Dry Bulk Cargo Trades
Shipbrokers, Ship Managers, and Ship Agents engaged in dry-cargo chartering should have adequate knowledge of world trades and the maritime environment. Daily working efficiency in this crucial commercial shipping activity will be significantly improved by the use of:
1- Maritime Atlas and Maritime Distance Tables (We highly recommend Netpas Distance www.netpas.net)
2- Load-line Map and International Navigating Limits (INL) Map (We highly recommend Netpas Distance www.netpas.net)
3- Maritime Commodities Book such as Sea Trading (We highly recommend Cargo Handbook www.cargohandbook.com)
4- Port Information Book (We highly recommend Fairplay and Lloyd’s publish Port Information Book)
5- Shipping Magazines and Shipping Newspapers (We highly recommend TradeWinds New www.tradewindsnews.com and Lloyd’s List)
Dry Bulk Tramp Trades
There are numerous Dry Bulk Tramp Trades, some are global, and some are local. We will focus on internationally important trade routes and cargoes.
1- Cargoes for Ships
2- Type and Size of Ships
Shipbrokers should read Dry Bulk Fixtures and Market Reports that appear in shipping publications such as Baltic Dry Index (BDI) and daily updates HandyBulk Ship Charter Rates www.handybulk.com.
Shipbrokers should learn of some of the main ports involved in the shipment and delivery of any particular cargoes, as well as the speed of cargo handling at ports involved and the preferred size of the ship.
Cargoes for Ships
The three (3) primary seaborne trade dry-cargo commodities in terms of volume are:
1- Iron Ore
1- Iron Ore: Iron Ore is produced predominantly in developing countries, such as Brazil, Venezuela, West Africa, Southeast Africa, and India, and also from advanced countries such as Australia, Canada, and Scandinavia. Iron Ore is mostly imported by the major industrialized countries, such as China, Europe, the USA, and Japan.
Nevertheless, raw, unrefined ores are frequently partly processed into commodities such as Pig Iron, Sinter, Pellets, or Concentrates, often at processing factories in developing countries, before being carried onwards in other ships to the discharging ports. Consequently, the benefits of this first processing stage taking place in the country of origin are threefold. The exporting country earns important foreign exchange as a result of the added value, the importing country saves the cost of this processing stage and the iron content of the cargo is largely increased therefore saving shipping costs.
In developed ports, Iron Ore is loaded at great speed, usually by a chute-fed by conveyors, with the ore dropped from a substantial height. Trimming is seldom required in modern bulk carriers as structures are usually flexible enough to spread the cargo somewhat evenly in cargo holds during the loading process.
Usually, Shipbrokers encounter the stipulation in chartering negotiations that the cargo has to be Spout Trimmed at the loading port. Because of the speed at which large bulk carriers are loaded, large bulk carriers require the facility to alter trim rapidly to maintain large bulk carriers’ safety. Generally, large bulk carriers are equipped with high-capacity ballast pumps for this purpose. Furthermore, regular draft checks may be needed as the ship approaches full cargo capacity, and allowance should ideally be made for the time taken on such surveys in the Charterparty Laytime Clauses.
In developed ports, Iron Ore is discharged by sophisticated equipment, although the one common element is the grab. It is not feasible to describe the many systems available, which range from the common slewing crane to highly specialized transporters. The discharging system employed depends on the type of inland transportation being used. Discharging speed of turnaround is critical. Therefore, it is not unusual for cargoes over 400,000 tonnes of iron ore to be loaded and discharged within a few days, possibly at rates around 50,000 tonnes per day.
During the Iron Ore discharging operation, the method used for weighing cargo is equally variable, although a large proportion goes through hoppers where it can be weighed in transit.
Major Iron Ore Exporting Countries and Ports:
Brazil: Tubarao, Ponta do Ubu, Sebetiba Bay
Australia: Dampier, Cape Lambert
Venezuela: Orinoco Ports
South Africa: Saldanha Bay
Canada: Seven Islands
India: New Mangalore, Mormugoa
It is challenging to forecast future growth in the iron ore trade because several countries have extremely large reserves but these have yet to be exploited. This is primarily due to the cost and the inaccessibility of the deposits but, as the more easily tapped iron ore resources decline, the incentive will increase to develop new supplies.
2- Coal: Coal has various types and grades suitable for a wide variety of uses. The two most significant buyers of coal from the chartering perspective are those planning to use it as a primary Fuel and the Electricity industry is naturally the most prominent in this group. The other is the Steel industry which transforms the coal into coke for use in blast furnaces. Coal can be located in varying quantities in numerous countries. Currently, the countries which produce exportable surplus coal are:
United States of America (USA)
Major coal importing countries are China, India, Japan, and the EU countries. Nevertheless, the volume of imports does not necessarily bear any relation to the overall consumption of coal because, in Western Europe, for instance, a considerable amount of coal requirements is acquired from indigenous sources. Japan must import much coal and iron ore to serve its industrial requirements.
Geographical and Economic factors also play in the coal trade. The EU countries import coal mainly from the United States, Colombia, Venezuela, and South Africa. On the other hand, Japan, India, China, and the Far East countries import coal mainly from Australia, Western Canada, Indonesia, Eastern Russia, and South Africa.
When estimating the demand for Coking Coal and Iron Ore, it will become apparent how the health of the Tramp Shipping Market depends on the success or failures of the Steel Industry. Therefore, in theory, a slump in steel making would have a knock-on impact on the demand for ships. However, as always, the situation is not necessarily so straightforward. Usually, it is encountered that a counterbalance cargo is supplied by an increase in demand for grain.
The major ports of loading for coal in the United States are in the area known as Hampton Roads, specifically the ports of Norfolk and Newport News, as well as nearby Baltimore and Philadelphia. Furthermore, substantial amounts of coal also originate in the massive Mississippi River basin, being exported via New Orleans and Mobile, also via Long Beach and Los Angeles from the United States West Coast.
The major ports of loading for coal in Australia are in New South Wales, comprising Newcastle, Port Kembla, and Gladstone, but during the past decade huge deposits have been exploited in Queensland, and ports such as Hay Point and Abbots Point have been exporting coal.
South Africa has significantly improved its coal exportation by the introduction of the specialized Richards Bay Coal Terminal (RBCT) near Durban, whilst Canada now has the Port of Robertsbank, near Vancouver.
Russia exports coal from the Black Sea and Vostochny (near Vladivostock). Russian Far Eastern coal exports meet the demands of Japan and Korea.
Coal exports are set to become increasingly important in Asian nations with Indonesia increasing its coal production and export facilities and coal is periodically exported also from Vietnam.
India, once a significant coal exporter, now demands internally all the coal the country can produce. Furthermore, India is a significant coal importer from Australia and Indonesia. Usually, coal is shipped to India in grab-fitted bulk carriers with self-discharging capabilities to overcome undeveloped port facilities on the sub-continent.
The future of coal shipping is encouraging despite the coal’s air pollution. Therefore, there is a need for more sophisticated appliances for burning coal. Numerous power stations have to grind coal to fine dust before placing the coal into the furnace and then there is an ash disposal issue. Coal can be obtained from various countries and coal cannot be used as a political weapon as we have witnessed happen with oil.
Usually, in the loading port, coal is transported to the loading port in rail wagons and then coal is loaded into the ship holds via a chute or conveyor. In the discharging port, discharging is usually performed by grab-fitted shore cranes.
Experimental shipments are accomplished with coal transportation in a slurry state. Furthermore, other methods of liquifying coal may be successful and allow tankers to carry coal, although there are many issues to be overcome before this will be commonplace, if ever.
For inland transportation of coal, rail or canal transports are utilized. One significant issue is that of coal storage space and, since land in industrial areas tends to be pricey, it is usually important that such coal storage space is kept to a minimum. This necessitates an efficient way of cooperation between the mines, inland transport, loading facilities, and Shipowners. Commonly, it is believed that the expression Subject Stem originates from the coal trade when it became necessary first to secure a ship on this subject before completing the entire operation to provide that ship with her cargo.
Petroleum Coke tends to be considered as part of the Coal Market. However, Petroleum Coke is a by-product of oil refining. Petroleum Coke is exported from those locations where major refineries exist in particular from both coasts of the USA including the US Gulf. China, India, some EU countries, and Japan are the major Petroleum Coke importers. Petroleum Coke is produced in different grades depending upon the structure of the refinery. Petroleum Coke is not the most popular of cargoes among Shipowners. Some types of Petroleum Coke are granular and are relatively oily whilst other Petroleum Cokes are extremely fine which generates a dust issue.
Petroleum Coke has several uses. Petroleum Coke is a source of virtually pure carbon and one of its main applications is in the manufacture of electrodes for use in the refining of aluminum.
3- Grain: Grain comprises wheat, rye, corn, sorghums, barley, oats, rice, and oilseeds. Although oilseed is not technically a grain, oilseed is considered a grain from a chartering perspective. The practice of Grain Trading has arisen during the 20th century. Leading grain producers are China, Russia, Ukraine, India, the United States, Canada, France, and Argentina.
Currently, major grain exporters are:
United States of America (USA)
Currently, major grain importers are Japan, China, EU Countries, North Africa, and the Middle Eastern countries. Furthermore, there are specific emergency grain trades designed for the countries where local famines and disasters occur, usually organized by the World Food Agency (UN). Nevertheless, the biggest phenomenon of the post-war decades has been an ever-growing trend in formerly developing nations, as their wealth has been boosted, to refuse to be content eating bread, rice, or maize as a diet and to seek instead meat, or meat by-products, poultry, and eggs. This development, translated into grain shipping and grain logistics, has initiated fundamental shifts in trade.
Cattle and poultry feeds are predominantly supplied by corn, sorghum, barley, and other coarse grains, in addition to soybeans and other oilseeds, and a mixture of them all by way of by-products such as meals, expellers, and oilcake. The major exporters of these products are the United States of America (USA), Argentina, Brazil, and Thailand. The major importers of these products are China, Japan, EU countries, and Taiwan.
In the developed grain ports, the grain and grain by-product is carried to sea terminals by rail, road, or barge. The developed countries have an internal network of country elevators, which are in effect collecting points for local harvesting centers. These collecting points are connected to the seaboard with a bulk grain transport infrastructure such as rail sidings, specialized grain hopper railcars, bulk grain road transport, or special grain barges where river transportation is suitable.
In the undeveloped grain ports, where storage is inadequate, surplus grain and grain by-product stocks are stored in alternative facilities, temporarily modified, and pressed into service such as redundant factories.
In the developed grain ports, terminals at seaports are predominantly modern. They operate extremely high-speed elevators, fitted to unload inland transport and transfer the grain and grain by-product into bulk carriers.
In grain and grain by-product shipping, any port congestion is due to more significant demands being placed on the internal and seaboard elevator capacities than can be accommodated, due often to commercial pressures or grain price systems. When Shipbrokers realize that the average grain and grain by-product loading rate in North American ports, for instance, is between 10,000 and 20,000 metric tons per day, it can be noticed that the primary cause of congestion is not the capacity of the shore equipment.
In grain and grain by-product discharging operations, methods differ broadly. In more developed countries, for instance, China, Japan, and the EU countries, the ship discharge may be performed by static or traveling suction unloaders. Some ports may still use bucket elevator types. Conveyor Belts are operated to tranship the grain and grain by-product from bulk carriers or to inland transport to store in grain silos.
In some ports, grain and grain by-products are discharged by portable Buhlers (SKT machines) which are fitted vertically into the ship’s holds by the ship’s gear and discharged directly to the road carrier.
In some ports, grain and grain by-products are discharged by crane and clamshell grabs into hoppers on the decks, feeding direct to road transport, or from hoppers to sacking machines, with the bags being stacked in bordering storehouses.
In some ports, grain and grain by-products are discharged by Vacuvator Type Portable Suckers which are like short pneumatic vacuum cleaner type machines on wheels, lifted onto a ship by shore cranes or ship’s gear, and carried on deck from hold to hold. Vacuvator Type Portable Suckers are powered either by internal combustion engines or by electricity.
In some undeveloped ports, grain and grain by-products are discharged by clamshell grabs that are fitted to the ship’s gear.
Currently, major grain loading ports are:
Argentina: Bahia Blanca, Rosario, Buenos Aires
Brazil: Santos, Rio Grando do Sul
United States of America (USA): Portland (Oregon), Seattle, Mississippi River Delta, Houston, Baltimore, Norfolk
Canada: Quebec Sorel, Baie Comeau, Thunder Bay, Churchill, Montreal, Seven Islands
Australia: Portland, Fremantle, Bunbury, Esperance, Adelaide, Geelong.
France: Le Havre, Rouen
Furthermore, there are still some undeveloped ports where grain is sacked in the holds and discharged by a sling, and usually the case with Aid Cargoes such as United Nations World Food Programme to famine-affected areas. United Nations World Food Programme is the world’s largest humanitarian organization concentrated on hunger and food security, and the biggest provider of school meals.
Where countries with poor inland facilities are concerned, and this is usually the case with aid cargoes, bags are frequently the only practicable form of carrying grain. Therefore, the grain may be loaded in bulk and bagged later at the discharging port, or bagged at the commencement of the sea voyage, in the loading port itself.
Usually, Charter Party Forms incorporate a clause that additional bags are to be carried, commonly free of charge, in case of damage or splitting of bags when they are moved, as well as in some cases, the carriage of needles and twine, so that bags can be filled and fastened, to prevent spillage.
Generally, only one grade of grain is carried in one ship hold. However, if charterers request to carry more than one grade of grain, separations are used, usually tarpaulins, or some similar material, with great care being taken to avoid a mixture of separate grains. Responsibility for the risk and expenses should be evaluated, negotiated, and documented in the Charter Party Form.
The most important Agricultural Products are Sugar and Tapioca.
Sugar is carried in ships in either Raw Bulk Sugar form (usually Cane Sugar but very occasionally Beet Sugar), or Refined Bulk Sugar from a refinery to a consuming country.
Many Raw Bulk Sugar exporting countries use mechanical facilities where the bulk raw sugar is carried on a moving band before dropping through a spout into a ship’s holds. Occasionally spreaders are utilized to distribute the sugar in ship’s holds, thereby improving the trimming and obtaining a better stow.
Discharge of Raw Bulk Sugar is performed by grabs, the bulk raw sugar is dropped into hoppers that empty onto a moving band via a weigh tower into the refinery, storage area, or onward truck.
Many tropical regions produce and export Raw Bulk Sugar. For example:
- The Caribbean and the North Coast South America (NCSA) (Barbados and Georgetown, Guyana)
- Islands of the Indian Ocean (Mauritius and Reunion);
- South Africa (Swaziland) via ports such as Durban
- Bangkok, Thailand, Fiji, Philippines
- Australia (Queensland)
- Brazil (Santos and Recife)
Major Raw Bulk Sugar importers include the UK, France, and the US.
Tapioca is another tropical plant. For seaborne trade, by far the biggest exporter is Thailand. Thailand ranks only seventh in terms of world Tapioca production. Currently, Thailand exports 80 percent of the Tapioca market. Much of Thailand’s Tapioca exports are destined for animal feed purposes.
Tapioca will remain economically attractive for European animal feed compounders. Tapioca is a cheap substitute for feedstock, rather than the more pricey locally grown grain.
Panamax or Capesize Bulk Carriers are employed for the carriage of Tapioca from Thailand to Europe. Handysize Bulk Carriers are employed for the carriage of Tapioca from Thailand to Malaysia and Indonesia. Smaller Carriers are employed for the carriage of Tapioca in South East Asia (SEA) because of discharging port facilities and draft restrictions.
Forest Products can be split into those appertaining to Raw Forest Products and Processed Forest Products.
1- Raw Forest Products can be sub-divided:
- Roundwood (Logs)
- Sawn Timber
The major importers of Raw Forest Products are Europe, China, and Japan. The major exporters of Raw Forest Products are North American and Scandinavian countries. Those areas supply predominantly softwood and Central America, Guyana, Brazil, West Africa (WAFR), India, Burma, Malaysia, and Indonesia supply hardwood.
Softwoods (Softwood Trees) are fast-growing and so can be planted as a crop in unrestricted locations.
Hardwoods (Hardwood Trees) are dotted around miscellaneous forests, and are more challenging to locate, having to be separately felled and transported to an exporting area. Therefore, Hardwoods (Hardwood Trees) tend to be shipped as Liner Parcels, although there are full Hardwoods (Hardwood Trees) cargoes, mainly from West Africa (WAFR) and from the River Amazon basis.
Softwoods (Softwood Trees) are often sawn before shipment and an increasing amount moves in sawn condition directly to a suitable distribution zone in an importing area, rather than to Sawmills located in importing areas.
Nothing is wasted and the Sawdust and general remains from Sawmills are termed Woodchips. Woodchips are also in demand for miscellaneous wood products, such as paper, chipboard, liner board, etc. Significant Woodchips trade exists from the West Coast of North America (WCNA) to Japan.
The terms Hardwood and Softwood relate more to the type of tree rather than exactly to the exact hardness or softness of the wood. For instance, Balsa Wood which is the softest and lightest of all woods is technically a Hardwood (Hardwood Tree). Contrarily, Columbian Pine which is a favorite material for the part of a quay that has to take the shock of a ship coming alongside is a Softwood (Softwood Tree).
The future of the Hardwood (Hardwood Tree) trade is not clear because there is tremendous pressure from conservationists to decrease Hardwood (Hardwood Tree) use. Most Hardwoods (Hardwood Trees) take many decades to grow to maturity so much of such timber being exploited is a non-renewable resource. Hardwoods (Hardwood Trees) are an essential part of lowering the greenhouse effect.
Softwoods (Softwood Trees) are the firs, larches, and pines. Softwoods (Softwood Trees) tend to be planted under strictly controlled circumstances so that in most planting zones the total amount is being increased.
2- Processed Forest Products are in broad types, ranging from Plywood through to Newsprint.
Processed Forest Products are particularly valuable and sensitive to mishandling damage. Therefore, Processed Forest Products are transported in specially designed ships employed in long-term agreements.
The major Processed Forest Products exporting countries are Canada and Finland. Inherently, winter conditions can cause loading disruption, especially when ice affects the St. Lawrence River and the Gulf of Bothnia. As a consequence, most ships that carry Processed Forest Products are ice-strengthened.
Furthermore, in western Canada, Processed Forest Products exporting terminals are frequently beset by heavy rainfall and Newsprint has to be kept dry at all costs.
Linerboard is a Processed Forest Product. Linerboard is in serious demand for the packaging and carton manufacturing industries. Linerboard is supplied predominantly from North America and Scandinavia.
Improvements in agriculture through the use of fertilizers may be seen in most developing nations. The three main chemicals required for plant growth are Nitrogen, Phosphate, and Potash. Nitrogen, Phosphate, and Potash occur naturally, but Nitrogen is usually manufactured today as a by-process in the oil and chemical industries. Chile is the main source of Nitrates. Nitrate is still in demand because of its other constituents, such as iodine.
Sulphate of Ammonia and Ammonium Nitrate are examples of manufactured Nitrates, and a valuable agent in their production is Sulphuric Acid. Sulphuric Acid is a by-product that also finds use in a large number of other manufacturing processes. Although there are specialized Molten-Sulphur Carriers and Tankers capable of carrying Sulphuric Acid, by far the majority of Sulphur is carried in a dry-bulk condition and converted into Sulphuric Acid at the delivery point.
Sulphur is obtained naturally in many parts of the earth. Sulphur is obtained naturally from Sicily and Bayonne (France), whilst the US was once a major Sulphur exporter. Today, much Sulphur is obtained as a by-product of the oil and gas industries. Main Sulphur exporting countries are Canada, Poland, Germany, Libya, and Arabian Gulf (AG) countries. Some importing countries use Sulphur to boost their products. For instance, Morocco improves the quality of the country’s exploitation of extensive natural Phosphate residues by using imported Sulphur to manufacture more substantial and more valuable Di-Ammonium Phosphate (DAP) and Triple-Super Phosphate (TSP).
Phosphate is found all around the African coastal countries from Togo, Senegal, and Morocco to Tunisia. Furthermore, Tunisia is engaged in the manufacture and export of Ammonium Nitrate.
Other Phosphate exporting countries are Jordan (Aqaba) and Egypt (El Hamrawein), certain of the Pacific Islands such as Christmas Island, and also the US (Tampa). Furthermore, the United States exports upgraded materials such as Di-Ammonium Phosphate (DAP) and Triple-Super Phosphate (TSP). Russia exports Phosphate via Murmansk. Besides, Russia exports Mono-Ammonium Phosphate (MAP) via Finland (Kokkola)
Potash can be exported naturally from Jordan, Israel, and Canada). Furthermore, Potash is converted into Potassium Chloride.
Besides Natural Fertilizers, many countries engage in the profitable business of manufacturing Fertilizer Compounds such as Urea, Ammonium Phosphate, and Nitro Phosphatic Kompound (NPK). Currently, Fertilizer Compounds are frequently exported from Antwerp, Rotterdam, Hamburg, Poland, and Romania.
Numerous oil-producing countries located in the Arabian Gulf (AG), the Mediterranean, South East Asia (SEA), and Russia manufacture exportable Urea as a by-product of oil refining.
All these Fertilizers, whether Natural Fertilizers or Manufactured Fertilizers require care in handling, although most can be carried in safety whether bagged or in bulk. Usually, Shipbrokers use the expression BHF (Bulk Harmless Fertilizers).
Harmless reassurance of the expression BHF (Bulk Harmless Fertilizers) dates back to the early days of transporting Ammonium Nitrate in bulk before such processes as Calcining this Ammonium Nitrate had been perfected. Without this treatment, a large quantity of Ammonium Nitrate in bulk can, under certain conditions, become spontaneously explosive which was tragically proved when a US Gulf port was almost destroyed many years ago. Recently, Ammonium Nitrate cargo destroyed Lebanon (Beirut). Today, this problem is so satisfactorily understood that numerous Fertilizers are completely Harmless from the dangerous cargo point of view. Nevertheless, the IMDG (International Maritime Dangerous Goods) Code should always be referred to especially if more than one type is to be loaded because some otherwise harmless Fertilisers are incompatible one with another.
Shipowners should be aware of the non-dangerous harm that certain Fertilizers can do. Some types of Fertilizers may have a damaging effect on the paintwork in the holds whilst other types of Fertilizers may cause severe corrosion to unprotected steel.
Steels Products comprise substantial types of cargoes, ranging from Rods, Bars, and Beams, to Plates, Coils, and Pipes.
Steel Products are exported mostly from industrialized countries both for cross-trading to others and for developing countries. Nevertheless, there is a prominent trade around semi-processed materials such as Pig Iron, Concentrates, Direct-Reduced Iron (DRI), etc. wherein developing countries may export.
Scrap Metals also constitute an essential seaborne commodity, the scrap being recycled in the steel industry and forming relatively inexpensive ready material around which some steel industries have been designed. Currently, Scrap Metals trade route from the United States to China, Japan, Korea, and Taiwan. Scrap Metals are exported from European countries to Turkey. Some modern electric furnaces used for steel-making may have scrap feed instead of iron ore. Nevertheless, many other routes, with ships of all sizes for Scrap Metals trades.
Bauxite is the primary component of the aluminium industry. Bauxite is mainly exported in large amounts from Guinea (WAFR) and Brazil to miscellaneous aluminium smelters worldwide in China, Japan, Canada, Venezuela, and the UK.
Ships for Cargoes
Dry Cargo Ships can be divided into various size and type categories:
Capesize: Capesize Bulk Carriers are around 100,000-200,000 DWT (Deadweight Tonnage). Capesize Bulk Carriers are limited very much by port restrictions. Usually, Capesize Bulk Carriers are employed to carry Iron Ore or Coal on long-haul runs. Capesize Bulk Carriers are operated mainly from loading areas in Brazil, Australia, South Africa, West Africa, the US, and Canada, discharging mainly in China, Japan, the Far East (FEAST), and Europe. Not all ships operating in this size category are pure dry-cargo ships; many combination carriers, mostly VLOOs (Very Large Ore-Oilers) transfer into the oil trades when the opportunity materializes or out of the oil trade when freight levels are uninviting.
Panamax: Panamax Bulk Carriers are around 65,000/75,000 DWT (Deadweight Tonnage). Many port establishments have been upgraded in recent years to accommodate Panamax Bulk Carriers. Most Panamax Bulk Carriers are pure bulk carriers. In the 1970s, Panamax Bulk Carriers have to compete with OBOs (Ore Bulk Oil Carriers) in the Atlantic when economic circumstances dictate, and the availability or otherwise of these invaders from the oil industry can have a deep impact on the state of the dry-cargo market.
The primary trades for Panamax Bulk Carriers are Coal, Iron Ore, and Grain.
Furthermore, Panamax Bulk Carriers carry other commodities such as Phosphate, Tapioca, Bauxite, etc. Therefore, Panamax Bulk Carriers are trading worldwide, although the Panamax Bulk Carriers market divides into miscellaneous regions:
1- Atlantic Basin
2- Pacific/Indian Ocean Basin
3- Atlantic to Pacific/Indian
4- Pacific/Indian to Atlantic
Generally, Panamax Bulk Carriers are paid the highest returns (freights) for cargoes from the Atlantic to the Pacific/Indian Oceans. Contrarily, Panamax Bulk Carriers are paid the lowest returns (freights) for cargoes from the Pacific/Indian to the Atlantic. This trade imbalance generates by normally higher freight levels for Trans-Atlantic Trades over Trans-Pacific Trades.
A major trade route includes that of Grain from the US Gulf and East Coast South America (ECSA) to China, Japan, and the Far East (FEAST). This route is a significant contributor to the Freight Futures Market operated by BIFFEX (The Baltic International Freight Futures Exchange) and a keen barometer of the soundness of the dry-cargo market.
Handy: There are two sub-categories of Handy-Size Bulk Carriers:
1- Small Handy-Size Bulk Carriers around 20,000-30,000 DWT (Deadweight Tonnage)
2- Large Handy-Size Bulk Carriers around 30,000-65,000 DWT (Deadweight Tonnage)
Handy-Size Bulk Carriers comprises sub-categories such as Handymax, Supramax, and Ultramax Bulk Carriers.
Large Handy-Size Bulk Carriers category emulates the trading pattern of Panamax Bulk Carriers but adds to its list of carriageable cargoes the major trade of Steels and Scrap, and Forest Products.
Many of Handy-Size Bulk Carriers are moderately sophisticated, with a combination of deck gear, cranes, etc.
Small Handy-Size Bulk Carriers have an even wider range of cargoes and are in particular demand for regions of the earth with restricted dimensions such as the Great Lakes (Lake-Fitted Handy-Size Bulk Carriers). There is no standard trade pattern for Small Handy-Size Bulk Carriers as can be identified for their larger competitors. Small Handy-Size Bulk Carriers can trade in all parts of the earth and are employed in the carriage of various cargoes.
Bulk Cargo Parcelling
Around Handy-Size Bulk Carriers what is termed Parcelling has developed. Oftentimes, Ship Operators hire Handy-Size Bulk Carriers to load miscellaneous cargoes in adjacent holds from a variety of nearby loading ports to the discharging ports.
Tweendeckers: Most modern Deepsea Tweendeckers range in size around 20,000 DWT (Deadweight Tonnage), although there are still very many Tweendeckers in this market of around 12,000-18,000 DWT (Deadweight Tonnage). 12,000-18,000 DWT (Deadweight Tonnage) Tweendeckers fleet is naturally aging, nevertheless, modern Tweendeckers are often described as Multi-Purpose (MPP) Ships having the ability to fold Tweendecks to convert to and compete with smaller bulk carriers.
The modern Deepsea Tweendeckers are in demand for liner traffic from the Far East (FEAST) and for the more sophisticated trades ex Europe. On the other hand, old Tweendeckers are the true tramps of today’s dry-cargo market. The old Tweendeckers were exploring the world’s oceans for whatever profitable cargo is around. Frequently, the old Tweendeckers engaged were carrying bagged fertilizers, grains and agricultural products, and occasional bulk commodities such as sugar.
Nevertheless, just as Tweendeckers compete for the cargoes that might otherwise be the exclusive domain of smaller bulk carriers, so those bulk carriers can be employed for what were once considered exclusive Tweendeck Liner Trades. Today, as more and more of the liner trades that remain after the deprivations associated with containerization develop more of a Parcelling attitude to the services they advertise, for which bulk carriers are quite suitable.
Short Sea Ships (Coaster Ships): Modern Short Sea Ships (Coaster Ships) are not necessarily restricted to coastal trades. It is not unusual to see Modern Short Sea Ships (Coaster Ships) of less than 10,000 DWT (Deadweight Tonnage) running far afield from their normal operating area. Modern Short Sea Ships (Coaster Ships) deliver a practical alternative shipment means to parcel for those shippers and traders seeking a more personal involvement in the carriage of their commodities. This process has been aided by a general move to ship smaller commodity parcels and by the removal of crewing restrictions by miscellaneous countries. Modern Short Sea Ships (Coaster Ships) would be encountered around the world in a pure tramp capacity, having been drawn away from their normal trading coastal seas by an alluring freight.
Ship Trading Restrictions
Besides the commercial factors, Shipbrokers must bear in mind certain other factors which restrict ships:
1- Political Restrictions
2- Navigational Restrictions
3- Ports Restrictions
4- Labor Restrictions
1- Political Restrictions: The ports of certain countries are not favored calling locations, because of future repercussions affecting ships and Shipowners or Ship Operators as a result of trading that port. Usually, Shipowners list certain political exclusions in Time Charterparty Forms. Shipbrokers engaged in Time Charterparty Forms should also be extremely careful in fixing cargoes to or from politically restricted countries. Some countries that have been sensitive in recent years are:
Israel: Because of possible black-listing by Arab countries for forthcoming trading. As a consequence, it is standard practice for Time Charterers and those engaged in voyage trade involving Arab countries, to negotiate and to incorporate in Charterparty Forms an Arab Boycott Clause. In Arab Boycott Clause, the Shipowner confirms that the ship is not boycotted or blacklisted by Arab countries as a result of previous calls at Israel ports.
Libya: All documents appertaining to ships and or cargoes must be translated into Arabic in Libya. Therefore, calling at Libya ports involves extra expenses for Arabic translations. Furthermore, Libyan Custom Authorities are likely to search ships for any sign of cargoes or equipment involving countries, such as Israel, of which the Libya government disapprove and, if such is found, charge heavy fines against the ship. Therefore, Libya is not a popular calling site.
Cyprus: Greek-flag ships are prohibited by the Greek Government from calling at the Turkish Republic of Northern Cyprus (TRNC) ports. Likewise, the Greek Government is not willing to allow other countries’ ships to call at Greek ports after calling at the Turkish Republic of Northern Cyprus (TRNC) ports. As a natural result, Greek-flag ships are not always welcome to call at ports in Turkey. Although the little official ruling is expressed over these restrictions by the Turkish Government, it will be noticed that some Turkish-bound cargoes are not fixable in Greek-flag ships.
Cuba: The United States has relaxed its ban on ships calling at Cuba. Although, Cuba is still mentioned in some Charterparty Forms as an exclusion clause “for vessels that have traded to Cuba since 1962….”. The Cuba restrictions are slowly being lifted, however, Cuba restrictions can still cause infrequent difficulties.
North Korea: North Korea resumes to adhere to its Marxist-Leninist policies. There are few indications remaining of countries boycotting North Korea. However, some Shipowners are still hesitant to have their ships calling at North Korean ports.
Iraq: It has been a long time since Iraq invaded Kuwait but tensions still exist. Sanctions on Iraq have been in place since Iraq’s invading forces were expelled by the US and British troops acting under a UN (United Nations) Resolution.
There are other ports where local issues materialize of a political nature. In some circumstances, it may not be wise to have onboard crew members of certain ethnicities. Even the nationality of the eventual Shipowners of a ship may create difficulties despite the actual flag the ship flies being acceptable. For instance, Liberian flag ships owned by Liberian corporations are not welcome in Syria. Many Greek-flag ships are owned by Liberian corporations, which prevents Greek-flag ships from calling at Syria.
Shipbrokers should keep up to date with the news and particularly international news. Shipbrokers should read about in daily newspapers that will not have at least an indirect impact on international shipping. This is particularly so in political and economic topics.
Shipbrokers should avoid being inadvertently impolite. If a country renames a port, it would be acceptable manners to address communications to the new name. For example, Saigon City is now known as Ho Chi Minh City. Polish individuals prefer Swinoujscie to be so-named rather than the Germanic Swinemunde. Iranian people prefer the Gulf to be called the Persian Gulf rather than the Arabian Gulf (AG). On the other hand, other individuals prefer Arabian Gulf (AG).
2- Navigational Restrictions: Climatic forces that affect ship trade and a straightforward example is that ICE will interrupt voyages at certain times and seasons of the year. Therefore, seaborne trading to and from the Great Lakes is not possible between January and March. Trading to the Northern Baltic is at the very least difficult during that period and voyages to and from the Hudson Bay are possible only between July and October every year.
Other climatic forces that affect ship trade are MONSOONS in certain zones at certain times, Hurricanes or Typhoons in other zones.
Shipbrokers should pay attention to Load-Line Zones while calculating the route between loading and discharging ports. Load-Line Zones may
affect cargo intake. Furthermore, Shipbrokers should pay attention to
expensive pilotage in some ports. Shipbrokers should pay attention to the costs and risks of passing round straits and canals.
Major Canals and Waterways affecting ship navigation and dry-cargo trades:
Cape of Good Hope (COGH)
St Lawrence Seaway (Great Lakes System)
Magellan Straits (Cape Horn)
Straits of Hormuz
Red Sea/Gulf of Aqaba-Eilat
Torres Straits (Great Barrier Reef)
Kiel Canal (Skaw)
Dover Straits (English Channel)
Shipbrokers should check the maritime atlas to familiarise themselves with the location of Major Canals and Waterways.
Shipbrokers also should locate the following landmarks frequently used in Ship Delivery and Redelivery positions in Time Charters:
Cape Passero (Sicily)
Southwest Pass (Mississippi River)
Cape Finisterre (Northwest Spain)
Dakar/Douala (West Africa)
Baton Rouge (Mississippi River)
Rosario, Santa Fe (Argentine)
Muscat (Arabian Sea/Persian Gulf)
Dondra Head (Sri Lanka)
Shipbrokers should check the Port Information Books that provide details of Canal and Waterway size restrictions and also the equipment that needs to be fitted on a ship before transit. Undoubtedly, Time Chartered ships for either Trip or Period Time Charters concerning any of these Canals or Waterways should incorporate clauses in which the Shipowners or Ship Operators confirm that the ships reasonably conform to local provisions and have proper fittings.
Shipbrokers should check and incorporate clauses in Charterparty if the ship is passing the Panama Canal and Suez Canal. Shipbrokers should incorporate Panama and Suez Canal Gross and Nett Registered Tonnages which differ from the usual NRT (Net Register Tonnage) and GRT (Gross Register Tonnage) and upon which transit tolls are based.
3- Port Restrictions: Shipbrokers should check Port Information Books that are important to estimate precisely what is involved in a prospective voyage. Many ports have hidden restrictions that Shipbrokers only discover by proper reference. For example:
Safi (Morocco) has a Harbor Bar which, at times when Atlantic Ocean roller waves are prevailing, indicates an extreme problem for ships of specific drafts in entering the port.
Douala (Cameroon) is what is termed a Neap Port, where tidal levels alter dramatically over every week or so, indicating that at certain times a ship may be prevented from berthing for some days due to inadequate water.
Genoa (Italy) has an air-draft restriction, not a physical restriction, but the air-draft restriction is strictly imposed by the Port Authorities because of the danger to airplanes overflying the port area to and from Genoa Airport.
Butterworth (Malaysia) berthing priority is given to gas tankers, so much so that a partly discharged or loaded ship may have to leave the berth to the gas tanker, berthing back only after the tanker has completed its cargo operations.
West Coast South America (WCSA) ports are seriously affected from time to time by steep waves causing ranging damage to the ship and/or berth.
Port Restrictions are not only physical dimensional. Port Restrictions comprise the hours that ships are worked by port labor, holidays, etc. all should be considered.
BIMCO (Baltic and International Maritime Council) publishes an annual BIMCO Holiday Calendar that records worldwide national and local holidays and port working hours. BIMCO Holiday Calendar is a useful tool for all Shipbrokers.
Port Costs vary widely in different ports. The costs in some ports are subsidized to attract more Shipowners and Ship Operators, whilst others have to be self-supporting and profitable. The Port Costs vary significantly, often not only between adjacent countries but between ports in the same country.
Shipbrokers should check Port Costs before fixing a ship to avoid unpleasant surprises. Shipbrokers should call local port agents and learn more about Port Restrictions and Port Costs.
Freight Taxes: Another charge that might be encountered is that of Freight Taxes. Freight Taxes might be extremely high. For example, Syria imposes Freight Taxes of around 13% and, Turkey imposes Freight Taxes of around 10%. Freight Taxes are imposed on the Recipient of the Freight, not the company paying, although Freight Taxes may be deducted at source by local law.
There are Bilateral Agreements between countries over the imposition of Freight Taxes so that not all Shipowners or Ship Operators are mandated to pay, or must pay only a part of the total cost to the ships of Non-Approved Countries.
Most Freight Taxes are imposed against the Ship’s Flag. However, some Freight Taxes are imposed against the country of the Recipient of the freight. For instance, Disponent Shipowner (Time Charterer) in the case of a time-chartered ship.
Shipbrokers should make allowance for Freight Taxes. A deduction may be included in the cost of the Voyage Estimation when considering the trade.
BIMCO (Baltic and International Maritime Council) publishes a practical annual book on worldwide Freight Taxes and Freight Tax Exemptions Shipbrokers should call local port agents and learn more about Freight Taxes and Freight Tax Exemptions.
4- Labor Restrictions: Also incorporated in the Trading Exclusions Clause will be nations entered because of labor rather than political restrictive factors. Labor Restrictions are well-known in Australasia (Australia and New Zealand) and Scandinavia.
Australasia (Australia and New Zealand) and Scandinavia are strongholds of the ITF (International Transport Workers’ Federation). ITF (International Transport Workers’ Federation) is an international organization established to help seafarers to keep wages and conditions at certain levels.
ITF (International Transport Workers’ Federation) requires that Shipowners internationally should comply with these restrictions. However, ITF (International Transport Workers’ Federation) is concerned primarily with ships flying so-called Flags of Convenience (FOG), such as Panama, Marshall Islands, Liberia, etc. ITF (International Transport Workers’ Federation) alleges that the conditions of the crews aboard ships flying so-called Flags of Convenience (FOG) are often below those standards specified by the ITF (International Transport Workers’ Federation).
ITF (International Transport Workers’ Federation) is usually supported by local unions in many countries. Local unions may have the power to hold ships until the wages and conditions are increased up to ITF (International Transport Workers’ Federation) requirements, including back-pay to which the seafarers may become entitled. Therefore, for ships flying so-called Flags of Convenience (FOG), Australasia and Scandinavia are usually excluded.
Another strict union requirement in Australasia and Scandinavia is that dry-cargo ships must be fitted with Hold-Ladders conforming to a specific style and dimensions, as defined by the Waterside Workers’ Federation. Waterside Workers’ Federation mandates that, for every six-meter drop in the ladder, a resting platform must be built. It is not always necessary to provide that cargo holds are completely clean and when loading bulk cargoes that can be poured into cargo holds, for ships to have those Hold-Ladders of that design. Nevertheless, if there is an issue with cargo holds and the workers are needed to descend into the cargo holds, workers will do so only if the Hold-Ladders suit the established design.
Australasian Waterside Unions are remarkably strong and authoritative. For instance, for ships loading and discharging in Australia, it is practically certain that the unions will insist on Cleaning Cargo Holds at a substantial cost that is far more than would usually be disbursed to the ship’s crew members. Furthermore, the ship would be delayed in port whilst the work is carried out. Therefore, some Shipowners are reluctant to call Australasia ports no matter what flag their ships fly.
Time in Ship Chartering
Time is important to the work of a Shipbroker, whether working under time constraints when negotiating charters; or communicating with Principals. Shipbrokers should be careful when calculating Time Charter Duration or confirming the Estimated Time of Arrival (ETA) of ships.
Nevertheless, it is crucial to comprehend how Time is Calculated.
On an international basis, Time can be said to commence at the Greenwich Meridian, which is taken to be Zero Degrees (0). From the Greenwich Meridian point, imaginary lines of Longitude are drawn, westwards and eastwards, for 180 degrees each making a total of 360 degrees for a total circumference of the world. Therefore, if 360 Meridians (Longitudes) are drawn from pole to pole at equal intervals, they will be 1 degree of longitude apart.
Commencing from the Greenwich Meridian and crossing eastwards, time advances One (1) Hour for every 15 degrees of Longitude. Therefore, a complete circle of the world coming back to the starting point of the Greenwich Meridian will take 24 Hours (360/15) and time will have advanced by 24 Hours (1 Day).
Westwards from Greenwich Meridian will have the reverse effect. One (1) Hour will be lost for every 15 degrees of Longitude and upon returning to the Greenwich Meridian, 24 Hours (1 Day) will be lost.
Eastwards and Westwards passages meet halfway round at the 180 Degrees Meridian, in the central Pacific Ocean, is located the imaginary International Date Line (IDL). International Date Line (IDL) is not completely straight, taking minor deviations so as not to bisect small islands or affect land masses. Therefore, by crossing Eastwards across the Eastern Hemisphere from the Greenwich Meridian, local time advances hour by hour until 180 Degrees East or the International Date Line (IDL) is reached, which is 12 Hours ahead of Greenwich Mean Time (GMT). Crossing in the opposite direction from the Greenwich Meridian across the Western Hemisphere, one loses 12 Hours in reaching 180 Degrees West or the International Date Line (IDL).
The date is one day earlier to the east of the International Date Line (IDL) than to the west and this impacts ship trading trans-Pacific. A ship steaming eastwards from China towards the US will gain one day upon crossing the International Date Line (IDL). A ship steaming in the opposite direction will lose one day. It is critical to consider the International Date Line (IDL) when calculating estimated dates or arrival and canceling dates concerning voyages across the Pacific Ocean.
Shipbrokers should consider the time differences during chartering negotiations. There is little point in making firm offers with reply times where there is little chance of Principals being contactable. Cases of emergency are another issue and all Shipbrokers, Ship Agents and Ship Managers tend to be prepared to sacrifice sleep and convenience at one time or another.
Shipbrokers should be careful to express in Firm Offers not only what the offer expiry time is, but at whose time it is to be expressed. Reply 1100 Hours could be misunderstood. Reply 1100 Hours Singapore Time is unmistakable.
Time in Ship Delivery and Redelivery
1- Local Time
2- Elapsed Time (Stop-Watch Time)
3- Greenwich Mean Time (GMT)
Time aspect may affect ship time charter delivery and redelivery. For example, a ship is delivered on time charter in London for a trip to Mumbai, where the ship will be redelivered. The voyage will take around 30 days (720 hours) and the daily hire rate of the ship is $30,000.
If the Time Charterparty specifies that delivery and redelivery are to be calculated in Local Time, the effect would be that the ship will remain on hire for around Five Hours (5 Hours) over the actual time taken. This may be of benefit to Shipowners, who will undoubtedly claim extra hire of $6,250 for around Five Hours (5 Hours). On the other hand, a ship steaming on the same terms in the reverse direction. The ship will lose five hours of hire which will be a benefit to the Time Charterers.
Shipbrokers interested in equity will undoubtedly ask why a Time Charterer should pay more hire than for the period a ship spends on time charter, or as Shipowner receives less than the time a ship is hired out. English law established the principle of Elapsed Time, which may be more smoothly comprehended by most of us as Stop-Watch Time.
To understand Elapsed Time (Stop-Watch Time), Shipbrokers should assume that a stop-watch is started the moment a ship is delivered and time runs continuously, deducted from any off-hire periods, until the time is stopped upon redelivery. The time that has accumulated in the Elapsed Time and is the Legal Period on Hire unless the Shipowners and Time Charterers have expressly agreed in the Time Chartererpaty Form to be bound by Local Times for ship delivery and redelivery.
Another method of calculating a time charter period is to apply Greenwich Mean Time (GMT). The effect of the Greenwich Mean Time (GMT) approach as an alternative to Local Time. The crucial point is to specify in a Time Charterparty Form that Greenwich Mean Time (GMT) is to apply to ship delivery and redelivery times. If the Time Charterparty Form remains silent on this aspect, in the event of a legal dispute the result depends on the legal code which applies to the Time Charterparty Form, and there can be varying consequences. For instance, a recent American arbitrator encountered that in the event of silence in the Time Charterparty Form, local time would be deemed to apply.
Under English Law, Elapsed Time (Stop-Watch Time) would be used, or time established by a common standard such as Greenwich Mean Time (GMT) at both ends of a time charter.
Shipbrokers should be able to comprehend how Salinity Calculations are performed.
Shipbrokers may encounter ports where the cargo intake needs to be calculated, and where the prevailing water may be:
1- Salt Water (SW)
2- Fresh Water (FW)
3- Brackish Water (BW)
A ship in Fresh Water (FW) will be deeper drafted than if a ship were in more buoyant Salt Water (SW). Salinity affects many shipping trades. For instance, the Panama Canal is a Fresh Water (FW) Canal, and the available draft is so expressed.
Salinity Calculations are fairly straightforward, given the Fresh Water Allowance (FWA) of a ship, usually displayed on the ship’s Capacity Plan, and the Density of the prevailing water in the port or canal which can be obtainable from port information books or the local port agent.
Salinity Calculations Example
A ship’s Fresh Water Allowance (FWA) is 300 mm and the Brackish Water (BW) Density is 1015 kg/m3
The following formula provides:
FWA x (Density of Sea Water – Density of Brackish Water)/
(Density of Sea Water – Density of Fresh Water)
Increased Draft = 300 mm x (1025 – 1015)/ (1025 – 1000)
Increased Draft = 300 mm x 10/ 25
Increased Draft = 3000 mm /25
Increased Draft = 120 mm