Shipping Buisness

Chapter 2: The shipping business

Syllabus:

Understand the role of different markets that comprise the global market. Be aware of the difference between absolute and comparative advantage. Understand the role of shipping as arising from derived demand.

Cabotage: Shipping along a coastline

Inland shipping: vessels running on rivers and lakes

Short sea shipping: Shipping trade within the same continent.

Theory of trade

-        Absolute advantage: Resource one country possesses in an exportable amount which other countries do not possess.

-        Preferences of consumers in an area also plays a huge role

o   For example in Europe people enjoy eating exotic fruit and chocolate which is not native to the area.

-        Example of absolute advantage: bananas are found in Africa but can’t be grown in the UK.

-        Enterprise greatly affected by government policy in each country

-        Comparative advantage: One country able to produce a commodity in a cheaper or higher quality way than another

o   Politics effects this

o   Geology effects this

o   Application of other factors of production [labor, land, capital, enterprise]

Shipping markets:

-        4 distinct: Liner dry bulk tanker passenger

-        Bulk liquids: Split into two main areas crude oil and Product.

o   Crude oil takes from field to refinery

o   Product takes refinery to end user

o   Different market dynamics compared with drybulk

o   Also uses charters and Large consignments.

-        DRY bulk: Ships in this market called tramps

o   Normally used by charterers bigger lot size often or mostly whole ships

o   Some ships specialized others multipurpose.

-        Liner: Manufactured goods, Lots of consignments 90 Transported by container

o   Car carriers and roll on roll off carriers are A subset of liners used to carry vehicles

o   Liners adhere to a published timetable on a set of conditions of carriage.

2.4: Who trades

- Shipowner, Charterer, Shipbroker

Two main types of charter,

-        Voyage charter: Hire a ship for a single trip or single group of trips.

-        Time Charter: Hire a ship For a specific time period.

Freight forwarder: Responsible movement of goods from premises of Exp onto ship used mostly in liner trade.

NVOC: Non vessel owning carriers: Take responsibility for goods from exporters factory to importers premises usually issue a bill of lading.

Ship operator: Operate ships as if they own them without owning them

Disponent owner: Someone who long leases a ship

-        Arranges crew and maintenance

-        Advantage is doesn’t need pay upfront cost for the ship.