Shipping Transport Operations Contract - Essay Example

Task I: Transport operations in Shipping Nomination of vessels This is an agreement that exists between a charterer and the owner of a ship, owner of a deponent or carrier in order for them to carry a specified large quantity of goods between places that have a specific period. The charterer stipulates a type and size of a vessel to transport goods, which owners do not nominate (Branch, 2007). The charter names the ship that they will use for consecutive voyages. At times, the vessel is under control of a charter implying that he clearly defines goods to carry and total period.

The owner of a ship approximates shipment dates and this gives a fair spread of shipment over that time. Each voyage contains a minimum quantity with margins that are more or less depending on the option of either the owners or the charterer. Loading laycan schedule: The owner of a ship has a responsibility of informing the charterer that the vessel is ready for loading. If the ship owner by any chance fails to notify the carrier that the vessel is ready, then this will cause a delay. It is not the responsibility of a charterer to find out time that a ship arrives to be ready for loading of a cargo (Branch, 2007).

If the owner of a ship fails to give a notice, then he liable for all cost that result from such delays. Despatch: This term applies to all methods of handling cargo when the carrier gives goods to the consignee in the port where despatch takes place. The carrier delivers the cargo at expected time and at required place of destination. This facilitates dispatching of goods from a vessel. Demurrage: Demurrage is the number of days that are agreed at a determined rate for which payment takes place should loading time go beyond the set loading time.

It is a liquidated damage clause and it represents attempts that they use to assess damages that the owner of a ship will incur in cases where a charterer goes beyond his set time for discharging or loading. The demurrage rate does not constitute to a penalty clause. Laytime: This term aims at limiting the amount of time that the charterer has to load or unload a cargo from a vessel that is on transit. It specifies exact number of days that loading of a cargo must take. This is because in the voyage charter party, the payment that a charterer makes to owner of a ship depends entirely on quantity of a cargo that was loaded and not on amount of time that the venture has to take (Branch, 2007).

Freight payment: It refers to charge that the carrier rises for transportation of a cargo. In international sea carriage, payments are in terms of United States Dollar. Once the charterer loads cargo into a vessel, then the shipping company is entitled to full payment despite when a ship sinks while on transit. The cargo owner either pays freight at the port of loading to get the original bill of lading or at the port where discharge takes place in exchange for the release of consignment from custody of a shipping company (Branch, 2007).

Task II: Current freight market outlook The freight industry in general is closely connected and dependent on the trends in international trade, if any changes occur in volumes, the industry is directly impacted. The recent global recession in an example of how the industry is closely connected to global trade, as the industry also slowed down during that period. However, the shipping industry witnessed high growth in freight volumes between 2004 and 2008, this period saw shipping companies perform increased business.

The credit crisis resulted in a decline in trade and number of world fleet remains laid down with no cargo to transport. Kumar (2009) notes that oil tankers are unable to bring in enough money to over their running costs and are operating on about 65% of their capacities. At the same time, the dry bulk carriers are as well facing low volumes compared to what they carried in 2008 when they were at their peak. Indeed, the Baltic Dry Index took a plunge. In addition, the container trade and other container companies as well face difficulties in maintaining profitability.

The shipbuilding sector also has not been spared by the financial crisis as the number of ship sales has reduced. Some companies, particularly small one have collapsed or merged to survive. Presently, there has been minimum improvement in freight volumes as many countries globally pull out of recession. Nonetheless growth in the industry is projected to be gradual. The exact time when the freight industry will be performing well is still unclear (Kumar, 2009). Some ship companies are still cutting down on their services and this cost cutting measures may compromise the growth of the industry.

Suitability of the ships for the contract There are several factors that have to be considers when contracting a ship, these includes, size, profile age, history and ownership. These factors are explained below: Size of the ship: Draught, length and height of the ship to be contracted are critical aspects when taking the ship into a port and all the details about the size, volume, draught, equipments and capacities of the ship. Ship profile: Ships are regularly contracted, thus the record of past history of the ship is important.

This will enable the charterer to know the trends of the ship and any weaknesses concerning performance standards of the ship Age of the ship: Age is important since some ports have placed bans and refuse to allow ships over a particular age to dock, even if they are in good condition. Thus, charterer should take into account the age of the ship and the landing port. Ship history: Before closing the contract, it’s important to evaluate history of the ship since it was built. Poor design and building errors can result to successive incidents with similar causes.

Owner/Manage: ships are regularly transferred or sold to new managers. Whereas the real owner or manager of the ship is not particularly necessary, the technical management is crucial for safe operation. Thus, it is essential to investigate the ship before contracting. Other factors are crew experience, external communication, cargo, terminal reports, class records and casualty information. Bibliography ______ (2011): Guidance on Good Practices for Ship Vetting: [Available Online] Branch, A (2007): Elements of Shipping: Taylor & Francis.

Kumar, A (2009): Shipping industry: An Overview, Current Situation and Future Outlook: Retrieved on 21/8/2011, from: http://www.frost.com/prod/servlet/market-insight-top.pag?docid=188028767