Bulk Shipping

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Bulk, or Tramp Shipping

N. Muhammad Aslaam B. Mohamed Abdul Ghani


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Tramp Shipping comprises of:

Industrial Carriers Ships, usually large tankers or dry bulk carriers, owned by an industrial house

(eg, steel or oil interest), that are employed solely for carrying commodities ofowners. These ships are not normally engaged on charter.

Independents Private carriers that are free to trade and seek cargo where available. They

normally carry a full load, usually for one shipper, occasionally more.


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Function of tramp market

Provide shipping space for all commodities whose annualmovement cannot be predicted with certainty and which cannot becarried on liners

Transport marginal tonnage requirements in respect of thosecommodities where the bulk of traffic is lifted by integrated fleets

Offer shippers lower rates than they could get under the liner systemwhere individual cargo tonnage is sufficient to compose full loads

Provide good, readily available shipping to meet international needin emergencies.


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The Contracts

Voyage Charter

The ship is chartered for one voyage from one place to another, usually atX$/tonne of cargo carried or X$/day.

In case such charters are fixed consecutively, they are called consecutivevoyage charters

The ship owner pays all the costs of fuel, port and canal charges, cargo handling,agency fees, light dues where applicable and any port conservancy charges, ifapplicable


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Characteristics of bulk cargoes which

influence their suitability for transport in bulk

Volume To be shipped in bulk there needs to be enough volume moving to fill a ship

Handling and Stowage Commodities with a consistent granular composition which can easily be handled

with automated equipment such as grabs and conveyers are more suitable forbulk transport

Cargo value High-value cargoes are more sensitive to inventory costs, which makes them

advantageous to ship in smaller parcels, whereas low-value commodities likeiron ore can be stockpiled


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Principles of Bulk Transport

Efficient Cargo Handling Unit costs can be reduced by increasing the size of the cargo on the shipping

leg. Bigger ships have lower unit costs and unit cargo handling and storage arealso cheaper at high throughput volumes.


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Minimize Cargo Handling Each time the product is handled during transport it costs money. For example,

grain is loaded on to quayside with grabs, bagged by hand and transported to thewarehouse by lorry. in contrast, a large modern grain elevator can dischargebarges more quickly and with these facilities the same vessel could be handledin a day.

A radical solution is to reduce the number of transport legs by relocating theprocessing plant. Manufacturing plants such as steel mills can be relocated tocoastal sites to avoid land transport of raw materials. Where cargo must behandled, the emphasis is on reducing cost by using specially constructed bulkhandling terminal.

Homogeneous dry bulks such as iron ore and coal can be handled very

efficiently using continuous loaders and discharged with cranes and large grabs.


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Integrate Transport Modes Employed Cargo handling can be made more efficient if care is taken to integrate the

various stages in the transport systems. One way to do this is to standardizecargo units. Cargo is packed in a form of that can easily be handled by all stagesin the transport systems, whether it be a ship, lorry or rail truck. Containerizationof general cargo is an outstanding example of this principle.

Design a systems which covers all stages in the transport operation. Ships,terminal facilities, storage areas and land transport are integrated into a balancedsystem. This approach works best where the cargo flows are regular, predictableand controlled by a single company, making it possible to justify specialinvestment in ships and cargo-handling equipment.


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Developments in Bulk

Shipping


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End of World war II to 1960

Liberty ships had been the main fleet for moving cargo during thewar

With the rebuilding of countries after the war, there was a rapid

expansion in bulk requirements

As larger quantities of cargo were sought, the size of ships started togrow

Shippers were seeking economies of scale and shipowners wereseeking to maximise profits


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End of World war II to 1960

Employment of ships was high and investment in ship building andowning was made easy by soft loans available not only fromfinancial institutions but also shipyards

By 1954, tanker size ad, coincidentally, increased to 54,000 tonnes

Bigger ships created their own problems

Neither ports nor the land based transport were capable pf

completely meeting their needs


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The 1960s

The construction of such large ships was made easier bydevelopments in shipbuilding technologybetter weldingtechniques, corrosion control systems, better steel and bettermachinery

However, ship design had not been perfected for these large shipsand it was not uncommon for such ships to break up at sea due toinadequate strengthening of the hull

The growth in size was accompanied by a reduction in the flexibilityof operations for ships as well as a reduction in the number of portsthat were accessible


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The 1960s

To make up for this loss of flexibility, combination of carryingoil/bulk/ore (OBO) was built for Erling Naess in the Mid-1960s.

The first bulk shipping consortium (Seabridge) was established in

1960.

The consortium controlled about 3 million tonnes dwt of shippingwhich could be efficiently matched with the demand for ore, coal andoil

With the increase in number and size of tankers on the market, thetrade went into its first post-war depression


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The 1960s

The latter half of the 1960s was Arab-Israel war leading to theclosure of the Suez Canal

This was a welcome development from the tanker owners point of

view because the demand for tanker tonnage suddenly increased

Combination carriers joined tankers in the oil market and newbuilding orders were placed for more and larger ships.


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The 1970s

The early 1970s saw the bulk carrier market boom, fuelled, in partby growth in the Japanese steel industry

The effect of this was an increase in the number of ships ordered.

This good time was relatively short lived. By the time the new shipscame on the market, much of the demand for them had vanished.

In the oil sector, the oil majors controlled the tanker market.

They owned the ships and set freight rates


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The 1970s

During the early 1970s, and indeed, between 1973 (when the first oilprice hike took place) and 1977, tankers remained very busy

Oil exploration was undertaken on a wide scale in different regions

of the world

Nuclear, solar and wind powers increasingly harnessed as thesources of energy

Coal became important as the fuel for power stations and heavyindustry


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The 1970s

The effect of all this on the bulk carrier market was that orders fortankers were cancelled or converted to dry bulk carriers, since shipowners believed that coal would be the next major energy source

Those that were employed resorted to slow steaming in an effort tokeep their costs down as well as to help the supply situation: themore ships that were at sea with cargo, the fewer would becompeting for the scarce cargo available

As for the dry bulk sector, the tanker orders that were converted tobulk carriers added supply to the market that could not sustain thenumber of ships

The slump in shipping got worse


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The 1970s

Surplus of supply in the market was caused by

Large shipyard capacity, aided by heavy government subsidies Large demand for very cheap oil

Large supply of money

Investment by small shipowners and entrepreneurs who were attracted to investin shipping by a combination of the above


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1970s

The forum did proposed the scrapping of ships to reduce the glut ofshipping in the market

This was viewed by many as a waste of resources

However, large scale scrapping did not take place untill the mid-1980s

In an effort to remove some tonnage from the market:

Large ships used for storage

Segregated ballast systems were instituted in tnkers

Lay-up ships

Bringing about flexible loadlines


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The 1970s

The effect of this was to reduce the effective cargo carrying capacityof ships, resulting in an overall reduction of available tonnage


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The 1980s

The effect of the increase oil prices in the 1970s was that bulk oiltrade was lower than dry bulk trade in the 1980s

The consequence of reduction in the supply of oil and increase in

price was that western countries started to produce their own.

North Sea oil, for example, came into production fairly rapidly anddemand from OPEC started to fall


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The 1980s

Grain tradepatterns change, depending on competition amongmajor producers and natural conditions

Coal tradesteam coal for power stations

In anticipation of large demand for coal, Large number of deliveries in mid 1980s

Demand did not materialize

Scrapping depends upon demand for steel, freight rates and scraprates

Large amounts of scrapping in mid 1980s improved supply andd d b l id bl

Bulk Shipping

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