when
demand for steel is also depressed.
Most importantly, the scrapping of a ship is a business decision and depends on
the ship-owner’s expectations of the future operating profitability of the vessel and
his financial position. If, during a recession he believes that there is some chance
of a freight market boom in the reasonably near future, he is unlikely to sell
unprofitable ships for scrap because the possible earnings during a freight market
boom are so great that they may justify incurring a small operating loss for a period
of years up to that date. Naturally the oldest ships will be forced out by the cost of
repairs but, where vessels are still serviceable, extensive scrapping to remove a
surplus capacity is only likely to occur when the shipping community as a whole
believes that there is no prospect of profitable employment for the older vessels in
the foreseeable future, or when companies need the cash so urgently that they are
forced into “distress” sales to ship breakers. It follows that scrapping will occur only
when the industry’s reserves of cash ad optimism have been run down.
8
INTERNAL USE ONLY
Freight/Charter Rates
Finally the supply of sea transport is influenced by freight rates. This is the ultimate
regulator which the market uses to motivate decision-makers to adjust capacity in
the short term, and to find ways of reducing their costs in the long-term. In the
shipping industry there are two main pricing regimes, the freight market and the
liner market. Liner shipping provides transport for small quantities of cargo for
many customers and is an essentially a retail shipping business. The liner
company is a common carrier, accepting cargo from any customer at prices set out
in the rate book. That is not to suggest that the business is not competitive. In
contrast bulk shipping is a wholesale operation. It sells its services in large
quantities, by contract to a much smaller number of industrial customers at
individually negotiated prices. In both cases the pricing system is central to the
supply of transport. In the short run supply responds to prices as ships change their
operation speed and move to and from layup, while liner operators adjust their
services. In the longer term freight rates contribute to the investment decisions
5
which result in scrapping and ordering of ships .
More common for oil tankers freight rates are determined based on amount of
cargo shipped (e.g. US dollar per metric ton determined based on published “World
scale” rates).
The concept of freight rate schedules originated during World War II, when the
British and American governments requisitioned merchant ships for the war effort
and compensated their owners based on a daily hire rate. From time to time during
the war, the governments made requisitioned tankers available to oil companies,
who then paid the governments on a “per voyage” basis. The payment structure
was defined according to a government-established rate schedule, and calculated
so that after allowing for voyage costs, ship-owners would receive the same net
daily revenue regardless of voyage length and variable costs. The idea was to
ensure that net earnings for tanker owners would be the same whether the voyage
was long and difficult or short and routine. This gave them incentive to transport oil
worldwide, and not just along the easiest or most lucrative routes.
This same concept guides the Worldwide Tanker Nominal Freight Scale, or World
Scale (WS), which was first established in 1969, and then replaced by the New WS
in 1989. The WS annual freight rate schedules are published by the Worldscale
Association (http://www.worldscale.co.uk), a shipping industry group with
headquarters in New York and London. These annual schedules list freight rates,
known as WS 100s, for about 320,000 port to port combinations applicable starting
from January 1 of each year known as individual tanker trade routes. The WS 100
for each route reflects these basic assumptions:
• A vessel carrying capacity of 75,000 DWT.
• Average service speed of 14.5 knots.
• Bunker (fuel) consumption) of 55 metric tons per day while underway, 100 metric
tons for purposes other than steaming, and 5 metric tons for each port stay.
• Fuel oil grade of 380 centistokes (a measure of fuel oil viscosity).
• Four days for a voyage between two ports, with 12 extra hours for each additional
port.
• Fixed hire rate of US$12,000 per day.
• Bunker price and currency exchange rate as specified.
5
9
INTERNAL USE ONLY
• Canal transit times, if applicable: 24 hours for Panama Canal, 30 hours for Suez
Canal.
The resulting WS100 flat rates, expressed in US dollars per ton of cargo, serve as
a starting point for spot charter negotiations. Ship-owners and spot charterers
usually negotiate the charter price of a tanker as percentage of World scale 100 for
the voyage involved. For example “World scale 85” or WS85 or W85 would be 85%
of published flat World scale rate.
Assessment of the market rates for spot fixtures in key routes are published on a
regular basis by several of the leading brokers and by publishing companies such
as Lloyd’s list, Platts, Argus and Reuters. Rates are also published by London
Tanker Association and by Baltic Exchange Limited, or the Baltic Exchange, a
London-based membership organization that provides daily shipping market
information to the global investing community, is an average of selected ship
brokers’ assessments of time charter rates paid by a customer to hire a drybulk or
tanker vessel. Although many of the published market assessments are quoted
based on spot ton rates or based on the percentage of World scale flat rates,
another figure that is often quoted is TCE (the “Time Charter Equivalent”). This is
revenue for a voyage after subtracting voyage costs such as port charges, fuel and
commission.
The London Tanker Broker’s Panel (LTBT) publishes the Average Freight Rate
Assessment (AFRA) rates on a monthly basis based on the average freight rate
levels for that month for different tanker sizes and for different type of contracts:
• Long term charters (i.e. over 12 months).
• Short term charters (i.e. up to 12 months).
• Single voyage charters.
The Baltic Exchange publishes the Baltic International Tanker Routes (BITR) report
on 10 oil routes for different sized of dirty and clean tankers. Route TD1, for
example, is for 220,000 metric ton dirty tankers on the route from Arab Gulf to USA
Gulf. Route TC4 is for 30,000 metric ton clean tankers traveling between Singapore
to Japan.
Within the drybulk shipping industry, the charterhire rate references most likely to
be monitored are the freight rate indices issued by the Baltic Exchange. These
references are based on actual charterhire rates under charter entered into by
market participants as well as daily assessments provided to the Baltic Exchange
by a panel of major shipbrokers. The Baltic Panamax Index is the index with the
longest history. The Baltic Capesize Index and Baltic Handymax Index are of more
recent origin. The Baltic Dry Index, or the BDI, which is published daily by the Baltic
Exchange has long been viewed as the main benchmark to monitor the
movements of the drybulk vessel charter market and the performance of the entire
drybulk shipping market.
Baltic Exchange and other sources, such as Lloyds List publish market date for
containerships, such as Howe Robinson Container Index.
There are various other sources that publish charter rates for various types and
sizes of vessels, such as Clarksons Shipping Intelligence, Weber Seas S.A, Allied
Shipbrokers, RS Platou ASA, Simpson Spence and Young, N. Cotzias Shipping
Group and others.
10
INTERNAL USE ONLY
Figure 3: Tankers – 1 Year Time Charter Equivalent Rate

Source: Clarkson Research Services Limited
$/Day
90.000
80.000
70.000
60.000
50.000
40.000
30.000
20.000
10.000
0
2000-01
2000-04
2000-07
2000-10
2001-01
2001-04
2001-07
2001-10
2002-01
2002-04
2002-07
2002-10
2003-01
2003-04
2003-07
2003-10
2004-01
2004-04
2004-07
2004-10
2005-01
2005-04
2005-07
2005-10
2006-01
2006-04
2006-07
2006-10
2007-01
2007-04
2007-07
2007-10
2008-01
2008-04
2008-07
2008-10
2009-01
2009-04
2009-07
2009-10
2010-01
2010-04
2010-07
2010-10
2011-01
1 Year Timecharter Rate 95,000 dwt S/H Early 1990s Tanker
1 Year Timecharter Rate 110,000 dwt D/H Modern Tanker
1 Year Timecharter Rate 150,000 dwt D/H Modern Tanker
1 Year Timecharter Rate 250,000 dwt 1970s Tanker
Figure 4: Product Tankers – 1 Year Time Charter Equivalent Rate Source:

Clarkson Research Services Limited
$/Day
40.000
35.000
30.000
25.000
20.000
15.000
10.000
5.000
0
2000-05
2000-08
2000-11
2001-02
2001-05
2001-08
2001-11
2002-02
2002-05
2002-08
2002-11
2003-02
2003-05
2003-08
2003-11
2004-02
2004-05
2004-08
2004-11
2005-02
2005-05
2005-08
2005-11
2006-02
2006-05
2006-08
2006-11
2007-02
2007-05
2007-08
2007-11
2008-02
2008-05
2008-08
2008-11
2009-02
2009-05
2009-08
2009-11
2010-02
2010-05
2010-08
2010-11
2011-02
1 Year Timecharter Rate 37,000 dwt Modern Products Tanker
1 Year Timecharter Rate 47-48,000 Modern Products Tanker
1 Year Timecharter Rate 74,000 dwt Modern Products Tanker
11
INTERNAL USE ONLY
Figure 5: Containerships – 6-12 Month Time Charter Rate

Feeder 350 teu grd 6-12 Month Timecharter Rate

$/Day Feedermax 725 teu grd 6-12 Month Timecharter Rate
60.000
Handy 1000 teu grd 6-12 Month Timecharter Rate
Sub-Panamax 2000 teu gls 6-12 Month Timecharter Rate
Sub-Panamax 2750 teu gls 6-12 Month Timecharter Rate
50.000
Panamax 3500 teu gls 6-12 Month Timecharter Rate
Panamax 4400 teu gls 6-12 Month Timecharter Rate
40.000
30.000
20.000
10.000
0
2000-01
2000-04
2000-07
2000-10
2001-01
2001-04
2001-07
2001-10
2002-01
2002-04
2002-07
2002-10
2003-01
2003-04
2003-07
2003-10
2004-01
2004-04
2004-07
2004-10
2005-01
2005-04
2005-07
2005-10
2006-01
2006-04
2006-07
2006-10
2007-01
2007-04
2007-07
2007-10
2008-01
2008-04
2008-07
2008-10
2009-01
2009-04
2009-07
2009-10
2010-01
2010-04
2010-07
2010-10
2011-01
2011-04
12
INTERNAL USE ONLY
Figure 6: Drybulk- 1 Year Time Charter Rate

$/Day
160.000
1 Year Timecharter Rate 30,000 dwt Bulkcarrier
140.000 1 Year Timecharter Rate 52,000 dwt Bulkcarrier
120.000 1 Year Timecharter Rate 75,000 dwt Bulkcarrier
100.000
80.000
60.000
40.000
20.000
0
2000-01
2000-04
2000-07
2000-10
2001-01
2001-04
2001-07
2001-10
2002-01
2002-04
2002-07
2002-10
2003-01
2003-04
2003-07
2003-10
2004-01
2004-04
2004-07
2004-10
2005-01
2005-04
2005-07
2005-10
2006-01
2006-04
2006-07
2006-10
2007-01
2007-04
2007-07
2007-10
2008-01
2008-04
2008-07
2008-10
2009-01
2009-04
2009-07
2009-10
2010-01
2010-04
2010-07
2010-10
2011-01
13
INTERNAL USE ONLY
Freight Derivatives
Freight rates have become increasingly volatile and many companies have started
using derivative instruments to “hedge” their risk exposure to fluctuating freight
rates. “Hedging” involved taking position in the financial market instrument which is
linked in value to the actual market risk that you wish to manage, e.g. freight rates.
The idea is that financial market instrument will provide payout that can
compensate its holder in case of major adverse movement in freight rates. In the
freight market, the number of different derivative instruments could be used
including freight forward agreements (FFAs), freight swaps and freight futures.
Monetary deposit with the third party intermediary is typically required before
entering into freight derivative contracts to serve as a counterparty performace
guarantee. Freight derivatives are financial instruments that are settled by cash
transfer. Settlements could be done at the end of trading day on a daily, weekly,
monthly or even annual basis. Freight derivatives are usually traded on standard
routes, such as published by Baltic Exchange.
FFAs include buying or selling of freight rates for a named route at a specific price
for same period in the future. It fixes the cost of shipping at the forward trading rate.
At the end of FFA contract period there will be a cash settlement of the difference
between actual spot freight rates and the forward rate agreed. FFAs are over-the-
counter (OTC) instruments, which means they are directly agreed between
counterparties and are not traded on an exchange. The FFA cover the agreed
route, settlement period, contract quantity and contract rate at which differences
are to be settled.
Like FFA’s, freight swaps are also over-the-counter instruments. Swaps are
financial instruments designed to transfer the risk between two counterparties.
Typically the charterer and the swaps provider, such as a bank, might agree on a
future exchange of cash based on the difference between fixed, specific freight rate
and the actual market freight rates for a particular size of ship and the route over
the certain period. Like forwards, swaps also effectively fix the cost of shipping over
certain time period.
The settlements OTC instruments is generally done through the third party
intermediaries, such as London Clearing House (LCH), NOS Clearing ASA (NOS),
or The New York Mercantile Exchange (NYMEX).
Futures allow companies to buy or sell an index of freight rates for a standard route
at a specific price for a future period. Like FFA and swap agreements they
effectively fix the cost of shipping and result in a cash settlement. However the
major difference with freight futures as compared to FFAs and freight swaps is that
they are traded through organized exchange such as the International Maritime
Exchange (IMAREX) in Norway. The exchange guarantees performance (i.e.
payment) of the contract and all trades are anonymous. IMAREX acts as a market
place for both freight futures cleared through clearing houses such as NOS, LCH
and NYMEX, as well as FFA.
14
INTERNAL USE ONLY
2. Vessel Operations
15
INTERNAL USE ONLY
2. Vessel Operations
Types of Vessel Employment

Introduction
The charter market is made up of cargo brokers, who represent the owners of the
cargo, and shipbrokers, representing the ship-owners. These individuals meet in
maritime and commercial centers such as London, Houston and New York to
arrange the terms of voyages. The resulting charter agreement is often referred to
as a charterparty.
The job of the cargo broker or shipbroker is to negotiate the most advantageous
charterparty terms for his or her client, based on the costs of transportation. These
costs fall into three categories:
1. The fixed capital costs of building or acquiring a vessel.
2. the semi-variable running costs or vessel operating costs for a crew, stores and
lubricants, repairs and maintenance, insurance and administration; and
3. the voyage costs, which include fuel, tug and pilot charges, port and harbor
fees, commission and other expenses that vary according to the distance and
route traveled.
All of these costs are borne either by the ship owner or the cargo owner, giving
rise to three major types of charter arrangements.
1. A voyage charter covers one specific voyage, for which the ship owner bears
the capital costs, running costs and most of voyage costs, and takes any surplus
from the charter hire as profit.
2. A time charter gives the charterer exclusive use of a vessel for a given time
period—for example, one year. In this arrangement, the ship owner pays the
capital and running costs, while the charterer bears the voyage costs during that
period.
3. Bareboat charter or demise where the ship owner bears only the capital costs,
while the charterer covers all other costs.
During periods of depressed market conditions, charterers may seek to renegotiate
firm period charters to reduce their obligations or may seek to repudiate their
charters. Suspension of period charters will result in the reduction in or loss of
dayrate for the period of the suspension.
1. Voyage Charter
Definition
A Voyage Charter is the hiring of a vessel for a single voyage or consecutive
journeys from the named port of loading to the port of destination. The charterer
contracts to provide full cargo for the ship and to pay freight for it which is on a per-
ton or lump-sum basis. If less than the agreed quantity is loaded then the charterer
is liable for dead freight. The parties usually provide for a “laytime and demurrage”
clause which allows a specified amount of time for loading and discharge. If the
stipulated time is exceeded the charterer has to pay damages for detention or,
where specified, liquidated damages called demurrage. The carrier will usually
have a lien on the cargo for the payment of any outstanding demurrage or freight.
16
INTERNAL USE ONLY
Payment Terms
Under an ordinary voyage charter, the payment which the charterer has to pay to
the owner is called “freight”. The freight can be determined in several ways, by
weight, by volume, by value, per unit, by lump sum. When the freight is given by
the weight, the type of tons is stated, i.e. metric tons, long tons or short tons.
When the freight is given by volume, it is expressed in cubic meter or in ton-
volume. The lump sum freight is a fixed amount for the transport of goods
independently of the weight or of the volume.
Payment of freight can be effected by two ways: 1) Prepayment: freight is paid on
shipment and it is deemed earned and non-returnable, irrespective of the vessel or
the cargo is lost, 2) On Delivery: freight is paid at destination and it is deemed
earned when the cargo is delivered.
Laytime
Laytime is the time allowed by the ship-owner to the voyage charterer to carry out
the cargo loading and/or discharging operations; laytime may be expressed as a
certain number of days or number of tons of cargo loaded/unloaded per day. If the
laytime is exceeded then demurrage is incurred, if not then dispatch is due to the
charterer. Laytime is one of the elements which involves most discussions during
the negotiations of a voyage charter agreement and which causes many
arguments between the ship owner and the charterer.
“Dispatch” is the compensation paid by ship-owner to charterer as a “reward” when
the latter is able to complete the cargo operations in less time than the laytime
allowed and “Demurrage” is the fee paid by the charterer to the ship-owner when
the latter's ship is detained beyond the specified date agreed in the charterparty.
The calculation of demurrage and dispatch does not normally present problems but
cases do arise where the charterer disputes the owner’s right to demurrage.
Costs
The owner generally pays all the costs except cargo handling costs and possibly
port dues and charges related to the vessel. Under this arrangement, the owner
pays vessel operating costs (crewing, stores and lubricants, repairs and
maintenance and insurance) and voyage costs (fuel, port costs, brokerage
commission). Refer to a general overview of the costs according to the different
charter types in Table 1 “Breakdown of Costs” (p. 21).
.
2. Contract of Affreightment (COA)
Definition
A COA is a contract to carry a large volume of specific cargo over a long period of
time between agreed ports or regions; unlike a voyage charter, the ship used for
the shipment is not named but based on general requirements specified by the
cargo owner. Under the COA, the owner undertakes to carry quantities of a specific
cargo on a particular route or routes over a given period of time using ships of his
choice within specified restrictions. This allows the owner to plan the use of his
ships in the most efficient manner as he can switch cargo between vessels.
Payment Terms
Under a COA, the payment terms are similar like for voyage charter.
3. Time Charter
3a. Period Time Charter
Definition
A Period Time Charter (the “TC”) is the hiring of a named vessel for a specific
17
INTERNAL USE ONLY
period of time. The time during which the ship is chartered differs from contract to
contract and can amount to several months (short term TC) or years (long term
TC). The charterer can make as many trips during that period with the ship as he
possibly can.
The charterer employs and directs the vessel in accordance with the charterparty,
but is generally only entitled to send it to safe ports, carrying lawful cargo. As the
use of the vessel is his for the specified period of hire the charterer bears the risk of
performance of the vessel and any delays during the voyages or the cargo
handling. In order for the charterer to plan and calculate, he obtains some
performance warranties from the ship-owner about the ship’s consumption, its
speed, and its performance to load and discharge, etc., which might be included in
the charterparty. Breach of these terms can give rise to claims of damages or even
to repudiation of the contract, depending on the facts and severity of the breach.
Payment Terms
Under an ordinary time charter, the payment which the charterer has to pay to the
owner is called “hire”. It is always paid in advance, the means of payment can be
agreed on between the parties, e.g. fixed rate per day or daily hire rate. The
payment can be scheduled every 30 days (or calendar month), every 15 days and
per day.
The hire will be considerably lower than the freight under a voyage charter,
because the owner only has to pay for the capital and vessel operating costs but
not for the variable voyage costs, except for commission. The charterer pays hire in
regular intervals for the services of the ship, regardless of the amount of cargo
carried or trips made. Payment of the hire by the stipulated time is important as
otherwise the ship-owner may be able to withdraw the vessel. It is a more
permanent arrangement than the voyage charter and more representations are
made about the ship to the charterer.
Index Based Time Charters
In the past, long term Time Charter Parties were fixed on the basis of a fixed time
charter rate. To meet possible heavy inflations, there is a growing tendency to
foresee a price adaptation in long term charterparties. The operating costs of the
owner which can be influenced by inflation are: ships stores and victualling, wages,
maintenance, administrative costs. Therefore, in long term time charters an “Index
Clause” or an “Escalator Clause” or an “Adjustment Rate of Hire Clause” is
included. As an example, if the fixed costs increase with a set percentage, then
the monthly hire will be increased with that same percentage.
To meet a possible currency devaluation, long term agreements include a
“Currency Clause”. Under this clause the hire is based upon the mean of the selling
and buying rate of a currency. Should this mean rate fluctuate, the hire shall be
adjusted upwards or downwards by the new mean rate in force on the due date of
payment. Some charter party arrangements include rate determined based on the
specific market index (e.g. based on the monthly average index for TD3 tanker
route).
Off-Hire
It is the period of time during which a vessel under time charter is unable to meet
the requirements agreed between the charterer and the ship-owner due to some
reasons within the control of the latter. In this case the charterer is not required to
pay hire to a ship-owner.
Every Time Charter Party specifies when the Charterer may demand an off-hire. In
the following cases the hire may be suspended:
• Dry Docking.
• Deficiency of Owners Stores.
• Strike of Crew.
18
INTERNAL USE ONLY
• Breakdown of Machinery.
• Deviation.
• Piracy.
• Compliance with class, port, legislation requirements.
• Vessel speed and various other specified in the charterparty.
Costs
Under the Time Charter, the running costs of the ship are for the account of the
ship owner but the voyage costs are for the account of the charterer. In more detail,
the charterer pays for all fuel the vessel consumes, port charges, harbor dues,
loading and discharging costs, stowage material and holds cleaning. The owner
continues to pay for the broker commission, crew, maintenance and repairs, stores
and lubricants and insurance. Refer to below for a general overview of the costs
according to the different charter types in Table 1 “Breakdown of Costs” (p. 21).
Ballast
Ballast Leg is that part of a ship's voyage during which she is not carrying any
cargo and sailing in ballast. Ballast is any weight in solid or liquid form taken on a
ship to increase draught, to change trim, or to improve the stability; use of sea
water is common. Ballast Bonus is money payable by time charterer to ship-owner
at the end of the charter period to compensate for the ballast trip taken from the
port of redelivery of the ship to the next port of loading.
Profit Sharing
Profit sharing represents the excess between an agreed daily base rate and the
actual rate generated by the vessel, if any, and is settled and recorded on a
periodic base. The agreed base for the computation of the Profit Sharing can be
one of the following:
1. Actual charterer’s profit in excess of an agreed daily base charter rate.
2. An Index (e.g. Baltic Exchange Index of the Transatlantic Route TC2) in excess
of agreed daily base charter rate.
3b. Trip Time Charter
A Trip Time Charter is in fact a charter for a single voyage but on time chartering
conditions. The time during which the ship is chartered amounts to the time that is
necessary to undertake one complete voyage. Under the Trip Time Charter, only a
single trip can be made just as under a voyage charter but at time charter
conditions.
4. Bareboat Charter
Definition
A Bareboat Charter or Demise Charter is an arrangement for the hiring of a vessel
whereby no administration or technical maintenance is included as part of the
agreement. The charterer obtains possession and full control of the vessel along
with the legal and financial responsibility for it. In commercial demise chartering,
the charter period may last for many years and may end with the charterer
acquiring title (ownership) of the ship. In this case, a demise charter is a form of
hire-purchase from the owners, who may well have been the shipbuilders.
The difference between a demise charterparty and a voyage or time charterparty is
as follows: the former is comparable with a contract of hire of a self-drive car as
opposed to using the services of a taxi in the cases of a voyage or time
charterparty.
19
INTERNAL USE ONLY
Payment
Under an ordinary bareboat charter, the payment which the charterer has to pay to
the owner is generally payable monthly in advance.
Costs
Under the bareboat charter, the charterer pays for all voyage and operating
expenses, including fuel, crew, port expenses and insurance. The owner will
exclusively bear the capital costs and possibly part of the insurance and in some
cases commission. Refer to below for a general overview of the costs according to
the different charter types in Table 1 “Breakdown of Costs” (p. 21).
Vessel Pools
Vessel pool arrangements provide the benefits of a large-scale operation and
chartering efficiencies that might not be available to smaller fleets. Under a pool
arrangement, a vessel is chartered out by the pool manager under an agreement
similar to a time charter agreement whereby the cost of bunkers and port expenses
are borne by the pool and operating costs including crews, maintenance and
insurance are typically paid by the owner of the vessel. Members of the pool share
in the revenue generated by the entire group of vessels in the pool, regardless of
the performance of the individual vessel, but the charterhire is divided based
usually on points among all of the vessels in the pool and therefore generally does
not provide the steady income normally associated withtime charters. Vessels’
points are rewarded based on their performance, age, consumption, speed and
other factors on a competitive basis compared to other vessels in the pool. Vessels
trading under a pool arrangement are usually chartered in the spot market, but the
pool manager might charter the vessels under short or longer time charters,
depending on the pool arrangement between the ship-owner and the pool
manager. When the vessel is off-hire, the ship-owner generally is not entitled to
payment, unless the charter of a vessel in the pool is responsible for the
circumstances giving rise to the lack of availability.
20
INTERNAL USE ONLY
Vessel Costs
Table 1: Breakdown of Costs
Source: Maritime Know How (http://www.maritimeknowhow.com)
Bareboat Time Voyage

Heading
Charter Charter Charter
Capital Costs
Depreciation
Vessel
financing
(debt to
equity) Owner Owner Owner
Interest on
Capital
Financial
Charges
Vessel Operating Costs
Insurance of
Owner or
Hull and Owner Owner
Charterer
Machinery
Survey Owner or
Owner Owner
Classification Charterer
Owner or
Dry Docking Owner Owner
Charterer
Repairs and
Charterer Owner Owner
Maintenance
General
Costs
Stock,
Supply Crew
Crew Wages Charterer Owner Owner

Lubricants Charterer Owner Owner
Owner or
Fresh Water Charterer Owner
Charterer
Voyage Costs
Fuel
Charterer Charterer Owner
(Bunkers)
Harbour or
Charterer Charterer Owner
Port Dues
Owner or
Loading and
Charterer,
Discharging Charterer Charterer
or Cargo
Costs
Owner
Stowage Owner or
Charterer Charterer
Material Charterer
Holds Owner or
Charterer Charterer
Cleaning Charterer
Owner or
Owner or Charterer
Damage to
Charterer Charterer (1) or
Cargo
(1) Cargo
Owner
Commission Owner Owner Owner
(1) Either in total for the charterer or one part for the owner and the balance
for the Charterer
21
INTERNAL USE ONLY
Voyage Costs
Introduction
Voyage Costs are the variable costs incurred in undertaking a particular voyage
and they include fuel costs for main engines and auxiliaries, port and light dues,
tugs and pilotage, canal dues and commission.
1. Fuel Costs
There are two types of fuels consumed, Fuel Oil (FO) and Diesel Oil (DO). FO is
used to power the main engines of the vessel while DO is used in auxiliary
engines. Fuel costs depend on the following factors.
a. Bunker Prices: Fuel costs are dominated by bunker prices. Platts and other
energy information provide published energy commodity prices and industry
indexes, such as bunkers.
Figure 7: Monthly Average Fuel Prices

Source: Clarkson Shipping Intelligence
$/Tonne
1400
1200
1000
800
600
400
200
0
2000-01
2000-05
2000-09
2001-01
2001-05
2001-09
2002-01
2002-05
2002-09
2003-01
2003-05
2003-09
2004-01
2004-05
2004-09
2005-01
2005-05
2005-09
2006-01
2006-05
2006-09
2007-01
2007-05
2007-09
2008-01
2008-05
2008-09
2009-01
2009-05
2009-09
2010-01
2010-05
2010-09
2011-01
180cst bunker prices, Average of 4 ports Rotterdam, Houston, Singapore, Fujairah
380cst bunker prices, Average of 4 ports Rotterdam, Houston, Singapore, Fujairah
Gas oil prices, Average of 4 ports Rotterdam, Genoa, Singapore, Fujairah
Diesel oil prices, Average of 4 ports Rotterdam, Houston, Singapore, Fujairah
b. Main Engine Efficiency: The design of the main engine is the most important
factor on fuel consumption.
c. Operating Speed: In addition to lower fuel consumption, engine operating speed
can attribute to lower fuel consumption. Operation of the vessel at lower speeds
(slow steaming) results in fuel savings because of the reduced water resistance.
d. Hull Condition: Fuel Consumption also depends on hull smoothness, since
between dry docks, marine growth on the hull of the ship increases its water
resistance, reducing the achievable speed.
2. Port Costs
Port costs include various fees levied against the vessel and/or cargo for the use of
the facilities and services provided by the port. Port dues are charged on the vessel
22
INTERNAL USE ONLY
for the general use of port facilities, including docking and wharfage charges and
the provision of basic port infrastructure. The service charge covers the various
services that the vessel uses in port, including pilotage, towage and cargo
handling.
3. Canal Dues
Canal dues are paid to gain the right to make a passage through a canal. The main
canal dues payable are for transiting the Suez and Panama Canals.
4. Cargo Handling Costs

Cargo Handling Costs include costs related to cargo loading and discharging.
These costs represent a significant component in total voyage costs since the
vessel can spend a considerable amount of time in port while loading and
discharging.
5. Commission
There are three types of commission arrangements:
a. Brokerage (or Commission). It is customary to express the remuneration for the
shipbroker's time and efforts in negotiating and arranging the charterparty as a
certain percentage of the money earned by the ship-owner. In shipbroking, the
term "brokerage" is generally preferable instead of "commission" because the
latter term is usually related to the charterer's reward as "address commission".
Charterparties contain a clause specifying the brokerage percentage payable.
In most cases brokerage for each broker is approximately 1.25% of the gross
hire or freight.
b. Address commission (Adcom). In some charterparties a certain percentage of

commission is due to charterers on the amount of freight or hire. Address
commission is almost equivalent to a reduction in the rate of freight, as few
special services are performed by charterers in return. However, the charterer
will deduct the amount before paying the ship-owner what is due. The
commission is like a rebate for the business from the charterers. If no address
commission is due, the vessel is "free of address". Address commission is
approximately 2.00% - 3.50% of the gross hire or freight.
c. Manager's Fee. The regular fixed management fee is the remuneration for
the manager who has attended to the ship's operation during its voyage and
is typically charged on per vessel basis per day and varies based on the type
of vessel employment. It is not uncommon for a company in some cases to
grant a percentage of freight or hire as commission to its manager in addition
to the regular fixed management fee. Manager commission is approximately
1.25% of the gross hire or freight. Refer to “Ship Managing” section (p.28) for
further information about the management companies.
23
INTERNAL USE ONLY
Vessel Operating Costs

Introduction
Operating costs are the ongoing expenses connected with the day to day operation
of the vessel. The principal components of operating costs are crewing costs,
stores, repairs and maintenance, administration and insurance.
1. Crew Costs
Crew Costs consist of basic salaries and wages, social insurance, pensions,
victuals and repatriation expenses. The level of manning costs are determined by
various factors such as the size of the crew, salaries paid, the employment policies
of the flag state, the degree of on-board automation of mechanical operations, the
skills of the crew, the training of the crew and the amount of on-board maintenance
undertaken by the crew. Crew composition within a vessel is generally as follows:
a. Officers: Master, Chief Officer, 2nd Officer, 3rd Officer, Chied Engineer, 2nd
Engineer, 3rd Engineer, Electrician.
b. Ratings: Bosun, Able Seaman, Ordinary Seaman, Oiler, Wiper, Fitter, Cook,
Messman.
c. Cadets: Often, shipping companies use cadets on board vessels. The cadets
acquire practical skills during practical training in navigation under the
supervision of experienced crew members. In those cases, cadets are usually 1
or 2. For example one cadet is employed in the deck and another one in the
engine room.
Manning agents are companies that act as an employment agency for seafarers
who use them to find employment at sea and for shipping companies who use
them to source crew. Crewing agents are paid a commission from employers for
their services once a crew member is engaged. Manning agents are most common
in labour supply countries, such as the Philippines and Eastern Europe. Larger
shipping companies employ their own in house global manning agencies rather
than use third party manning agencies to recruit their crew.
The wages paid to the crew have always been controversial, as the International
Transport Worker’s Federation (ITF) has laid down minimum basic monthly wages
but these are not universally accepted.
Shipping companies rely on continuous education and training in order to maintain
and improve the skills and qualifications of crew members, above the minimum
requirements of the International Maritime Organization (IMO) and in accordance
with their vessels requirements. Seagull, Wartsila, ABS Academy, Lloyd’s Register
and Videotel are well-known providers of continuous education in the industry and
many shipping companies outsource their training process to such providers. Apart
from the seminars and courses offered by various training providers, it is typical for
the Master and the Chief Engineer to be responsible for the continuous training of
crew members. For some companies, the Master and the Chief Engineer use
judgment in order to identify the individual training requirements of each seaman
where most of the trainings are completed on board. Larger shipping companies
normally have the flexibility and the resources required for developing their own
training centers where many of the required courses for specialized training and
advancement of the seafarers is provided.
The Baltic and International Maritime Council (BIMCO) estimated that the
worldwide supply of seafarers in 2010 was approximately 624,000 officers and
747,000 ratings. The Philippines and India are very significant maritime labour
supply nations, with many seafarers from these countries enjoying employment
opportunities on foreign flag ships operated by international shipping companies.
China has also seen a large increase in the number of seafarers, but at the
moment most of these work on the Chinese fleet, meeting domestic requirements.
Eastern Europe has recently become an increasingly large supplier of seafarers
with high numbers from countries including the Ukraine, Croatia and Latvia.
24
INTERNAL USE ONLY
Other major labor supply countries include Greece, Japan, Russia and the United
Kingdom.
Below lists the number of seafarers and their nationalities as of December 31,
2010:
Table 2: Global Seafarer Supply by Broad Geographical Category
Source: International Chamber of Shipping & International Shipping Federation
(www.marisec.org)
Area Current Supply

Officers Ratings
% %
(1000’s) (1000’s)
OECD Countries (North
America, Western Europe, 184 29.4 143 19.2
Japan et.)
Eastern European 127 20.3 109 14.6
Africa/Latin America 50 8.0 112 15.0
Far East 184 29.5 275 36.7

Indian Sub-Continent 80 12.8 108 14.5
All National Groups 624 100.0 747 100.0
2. Stores
Stores are the consumable supplies of a vessel and these fall into three main
categories:
a. General Stores such as spare parts, deck and engine room equipment.
b. Cabin Stores that cover various domestic items used on board the vessel such
as cleaning products, linen and dishware and
c. Lubricating Oil which is used for the lubrication of marine diesel engines.
3. Repairs and Maintenance
Repairs and maintenance covers all outside charges associated with maintaining
the vessel to the standard required by company policy, the classification society
and the charterer. There are two main groups of repair and maintenance costs:
a. Routine Maintenance: includes maintaining the main engine and auxiliary
equipment, painting the superstructure and carrying out steel renewal in areas
which can be accessed during voyage.
b. Breakdowns: mechanical failure may result in additional costs outside those
covered by routine maintenance.
To maintain class for insurance, employment and ability of going to various ports
purposes, all merchant ships must undergo regular surveys. The ship must be dry
docked (pulled out of water and inspected) approximately every 2.5 years and it
must have a special survey approximately every 5 years. As previously presented
in Table 1, “Breakdown of Costs” (p.21), dry-docking costs are born by owner of a
vessel, except in the case of a Bareboat Charter where dry-docking costs are to
the burden of the charterer or the owner, depending on the terms of the Bareboat
Charter. Please refer to later in this publication “Dry-docking” section above where
a breakdown on various Dry-docking cost types are presented.
4. Administration and General Costs
These include shore-based administrative and management charges,
communications, owners’ port charges and miscellaneous costs.
25
INTERNAL USE ONLY
5. Marine Insurance
A. Background
Marine insurance is very important because through marine insurance, ship owners
and transporters can be sure of claiming damages especially considering the mode
of transportation used. Of the four modes of transport – road, rail, air and water – it
is the latter most which causes a lot of worry to the transporters not only because
there are natural occurrences which have the potential to harm the cargo and the
vessel but also other incidents and attributes which could cause a huge loss in the
financial casket of the transporter and the shipping corporation.
Incidents like piracy and possibilities like cross-border shoot-outs also pose a
major threat when it comes to water transportation and therefore in order to avoid
any loss because of such events and happenings, in the interest of the corporation
and the transporter, it is always beneficial to have a back-up like a marine
insurance.
Another important aspect of having marine insurance is that a transporter can
choose the insurance plan as per the size of his ship, the routes that are taken by
his ship to transport the cargo and many such minor points which could go a great
length in affecting the transporter majorly. Also, since there are various plans and
policies which indicate about covering not just the cargo but also the vessel and
off-hire periods, the transporter can choose the policy that suits his business the
best. Insurance coverage can be provided by insurance companies, but the most
common form of marine insurance is through Insurance Clubs.
B. Insurance Clubs and Common Forms of Insurance
Insurance Clubs in shipping are comprised of independent, non-profit making
mutual insurance associations, providing cover for its ship-owner and charterer
members against third party liabilities relating to the use and operation of ships.
Each club is controlled by its members through a board of directors or committee
elected from the membership. The day to day management of the Club, handling
of the claims, investment and administration is done by a management company,
often originating from a law firm.
There are 13 P&I (“Protection and Indemnity”) Associations that comprise the
International Group and they insure approximately 90% of the world's commercial
tonnage. Members are subject to “calls” (or premiums) payable to the associations
based on their claim records as well as the claim records of all other members of
the individual associations and members of the shipping pool of P&I associations
comprising the International Group. If there is a shortfall because claims are high,
the Members may pay a pro rata "additional call" (also called “back call”) and if
there is a surplus, a return may be made to the Club, or the surplus transferred to
reserve to meet losses on other years. The funds of the mutual are invested and
the investment return are used to benefit the Members.
(http://www.nfmm.no/tmm/145-paampi-clubs-insurance)
Insurance Clubs cover a wide range of liabilities by providing P&I insurance
coverage including personal injury to crew, passengers and others on board,
cargo loss and damage, oil pollution, wreck removal and dock damage. Clubs also
provide a wide range of services to their members on claims, legal issues and loss
prevention, and often play a leading role in the management of casualties. One of
the largest mutual marine protection and indemnity organization is the UK P&I Club
(www.ukpandicom) - it insures around 175 million tonnes of owned and chartered
ships from more than fifty countries across the globe.
The different types of marine insurance policies include the following:
• Cargo Insurance: Cargo insurance caters specifically to the cargo of the ship
and also pertains to the belongings of a ship’s voyagers. This type of insurance
is usually preferred by cargo owners who wish to protect their interest in the
cargo being shipped.
26
INTERNAL USE ONLY
• Hull and Machinery - Physical loss or damage coverage for all types of
vessels. Risks covered by this form of insurance includes losses due to total
loss of the vessel or expenses due to repair of damages to vessel’s hull,
machinery or equipment; vessel’s share in losses, expenses and contribution
allowed in general average; necessary and properly incurred expenses for the
salvage of the vessel; necessary and reasonable expenses for preventing,
minimizing the loss or ascertaining it’s extent.
• Hull and Machinery – War and Strikes Risk - Cover against war, strikes, riots,
civil commotions etc. Generally, but not always, arranged separately to a
vessel’s Hull and Machinery Insurance and extended to include War Protection
and Indemnity Risks.
• Freight Demurrage and Defense Club (FD&D) - This insures the ship-owner
from legal costs associated with either the defense or pursuit of a claim relating
to the insured vessel, for example, the legal fees resulting from a charterparty
dispute.
• Loss of Hire or Freight Insurance - Insurance designed to protect a ship
owner for potential loss of earnings of a vessel (either freight or charter hire)
resulting from: 1) a casualty, 2) piracy, 3) off-hire due to speed claim, 4) off-hire
due to repairs. A daily amount reflecting the vessel's earning capacity is
normally stipulated by the assured and accepted by the insurer and forms the
basis of the contract. Also a maximum number of indemnity days are agreed
upon, the standard being 90 days for medium size tonnage and 180 days for
larger tonnage. The daily indemnity multiplied with the number of indemnity
days agreed upon, equals the sum insured under the policy.
• Pollution Liability Insurance – covers accidents such as oil spills and other
environmental incidents.
In addition to these types of marine insurance, there are also various types of
marine insurance policies which are offered so as to provide the clients with
flexibility while choosing a marine insurance policy. The availability of a wide array
of marine insurance policies gives a client a wide arena to choose from, thus
enabling him to get the best deal for his ship and cargo. The different types of
marine insurance policies are detailed below:
• Voyage Policy: valid for a particular voyage.
• Time Policy: valid for a specified time period, generally for a year.
• Mixed Policy: offers a client the benefit of both time and voyage policy.
• Open (or) Un-valued Policy: the value of the cargo and consignment is not put
down in the policy beforehand. Therefore reimbursement is done only after the
loss to the cargo and consignment is inspected and valued.
• Valued Policy: is the opposite of an open marine insurance policy. In this type
of policy, the value of the cargo and consignment is ascertained and is
mentioned in the policy document beforehand thus making clear about the
value of the reimbursements in case of any loss to the cargo and consignment.
• Port Risk Policy: taken out in order to ensure the safety of the ship while it is
stationed in a port.
• Wager Policy: the one where there are no fixed terms of reimbursements
mentioned. If the insurance company finds the damages worth the claim then
the reimbursements are provided, else there is no compensation offered. Also,
it has to be noted that a wager policy is not a written insurance policy and as
such is not valid in a court of law.
• Floating Policy: only the amount of claim is specified and all other details
are omitted until the time the ship embarks on its journey, is known as floating
policy. For ship owners who undertake frequent trips of cargo transportation
through waters, this is the most ideal and feasible marine insurance policy.
27
INTERNAL USE ONLY
Ship Management
The ship management company manages ships for the owner who pays annual
amount or a daily fixed management fee per ship, which also depends on the type
of vessel employment. A ship owner signs a contract with management company
for a defined duration of time. The ship owner may continue with the same
management company or can approach another company if he is not satisfied with
the performance of a particular ship management company. Ship management
company could be an independent company (e.g. V-Ships) or be part of the group
of the companies owned by the same ship owner as owner of the vessels.
Tasks Performed While Managing a Ship
Ship management includes several tasks which are to be carried out before, during
and after the operation of the ship. The first and foremost thing that a ship
management company needs to do is get the ship approved. There are many
approvals that are to be taken from different classification societies. The ship
management company can operate different types of vessels or just concentrate
on any one type. For e.g. MSC (Mediterranean Shipping Corporation) deals only
with container vessels, whereas companies like V-ships, or Anglo-Eastern
manages various different types of ships.
If a management company wants to enter into a new field by indulging itself in
operating different types of vessels, but is operating the vessel type for the first
time then approval for operation is given for six months and their performance is
evaluated, which will decide any further approval.
Vetting is also important aspect when finding vessel employment and includes
conducting background checks on a vessel, including looking at its age, history and
track record.
Services that a Ship Management Company Provides
Following are the services that a ship management company is entitled to provide:
1. Supervision of the maintenance of machinery on board the ship, including
different surveys and repair work of the ship.
2. Provide adequate crew for manning the ship.
3. Arrange for loading and unloading of the cargo.
4. Negotiate with brokers and hire the ship on behalf of the ship owner.
5. Negotiate the contracts for bunker and lube oil.
6. Pay expenses on behalf of the ship owner.
7. Make an arrangement for the entry of the ship in the P&I association and
arrange insurance for the ship.
8. Deal with various claims related to insurance, salvage etc.
9. Arrange for providing victualling and stores for the crew of the ship.
Shipping Department
a. Operations Department is responsible for the day to day running of vessels.
Some key tasks include: keeping track of the vessels to ensure that it’s on
schedule as per instructions, coordinate with vessel and ensure that it is
adequately supplied with bunkers (fuel), and coordinate with the agents in the
ports to assist with arrival and departure of the vessel.
b. Technical Department ensures that the vessels perform according to the

technical specification of the vessel. Some key tasks include: monitor technical
performance of various key components such as main engine, propeller, shaft,
generators, and rudders, responsible for purchasing the spare parts,
28
INTERNAL USE ONLY
responsible for major and minor dry-docks, responsible for vessel’s compliance
with laws and regulations.
c. Safety and Quality S&Q/Vetting Department is responsible for ensuring the

high standards of operations both on the vessels and ashore. Some key tasks
include: creation of operational manuals and policies, monitoring safe
operations according to procedures, and coordination of personnel training
d. Chartering/Commercial Department is responsible for the day to day

commercial operation of the vessels (i.e. ensuring fleet vessels are employed).
e. Sale and Purchase (S&P) Department is responsible for: 1) identifying

company’s vessels for sale, 2) identifying potential buyers for sale of the
company’s vessels and 3) identifying opportunities for vessel purchases. The
S&P department relies on information from various sale and purchase brokers.
Refer to the “Vessel Sale & Purchase’ section of this publication.
f. Finance and Accounting Department is responsible for administrative

services, such as accounting, audit, legal, banking, investor relations,
information technology and insurance services.
29
INTERNAL USE ONLY
Safety and Environmental Regulations Governing the

Vessel Trade
A number of key initiatives have been imposed on maritime shipping in general, as

well as there are specific requirements for various shipping industry segments. The
flag state, as defined by the United Nations Convention on Law of the Sea, has
overall responsibility for the implementation and enforcement of international
maritime regulations for all ships granted the right to fly its flag. The “Shipping
Industry Guidelines on Flag State Performance” evaluates flag states based on
factors such as sufficiency of infrastructure, ratification of international maritime
treaties, implementation and enforcement of international maritime regulations,
supervision of surveys, casualty investigations and participation at IMO meetings.
Some of the most important of regulations governing vessel trade are as follows:
• The International Maritime Organization (the “IMO”), the United Nations agency
for maritime safety and the prevention of pollution by ships, or the IMO, has
adopted the International Convention for the Prevention of Marine Pollution,
1973, as modified by the related Protocol of 1978 relating thereto, which has
been updated through various amendments, or the MARPOL Convention. The
MARPOL Convention establishes environmental standards relating to oil
leakage or spilling, garbage management, sewage, air emissions, handling and
disposal of noxious liquids and the handling of harmful substances in packaged
forms. These regulations have been adopted by over 150 nations, including
many of the jurisdictions in which our vessels operate.
• The IMO also adopted the International Convention for the Safety of Life at Sea
(SOLAS, 1974) and the International Convention on Load Lines, or the LL
Convention, which impose a variety of standards that regulate the design and
operational features of ships. The IMO periodically revises the SOLAS and LL
Convention standards. For example, SOLAS implemented strict fire safety
requirements for tankers, along with equipment duplication requirements to
ensure that ships can be controlled in the event of steering gear or navigational
equipment failure.
• The International Safety Management Code for the Safe Operation of Ships and
Pollution Prevention (1993) provides an “international standard for the safe
management and operation of ships and for pollution prevention.” (ISM Code).
Vessels must be ISM code-certified (obtain safety management certificate) in
order to be able to go into most of the ports or obtain insurance coverage.
• The IMO has negotiated international conventions that impose liability for oil
pollution in international waters and the territorial waters of the signatory to such
conventions. For example, IMO adopted an International Convention for the
Control and Management of Ships’ Ballast Water and Sediments, or the BWM
Convention, in February 2004.
• The IMO adopted the International Convention on Civil Liability for Bunker Oil
Pollution Damage, or the Bunker Convention, to impose strict liability on ship-
owners for pollution damage in jurisdictional waters of ratifying states caused by
discharges of bunker fuel. The Bunker Convention, which became effective on
November 21, 2008, requires registered owners of ships over 1,000 gross tons
to maintain insurance for pollution damage in an amount equal to the limits of
liability under the applicable national or international limitation regime.
30
INTERNAL USE ONLY
• The United States, in 1990, put into law the US Oil Pollution Act (OPA) in
response to the Exxon Valdez disaster. The OPA is comprehensive,
“establishing provisions that expand the federal government's ability, and
provide the money and resources necessary, to respond to oil spills.” The OPA
also includes provisions for establishing liability, compensation and remediation
relating to spill incidents. (http://www.epa.gov/oilspill/opaover.htm)
• The U.S. Clean Water Act, or CWA, prohibits the discharge of oil or hazardous
substances in U.S. navigable waters unless authorized by a duly-issued permit
or exemption, and imposes strict liability in the form of penalties for any
unauthorized discharges. The CWA also imposes substantial liability for the
costs of removal and remediation and damages and complements the remedies
available under OPA and CERCLA. In addition, most U.S. states that border a
navigable waterway have enacted environmental pollution laws that impose
strict liability on a person for removal costs and damages resulting from a
discharge of oil or a release of a hazardous substance. These laws may be
more stringent than U.S. federal law.
• In October 2009, the European Union amended a directive to impose criminal

sanctions for illicit ship-source discharges of polluting substances, including
minor discharges, if committed with intent, recklessly or with serious negligence
and the discharges individually or in the aggregate result in deterioration of the
quality of water. Criminal liability for pollution may result in substantial penalties
or fines and increased civil liability claims.
In one of the more important ramifications for the tanker industry, the OPA
established a phase-out period for single-hull tankers, requiring that they be
replaced with double hull tankers. And it eliminated limitations on liability for ship
owners found responsible for pollution episodes. Given the role of the US as a
major importer of oil, this purely domestic legislation had worldwide effects.
Following the sinking of the Erika off the coast of France in 1999 and the resulting
pollution by 12,000 tons of fuel oil, the IMO amended the MARPOL Convention in
2001 and 2003 to speed up the phasing out of single hull tankers by 2010. The full
MARPOL timetable for phasing out of single hull tankers is published by IMO.
(http://www.imo.org)
31
INTERNAL USE ONLY
3. Vessel Types, Sales and

Purchases, Shipbuilding
and Financing
32
INTERNAL USE ONLY
3. Vessel Types, Sales and Purchases,

Shipbuilding and Financing
Vessel Types
Introduction - Vessel Measurements
Vessel measurements are based on the volume of cargo carrying capacity as well
as based on weight of the vessel with cargo or without.
Tonnage is a measure of the size or cargo carrying capacity of a ship. The term
derives from the taxation paid on tuns or casks of wine, and was later used in
reference to the weight of a ship's cargo; however, in modern maritime usage,
"tonnage" specifically refers to a calculation of the volume or cargo volume of a
ship.
Gross register tonnage (GRT) represents the total internal volume of a vessel,
where a register ton is equal to a volume of 100 cubic feet (2.83 m³), which volume,
if filled with fresh water, would weigh around 2,800 kg or 2.8 tonnes. Gross register
tonnage was replaced by gross tonnage in 1994 under the Tonnage Measurement
convention of 1969, but is still a widely used term in the industry.
Net register tonnage (NRT) is the volume of cargo the vessel can carry; i.e., the
gross register tonnage less the volume of spaces that will not hold cargo (e.g.,
engine compartment, helm station, crew spaces, etc., again with differences
depending on which port or country is doing the calculations). It represents the
volume of the ship available for transporting freight or passengers. It was replaced
by net tonnage in 1994, under the Tonnage Measurement convention of 1969.
The Panama Canal/Universal Measurement System (PC/UMS) is based on net
tonnage, modified for Panama Canal purposes.
The Suez Canal Net Tonnage (SCNT) is derived with a number of modifications
from the former net register tonnage of the Moorsom System and was established
by the International Commission of Constantinople in its Protocol of 18 December
1873. It is still in use, as amended by the Rules of Navigation of the Suez Canal
Authority, and is registered in the Suez Canal Tonnage Certificate.
Lightship or Lightweight (“LWT”) measures the actual weight of the ship with no
fuel, passengers, cargo, water, etc. on board
Dead Weight Tonnage (“DWT”), the most common measure in shipping of how
much weight a ship is carrying or can safely carry. It is the sum of weights of cargo,
fuel, fresh water, ballast water, provisions, passengers, and crew. The term is often
used to specify a ship’s maximum permissible DWT when the ship is fully loaded
so that its Plimsoll line is at the point of submersion, although it may also denote
the actual DWT of a ship not loaded to capacity. DWT refers to metric tons (or
“tonnes),” where one metric ton is equal to 1000 kilograms or 2205 pounds. In
some publications, however, DWT may refer to “long tons,” where one long ton
equals 1016 kilograms or 2240 pounds.
33
INTERNAL USE ONLY
Drybulk Carriers
Bulk carriers carry bulk cargo. Bulk cargo is defined as a "loose" cargo that can be
loaded easily and directly into a vessel's cargo holds, such as unpackaged goods -
usually large volumes of single-commodity goods such as grain, coal, cement,
soybeans, iron ore, steel pellets and in some cases fertilizers are loaded on these
vessels.
Capesize (Bulk Carriers with carrying capacity of more than 80,000 DWT)
Picture 1: Capesize Vessel
Panamax -Bulk carriers which have an average deadweight of 65,000 to 80,000 tones
(the name is derived from the fact that it is the maximum size ship that can fit through
Panama canal). The biggest type of Panamax is the Kamsarmax that is able to load at
the world’s largest bauxite port, Port Kamsar in Equatorial Guinea. A Kamsarmax type
bulk carrier is basically a 82,000 DWT Panamax.
Picture 2: Panamax Vessel
34
INTERNAL USE ONLY
Handymax and Supramax are naval architecture terms for a bulk carrier, in a
series that is called Handysize class. Handysize class consists of Supramax (Bulk
carriers with carrying capacity of 50,000 t0 60,000 DWT), Handymax (40,000 to
50,000 DWT) and Handy (<40,000 DWT).These ships are used for less
voluminous cargos, even allowing for combining different cargos in different holds.
Picture 3: Supramax Vessel
Picture 4: Handymax Vessel
Picture 5: Handysize Vessel
35
INTERNAL USE ONLY
Tankers
A tanker (or tank ship or tankship) is a ship designed to transport oil and oil
products in bulk. The two main types of oil tankers are crude oil tankers, which
carry unrefined crude oil (“dirty cargo”) exclusively, and product tankers, which
carry refined petroleum products (“clean cargo”). A crude oil tanker typically
discharges its cargo at a single destination and then returns to the loading port with
only seawater for ballast. Product tankers, on the other hand, are built to carry
different types of products simultaneously to multiple destinations—thus, although
they are not as large as the bigger crude oil tankers, their designs are more
complex.
Most often, tanker size is measured in DWT. To translate DWT into barrels of oil,
the oil’s density must be known. Within typical ranges one metric ton of oil will
occupy anywhere from about 6.3 to 8 barrels of oil, a worldwide average is about
7.38 barrels per metric ton (BP, 2005).
In 1954 Shell oil developed the average freight rate assessment system which
classifies tankers of different sizes. At first, they divided the groups as General
Purpose for Tankers under 25,000 tons DWT; Medium Range for ships between
25,000 and 45,000 DWT and Large Range for the then enormous ships that were
larger than 45,000 DWT. The average freight rate assessment system is the
following:
• 10,000–24,999 DWT: General Purpose tanker
• 25,000–44,999 DWT: Medium Range tanker
• 45,000–79,999 DWT: Large Range 1 (LR1)
• 80,000–159,999 DWT: Large Range 2 (LR2)
• 160,000–319,999 DWT: Very Large Crude Carrier (VLCC)
• 320,000–549,999 DWT: Ultra Large Crude Carrier (ULCC)
Crude Oil Tankers

Crude tankers are built to transport crude oils from the oil field or exporting harbor
to the oil refinery. Historically the refineries have been built close to the consuming
market, but in recent years new refineries to a larger extent have been built closer
to the oil well. Everything else being equal a continuation of this trend may lead to
less demand for crude tankers.
Crude tankers are characterized by not having coated tanks since the crude oils
are not corrosive to metals and because the oil companies do not have as high
requirements in regard to the purity of the crude oil. The crude tankers are divided
into segments depending on the size of the ship. The most general segments are
ULCC, VLCC, Suezmax, Aframax and Panamax.
V-Plus Size Tankers
As of 2008, the world’s four largest working supertankers were TI Class

Supertankers; currently know as the TI Asia, TI Europe, TI Oceania, and TI Africa.
These ships were built in 2002 and 2003 as the Hellespont Alhambra, Hellespont
Metropolis, Hellespont Tara and Fairfax for the Greek Hellespont Steamship
Corporation. Hellespont sold these ships to Overseas shipholding Group and
Euronav in 2004. Each of the four sister ships has a capacity of over 441,500
DWT, a length overall of 380 meters and a cargo capacity of 3,166,353 barrels.
The first ULCC Tankers to be built for some 25 years, they were also the first
ULCCs to be double hulled. To differentiate them from smaller ULCCs, these ships
are sometimes given the V-Plus size designation.
36
INTERNAL USE ONLY
Pictures 6-7: VLCCs Hellespont Metropolis & Hellespont Tara.
Largest Supertanker
The world’s largest supertanker ever was built in 1979 at the Oppama shipyard by
Sumitomo heavy industries, Ltd. This ship was built with a capacity of 564,763
DWT, a length overall of 458.45 meters and a draft of 24.611 meters. She had 46
tanks, 31,541 square meters of deck, and was too large to pass through the
English Channel. After several sale and purchase activities for this vessel, it was
renamed Knock Nevis.
Picture 8: Knock Nevis
37
INTERNAL USE ONLY
Figure 8: Comparison of Knock Nevis with other large buildings
ULCC (Ultra Large Crude Carrier): Tankers with a loading capacity of 320,000 to
440,000 DWT.
Picture 9: Ultra Large Crude Carrier
38
INTERNAL USE ONLY
VLCC (Very Large Crude Carrier): Tankers with a loading capacity from 200,000
to 320,000 DWT. Can carry up to 2 million barrels of crude oil.
Picture 10: 297,958 DWT VLCC built in 2010 (courtesy of Crude Carriers
Corp.)
Suezmax -Tankers that can sail through the Suez canal, generally considered in
between 120,000 to 200,000 DWT. Can carry around 1 million of barrels of crude
oil.
Picture 11: 150,096 DWT Suezmax built in 2008 (courtesy of Crude Carriers
Corp.)
39
INTERNAL USE ONLY
Aframax -Tankers with a loading capacity of 80,000 to 120,000 DWT.
Picture 12: Aframax Tanker
Panamax -Tankers with a loading capacity of 50,000 to 80,000 DWT.
Picture 13: Panamax Tanker
40
INTERNAL USE ONLY
Clean Product Tankers

LR2 Tankers 80,000 to 120,000 DWT
Long/Large Range 2 Tanker – Product Tanker ranking in size between from 80,000
to 120,000 DWT. Main trade routes are from Middle East Gulf to the Far East and
Europe, or from Northwest Europe to the United States. When carrying clean
products these ships usually trade on the long voyages out of the Middle East to
the Asian countries and Northern Europe. When carrying dirty products these ships
usually trade on the long and medium voyages out of the Black sea to the
Mediterranean and the US and out of the Baltic and North sea to Northern Europe
and the US.
LR 1 Tankers 45,000 to 80,000 DWT

Long/Large Range 1 Tanker – Product Tanker ranking in size between 45,000 to
80,000 DWT. Main Trade routes are from Middle East Gulf to the Far East and
Europe, or from Northwest Europe to the United States.
Panamax & Handysize Tankers

These tankers are primarily used for both the transportation of crude oil and
petroleum products. Panamax tankers have displacement between 50,000 and
80,000 DWT and trade in short haul. Handysize tankers have
displacement between 50,000 and 10,000 DWT. They primarily carry finished
petroleum products as their smaller size makes them less economic for the
1
transport of crude . Handysize tankers include MR or Medium Range tankers of
about 25,000 to 45,000 DWT and GP or General Purpose Tankers of about 16,500
to 25,000 DWT.
Picture 14: Medium Range (MR) Tanker (courtesy of Capital Product Partners
L.P.)
41
INTERNAL USE ONLY
Chemical Tankers
A chemical tanker is a type of tanker designed to transport chemicals in bulk.
Ocean-going chemical tankers generally range from 5,000 metric tons DWT to
40,000 DWT in size, which is considerably smaller than the average size of other
tanker types due to the specialized nature of their cargoes and the size restrictions
of the port terminals where they call to load and discharge.
Chemical tankers normally have a series of separate cargo tanks which are either
coated with specialized coatings such as phenolic epoxy or zinc paint, or made
from stainless steel. The coating or cargo tank material determines what types of
cargo a particular tank can carry: stainless steel tanks are required for aggressive
acid cargoes such as sulfuric and phosphoric acid, while 'easier' cargoes - e.g.
vegetable oil - can be carried in epoxy coated tanks.
Picture 15: Chemical Tanker
42
INTERNAL USE ONLY
Containerships or Liners
Container ships (or 'box ships') carry their cargo packed into standard 20' or 40'
containers that are stacked both on and below deck. Container ships are cargo
ships that carry their entire load in truck-size intermodal containers, in a technique
called containerization. They form a common means of commercial intermodal
freight transport. Container ships are designed in a manner that optimizes space.
Capacity is measured in Twenty-foot equivalent unit (TEU).
Α below table illustrates the Container Ship size categories:
Table 3: Container Ship Size Categories
Source: www.wikipedia.org
Container Ship Size Categories

Type of Container
Capacity (TEU)
vessel
Ultra Large Container
14,501 and higher
Vessel (ULCV)
New Panamax 10,000 – 14,500
Post Panamax 5,101 – 10,000
Panamax 3,001 – 5,101
Feefermax 2,001 – 3,000
Feeder 1,001 – 2,000
Smaller Feeder Up to 1000
New Panamax (10,000 – 14,500 TEUs)

Picture 16: New Panamax
43
INTERNAL USE ONLY
Post Panamax 5,101 – 10,000 TEUs

Picture 17: Post Panamax
Feefermax or Intermediate 2,001 – 3,000 TEUs

Picture 18: Feefermax
44
INTERNAL USE ONLY
Feeder Lines or Feeder Ships also known as Handysize are ships of various
sizes, but mostly understood to be sea going vessels with an average capacity of
carrying 300 Twenty-foot equivalent units (TEU) to 500 TEU.
Picture 19: Handy Size Feeder 1,736 TEU built in 2007 (courtesy of Euroseas
Ltd.)
Picture 20: Feeder 1,169 TEU built in 1993 (courtesy of Euroseas Ltd.)
45
INTERNAL USE ONLY
LNG – LPG Vessels
LNGs (Liquefied Natural Gas Carriers) are type of tankers that are used mainly for
the transportation of methane gas under pressure or refrigerated at extremely low
temperatures, at its atmospheric pressure boiling point of -162 degree Celsius.
Today the majority of the new ships under construction are in the size of 120,000
m³ to 160,000 m³. But there are orders for ships with capacity up to 260,000 m³.
LPGs (Liquefied Petroleum Gas Tanker Carriers) are used for the transportation of
propane, butane and other gases under pressure or refrigerated at extremely low
temperatures in integral tanks incorporated in the hull.
The major types of gas carriers include the following in cubic meters (“cbm or m3”):
• Very Large Gas Carriers (VLGC, 70,000+ cbm).
• Large Gas Carriers (LGCs, 50,000 – 70,000 cbm).
• The medium Gas Carriers (MGCs, 20,000 – 40,000 cbm).
• Smaller LPG Carriers segment (e.g. 3,000 to 8,000 cbm).
In these types of carriers, all gases are transported in liquid form, mainly
because their physical and chemical properties do not allow them to be carried
in vapor form. They are carried in manly in two ways:
• By keeping their pressure greater than the atmospheric pressure.
• By keeping their temperatures below the ambient temperature.
Sometimes, the methods can also be combined and used.
According to the above methods, LPG carriers are divided into three main
categories:
• Fully pressurized.
• Semi pressurized and refrigerated.
• Fully refrigerated.
Fully Pressurized Ships
This is the very first type of carrier that was used to transport gases. With a cargo
capacity of 3500 cubic meters, these ships are designed to work at a pressure of
17.5 kg/cm2. Cargo is carried in cylindrical or spherical steel tanks with an
appropriate storage temperature. All these ships are double bottomed.
Semi-Pressurized / Semi- Refrigerated
This type of carrier has both refrigeration and pressurizing facilities. They have full
refrigeration facility with high design pressure for the cargo tanks. The tanks are
cylindrical in shape and thinner than the pressurized vessels.
Semi-pressurized, semi-refrigerated ships have a cargo carrying capacity of 5000
meter cube under temperature and pressure conditions of -10 degree Celsius and
8.5 kg/ cm2, respectively. Larger vessels can carry at temperature of -48 degree
Celsius.
A re-liquefaction plant on the ship can load the cargo as gas and liquefy it onboard.
Heating and cooling facilities are also provided for smooth discharging of the cargo
They generally have 2-6 tanks and are double bottomed.
46
INTERNAL USE ONLY
Pictures 21-22: LNG Carriers - Membrane Type 152,532 m³, 82,291 DWT, built
in 2010 (courtesy of Ceres LNG Services Ltd.)
47
INTERNAL USE ONLY
Picture 23: LPG/LNG Carrier fully pressurized – Moss type
Picture 24: LPG Carrier 7,465 DWT
48
INTERNAL USE ONLY
Picture 25: LPG/C vessel built in 2009, 3,500 cbm, approximately 3,000 DWT
(courtesy of StealthGas Inc.)
49
INTERNAL USE ONLY
Oil Exploration (Drilling Rigs and Drillships)
Since our appetite for cheap energy appears insatiable, it is necessary to search
and find oil to replace the wells that are running dry. Oil rigs are used to drill
exploration wells to look for oil. And oil platforms are used to drill into an oil field to
extract the oil. There are several different types of oil rig and platform.
Figure 9: Types of Platforms

Some of the types of oil platforms as compared with the BT tower in London.
Offshore Platforms
An offshore platform, also referred to as an oil platform or oil rig, is a lаrge structure
with facilities to drill wells and extract and process oil and natural gas and export
the products to shore.
Picture 26: Offshore Platform
Drillships
A drillship is a maritime vessel that has been fitted with drilling apparatus. It is most
often used for exploratory offshore drilling of new oil or gas wells in deep water or
50
INTERNAL USE ONLY
for scientific drilling. The drillship can also be used as a platform to carry out well
maintenance or completion work such as casing and tubing installation or subsea
tree installations. It is often built to the design specification of the oil production
company and/or investors, but can also be a modified tanker hull outfitted with a
dynamic positioning system to maintain its position over the well.
The greatest advantages these modern drillships have is their ability to drill in water
depths of more than 2500 meters and the time saved sailing between oilfields
worldwide. Drillships are completely independent, in contrast to semi-submersibles
and jackup barges.
Picture 27: Drillship
Offshore Drilling Contract Types
a. Day Work Contract. A day work contract is a contract for the drilling of oil and
gas well under which the drilling contractor (a ship-owner) furnishes the drilling
crew and drilling equipment and is paid an agreed sum of money for each day
spent in drilling regardless of the number of days involved. This contract
generally extends over a period of time covering either the drilling of a single
well or group of wells or covering a stated term. Higher rates are paid while the
drilling unit is operating and lower rates for periods of mobilization or when
drilling operations are interrupted or restricted by equipment breakdowns,
adverse environmental conditions or other conditions beyond owner’s control.
The day work contract is highly favored by the drilling industry because the
contractor is paid based on the total number of days on station over the well,
regardless of the progress as to the depth drilled. The contractor waits for
direction by the operator, and most importantly the contractor retains only the
specified risks detailed in the contract. All other risks, whether detailed in the
contract or unaddressed by the written agreement, are shifted to the operator.
Day work drilling contracts are the most commonly used today.
b. Footage Contract. A footage contract provides that payment is made based on
an agreed sum per each well drilled. Much like a day work contract, "the drilling
contractor furnishes the drilling crew and the drilling equipment and is paid an
agreed sum of money for each well actually drilled, irrespective of whether the
proposed depth is reached or not.
c. Turnkey Contract. A turnkey contract is a contract wherein the drilling
contractor drills the well, establishes production and turns the completed job
over to the operator for the amount specified in the contract. Here all work of
drilling and completing a well for production is borne by the contractor. The
operator simply waits for the contractor to complete working before becoming
the owner of the well.
51
INTERNAL USE ONLY
Contracts to provide offshore drilling services are individually negotiated and vary
in their terms and provisions. Contracts are obtained through competitive bidding
against other contractors.
The contract term in some instances may be extended by the customer exercising
options for the drilling of additional wells or for an additional term. Contracts may
also include a provision that allows the customer to extend the contract to finish
drilling a well-in-progress.
Offshore Support Vessels
The offshore market is characterized by vessels built for assistance in oil extraction
and exploration at sea. The specifications of the vessels depend on whether they
are built primarily to move drilling rigs and their anchors (Anchor Handling Tug
Supply vessels), to deliver goods and supplies to oil rigs (Platform Supply
Vessels), to act as safety and fire-fighting vessels (stand-by -vessels) or for other
purposes required to maintain and expand oil production at sea.
The North Sea and the Gulf of Mexico are the largest markets for offshore vessels,
but other areas such as Western Africa, Canada, the Far East and Brazil employ
an ever-increasing share of the global fleet.
Apart from the common offshore ship types, there exist numerous types of offshore
related ships that have very specific characteristics. These include:
• Pipe-laying Vessels are used in the construction of subsea infrastructure.
• ROV-Support Vessels are used as a floating base for professional diving
projects below or around oil production platforms and associated installations.
• Seismic Vessels which are solely used for the purpose of seismic survey in the
high seas and oceans.
• Diving Support Vessels which are also used as a floating base in professional
diving projects.
• Floating Production Storage and Offloading Vessels which are used by the
offshore industry for the processing of hydrocarbons and for storage of oil or
gas.
Shuttle Tanker
A shuttle tanker is a specialized ship designed to transport crude oil and

condensates from offshore oil field installations to onshore terminals and refineries.
Shuttle tankers are equipped with sophisticated loading systems and dynamic
positioning systems that allow the vessels to load cargo safely and reliably from oil
field installations, even in harsh weather conditions. Shuttle tankers were
developed in the North Sea as an alternative to pipelines. The first cargo from an
offshore field in the North Sea was shipped in 1977, and the first dynamically
positioned shuttle tankers were introduced in the early 1980s. Shuttle tankers are
often described as “floating pipelines” because these vessels typically shuttle oil
from offshore installations to onshore facilities in much the same way a pipeline
would transport oil along the ocean floor.
Picture 28: Shuttle Tanker
52
INTERNAL USE ONLY
FPSO, Oil
A floating production, storage and offloading (FPSO) unit is a floating vessel used
by the offshore industry for the processing and storage of oil and gas. FPSO units
are offshore production facilities that are typically ship-shaped and store processed
crude oil in tanks located in the hull of the vessel. FPSO units are typically used as
production facilities to develop marginal oil fields or deepwater areas remote from
existing pipeline infrastructure. Of four major types of floating production systems,
FPSO units are the most common type. Typically, the other types of floating
production systems do not have significant storage and need to be connected into
a pipeline system or use an FSO unit for storage. FPSO units are less weight
sensitive than other types of floating production systems and their extensive deck
area provides flexibility in process plant layouts. In addition, the ability to utilize
surplus or aging tanker hulls for conversion to an FPSO unit provides a relatively
inexpensive solution compared to the new construction of other floating production
systems. A majority of the cost of an FPSO comes from its top-side production
equipment and thus FPSO units are expensive relative to conventional tankers. An
FPSO unit carries on-board all the necessary production and processing facilities
normally associated with a fixed production platform. As the name suggests, FPSO
units are not fixed permanently to the seabed but are designed to be moored at
one location for long periods of time. In a typical FPSO unit installation, the
untreated well stream is brought to the surface via subsea equipment on the sea
floor that is connected to the FPSO unit by flexible flow lines called risers. The
risers carry oil, gas and water from the ocean floor to the vessel, which processes it
onboard. The resulting crude oil is stored in the hull of the vessel and subsequently
transferred to tankers either via a buoy or tandem loading system for transport to
shore.
Picture 29: FPSO, Oil
53
INTERNAL USE ONLY
FSO, Oil
A vessel used only to store oil (without processing it) is referred to as a floating
storage and offloading vessel (FSO). FSO units provide on-site storage for oil
field installations that have no storage facilities or that require supplemental
storage. An FSO unit is generally used in combination with a jacked-up fixed
production system, floating production systems that do not have sufficient storage
facilities or as supplemental storage for fixed platform systems, which generally
have some on-board storage capacity. An FSO unit is usually of similar design to a
conventional tanker, but has specialized loading and offtake systems required by
field operators or regulators. FSO units are moored to the seabed at a safe
distance from a field installation and receive the cargo from the production facility
via a dedicated loading system. An FSO unit is also equipped with an export
system that transfers cargo to shuttle or conventional tankers. Depending on the
selected mooring arrangement and where they are located, FSO units may or may
not have any propulsion systems. FSO units are usually conversions of older
single-hull conventional oil tankers. These conversions, which include installation of
a loading and offtake system and hull refurbishment, can generally extend the
lifespan of a vessel as an FSO unit by up to 20 years over the normal conventional
tanker lifespan of 25 years.
Picture 30: FSO, Oil
FSRU, Gas
A vessel used for Floating production storage and offloading. The FSRU is to
typically permanently moored offshore and export gas to shore through a subsea
pipeline.
Picture 31: FSRU, Gas
54
INTERNAL USE ONLY
Offshore Support Vessel
This vessel is mainly used to transport materials, supplies, and personnel, as well
as to move and position drilling structures.
Picture 32: Offshore Support Vessel
Diving Support Vessel
A diving support vessel is a ship that is used as a floating base for professional
diving projects. Commercial Diving Support Vessels emerged during the 1960s and
1970s when the need arose for diving operations to be performed below and
around oil production platforms and associated installations in open water in the
North Sea and Gulf of Mexico.
Picture 33: Diving Support Vessel
55
INTERNAL USE ONLY
Pipe Carriers Vessel

The purpose of this vessel is to enable the ability to dock alongside pipe-laying
barges while running anchor spreads.
Picture 34: Pipe Carriers Vessel
Pipe Layer
A pipe-laying ship is a maritime vessel used in the construction of subsea
infrastructure. It serves to connect oil production platforms with refineries on shore.
Picture 35: Pipe Layer
56
INTERNAL USE ONLY
Pipe Burying Vessel

This vessel is mainly used to bury pipeline beneath the seafloor.
Picture 36: Pipe Burying Vessel
Bunkering Vessel
Bunkering vessels deliver marine fuels and marine lubricants from refineries, major
oil producers and other sources to other ships.
Picture 37: 2,972 DWT Bunkering Tanker built in 1990 (courtesy of Aegean
Marine Petroleum Network Inc.)
57
INTERNAL USE ONLY
Other Types of Vessels
Ro-Ro Shipping
RO/RO ships (roll on/ roll off) are ferries with facilities for vehicles to drive on and
off and carry both road haulage and passenger vehicles.
Picture 38: RO/RO ship
Barges
A barge is a flat-bottomed boat, built mainly for river and canal transport of heavy
goods. Some barges are not self-propelled and need to be towed by tugboats or
pushed by towboats.
Pictures 39: Barge
58
INTERNAL USE ONLY
Accommodation Ship
A barracks ship may also be used as a "Receiving Unit" for sailors who need
temporary residence prior to being assigned to their ship. In civilian use the terms
accommodation vessel or accommodation ship are used.
Picture 40: Accommodation Ship
Anchor Handling Tug Supply
Anchor handling tug supply (AHTS) vessels are vessels which supply oil rigs, tow
them to location, anchor them up and, in a few cases, serve as an Emergency
Rescue and Recovery Vessel (ERRV).
Picture 41: AHTS
59
INTERNAL USE ONLY
Crew/Supply Vessel
The crew-supply vessels are a quad waterjet diesel powered vessels. Their hull
and superstructure is of aluminum alloy, welded in accordance with approved
codes. Superstructure is arranged with passenger compartment on the main deck
with pilot house above.
Picture 42: Crew/Supply Vessel
Fishing Trawler
A fishing trawler is a commercial fishing vessel designed to operate fishing trawls.

Trawling is a method of fishing that involves actively pulling a trawl through the
water behind one or more trawlers. Trawls are fishing nets that are dragged along
the bottom of the sea or in midwater at a specified depth. A trawler may also
operate two or more trawl nets simultaneously (double-rig and multi-rig). There are
many variants of trawling gear. They vary according to local traditions, bottom
conditions, and how large and powerful the trawling boats are. A trawling boat can
be a small open boat with only 30 horsepower (hp) or a large factory ship with
10,000 hp. Trawl variants include beam trawls, large-opening midwater trawls, and
large bottom trawls, such as "rock hoppers" that are rigged with heavy rubber
wheels that let the net crawl over rocky bottom.
Picture 43: Fishing Trawler (Factory trawler), built in 1994, DWT FT –

5,539MT’s (courtesy of Lavinia Corporation)
60
INTERNAL USE ONLY
Reefership
A reefer ship is a type of ship typically used to transport perishable commodities

which require temperature-controlled transportation, mostly fruits, meat, fish,
vegetables, dairy products and other foodstuffs.
Reeferships may be split into three categories:
1. Sidedoor vessels have water tight ports on the ships hull, which open into a cargo
hold. Elevators or ramps leading from the quay serve as loading and discharging
access for the forklifts or conveyors. Inside these access ports or side doors, pallet
lifts or another series of conveyors bring the cargo to the respective decks. This
special design makes the vessels particularly well suited for inclement weather
operations as the tops of the cargo holds are always closed against rain and sun.
2. Conventional vessels have a traditional cargo operation with top opening hatches
and cranes/derricks. On such ships, when facing wet weather, the hatches need to
be closed to prevent heavy rain from flooding the holds. Both above ship types are
well suited for the handling of palletized and loose cargo.
3. Refrigerated Container vessels are specifically designed to carry containerised unit
loads where each container is an individual refrigerated unit. These ships differ from
conventional container ships in design and power generation equipment.
Picture 44: Reefer CBFT 269,308, built in 1994, DWT FT – 6,750MT’s (courtesy
of Lavinia Corporation)
61
INTERNAL USE ONLY
World Fleet Size by Principal Vessel Types, 2009-2010
Table 4: World fleet size by principal vessel types, 2009-2010 (beginning-of-

year figures, thousands of DWT)
Source: UNCTAD (United Nations Conference on Trade and Development)
Percentage
Principal types 2009 2010 change
2010/2009
Oil tankers 418,266 450,053 7.6%
35.1% 35.3% 0.2%
Bulk carriers 418,356 456,623 9.1%
35.1% 35.8% 0.7%
General cargo ships 108,881 108,232 -0.6%
9.1% 8.5% -0.7%
Container ships 161,919 169,158 4.5%
13.6% 13.3% -0.3%
Other types of ships 84,895 92,072 8.5%
7.1% 7.2% 0.1%
Liquefied gas carriers 36,341 40,664 11.9%
3% 3.2% 0.1%
Chemical tankers 8,141 7,354 -9.7%
0.7% 0.6% -0.1%
Offshore supply 22,567 24,673 9.3%
1.9% 1.9% 0%
Ferries and passenger
6,083 6,152 1.1%
ships
0.5% 0.5% 0%
Other/n.a. 11,762 13,229 12.5%
1% 1% 0.1%
World total 1,192,317 1,276,137 7%
100% 100%
62
INTERNAL USE ONLY
Vessel Sale & Purchase Activity
Broadly speaking, S&P is the activity for buying / selling a ship and can be
subdivided into the following five categories:
Placing the Ship on the Market. The first step is for the buyer or seller to appoint
a broker in exchange for a commission– or he may decide to handle the
transaction himself. Particulars of the ship for sale are circulated to interested
parties in the market.
Negotiation of Price and Conditions. Once a prospective buyer has been found
the negotiation begins. The buyer will make his offer for delivery at a specified or
time, with the option to cancel if the vessel is not delivered by the latest specified
date. No specific rules when negotiating apply. In a buoyant market the buyer may
have to make a quick decision on very limited information. Alternatively during a
weak market, he can take his time, inspecting a large number of ships and seek
detailed information from the owners. When agreement is reached in principle, the
brokers may draw up a ‘recap telex’ summarizing the key details about the ship
and the transaction, before proceeding to the formal stage of preparing a sales
contract.
Memorandum of Agreement. Once an offer has been accepted a Memorandum

of Agreement (“MOA”) is drafted outlining the terms on which the sale will take
place. A commonly used template for the MOA is the Norwegian Sales form
(1987). The memorandum sets out the administrative details for the sale (i.e.
where, when and on what terms) and lays down certain contractual rights, such as
the right of the buyer to inspect Class Society Records. At this stage the
memorandum is not generally legally binding, since it will include a phrase to the
effect that it is ‘subject to…’.
Sale and Purchase Memorandum of Agreement (MOA): Example: Norwegian

Sales form 1987.
The following summary refers to the MOA as drafted. Individual clauses are
generally modified during the negotiation process, with terms added or removed.
Preamble. At the top of the form are spaces to enter the date, the seller, the buyer
and details of the ship, including the classification society, year of build, shipyard,
flag, etc.
1. Price: The price to be paid for the vessel.

2. Deposit: States the deposit paid by the purchaser, when it must be paid and
where payment is accepted.
3. Payments: The buyer can inspect the vessel and its class records. The clause
states where and when the vessel will be available and restricts the scope of
the inspection. After inspection the buyer has 48 hours to accept in writing, after
which the contract is null and void. (In practice the buyer generally inspects the
ship before the MOA is drawn up, in which case this clause does not apply).
4. Place and time of delivery: States where the vessel will be delivered and when,
usually a range of ports over a period of time are specified. The buyer can
cancel the purchase if the ship is not delivered by the stated date at the
specified port.
5. Dry-docking: The seller is to dry-dock the vessel at the port. However this
clause is not obligatory in all MOA’s. The buyer may buy a vessel subject to dry-
docking.
Inspections. The buyer or his surveyor conducts any inspections permitted under
the sales contract. A physical inspection of the ship will most likely take place,
possibly including an underwater inspection by divers. The Classification Society
records outlining information about the mechanical and structural history of the ship
63
INTERNAL USE ONLY
may also be inspected. Sales often fail at this stage if the buyer is not happy with
the results of the inspections.
The Closing. Finally the ship is delivered to its new owners who simultaneously
transfer the balance of funds to the seller’s bank. At the closing meeting,
representatives of the buyer and seller on board ship are in telephone contact with
ashore representatives of the sellers, buyers, current and prospective mortgagee’s
and the ship’s existing registry.
Ships can be sold free from all charters or with existing time charters/bare boat
charters – that could be transferred to the new owners, depending on agreement.
In these cases a re-assignment of the existing charter to the new owner takes
place. This is specified in the MOA.
Role of Ship Management Companies in Sale and

Purchase of Vessels
A ship management company identifies vessel(s) for purchase, performs class
records review and physical inspection and makes recommendation to a ship-
owner as to whether identified vessel should be bought.
After approval had been granted by a ship-owner for a purchase of identified
vessel, a ship management company proceeds to purchase of such vessel on
behalf of a ship-owner under the best possible terms and conditions in accordance
with industry standards.
A ship management company performs all functions necessary to allow ship-
owners to take physical delivery of purchased vessel and proceeds with
commercially managing same.
A ship management company also sells vessel(s) on behalf of a ship-owner at a
ship-owner’s request. It markets the vessel for sale, solicits offers, and negotiates
the sale under the best possible terms and conditions in accordance with industry
standards. It also performs all necessary functions to enable a ship-owner to
physically deliver a vessel to her contractual buyer.
All the services presented above are rendered by a ship management company in
exchange for an S&P commission paid by seller or buyer, which is typically about
1% of the agreed vessel price.
Flag of Convenience
The term flag of convenience describes the business practice of registering a
merchant ship in a sovereign state different from that of the ship-owner’s, and flying
that state's civil ensign on the ship. Ships are registered under flags of
convenience to reduce operating costs or avoid the regulations of the owner's
country. The closely-related term open registry is used to describe an organization
that will register ships owned by foreign entities.
The term "flag of convenience" has been in use since the 1950s and refers to the
civil ensign a ship flies to indicate its country of registration or flag state. A ship
operates under the laws of its flag state, and these laws are used if the ship is
involved in an admiralty case.
The modern practice of flagging ships in foreign countries began in the 1920s in
the United States, when ship-owners frustrated by increased regulations and rising
labor costs began to register their ships to Panama. The use of flags of
convenience steadily increased, and in 1968, Liberia grew to surpass the United
Kingdom as the world's largest shipping register. As of 2009, more than half of the
world’s merchant ships are registered under flags of convenience, and the
Panamanian, Liberian, and Marshallese flags of convenience account for almost
40% of the entire world fleet, in terms of deadweight tonnage.
64
INTERNAL USE ONLY
Shipyards
Shipyards and dockyards are places where ships are built and repaired,
respectively. Dockyards are sometimes more associated with maintenance and
basing activities than shipyards, which are sometimes associated more with initial
construction. The terms are routinely used interchangeably, in part because the
evolution of dockyards and shipyards has often caused them to change or merge
roles.
Countries with large ship building industries include South Korea, Australia, Japan,
China, Germany, Turkey, Poland and Croatia. The shipbuilding industry tends to be
more fragmented in Europe than in Asia. In European countries there are smaller
companies, compared to the fewer, larger companies in the ship building countries
of Asia.
Most ship builders in the United States are privately owned, the largest being
Northrop Grumman, a multi-billion dollar defense contractor. The publicly owned
shipyards in the US are Naval facilities providing basing, support and repair.
The site of a large shipyard will contain many specialized cranes, dry docks,
slipways, dust-free warehouses, painting facilities and extremely large areas for
fabrication of the ships.
After a ship's useful life is over, she makes her final voyage to a shipbreaking yard.
Until the late 20th century, ship breaking was carried on in port cities of
industrialized countries such as the United Kingdom and the United States. Today,
most ship breaking yards are in developing countries, with the largest yards at
Gadani in Pakistan, Alang in India, Chittagong in Bangladesh and Aliaga in Turkey.
This is due to lower labor costs and less stringent environmental regulations
dealing with the disposal of lead paint and other toxic substances. Some "breakers"
still remain in the United States which work primarily on government surplus
vessels. There are also some in Dubai, UAE for tankers. China used to be an
important player in the 1990s. It is now trying to reposition itself in more
environmentally friendly industries.
Nowadays many European companies bring some ship breaking back to European
shores, where it was widespread until the 1970s, by building “green” ship-breaking
facilities that can safely dispose of large ships.
Shipbuilding
Shipbuilding is the construction of ships. It normally takes place in shipyards.
The following types of costs are incurred by the ship-owner during vessel
construction:
• Shipyard installments as specified in the contract between the ship-owner and
the builder. Payments terms are typically involve certain percentages upon
entering into a ship-building contract, steel cutting, keel laying, launching and/or
vessel delivery.
• Vessel construction supervision costs.
• Crew expenses for those crew members that participate in the sea trials.
• Fuel consumption during sea trials.
• Cost of machineries, equipment and spare parts furnished by the ship-owner.
• Fees and charges incidental to compliance with the classification society rules.
• Fees for registration under the applicable laws.
65
INTERNAL USE ONLY
Vessel’s Useful Economic Life

Once vessel construction is completed and it is delivered from a shipyard, the ship-
owner must determine vessels useful economical life, which is defined as a period
over which a vessel is expected to be usable, with normal repairs and
maintenance, for the purpose it was acquired, rented, or leased. Expressed usually
in number of years, it is usually less than the vessel’s physical life, and is the
period over which the vessel's depreciation is charged. Also called average life,
economic useful life, effective life, mean life or useful life. Based on our review of
the SEC fillings of 60 shipping companies listed in the USA, the useful economical
lives used by the shipping industry are as follows:
Table 5: Summary of vessels’ useful economic lives – results of survey
Shipping industry Vessel’s useful

segment economic life
Container vessels - general 25, 30, 45
12 Companies
Surveyed Reefer container 15
Dry container 12.5
24 Companies Dry Bulk 20,25,28,30
Surveyed
29 Companies Tankers 20,25,24-27,30
Surveyed
Gas
6 Companies Surveyed LNG 30,35,40
LPG 30
1 Company Surveyed FPSO 25-30
Other types
Baredeck 30
6 Companies Surveyed
Tugs 10-30, 25
Barge 10-30
Dry-Docking
The hull and machinery of every commercial vessel must be classed by a
Classification Society authorized by its country of registry. The Classification
Society certifies that a vessel is safe and seaworthy in accordance with the
applicable rules and regulations of the country of registry of the vessel and the
Safety of Life at Sea Convention (“SOLAS”). Vessels are certified by the
Classification Societies (e.g., American Bureau of Shipping, Lloyd’s Register of
Shipping).
A vessel must undergo annual surveys, intermediate surveys, dry-dockings
and special surveys. In lieu of a special survey, a vessel’s machinery may be on
a continuous survey cycle, under which the machinery would be surveyed
periodically over a five-year period. Every vessel is also required to be dry-docked
every two to three years for inspection of the underwater parts of such vessel.
If any vessel does not maintain its class and/or fails any annual survey,
intermediate survey, dry-docking or special survey, the vessel would be unable to
carry cargo between ports and therefore would be unemployable and uninsurable
which could cause the owner to be in violation of certain covenants in his credit
facilities. Dry-docking costs include all works required by the vessel’s Classification
Societies which may consist of actual costs incurred at the dry-dock yard, including
but not limited to, dry-docking dues and general services for vessel preparation,
steelworks, coatings, piping works and valves, machinery works, electrical works
66
INTERNAL USE ONLY
and other expenses. Further, some Classification Societies (NKK, Lloyd’s Register)
require having all steel works coated with a suitable paint and suitable protection of
the underwater portion of the hull to be provided. Accordingly, the cost of paints for
the steel works and underwater portion of the hull is part of dry-docking costs.
Steelworks relate to costs in connection with ultrasonic measurements for
steelwork evaluation, steel renewals in way of vessel’s cargo holds, tanks, decks,
hatch covers and any other spaces/compartments, erection and removal of staging
and provision of ancillary shipyard services such as crane, ventilation, lighting,
testing and cleaning of debris after works completion.
Coatings relate to costs in connection with the treatment and coating of vessel’s
tanks and the various exterior and interior surfaces of the hull.
Piping and valves relate to costs in connection with piping renewal and valves
inspection, overhaul and/or renewal in way of cargo holds, tanks, deck and engine
room.
Machinery and electrical works relate to the costs of the works performed on the
main engine, the auxiliary engines and generators, the boilers, on automation and
electrical equipment and other engine room or deck machinery.
Other expenses relate to costs in connection with dry-docking dues, normal dry-
docking works and general services such as pilot and tugboat services, mooring
and unmooring, docking and undocking, wharfage, erection and removal of keel
and side blocks, fire lines and fire watchmen, security watch, shore power supply,
cooling and ballast water supply, gas free inspection, crane and cherry picker
services, inspection and overhaul of safety equipment items.
67
INTERNAL USE ONLY
Vessel Financing
The traditional ship financing is obtained through bank loans where a ship-owner
contributes about 60%-80% towards purchase price of a ship in a form of equity
and the bank would finance the rest in form of bank loan. Such vessel specific bank
agreements are secured by liens on a vessel and contain various financial and
other covenants. Among those covenants are requirements that relate to the
financial position, operating performance and liquidity of a ship-owner in general or
off a ship-owning company. For example, under certain provisions of such loan
agreements a ship-owner is required to maintain a ratio of the fair market value of a
mortgaged vessel to the aggregate loan outstanding at the end of predetermined
period. Loan covenants might limit ship-owner’s selection of the management
company, type of vessel employment, and also might restrict payment of dividends,
change in ownership of the company, vessel sale and various other.
Many shipping companies have obtained equity financing from public markets from
the proceeds from initial public offering and follow-on or secondary equity securities
offerings. According to Capital Link Shipping, at the beginning of 2011 there were
193 publically traded global shipping, cruise and offshore companies, as follows by
stock exchange.
Table 6: Publically traded global shipping, cruise and offshore companies
Number of Listed
Stock Exchange
Companies
AIM- London Stock Exchange's international market for
2
smaller growing companies
ASE – Athens Stock Exchange 5
BRU - Euronext Brussels Stock Market 1
HKEX - Hong Kong Stock Exchange 8
LSE – London Stock Exchange 21
Milan Stock Exchange 1
NASDAQ - National Association of Securities Dealers
21
Automated Quotations of USA
NYSE – New York Stock Exchange 43
OBX - Oslo Stock Exchange 57
OMX AB (Aktiebolaget Optionsmäklarna/Helsinki Stock
11
Exchange) a Swedish-Finnish, part of NASDAQ group
SGX - Singapore Exchange Limited 23
USA markets have been the most favorable for shipping companies and have
attracted a large number of ship-owners to list, especially during 2004 – 2007 time
periods and continuing into 2010 to the lesser extent, including 23 Greek owned
shipping companies that listed during 2000’s. In 2010 only 3 shipping companies
have successfully completed their initial public offerings. Listing opportunities in the
USA have been continuing to be limited. Being listed in the USA makes a shipping
company subject to the various compliance and reporting requirements, such as
Securities and Exchange Commission (SEC) regulations, Sarbanes and Oxley Act
(SOX), taxation, Foreign Corrupt Practices Act (FCPA) and other. Therefore, some
private ship-owners have started turning to Asia for their equity financing, with
Hong Kong being as a potential new source of equity financing.
Lately, due to the financial services sector suffering from the global financial crisis
and banks being dependant on governmental support and unwilling to lend to the
ship-owners, as well as conventional equity markets being closed, the ship-owners
wanting to grow and benefit from the market decline by buying at a bottom have
turned to alternative sources of financing, such as high yield debt, convertible debt,
private placements, sales-leaseback transactions and other. Furthermore, a
number of companies have been forced to refinance or restructure their loan
facilities as a result of covenant breaches incurred, mostly loan to value ratios,
which resulted in banks charging higher interest rates or even willing to force
vessel sales.
68
INTERNAL USE ONLY
4. Appendix - Glossary of
Shipping Terms
69
INTERNAL USE ONLY
4. Appendix-Glossary of Shipping Terms 2

A
AAOSA- Always afloat or safe aground. The condition for a vessel whilst in port. Also NAABSA Not always afloat but safely
aground.
ABLE BODIED SEAMAN - A member of the deck crew who is able to perform all the duties of an experienced seamen;
certificated by examination; must have three years sea service. Also called Able Seamen and A.B.
ABS -American Bureau of Shipping: A U.S.-based private classification,or standards setting society for merchant ships and other
marine systems.
Accommodation unit - Fitted with cabins and catering facilities for offshore crews. Semisubmersible accommodation units are
ofte called "Flotels".
ADDENDUM- Additional terms at the end of a charter party.
ADMEASUREMENT- The confirmed or official dimensions of a ship.
AFT -In, near, or toward the stern of the vessel.
AGENCY FEE- A fee charged to the ship by the ship's agent, representing payment for services while the ship was in port.
Sometimes called attendance fee.
AHT (Anchor-handling tug) - Moves anchors and tow drilling vessels, lighters and similar.
AHTS (Anchor-handling Tug/Supply) - Combined supply and anchor-handling ship. Seismic ship: Conducts seismic surveys to
map geological structures beneath the sea bed.
AID -Agency for International Development.
ALLISION- The act if striking or collision of a moving vessel against a stationary object.
AID - Agency for International Development
AIMS - American Institute of Merchant Shipping.
AMC -American Maritime Congress.
API -American Petroleum Institute.
AWO -American Waterway Operators. The national trade association for the barge and towing industry and the shipyards
employed in the repair and construction of these craft.
AMIDSHIPS - Generally speaking the word amidships means in the middle portion of a vessel.
ARBITRATION- Method of settling disputes which is usually binding on parties. A clause usually in a charter party.
ARTICLES OF AGREEMENT - The document containing all particulars relating to the terms of agreement between the Master of
the vessel and the crew. Sometimes called ship's articles, shipping articles.
ASBA- American Shipbrokers Association
ASTERN - A backward direction in the line of a vessel's fore and aft line; behind. If a vessel moves backwards it is said to move
astern; opposite to ahead.
AT SEA - In marine insurance this phrase applies to a ship which is free from its moorings and ready to sail.
AUTOMATIC PILOT- An instrument designed to control automatically a vessel's steering gear so that she follows a pre-
determined track through the water.
B
BACKFREIGHT- The owners of a ship are entitled to payment as freight for merchandise returned through the fault of either the
consignees or the consignors. Such payment, which is over and above the normal freight, is called backfreight.
BACKHAUL- A deviation to move cargo on the return leg of a voyage for the purpose of minimizing ballast mileage and thereby
reducing transportation costs.
BACKLETTER- Where a seller/shipper issues a 'letter of indemnity' in favour of the carrier in exchange for a clean bill of lading.
May have only a limited value. Example: P & I problems.
BAF- Bunker adjustment factor
70
INTERNAL USE ONLY
BAGGED CARGO- Various kinds of commodities usually packed in sacks or in bags, such as sugar, cement, milk powder, onion,
grain, flour, etc.
BALE CAPACITY- Cubic capacity of a vessels holds to carry packaged dry cargo such as bales/pallets.
BALLAST - Heavy substances loaded by a vessel to improve stability, trimming, sea-keeping and to increase the immersion at
the propeller. Sea water ballast is commonly' loaded in most vessels in ballast tanks, positioned in compartments right at the
bottom and in some cases on the sides, called wing tanks. On a tanker, ballast is seawater that is taken into the cargo tanks to
submerge the vessel to a proper trim.
BALLAST BONUS- Compensation for relatively long ballast voyage
BALLAST MOVEMENT- A voyage or voyage leg made without any paying cargo in a vessel's tanks. To maintain proper stability,
trim, or draft, sea water is usually carried during such movements.
BALLAST TANK- Compartments at the bottom of a ship or on the sides which are filled with liquids for stability and to make the
ship seaworthy. Any shipboard tank or compartment on a tanker normally used for carrying salt water ballast. When these
compartments or tanks are not connected with the cargo system they are called segregated ballast tanks or systems.
BARE BOAT CHARTER- A charter in which the bare ship is chartered without crew; the charterer, for a stipulated sum taking
over the vessel for a stated period of time, with a minimum of restrictions; the charterer appoints the master and the crew and
pays all running expenses. See Demise Charter.
BAREBOAT CHARTER- Vessel contract where charterers take over all responsibility for the operation of the vessel and
expenses for a certain period of time.
BARGE -Flat-bottomed boat designed to carry cargo on inland waterways,usually without engines or crew accommodations.
Barges can be lashed together and either pushed or pulled by tugs, carrying cargo of 60,000 tons or more. Small barges for
carrying cargo between ship and shore are known as lighters.
BARGE ABOARD CATAMARAN - A way of loading cargo into large barges and then in turn loading the barges into a ship.
BARGE CARRIERS- Ships designed to carry either barges or containers exclusively, or some variable number of barges and
containers simultaneously. Currently this class includes two types of vessels, the LASH and the SEABEE.
BBB- Before breaking bulk. Refers to freight payments that must be received before discharge of a vessel commences.
B/d-Barrels per day (measure of petroleum production).
BEAM -The width of a ship. Also called breadth.
BENEFICIAL OWNERSHIP- Designates the owner who receives the benefits or profits from the operation.
BERTH CARGO- When a liner cargo vessel accepts extra cargo to fill up the empty space remaining.
BERTH C/P- Term used in a voyage charter party, e.g. vessel shall proceed to Berth 2 at Falmouth.
BILL OF LADING- A document by which the Master of a ship acknowledges having received in good order and condition (or the
reverse) certain specified goods consigned to him by some particular shipper, and binds himself to deliver them in similar
condition, unless the perils of the sea, fire or enemies prevent him, to the consignees of the shippers at the point of destination on
their paying him the stipulated freight. A bill of lading specifies the name of the master, the port and destination of the ship, the
goo4s, the consignee, and the rate of freight.
B/L - Bill of Lading
BLACK CARGO- Cargo banned by general cargo workers for some reason. This ban could be because the cargo is dangerous
or hazardous to health.
BLACK GANG - A slang expression referring to the personnel in the engine department aboard ship.
BLS - Bureau of Labor Statistics, Department of Labor.
B/N- Booking note
BOATSWAIN (BOSUN)- The highest unlicensed rating in the deck department who has immediate charge of all deck hands and
who in turn comes under the direct orders of the master or chief mate or mate.
BOILERS- Steam generating units used aboard ship to provide steam for propulsion (and) for heating and other auxiliary
purposes.
BOW THRUSTERS - A propeller at the lower sea-covered part of the bow of the ship which turns at right angles to the fore-and-
aft line and thus provides transverse thrust as a manoeuvering aid.
B/p or BOP - Balance of payments.
BREADTH- See Beam
BREAKBULK VESSEL- A general, multipurpose, cargo ship that carriers cargoes of nonuniform sizes, often on pallets, resulting
in labor-intensive loading and unloading; calls at various ports to pick up different kinds of cargoes.
BREAK BULK- The process of assimilating many small shipments into one large shipment at a central point so that economies of
scale may be achieved; to commence discharge of cargo.
BRIDGE -Used loosely to refer to the navigating section of the vessel where the wheel house and chart room are located; erected
structure amidships or aft or very rarely fore over the main deck of a ship to accommodate the wheelhouse.
71
INTERNAL USE ONLY
BROKERAGE- Percentage of freight payable to broker (by owners in c/p's) or applicable to sale or purchase.
BULK -Cargo shipped in loose condition and of a homogeneous nature.Cargoes that are shipped unpackaged either dry, such as
grain and ore, or liquid, such as petroleum products. Bulk service generally is not provided on a regularly scheduled basis, but
rather as needed, on specialized ships, transporting a specific commodity.
BULK CARRIER- Ship specifically designed to transport vast amounts of cargoes such as sugar, grain, wine, ore, chemicals,
liquefied natural gas; coal and oil. See also LNG Carrier, Tanker, OBO Ship.
BULKHEAD - A name given to any vertical partition which separates different compartments or spaces from one another.
BUNKERS- Fuel consumed by the engines of a ship; compartments or tanks in a ship for fuel storage.
BUOY - A floating object employed as an aid to mariners to mark the navigable limits of channels, their fairways, sunken dangers,
isolated rocks, telegraph cables, and the like; floating devices fixed in place at sea, lake or river as reference points for navigation
or for other purposes.
C
CABLE SHIP- A specially constructed ship for the laying and repairing of telegraph and telephone cables across channels, seas,
lakes, and oceans.
CABOTAGE -The carriage of goods or passengers for remuneration taken on at one point and discharged at another point within
the territory of the same country.
CABOTAGE POLICIES- Reservation of a country's coastal (domestic) shipping for its own flag vessels.
CAORF -Computer-Assisted Operations Research Facility: A MarAd R&D facility located at U.S. Merchant Marine Academy,
Kings Point,New York.
CAPESIZE- A vessel too large to pass through the Suez Canal.
CARGO HANDLING- The act of loading and discharging a cargo ship.
CARGO PLAN- A plan giving the quantities and description of the various grades carried in the ship's cargo tanks, after the
loading is completed.
CARGO PREFERENCE- Reserving a portion of a nation's imports and exports to national-flag vessels.
CARGO RETENTION CLAUSES- Clauses introduced by charterers based on shortage of delivered cargo because of increased
oil prices.
CARRIAGE OF GOODS BY SEA ACT - A law enacted in 1936 covering the transportation of merchandise by sea to or from
ports of the United States and in foreign trades.
CARRIERS- Owners or operators of vessels providing transportation to shippers. The term is also used to refer to the vessels.
CATAMARAN- A double or treble-hulled vessel constructed in wood, aluminum or reinforced glass fibre and is also composed of
two or three hulls diagonally joined together by various methods. Normally no ballast is needed to counteract the center buoyancy
since it enjoys good stability at sea.
CATUG -Short for Catamaran Tug. A rigid catamaran tug connected to a barge. When joined together, they form and look like a
single hull of sa ship; oceangoing integrated tug-barge vessels.
CATWALK - A raised bridge running fore and aft from the midship, and also called "walkway". It affords safe passage over the
pipelines and other deck obstructions.
CBF- Cubic feet
CBM- Cubic metres
CCC -Commodity Credit Corporation.
CCF -Capital Construction Fund: A tax benefit for operators of U.S.-built, U.S.-flag ships in the U.S. foreign, Great Lakes, or
noncontiguous domestic trades, by which taxes may be deferred on income deposited in a fund to be used for the replacement of
vessels.
CDS -Construction Differential Subsidy: A direct subsidy paid to U.S. shipyards building U.S.-flag ships to offset high construction
costs in American shipyards. An amount of subsidy (up to 50 percent) is determined by estimates of construction cost differentials
between U.S. and foreign yards.
CERTIFICATE OF REGISTRY - A document specifying the nation registry of the vessel.
C & F -Cost and Freight
C & I -Cost and Insurance
CHANDLER- A person who deals in the selling of provisions, dried stores,etc.
CHARTERER- The person to whom is given the use of the whole of the carrying capacity of a ship for the transportation of cargo
or passengers to a stated port for a specified time.
72
INTERNAL USE ONLY
CHARTER RATES - The tariff applied for chartering tonnage in a particular trade.
CHARTER PARTY- A contractual agreement between a ship owner and a cargo owner, usually arranged by a broker, whereby a
ship is chartered (hired) either for one voyage or a period of time.
Chemical tanker - Specially designed for the transport of chemicals.
CHIEF ENGINEER- The senior engineer officer responsible for the satisfactory working and upkeep of the main and auxiliary
machinery and boiler plant on board ship.
CHIEF MATE - The officer in the deck department next in rank to the master; second in command of a ship. He is next to the
master, most especially in the navigation and as far as the deck department is concerned. The chief mate assumes the position of
the Master in his absence.
C.I.F. - Cost, Insurance and Freight: Export term in which the price quoted by the exporter includes the costs of ocean
transportation to the port of destination and insurance coverage.
CLASSIFICATION SOCIETY- Worldwide experienced and reputable societies. which undertake to arrange inspections and
advise on the hull and machinery of a ship. A private organization that supervises vessels during their construction and afterward,
in respect to their seaworthiness, and the placing of vessels in grades or "classes" according to the society's rules for each
particular type. It is not compulsory by law that a shipowner have his vessel built according to the rules of any classification
society; but in practice, the difficulty in securing satisfactory insurance rates for an unclassed vessel makes it a commercial
obligation.
CLEAN SHIP- Refers to tankers which have their cargo tanks free of traces of dark persistent oils which remain after carrying
crudes and heavy fuel oils.
COA- Contract of affreightment
COASTWISE- Domestic shipping routes along a single coast.
CODE OF LINER CONDUCT (UNCTAD)- A convention drafted under the auspices of the United Nations Conference on Trade
and Development which provides that all shipping traffic between two foreign countries is to be regulated as far as the quantities
of shipments are concerned on the following percentages -- 40% for owners of the country of origin, 40% for owners of country of
destination, and 20% for owners of the country which is neither the origin nor the destination.
COGSA- Carriage of Goods by Sea
COLLIER- Vessel used for transporting coal.
COLLISION AVOIDANCE SYSTEM- Electronic system commonly used to prevent collisions in inland navigable waterways.
COLREG -Convention on International Regulations for Preventing Collisions at Sea.
COMBI -Combination passenger/cargo vessel; a vessel specifically designed to carry both containers and conventional cargoes.
Combined ships - Ships which can carry both liquid and dry bulk cargoes.
COMMISSION- See "Brokerage"
COMMON CARRIER- Holds himself out for hire to the general public. Must post rates and cannot discriminate against customers
whose cargo he is equipped to carry.
COMPLEMENT - The number of officers and crew employed upon a vessel for its safe navigation and operation.
CONFERENCE- An affiliation of shipowners operating over the same route(s) who agree to charge uniform rates and other terms
of carriage. A conference is "closed" if one can enter only by the consent of existing members of the conference. It is "open" if
anyone can enter by meeting certain technical and financial standards. Conference members are common carriers.
CONGESTIONS- Port/berth delays
CONSIGNEE - The person to whom cargo is consigned as stated on the bills of lading.
Construction unit - Equipped to assist during offshore construction and maintenance work.
CONSIGNOR- The person named in the bill of lading as the one from whom the goods have been received for shipment.
CONTAINER- A van, flatrack, open top trailer or other similar trailer body on or into which cargo is loaded and transported without
chassis aboard ocean vessels.; a large rectangular or square container/box of a strong structure that can withstand continuous
rough handling from ship to shore and back. It opens from one side to allow cargo to be stacked and stowed into it.
CONTAINER SHIP- A ship constructed in such a way that she can easily stack containers near and on top of each other as well
as on deck. A vessel designed to carry standard intermodal containers enabling efficient loading, unloading, and transport to and
from the vessel. Oceangoing merchant ship designed to transport a unit load of standard-sized containers 8 feet square and 20 or
40 feet long. The hull is divided into cells that are easily accessible through large hatches, and more containers can be loaded on
deck atop the closed hatches. Loading and unloading can proceed simultaneously using giant traveling cranes at special berths.
Container ships usually carry in the range of 25,000 to 50,000 deadweight tons. Whereas a general-cargo ship may spend as
much as 70 percent of its life in port loading and discharging cargo, a container ship can be turned around in 36 hours or less,
spending as little as 20 percent of its time in port. This ship type is the result of American design innovation. Specialized types of
container ships are the LASH and SeaBee which carry floating containers (or "lighters,") and RoRo ships, which may carry
containers on truck trailers.
73
INTERNAL USE ONLY
CONTRACT OF AFFREIGHTMENT (COA)- A service contract under which a ship owner agrees to transport a specified quantity
of fuel products or specialty products, at a specified rate per ton, between designated loading and discharge ports. This type
contract differs from a spot or consecutive voyage charter in that no particular vessel is. specified.
C/P- Charter Party
CPI -Consumer Price Index.
CREW -The personnel engaged on board ship, excluding the master and officers and the passengers on passenger ships.
CREW LIST- List prepared by the master of a ship showing the full names, nationality, passport or discharge book number, rank
and age of every officer and crew member engaged on board that ship. This serves as one of the essential ship's documents
which is always requested to be presented and handed over to the customs and immigration authorities when they board the
vessel on arrival.
CROSS-TRADES- Foreign-to-foreign trade carried by ships from a nation other than the two trading nations.
CRUDE OIL WASHING- A technique of cleaning tanks in oil tankers.
Cubic capacity - The most important commercial measurement when the intrinsic weight of the cargo is so low that the ship
becomes full without being loaded to the cargo line. Is expressed in cubic metres or cubic feet.
D
DANGEROUS CARGO- All substances of an inflammable nature which are liable to spontaneous combustion either in
themselves or when stowed adjacent to other substances and, when mixed with air, are liable to generate explosive gases or
produce suffocation or poisoning or tainting of foodstuffs.
DANGEROUS LIQUIDS- Liquids giving off inflammable vapors.
DAVITS -Two radial cranes on a ship which hold the lifeboats. They are constructed in such a way as to lower and lift the lifeboats
the easiest way possible and are also unobstructed in case of an emergency.
DEADFREICHT- Space booked by shipper or charterer on a vessel but not used
DEADFREIGHT FACTOR- Percentage of a ship's carrying capacity that is not utilized.
DEADWEIGHT/DWAT/DWCC- A common measure of ship carrying capacity. The number of tons (2240 lbs.) of cargo, stores and
bunkers that a vessel can transport. It is the difference between the number of tons of water a vessel displaces "light" and the
number of tons it displaces "when submerged to the 'deep load line'." A vessel's cargo capacity is less than its total deadweight
tonnage. The difference in weight between a vessel when it is fully loaded and when it is empty (in general transportation terms,
the net) measured by the water it displaces. This is the most common, and useful, measurement for shipping as it measures
cargo capacity.
DECK GANG- The officers and seamen comprising the deck department aboard ship. Also called deck crew, deck department, or
just deck.
DECKHAND- Seaman who works on the deck of a ship and remains in the wheelhouse attending to the orders of the duty officers
during navigation and manoeuvering. He also comes under the direct orders of the bosun.
DECK LOG -Also called Captain's Log. A full nautical record of a ship's voyage, written up at the end of each watch by the deck
officer on watch. The principal entries are: courses steered; distance run; compass variations, sea and weather conditions; ship's
position, principal headlands passed; names of lookouts, and any unusual position, principal headlands passed; names of
lookouts, and any unusual happenings such as fire, collision, and the like..
DECK OFFICER- As distinguished from engineer officer, refers to all officers who assist the master in navigating the vessel when
at sea, and supervise the handling of cargo when in port.
DECK HOUSE- Small superstructure on the top deck of a vessel which contains the helm and other navigational instruments.
DEEP SEA TRADES- The traffic routes of both cargo and passenger vessels which are regularly engaged on the high seas or on
long voyages.
DEEP STOWAGE- Any bulk, bagged or other type of cargo stowed in single hold ships.
DEMISE CHARTER- See Bareboat Charter.
DEMURRAGE -A fee levied by the shipping company upon the port or supplier for not loading or unloading the vessel by a
specified date agreed upon by contract. Usually, assessed upon a daily basis after the deadline.
DESPATCH- Time saved, reward for quick turnaround - in dry cargo only
DEVIATION- Vessel departure from specified voyage course
DISABLED SHIP- When a ship is unable to sail efficiently or in a seaworthy state as a result of engine trouble, lack of officers or
crew, damage to the hull or ship's gear.
DISCHARGES- An essential document for officers and seamen as it serves an official certificate confirming sea experience in the
employment for which he was engaged.
74
INTERNAL USE ONLY
DOD -Department of Defense.
DOE - Department of Energy
DOMESTIC OFFSHORE TRADES - Domestic shipping routes serving Alaska and non-continental U.S. States and territories.
DOT -Department of Transportation.
DOUBLE BOTTOM- General term for all watertight spaces contained between the outside bottom plating, the tank top and the
margin plate. The double bottoms are sub-divided into a number of separate tanks which may contain boiler feed water, drinking
water, fuel oil, ballast, etc.
DRAFT -The depth of a ship in the water. The vertical distance between the waterline and the keel, in the U.S. expressed in feet,
elsewhere in meters.
Drilling unit - Fitted with drilling rig (oil derrick with rotary drill and a mud pumping system), drilling for petroleum.
Drill Ship -: Regular ship shaped vessel, production ship. Positioned by anchors or dynamic positioning. Has its own propulsion
machinery.
DRY CARGO- Merchandise other than liquid carried in bulk.
DRY CARGO SHIP- Vessel which carriers all merchandise, excluding liquid in bulk.
DRY DOCK- An enclosed basin into which a ship is taken for underwater cleaning and repairing. It is fitted with water tight
entrance gates which when closed permit the dock to be pumped dry.
DUAL PURPOSE SHIP- Specially constructed ship able to carry different types of cargoes such as ore and/or oil.
DUNNAGE- A term applied to loose wood or other material used in a ship's hold for the protection of cargo.
DWT -Deadweight tons.
E
EEC -European Economic Community.
ENTRY -A customs form used for the clearance of ships or merchandise.
ETA- Estimated time of arrival
ETD- Estimated time of departure
EUSC -Effective U.S. Control.
EVEN KEEL- When the draft of a ship fore and aft are the same.
EXIMBANK- Export-Import Bank: A Federal agency that aids in financing exports of U.S. goods and services through direct loans,
loan guarantees, and insurance.
F
FAC- Fast as can
FACS -Federation of American Controlled Shipping.
FAS -Free Along Side (of ship).
FEDERAL MARITIME COMMISSION(FMC) - Authorized tariffs and rate-making procedures on conferences operating in the
United States.
FEEDER -A grain container or reservoir constructed around the hatchway between two decks of a ship which when filled with
grain automatically feeds or fills in the vacant areas in the lower holds.
FEU -Forty Foot Equivalent Units (Containers).
FHEX- Fridays, holidays excluded
FHINC- Fridays, holidays included
FIO -Free in and out.
FIOST- Free in and out, stowed and trimmed
FIREMAN- an unlicensed member of the engine, room staff whose duties consist in standing watch in the boiler room and
insuring the oil burning equipment is working properly.
FIRST REFUSAL- First attempt at best offer that can be matched
75
INTERNAL USE ONLY
FIXTURE- Conclusion of shipbrokers negotiations to charter a ship - an agreement
FLAGS OF CONVENIENCE- The registration of ships in a country whose tax on the profits of trading ships is low or whose
requirements concerning manning or maintenance are not stringent. Sometimes referred to as flags of necessity; denotes
registration of vessels in foreign nations that offer favorable tax structures and regulations; also the flag representing the nation
under whose jurisdiction a ship is registered. Ships are always registered under the laws of one nation but are not always required
to establish their home location in that country.
FLOATING OIL STORAGE- Oil stored on floating vessels. It has been the practice for oil to be stored in large laid-up oil tankers
in order to offset the loss involved while the tankers are inactive.
FMC -Federal Maritime Commission.
FO- Fuel oil/free out
FOB (FREE ON BOARD)- Cost of a product before transportation costs are figured in.
F.O.B. - Free on Board: Export term in which the price quoted by the exporter does not include the costs of ocean transportation,
but does include loading on board the vessel.
FORCE MAJEURE- Clause limiting responsibilities of charterers, shippers and receiver of cargo
FORECASTLE- The raised part of the forward end of a ship's hull. The inside space may be used for crew accommodation or
quarters, though on new ships this space is being used for the storage of paints, tackle, deck and engine stores, tarpaulins, etc.
FORWARD - At or in the direction of the bow. Also the fore part of the ship.
FREE PRATIQUE- Clearance by the Health Authorities
FREIGHT- Money payable on delivery of cargo in a mercantile condition.
FREIGHT FORWARDER- Arranges shipments for customers usually break bulk. Does not actually carry the cargo or conduct
business for the ship.
FREIGHT RATE- The charge made for the transportation of freight.
FRUSTRATION- Charterers when cancelling agreement sometimes quote 'doctrine of frustration' i.e. vessel is lost, extensive
delays .
G
GA- General Average
GANGWAY- A narrow portable platform used as a passage, by persons entering or leaving a vessel moored alongside a pier or
quay.
Gas tanker - Specially designed for the transport of condensed (liquefied) gases. The most important gases are: ammonia,
ethylene, LNG (Liquefied Natural Gas), which consists mainly of methane, and is cooled to a temperature of minus 163 degrees
Celcius, and LPG (Liquefied Petroleum Gas) such as butane and propane.
GATF -General Agreements on Tariffs and Trade
GDP -Gross Domestic Product: The total value of goods and services produced by a nation over a given period, usually 1 year.
GENERAL CARGO- A non-bulk oil cargo composed of miscellaneous goods.
GEOGRAPHICAL ROTATION- Ports in order of calling
GNP -Gross National Product: GDP plus the net income accruing from foreign sources.
GOVERNMENT IMPELLED- Cargo owned by or subsidized by the Federal Government.
GRAIN CAPACITY- Cubic capacity in 'grain"
GREAT LAKES PORTS- Ports in the lakes of Canada and/or USA popular for grain shipments. In Canada: Port Arthur and Fort
William in Lake Superior; Hamilton, Kingston, Toronto and Prescott in Lake Ontario. In USA: Chicago, Milwaukee in Lake
Michigan; Duluth and Superior in Lake Superior and Toledo in Lake Erie.
GREAT LAKES SHIP- Cargo ship developed to carry raw materials and manufactured goods on the Great Lakes. Most carry bulk
cargoes of grain, iron ore or coal.
GROSS FREIGHT- Freight money collected or to be collected without calculating the expenses relating to the running cost of the
ship for the voyage undertaken.
Gross and Net tonnage (GT and NT) - Gross tonnage is the basis on which manning rules and safety regulations are applied,
and registration fees are reckoned. Port fees are also often reckoned on the basis of GT and NT. GT and NT are defined
according to formulas which take account, among other things, of the volume of the vessel's enclosed spaces (GT) and the
volume of its holds (NT).
76
INTERNAL USE ONLY
GROSS REGISTERED TONS- A common measurement of the internal volume of a ship with certain spaces excluded. One ton
equals 100 cubic feet; the total of all the enclosed spaces within a ship expressed in tons each of which is equivalent to 100 cubic
feet.
GROUNDING -Deliberate contact by a ship with the bottom while she is moored or anchored as a result of the water level
dropping.
H
HAGUE RULES- Code of minimum conditions for the carriage of cargo under a bill of lading
HARBOR DUES- Various local charges against all seagoing vessels entering a harbor, to cover maintenance of channel depths,
buoys, lights, etc. all harbors do not necessarily have this charge.
HARBOR MASTER- A person usually having the experience of a certificated master mariner and having a good knowledge of the
characteristics of the port and its whole area. He administers the entire shipping movements that take place in and within reach of
the port he is responsible for.
HARD AGROUND- A vessel which has gone aground and is incapable of refloating under her own power.
HARD CURRENCY- A currency which is sound enough to be accepted internationally and which is usually fully convertible.
HARTER ACT- (1893). This U.S. statute refers to merchandise or property transported from or between ports of the United States
and foreign ports. Now partially superseded by the US Carriage of Goods by Sea Act of 1936.
HATCH -An opening, generally rectangular, in a ship's deck affording access into the compartment below.
HAWSER -Large strong rope used for towing purposes and for securing or mooring ships. Hawsers are now mostly made of
steel.
HELM - A tiller or a wheel generally installed on the bridge or wheelhouse of a ship to turn the rudder during manoeuvering and
navigation. It is in fact the steering wheel of the ship.
HOISTING ROPE - Special flexible wire rope for lifting purposes, generally being of six strands with 19 wires in each strand and in
most cases having a hemp rope at the center.
HIRE- T/C remuneration
HOLD - A general name for the spaces below the main deck designated for stowage of general cargo. A hold on a tanker is
usually just forward of #1 cargo tank. Some newer tankers have no hold.
HOVERCRAFT- A vessel used for the transportation of passengers and cargo riding on a cushion of air formed under it. It is very
maneuverable and is also amphibious.
HULL -Shell or body of a ship.
HYDROFOIL - A craft more or less similar to the Hovercraft insofar as it flies over water and thus eliminates friction between the
water and the hull. Under acceleration it rises above water but remains in contact with the surface through supporting legs.
I
ILO -International Labor Organization; Based in Geneva, it is one of the oldest components of the UN system of specialized
agencies and has been involved over the years in appraising and seeking to improve and regulate conditions for seafarers. In its
unusual tripartite way, involving official representatives of government, employer and employee interests, its joint Maritime
Commission have had in hand moves on the employment of foreign seafarers to urge the application of minimum labor standards,
on crew accommodation, accident prevention, medical examination and medical care, food and catering and officers
competency..
IMDG -International Maritime Dangerous Goods Code.
IMF -International Monetary Fund.
IMO -International Maritime Organization: Formerly known as the Inter-Governmental Maritime Consultative Organization (IMCO),
was established in 1958 through the United Nations to coordinate international maritime safety and related practices.
INERT GAS SYSTEM -A system of preventing any explosion in the cargo tanks of a tanker by replacing the cargo, as it is
pumped out, by an inert gas, often the exhaust of the ship's engine. Gas-freeing must be carried out subsequently if worker have
to enter the empty tanks.
INFLAMMABLE LIQUIDS- Liquids liable to spontaneous combustion which give off inflammable vapors at or below 80 degrees F.
For example, ether, ethyl, benzine, gasoline, paints, enamels, carbon disulfide, etc.
INLAND WATERS- Term referring to lakes, streams, rivers, canals, waterways, inlets, bays and the like.
INMARSAT- International Maritime Satellite System.
77
INTERNAL USE ONLY
INTEGRATED TUG BARGE- A large barge of about 600 feet and 22,000 tons cargo capacity, integrated from the rear on to the
bow of a tug purposely constructed to push the barge.
INTERCOASTAL- Domestic shipping routes serving more than one coast.
INTERMODALISM- The concept of transportation as a door-to-door service rather than port-to-port. Thus efficiency is enhanced
by having a single carrier coordinating the movement and documentation among different modes of transportation.
INTERNATIONAL LOAD LINE CERTIFICATE - A certificate which gives details of a ship's freeboards and states that the ship
has been surveyed and the appropriate load lines marked on her sides. This certificate is issued by a classification society or the
Coast Guard.
INTERNATIONAL OIL POLLUTION COMPENSATION FUND - An inter-governmental agency designed to pay compensation for
oil pollution damage, exceeding the shipowner's liability. It was created by an IMO Convention in 1971 and started its operations
in October 1978. Contributions come mainly from the oil companies of member states.
INTERNATIONAL TONNAGE CERTIFICATE - A certificate issued to a shipowner by a government department in the case of a
ship whose gross and net tonnages have been determined in accordance with the International Convention of Tonnage
Measurement of Ships. The certificate states the gross and net tonnages together with details of the spaces attributed to each.
INTERNATIONAL WATERWAYS - Consist of international straits, inland and interocean canals and rivers where they separate
the territories of two or more nations. Provided no treaty is enforced both merchant ships and warships have the right of free and
unrestricted navigation through these waterways.
INTERTANKO- An association of independent tanker owners whose aims are to represent the views of its members
internationally.
INTRACOASTAL- Domestic shipping routes along a single coast.
ITF- International Transport Workers Federation (Trade Unions)
ITINERARY- Route/Schedule
IWL- Institute Warrant Limits
J
Jackup - A deck with legs that can be jacked up or down. During operations, the legs rest on the sea-bed. When the rig is moved,
the legs are retracted, leaving the rig floating. A jackup has normally no propulsion machinery of its own.
JONES ACT- Merchant Marine Act of 1920, Section 27, requiring that all U.S. domestic waterborne trade be carried by U.S.-flag,
U.S.-built, and U.S.-manned vessels.
K
KEEL -The lowest longitudinal timber of a vessel, on which framework of the whole is built up; combination of iron plates serving
same purpose in iron vessel.
KNOT - Unit of speed in navigation which is the rate of nautical mile (6,080 feet or 1,852 meters) per hour.
LAID-UP TONNAGE- Ships not in active service; a ship which is out of commission for fitting out, awaiting better markets,
needing work for classification, etc.
LAKER -Type of ship which trades only in the Great Lakes of North America. They usually carry grain and ore cargoes.
LANDBRIDGE - A system of through rates and service offered by a carrier for cargo shipments from a foreign port to a U.S. port,
across U.S. land to another U.S. port and finally by sea to a foreign port destination.
LASH -Lighter aboard ship: A barge carrier designed to act as a shuttle between ports, taking on and discharging barges.
LASH SHIPS -LASH stand for Lighter Aboard Ship. It is a specialized container ship carrying very large floating containers, or
"lighters." The ship carries its own massive crane, which loads and discharges the containers over the stern. The lighters each
have a capacity of 400 tons and are stowed in the holds and on deck. While, the ship is at sea with one set of lighters, further sets
can be made ready. Loading and discharge are rapid at about 15 minutes per lighter, no port or dock facilities are needed, and
the lighters can be grouped for pushing by towboats along inland waterways.
LAY/CAN- Laydays/cancelling
LAYTIME -Time allowed by the shipowner to the voyage charterer or bill of lading holder in which to load and/or discharge the
cargo. It is expressed as a number of days or hours or as a number of tons per day.
LAY-UP -Temporary cessation of trading of a ship by a shipowner during a period when there is a surplus of ships in relation to
the level of available cargoes. This surplus, known as overtonnaging, has the effect of depressing freight rates to the extent that
some shipowners no long find it economical to trade their ship, preferring to lay them up until there is a reversal in the trend.
78
INTERNAL USE ONLY
L/C- Letter of credit
LESS THAN CONTAINER LOAD- A consignment of cargo which is inefficient to fill a shipping container. It is grouped with other
consignments for the same destination in a container at a container freight station.
LIFEBOAT- A specially constructed double ended boat which can withstand heavy, rough seas.
LIFEBOAT DRILL- The master of every vessel is bound by international law to make the officers, crew and passengers
adequately acquainted with the procedures of lowering and the use of lifeboats in case of emergency.
LIGHT DISPLACEMENT TONNAGE- The weight of a ship's hull, machinery, equipment and spares.This is often the basis on
which ships are paid for when purchased for scrapping. The difference between the loaded displacement and light displacement
is the ship's deadweight.
LIGHTER- General name for a broad, flat-bottomed boat used in transporting cargo between a vessel and the shore. The
distinction between a lighter and a barge is more in the manner of use than in equipment. The term "lighter" refers to a short haul,
generally in connection with loading and unloading operations of vessels in harbor while the term "barge" is more often used when
the cargo is being carried to its destination over a long distance.
LIGHTER ABOARD SHIP- An ocean ship which carries barges. These barges are loaded with cargo, often at a variety of
locations, towed to the ocean ship, sometimes referred to as the mother ship, and lifted or, in some cases, floated on board. After
the ocean crossing, the barges are off-loaded and towed to their various destinations. The ocean ship then receives a further set
of barges which have been assembled in readiness. This concept was designed to eliminate the need for specialized port
equipment and to avoid transshipment with its consequent extra cost.
LIGHTERAGE- Charge for conveying cargo by lighters or barges.
LIGHTERING- Conveying cargo with another vessel known as a lighter from ship to shore, or vice versa.
LIEN- Retention of property until outstanding dept is paid
LINER -A cargo-carrying ship which is operated between scheduled,advertised ports of loading and discharge on a regular basis.
LINER SERVICE- Vessels operating on fixed itineraries or regular schedules and established rates available to all shippers. The
freight rates which are charged are based on the shipping company's tariff or if the company is a member of a liner conference,
the tariff of that conference.
LLOYD'S REGISTER OF SHIPPING -British classification society.
LNG -Liquefied Natural Gas, or a carrier of LNG.
LNG CARRIER - Liquefied natural gas carrier, perhaps the most sophisticated of all commercial ships. The cargo tanks are made
of a special aluminum alloy and are heavily insulated to carry natural gas in its liquid state at a temperature of -2850F. The LNG
ship costs about twice as much as an oil tanker of the same size.
LOAD FACTOR- Percentage of cargo or passengers carried e.g. 4000 tons carried on a vessel of 10000 capacity has a load
factor of 40%
LOAD LINE - The line on a vessel indicating the maximum depth to which that vessel can sink when loaded with cargo. Also
known as marks.
LOADED LEG - Subdivision of a ship's voyage during which the ship is carrying cargo.
LOF- Lloyds open form
LOI- Letter of indemnity
LONG TON- 2,240 pounds.
LOOKOUT -A member of the crew stationed on the forecastle, or on the bridge, whose duty it is to watch for any dangerous
objects or for any other vessels heaving into sight.
LPG -Liquefied Petroleum Gas, or a carrier of LPG.
LSA -Liner Shipping Agreements.
LT- Long Ton = 1016.05 kilogram
L/T -Long tons (2,240 lbs.).
LUMPSUM FREIGHT- Money paid to shipper for charter of a ship (or portion) up to stated limit irrespective of quantity of cargo
79
INTERNAL USE ONLY
M
MAIN DECK- The main continuous deck of a ship running from fore to aft; the principle deck; the deck from which the freeboard is
determined.
MANIFEST -A document containing a full list of the ship's cargo, extracted from the bills of lading.
MANNING SCALES- The minimum number of officers and crew members that can be engaged on a ship to be considered as
sufficient hands with practical ability to meet every possible eventuality at sea.
DECK DEPARTMENT LICENSED
MASTER (CAPTAIN)
- Highest officer aboard ship. Oversees all ship operations. Keeps ships records. Handles accounting and bookkeeping. Takes
command of vessel in inclement weather and in crowded or narrow waters. Handles communications. Receives and implements
instructions from home office.
FIRST MATE (CHIEF MATE)
- In charge of four to eight watch. Directly responsible for all deck operations (cargo storage and handling, deck maintenance deck
supplies). Assigns and checks deck department overtime. Ship's medical officer.
SECOND MATE
-In charge of twelve to four watch. Ships navigation officer. Keeps charts (maps) up to date and monitors navigation equipment on
bridge.
THIRD MATE
-In charge of eight to twelve watch. Makes sure emergency survival equipment (lifeboats, life rings, etc.) are in order. Assists
other officers as directed.
ENGINE DEPARTMENT LICENSED
CHIEF ENGINEER
- Head of engineer department. Keeps records of all engine parts and repairs. Generally tends to the functioning of all mechanical
equipment on ship.Calculates fuel and water consumption and requirements.Coordinates operations with shoreside port engineer.
FIRST ASSISTANT ENGINEER
- In charge of four to eight watch. Usually works from eight to four handling engine maintenance. Assigns duties to unlicensed
personnel and monitors and records overtime. Consults with Chief regarding work priorities.
SECOND ASSISTANT ENGINEER
- In charge of twelve to four watch. On steam vessels has responsibility for the boilers, on diesels, the evaporators and the
auxiliary equipment.
THIRD ASSISTANT ENGINEER
- In charge of eight to twelve watch. Maintains lighting fixtures. Repairs malfunctioning accessories in living quarters. Assist other
engineers as directed.
DECK DEPARTMENT UNLICENSED
BOATSWAIN (BOSUN)
- Receives working orders for deck gang from chief mate and passes them onto AB's and ordinaries. Tantamount to foreman, he
is on deck directly supervising maintenance operations.
SHIPS CHAIRMAN (SHOP STEWARD)
- In charge of union business for unlicensed personnel. Handles grievances.
ABLE SEAMEN (AB)
- Stand watch, during which they steer the vessel, stand lookout, assist the mate on watch and make rounds of the ship to insure
that all is in order. They also tie up and untie the vessel to and from the dock and maintain the equipment on deck.
ORDINARY SEAMAN (OS)
- An apprentice AB, assists AB's bosun, and officers, keeps facilities clean.
ENGINE DEPARTMENT UNLICENSED
PUMPMAN AND ELECTRICIAN - QUALIFIED MEMBERS OF THE ENGINE DEPARTMENT (Q.M.E.D.)
-Trained in all crafts necessary to engine maintenance (welding, refrigeration, lathe operation, die casting,electricity, pumping,
water purification, oiling,evaluating engine gauges, etc.) Usually watchstanders but on some ships day workers.
PUMPMAN (TANKERS)
80
INTERNAL USE ONLY
-Operates pumps and discharges petroleum products.Maintains and repairs all cargo handling equipment.
EQUIPMENT (LINERS)
- Maintains and repairs cargo handling equipment and also cargo with special handling characteristics.
WIPERS
- Apprentice QMED. Cleans engine room. Assists officers and QMED's.
STEWARD DEPARTMENT
CHIEF STEWARD
-Orders food. Prepares menus. Assists chief cook in food preparation.
COOK AND BAKER (CHIEF COOK)
- Cooks and bakes.
STEWARD ASSISTANT
-Clean galley and mess halls, set tables, prepare salads,clean living quarters.
RADIO DEPARTMENT
RADIO OPERATOR
- Maintains and monitors radio, sends and receives messages. Often maintains electronic navigation equipment.
MARITIME ADMINISTRATION (MARAD )- Oversees subsidy programs to the United States Merchant Marine.Assigns routes to
subsidized liners.
MARITIME LIEN- A claim which attaches to the res, i.e., the ship,. freight, or cargo.
MARITIME SUBSIDY BOARD (MSB)- A branch within the Maritime Administration which deals with Operating Differential
Subsidy and Construction Differential Subsidy.
MARPOL 73/78- The International Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of
1978.
MASTHEAD LIGHT- A white light positioned over the fore and aft centerline of the vessel.
MIB -Marine Index Bureau.
MFN -Most Favored Nation.
MINILAND BRIDGE -The process of taking inland cargo bound for export to the coast by rail and loading it directly to the ship.
MIRAID -Maritime Institute for Research and Industrial Development.
MIXED SHIPMENT- A shipment consisting of more than one commodity, articles described under more than one class or
commodity rate item in a tariff.
MICROBRIDGE- A system of through rates and service offered by a carrier for cargo shipments from any inland U.S. location to a
port, by sea to a foreign port and finally overland to foreign inland destination.
MOA- Memorandum of agreement
MODU -Mobile Offshore Drilling Unit.
MOORING LINE -A cable or line to tie up a ship.
MORTGAGE- Loan issued against some security
MSB -Maritime Subsidy Board.
M/T -Metric tons (2,250 lbs.).
MTC -Maritime Transport Committee, OECD
MULTIPURPOSE SHIP- Any ship capable of carrying different types of cargo which require different methods of handling. There
are several types of ships falling into this category, for example, ships which can carry roll on/roll off cargo together with
containers
N
NATIONAL CARGO BUREAU- A private organization having representatives throughout the main harbors in the U.S. It is
empowered to inspect cargoes of a hazardous nature and issue certificates which are automatically approved by the Coast
Guard.
NATIONAL FLAG -The flag carried by a ship to show her nationality.
NEOBULK -Shipments consisting entirely of units of a single commodity,such as cars, lumber, or scrap metal.
81
INTERNAL USE ONLY
NET CAPACITY- The number of tons of cargo which a vessel can carry when loaded in salt water to her summer freeboard
marks. Also called cargo carrying capacity, cargo deadweight, useful deadweight.
NATIONAL CARGO BUREAU- A private organization having representatives throughout the main harbors in the U.S. It is
empowered to inspect cargoes of a hazardous nature and issue certificates which are automatically approved by the Coast
Guard.
NATIONAL FLAG -The flag carried by a ship to show her nationality.
NEOBULK- Shipments consisting entirely of units of a single commodity,such as cars, lumber, or scrap metal.
NET CAPACITY- The number of tons of cargo which a vessel can carry when loaded in salt water to her summer freeboard
marks. Also called cargo carrying capacity, cargo deadweight, useful deadweight.
NET TONNAGE- Equals gross tonnage minus deductions for space occupied by crew accommodations, machinery, navigation
equipment and bunkers.It represents space available for cargo (and passengers). Canal tolls are based on net (registered)
tonnage.
NON-CONFERENCE LINE- A shipping line which operates on a route served by a liner conference but which is not a member of
that conference.
NONCONTIGUOUS- Domestic shipping routes serving Alaska and non-continental U.S. States and territories.
NOR- Notice of readiness
NORSKE VERITAS- Norwegian classification society.
NRT -Net registered tons. This tonnage is frequently shown on ship registration papers; it represents the volumetric area available
for cargo at 100 cubic feet = 1 ton. It often is used by port and canal authorities as a basis for charges.
NVO -Non-vessel-operating common carrier, a ships agent, conducts business for the ship but does not operate the vessel.
O
OBO- Ore/bulk/oil vessel
OBO SHIP- A multipurpose ship that can carry ore, heavy dry bulk goods and oil. Although more expensive to build, they
ultimately are more economical because they can make return journeys with cargo rather than empty as single-purpose ships
often must.
OCEAN WAYBILL- A document, issued by a shipping line to a shipper which serves as a receipt for the goods and evidence of
the contract carriage.
ODS -Operating Differential Subsidy: A direct subsidy paid to U.S.-flag operators to offset the high operating cost of U.S.-flag
ships when compared to foreign-flag counterparts.
OECD -Organization for Economic Cooperation and Development. The Maritime Transport Committee is part of this organization.
OFF-HIRE CLAUSE -In a time charter, the owner is entitled to a limited time for his vessel to be off hire until such time as the
vessel may be repaired or dry-docked.
OFFICER -Any of the licensed members of the ship's complement.
OFF-LOAD- Discharge of cargo from a ship.
Offshore service vessels - Special vessels employed in exploration for, development of or continuous production of, subsea oil
and gas.
OILER -An unlicensed member of the engine room staff who oils and greases bearings and moving parts of the main engine and
auxiliaries. Most of this work is now done automatically and the oiler merely insures it operates correctly.
OIL RECORD BOOK- A book or log kept by the master of an oil tanker wherein every discharge or escape of oil is recorded.
OIL TANKER- A ship designed for the carriage of oil in bulk, her cargo space consisting of several or many tanks. Tankers load
their cargo by gravity from the shore or by shore pumps and discharge using their own pumps.
OPEN RATES- Pricing systems that are flexible and not subject to conference approval. Usually applied to products in which
tramps are substituted for liners.
OPEN REGISTRY- A term used in place of "flag of convenience" or "flag of necessity" to denote registry in a country which offers
favorable tax, regulatory, and other incentives to ship owners from other nations.
ORE CARRIER- A large ship designed to be used for the carnage of ore.Because of the high density of ore, ore carriers have a
relatively high center of gravity to prevent them being still when at sea, that is, rolling heavily with possible stress to the hull.
ORE-BULK-OIL CARRIER- A large multi-purpose ship designed to carry cargoes wither of ore or other bulk commodities or oil so
as to reduce the time the ship would be in ballast if restricted to one type of commodity. This type of ship is sometimes called
bulk-oil carrier.
ORE-OIL CARRIER- A ship designed to carry either ore or oil in bulk.
82
INTERNAL USE ONLY
ORDINARY SEAMAN - A deck crew member who is subordinate to the Able Bodied Seamen.
OVERTONNAGING- A situation where there are too many ships generally or in a particular trade for the level of available
cargoes.
P
PALLET -A flat tray, generally made of wood but occasionally of steel, on which goods particularly those in boxes, cartons or
bags, can be stacked. Its purpose is to facilitate the movement of such goods, mainly by the use of forklift trucks.
PANAMAX- A vessel designed to be just small enough to transit the Panama Canal
PASSENGER SHIP- A passenger ship that its authorized to carry over twelve passengers.
PER CONTAINER RATE- Rates and/or changes on shipments transported in containers or trailers and rated on the basis of the
category of the container or trailer.
PERSONAL FLOATATION DEVICE- Approved floats meant as life preservers and carried on board American ships.
P & I- Protection and indemnity insurance
PILOT -A person who is qualified to assist the master of a ship to navigate when entering or leaving a port.
PILOTAGE- The act carried out by a pilot of assisting the master of a ship in navigation when entering or leaving a port.
Sometimes used to define the fee payable for the services of a pilot.
PILOTAGE DUES -A fee payable by the owner or operator of a ship for the services of a pilot. This fee is normally based on the
ship's tonnage.
PILOT HOUSE- The enclosed space on the navigating bridge from which a ship is controlled when under way.
P.L. 480- Agricultural Trade Development and Assistance Act of 1954.
P.L. 664- Mandates that 50 percent of government impelled cargoes be carried under U.S. flag. Known as the 50/50 shipping law.
PMA -Pacific Maritime Association.
POOLING- The sharing of cargo or the profit or loss from freight by member lines of a liner conference. Pooling arrangements do
not exist in all conferences.
PORT CIP- Contracts with berth CIP. NOR can be given when within commercial limits of the port
POST-PANAMAX- A vessel to wide to pass through the Panama Canal.
PR-17 -Public Resolution which requires that U.S. Government financed cargoes (Eximbank) must be shipped 100% in U.S. flag
ships, but that the requirement may be waived up to 50% in some cases.
PREAMBLE- Introduction to a Charter Party
PRODUCT CARRIER- A tanker which is generally below 70,000 deadweight tons and used to carry refined oil products from the
refinery to the consumer. In many cases, four different grades of oil can be handled simultaneously.
Production unit - Equipped to extract petroleum, e.g. oil production ship.
PROFORMA ACC- Estimated account
PROPANE CARRIER- A ship designed to carry propane in liquid form. The propane is carried in tanks within the holds; it remains
in liquid form by means of pressure and refrigeration. Such ships are also suitable for the carriage of butane.
PSV (Platform Supply Vessel) - Carries supplies to drilling units or installations during field de-velopment or production.
PUMPMAN- A rating who tends to the pumps of an oil tanker.
PURSER -A ship's officer who is in charge of accounts, especially on a passenger ship.
Q
QUALIFIED MEMBER OF THE ENGINE DEPARTMENT(OMED) - Unlicensed members of the engine department who attend to
a fully automated engine room.
OUARTERMASTER/HELMSMAN -An able-bodied seamen entrusted with the steering of a vessel.
QUARTERS -Accommodations.
RADIO OPERATOR- An officer who operates and controls the shipboard communication equipment.
RECAP- Recapitulation of the terms and conditions agreed
83
INTERNAL USE ONLY
REEFER -Refrigerator ship; a vessel designed to carry goods requiring refrigeration, such as meat and fruit. A reefer ship has
insulated holds into which cold air is passed at the temperature appropriate to the goods being carried.
REEFER BOX- An insulated shipping container designed to carry cargoes requiring temperature control. It is fitted with a
refrigeration unit which is connected to the carrying ship's electrical power supply.
RETURN CARGO -A cargo which enables a ship to return loaded to the port or area where her previous cargo was loaded.
REVERSIBLE -TIME- Option for charterers to add together time allowed for loading & discharging relative to terms of a particular
charter party
ROLLING CARGO - Cargo which is on wheels, such as truck or trailers, and which can be driven or towed on to a ship.
RO/RO SHIP- Freight ship or ferry with facilities for vehicles to drive on and off (roll-on roll-off); a system of loading and
discharging a ship whereby the cargo is driven on and off on ramps. Equipped with large openings at bow and stern and
sometimes also in the side, the ship permits rapid loading and discharge with hydraulically operated ramps providing easy access.
Fully loaded trucks or trailers carrying containers are accommodated on the deck.
S
SALVAGE- The property which has been recovered from a wrecked vessel, or the recovery of the vessel herself.
SB- Safe berth
SEABEE -Sea-barge, a barge carrier design similar to "LASH" but which uses rollers to move the barges aboard the ship; the
self-propelled loaded barges are themselves loaded on board as cargo and are considerably larger than those loaded on LASH
ships.
SEA TRIALS- A series of trials conducted by the builders during which the owner's representatives on board act in a consulting
and checking capacity to determine if the vessel has met the specifications.
SEA WORTHINESS- The sufficiency of a vessel in materials construction,equipment, crew and outfit for the trade in which it is
employed.Any sort of disrepair to the vessel by which the cargo may suffer -- overloading, untrained officers, etc., may constitute
a vessel unseaworthy.
SEAWORTHINESS- Statement on the condition of the vessel . It has valid certificates, is fully equipped and manned
SEAWORTHINESS CERTIFICATE- A certificate issued by a classification society surveyor to allow a vessel to proceed after she
has met with a mishap that may have affected its seaworthiness. It is frequently issued to enable a vessel to proceed, after
temporary repairs have been effected, to another port where permanent repairs are then carried out.
SELF-SUSTAINING SHIP- A containership which has her own crane for loading and discharging shipping containers enabling the
ship to serve ports which do not have suitable lifting equipment.
SELF-TRIMMING SHIP - A ship whose holds re shaped in such a way that the cargo levels itself.
SELF-UNLOADER- A bulk carrier which is equipped with gear for unloading cargo.
Semisubmersible - Deck supported by pillars, fastened to pontoons. The pontoons are half submerged during operations. Kept in
position by anchors (or by dynamic positioning). Normally equipped with its own propulsion machinery.
SHEX- Sundays, holidays excluded
SHIFTING- This refers to movements or changing positions of cargo from one place to another. This can easily endanger the
seaworthiness or cargoworthiness of the ship.
SHINC- Sundays, holidays, included
SHIP'S ARTICLES- A written agreement between the master of a ship and the crew concerning their employment. It includes
rates of pay and capacity of each crewman, the date of commencement of the voyage and its duration.
SHIP'S STABILITY- The seaworthiness of a ship regarding the centrifugal force which enables her to remain upright.
SHIP'S AGENT- A person or firm who transacts all business in a port on behalf of shipowners or charterers. Also called shipping
agent; agent.
SHIPPERS- Individuals or businesses who purchase transportation services or commodities.
SHIPPER'S COUNCIL- An organization of shippers formed to collectively and services with the conferences of ship operators.
SHORT TON- 2,000 pounds.
SISTER SHIPS -Ships built on the same design.
SIU -Seafarers International Union.
SLOP TANK- A tank in a tanker into which slops are pumped. These represent a residue of the ship's cargo of oil together with
the water used to clean the cargo tanks. They are left to separate out in the slop tank.
SOFT CURRENCY- Currency which is not fully convertible to all currencies but only to some other soft currencies.
84
INTERNAL USE ONLY
SOLAS -Safety of Life a Sea Convention
SP- Safe port
SPOT (VOYAGE)- A charter for a particular vessel to move a single cargo between specified loading port(s) and discharge port(s)
in the immediate future. Contract rate ("spot" rate) covers total operating expenses, i.e., bunkers, port charges, canal tolls, crew's
wages and food, insurance and repairs. Cargo owner absorbs, in addition, any expenses specifically levied against the cargo.
S.S. - Steamship.
ST- Short ton
S/T -Short tons (2,000 lbs.).
Stand-by vessel - Stationed near an offshore in-stallation, responsible for evacuating its crew in emergencies. Also performs
continuous guard function, warning other vessels to keep their distance from installations, etc.
STARBOARD- The right-hand side of a ship when facing the front or forward end. The starboard side of a ship during darkness is
indicated by a green light.
STATION BILL- A list which shows the vessel's complement and details their various duties in connection with fire and boat drills.
STEM- Subject to enough cargo
STERN -(Noun) The upright post or bar of the bow of a vessel.
STERNWAY- The reverse movement of a vessel.
STORE -A general term for provisions, materials and supplies used aboard ship for the maintenance of the crew, and for the
navigation, propulsion and upkeep of the vessel and its equipment.
STOWAGE- The placing of goods in a ship in such a way as to ensure the safety and stability of the ship not only on a sea or
ocean passage but also in between ports when parts of the cargo have been loaded or discharged.
STOWAGE FACTOR- Cubic space (measurement tons occupied by one tonne (2204 lbs or 1000 kgs of cargo))
STRANDING -The running of a ship on shore on a beach.
SUBJECT TO- Depending upon as a condition
T
TAIL SHAFT- The extreme section at the aft end of a ship's propeller shaft.
TANK-BARGE- A river barge designed for the carriage of liquid bulk cargoes.
TANK CLEANING- Removal of all traces of a cargo from the tanks of a tanker normally by means of high pressure water jets.
TANKER -A tanker is a bulk carrier designed to transport liquid cargo, most often petroleum products. Oil tankers vary in size
from small coastal vessels of 1,500 tons deadweight, through medium-sized ship of 60,000 tons, to the giant VLCCs (very large
crude carriers).
Tariff Act of 1930 (P.L. 361)- imposes a 50-percent tariff on maintenance and repair work done on U.S.-flag vessels in foreign
shipyards. Also, U.S.-flag vessels must either be built in the United States or have been a U.S.-flag vessel for at least 3 years to
be eligible to carry preference cargo.
TBN- To be named/to be nominated
T/C- Time charter
T/C EQUIVALENT- Revenue per day
TERRITORIAL WATERS- That portion of the sea up to a limited instance which is immediately adjacent to the shores of any
country and over which the sovereignty and exclusive jurisdiction of that country extend.
T.E.U. -Twenty Foot Equivalent Unit (containers): A measurement of cargo-carrying capacity on a containership, referring to a
common container size of 20 ft in length.
TI -Transportation Institute, a non-profit organization devoted to maritime research and education.
TIME BAR- Time after which legal claims will not be entertained
TIME CHARTER- A form of charter party wherein owner lets or leases his vessel and crew to the charterer for a stipulated period
of time. The charterer pays for the bunkers and port charges in addition to the charter hire.
TITLE XI- A ship financing guarantee program.
TON MILE- A measurement used in the economics of transportation to designate one ton being moved one mile. This is useful to
the shipper because it includes the distance to move a commodity in the calculation.
TONNAGE- Deadweight, gross, net, displacement.
85
INTERNAL USE ONLY
TONNAGE- A quantity of cargo normally expressed as a number of tons.
TOP-OFF- To fill a ship which is already partly loaded with cargo.
TOW -When one or more vessels are being towed; when a tug is towing one or more floating objects; to pull an object in the water
by means of a rope.
TOWAGE -Charges for the services of tugs assisting a ship or other vessels in ports or other locations; the act of towing a ship or
other objects from one place to another.
TRADING LIMITS- Maritime area usually specified by range of ports in which a vessel may operate
TRAMP SERVICE- Vessels operating without a fixed itinerary or schedule or charter contract.
TRIM -The relationship between a ship's draughts forward and aft.
TUG - A small vessel designed to tow or push large ships or barges. Tugs have powerful diesel engines and are essential to
docks and ports to maneuver large ships into their berths. Pusher tugs are also used to push enormous trains of barges on the
rivers and inland waterways of the U.S. Oceangoing salvage tugs provide assistance to ships in distress and engage in such work
as towing drilling rigs and oil production platforms.
U
ULCC -Ultra Large Crude Carriers. Tankers larger than 300,000 DWT.
UNCTAD -United Nations Conference on Trade and Development
UNMANNED MACHINERY SPACES- A space where alarm bells are installed on the bridge of a ship to trace or rectify any
machinery faults. The computerized devices will report any fault immediately it appears and the engineers on board can attend to
the necessary ramifications.
UNSEAWORTHINESS - The state or condition of a vessel when it is not in a proper state of maintenance, or if the loading
equipment or crew, or in any other respect is not ready to encounter the ordinary perils of sea.
U.S. EFFECTIVE CONTROLLED FLEET- That fleet of merchant ships owned by United States citizens or corporations and
registered under flags of "convenience" or "necessity" such as Liberia or Panama. The term is used to emphasize that, while the
fleet is not U.,$.-flag, it is effectively under U.S. control by virtue of the ship's owners and can be called to serve U.S. interests in
time of emergency.
U.S.-flag vessels- are registered in the United States and are subject to additional U.S. laws and regulations to which foreign-flag
vessels are not. They must be owned by U.S. citizens, corporations, or governments and must be crewed mainly by U.S. citizens.
V
VLCC -Very Large Crude Carriers: Tankers between 200,000 and 300,000 DWT.
VOYAGE CHARTER- A contract whereby the shipowner places the vessel at the disposal of the charterer for one or more
voyages, the shipowner being responsible for the operation of the vessel.
W
WATCH -The day at sea is divided into six four hour periods. Three groups of watchstanders are on duty for four hours and then
off for eight, then back to duty. Seamen often work overtime during their off time.
WEATHER PERMITTING- That time during which weather that prevents working shall not count as laytime
WIBON- Whether in berth or not
WORLDSCALE- An index representing the cost of time chartering a tanker for a specific voyage at a given time. The index is
given at Worldscale 100, which represents the price in dollars per ton for carrying the oil at that rate. The negotiated rate will be
some percentage of the index value.
FOR EXAMPLE:
W1OO on the voyage Ras Tannura - Rotterdam (Cape-Cape) =
$31.16/ton of oil
W25 = 25% of W1OO
W25 = $7.79/ton of oil
N.B. rates may be above as well as below W1OO
WW- Weather working
86
INTERNAL USE ONLY
YAR 1974- or 1994 York Antwerp Rules
WW- Weather working
YAR 1974- or 1994 York Antwerp Rules
2
Appendix Source: Armadillo Marine Consultants (http://amchouston.home.att.net/)
87
INTERNAL USE ONLY
5. References – Useful
Links
88
INTERNAL USE ONLY
5. References – Useful Links
References
BP (2005). “Statistical Review of World Energy”, 2005.. London: BP p.l.c.
Energy Information Administration (2004). World Oil Transit Choke Points. Available at
www.eia.doe.gov/emeu/cabs/World_Oil_Transit_Chokepoints/Background.html. Washington, DC: US Department of Energy,
Energy Information Administration.
Glenn, D. and Martin, B. (2002). “The Tanker Market: Current Structure and Economic Analysis.” In The Handbook of Maritime
Economics and Business. London: LLP..
Armadillo Marine Consultants (http://amchouston.home.att.net/)
Bright Hub (www.brighthub.com)
Capital Product Partners corporate website (http://www.capitalpplp.com)
Clarksons Intelligence Network
Codan Marine (www.codanmarine.com)
Danish Ship Finance corporate website (www.skibskredit.dk)
Forbes (www.forbes.com
FP Marine Risks (www.fp-marine.com)
General Maritime Corporation corporate website (www.generalmaritimecorp.com)
Houlder Maritime Engineering & Design corporate website (www.houlderltd.com)
IGP&I- International Group of P&I Clubs (www.igpandi.org)
International Chamber of Shipping & International Shipping Federation (www.marisec.org)
International Maritime Organization (2006). (www.imo.org).
ITF Seafarers- Your port of call online (www.itfseafarers.org)
Kobe Shipping Group corporate website (http://www.kobeshipping.co.jp)
Learning Matters (www.learningmatters.co.uk)
Marine Insight- An Inside View of the Marine World (http://marineinsight.com)
Maritime Know How- A world of knowledge http://www.maritimeknowhow.com
M-i-link.com- Connecting maritime industry (www.m-i-link.com)
Modec corporate website (www.modec.com)
89
INTERNAL USE ONLY
Photobucket (http://media.photobucket.com/TEEKAY CORPORATION 2009 Annual report)
Planeta Gadget (http://planetagadget.com)
Sea News (www.seanews.com)
Shippipedia- your guide to the maritime world (www.shippipedia.com)
Ships & Harbours photos (www.shipsandharbours.com)
Vopak (2006). Royal Vopak Corporate Website at (http://www.vopak.com/). Rotterdam: Royal Vopak
Wikepedia (www.wikipedia.org)
Worldscale Association (http://www.worldscale.co.uk). London, New York.
Useful links
http://shipping.capitallink.com
http://www.balticexchange.com/
http://www.marinews.gr/default.asp
http://www.hellenicshippingnews.com/
http://www.cotzias.gr/index1.html
http://www.yourshipbuildingnews.com/index.php
http://www.fearnleys.com/index.gan?id=293&subid=0
http://www.clarksons.com/
http://www.imarex.com/
http://www.nilimar.com/
http://www.posidonia-events.com/online/
http://www.weberseas.com/
http://www.allied-shipbroking.gr/
90
INTERNAL USE ONLY
About Deloitte Shipping & Ports Group
Deloitte’s Shipping & Ports Group provides professional services to the international deep sea transportation
industry which includes oil & gas carriers, dry bulk carriers, containerships, reefers, offshore drill ships and support
vessels, marine fuel logistics companies, shipyards, ports, terminals and harbor authorities. We work with clients to
develop solutions to complex business issues, enhancing their effectiveness in a dynamic industry. The group’s
network of more than 500 industry professionals in 56 countries is prepared to serve you, wherever and whenever
you may need us.
About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee,
and its network of member firms, each of which is a legally separate and independent entity. Please see
www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its
member firms. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients
spanning multiple industries. With a globally connected network of member firms in 147 countries, Deloitte brings
world-class capabilities and deep local expertise to help clients succeed wherever they operate. Deloitte's more
than 170,000 professionals are committed to becoming the standard of excellence.
2
Armadillo Marine Consultants (http://amchouston.home.att.net/)
91

Shipping 101 Formatted

Загружено:

Сведения о документе

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Shipping 101 Formatted

Загружено:

Авторское право:

Доступные форматы

INTERNAL USE ONLY

1. Introduction to Shipping Industry 1

3. Vessels Types Sales and Purchases, Shipbuilding

4. Appendix - Shipping Glossary Containing Shipping Terms 69

Commodities Traded by Sea

Figures 1-2: Commodities traded by sea- 2009 preliminary figures

Millions of tons (1000 kg) loaded

Containerized cargo 1190

Other dry cargo 1040

Minor bulks (manufactures, agribulks,

Major dry bulks (iron ore, coal, grain,

Crude oil, petroleum products and gas 2649

0 500 1000 1500 2000 2500 3000

Share (%) of millions of tons (1000 kg) loaded

Minor bulks 26.94% Major dry bulks

Major Shipping Routes and Chokepoints

Map 1: Major shipping routes and chokepoints

A chokepoint is a geographical restriction—such as a narrow strait or channel—

1 Panama Canal, Panama

Stages in a Shipping Cycle 2

Factors Affecting the Demand for Sea Transport 3

1. The World Economy

2. The Trade Elasticity of the World Economy

3. Seaborne Commodity Trades

4. Average Haul and Ton Miles

5. Political Disturbances and Ship Demand

6. Transport Costs and the Long Run Demand Function

Factors Affecting the Supply of Sea Transport 4

1. The Merchant Fleet

4. Scrapping and Losses

• Average service speed of 14.5 knots.

• Fuel oil grade of 380 centistokes (a measure of fuel oil viscosity).

• Fixed hire rate of US$12,000 per day.

• Bunker price and currency exchange rate as specified.

• Short term charters (i.e. up to 12 months).

• Single voyage charters.

Figure 3: Tankers – 1 Year Time Charter Equivalent Rate

Figure 4: Product Tankers – 1 Year Time Charter Equivalent Rate Source:

1 Year Timecharter Rate 37,000 dwt Modern Products Tanker

1 Year Timecharter Rate 47-48,000 Modern Products Tanker

1 Year Timecharter Rate 74,000 dwt Modern Products Tanker

Figure 5: Containerships – 6-12 Month Time Charter Rate

Feeder 350 teu grd 6-12 Month Timecharter Rate

Figure 6: Drybulk- 1 Year Time Charter Rate

Types of Vessel Employment

• Deficiency of Owners Stores.

• Compliance with class, port, legislation requirements.

• Vessel speed and various other specified in the charterparty.

Bareboat Time Voyage

Crew Wages Charterer Owner Owner

Figure 7: Monthly Average Fuel Prices

4. Cargo Handling Costs

b. Address commission (Adcom). In some charterparties a certain percentage of

Vessel Operating Costs

Area Current Supply

Far East 184 29.5 275 36.7

All National Groups 624 100.0 747 100.0

b. Technical Department ensures that the vessels perform according to the

c. Safety and Quality S&Q/Vetting Department is responsible for ensuring the

d. Chartering/Commercial Department is responsible for the day to day

e. Sale and Purchase (S&P) Department is responsible for: 1) identifying

f. Finance and Accounting Department is responsible for administrative

Safety and Environmental Regulations Governing the

A number of key initiatives have been imposed on maritime shipping in general, as