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International trade shipping (International Trade Shipping Industry) is considered to be the navigation of merchant ships for the purpose of commercial activities for the transportation of goods and passengers between countries along the sea lanes.

The form of shipping organization and commercial relations of transport process participants are defined by nature of cargo traffic and ways of trade of this or that commodity (cargo).

Depending on the form of organization of shipping, i.e. the work of ships, international merchant shipping is divided into:

  • Tramp shipping - a form of irregular shipping, not associated with permanent ports of loading/unloading and not limited to certain types of cargo;

  • liner shipping - a form of regular navigation, serving traffic directions with stable cargo and passenger flows and ensuring quick cargo delivery;

  • merchant shipping is a form of regular shipping related to intra-corporate transportations, mainly of mineral raw materials by subordinate ships of big industrial companies.

The contract between the charterer (cargo owner or his representative) and the charterer (ship owner or his representative) in tramp shipping is executed in the form of Charter-party (Charter). Under this contract, one party, the "charterer", must ensure the loading of the ship in the port of departure and the other party, the "carrier", must accept the cargo on the ship from the sender, deliver it to the destination port and transfer the cargo to the consignee.

The charterer must pay the carrier a fee for the carriage - freight. Under this contract, cheap cargoes are transported, which can be accumulated up to the size of a "steamship consignment". All terms and conditions of the contract are agreed between the parties.

Transportation under this form of contract was practiced in the Middle Ages in the Mediterranean basin. The contract was drawn up on one large sheet of paper, which was folded and torn into two halves. One half was kept by the skipper, and the other half was given to the merchant (sender of the cargo). At the port of destination, the buyer would present the half of the document received from the merchant to the skipper, who would put it to his half, and if the torn edges matched, it would confirm that the bearer of the document had the legal right to receive the cargo. Hence the name - in Latin carta partita means torn paper. Later on, this name came into use as a term for the contract of carriage by sea and the chartering of a vessel. Therefore, today charter-party or briefly charter - historically formed document containing the terms of the contract of carriage by sea and vessel charter, which after signing becomes a contract of carriage by sea.

Linear Shipping

Linear navigation emerged due to necessity in regular ocean transportation of valuable general cargoes: industrial equipment, consumer goods, etc. Such transportation was necessitated in early 19th century on the North Atlantic as a result of fast industrial and economic development of the USA and European countries. The U.S. became a major market for expensive goods of European manufacture and at the same time a supplier of its goods to European markets. In the second half of the 20th century, Japan and developed countries of South-East Asia (Southeast Asia) took a similar place in world trade.

At present, the main lines of world liner traffic are: Europe - USA, USA - SEA, SEA - Europe, where there are large and stable cargo flows of valuable general cargoes in counter directions, the main defining characteristic of which is high (1-2 orders of magnitude higher than mass) cost and, as a consequence, small batch supplies. Such goods as cotton, wool, wine, coffee, electronics, cars, etc. cannot lie in warehouses for a long time and be accumulated for shipment by shiploads, so they are shipped immediately as they arrive. And high-value cargo is usually sold in batches of a few tons (and sometimes less than a ton). It is impossible to charter a whole ship for such consignment and under existing in XIX century forms of commercial shipping, a seller of expensive goods could send them only on cargo-passenger ships or mail-packet ships that made regular voyages, but carrying capacity of these ships was soon exhausted.

A characteristic feature of liner shipping is that the shipowner is the initiator of transportation. Relying only on market research and making sure that there is demand for transportation of valuable small-particle cargoes, he organizes a shipping line at his own risk and offers transportation services to a wide range of shippers. Such an offer is made in the form of a published and advertised schedule. Performance of announced voyages is not connected with conclusion of preliminary contracts and receipt of shippers' guarantees concerning cargo delivery (as it takes place in tramp shipping: first a charter-party - then a voyage).

The line carrier becomes a party to a public contract, i.e. it must enter into a contract of carriage by sea with any and every consignor who applies to it, if it has the technical capability to do so. A vessel's load is formed of dozens of small consignments of different shippers, and, in fact, one vessel voyage executes dozens of contracts of maritime carriage. The carrier has no possibility to discuss and mutually agree the terms of the contract with every consignor. Initially it is executed by the accepted application of the consignor - Booking Note, and after actual acceptance of the cargo it is confirmed by a liner bill of lading.

The shipper delivers his goods to the port and delivers them to the warehouse of the line company, and a bill of lading is issued with the mark "accepted for carriage". After loading of this consignment onto a ship, the name of the ship is entered into the bill of lading and it becomes an "on board" bill of lading. When the cargo arrives at the port of destination, it is unloaded at the company's warehouse and notified to the consignee, who then collects it from the warehouse.

Linear shipping accounts for about 30% of the physical volume (in tons) and 75% of the total value of cargo transported by sea.

The role of liner shipping increases even more in the context of globalization of the world economy, which causes expansion and deepening of interstate trade relations, when often semi-finished products or components are produced in one place, and the finished product - on the other side of the ocean. It means that sea transport becomes an indispensable participant of the production process, on the reliable and rhythmic operation of which the final results of production depend. In its turn, it requires from line companies a high degree of organization of vessel traffic and use of logistical service systems.

Linear shipping is a form of organization of cargo transportation in which the shipowner (line operator) ensures fulfillment of five obligatory conditions:

  1. regular movement of named vessels;

  2. according to a schedule announced in advance

  3. between established ports;

  4. on the basis of a standard contract of carriage by sea - the line bill of lading;

  5. with payment for transportation under stable tariffs.

The following types of lines are distinguished:

  • unilateral, operated by one shipowner;

  • joint, operated by several transportation companies;

  • conference lines, which are organized and operated on the basis of agreements of conferences (unions) of ship-owning companies.

The United Nations (UN) developed in 1974 the Code of Conduct for Liner Conferences, according to which a liner conference is a group of two or more shipping companies, operating ships, which provide international liner transportation services on a certain direction and have agreements on common tariff rates, rights and obligations of conference members and other conditions.

The Code approved the concept of open liner conferences with the priority right of participation of national shipping companies of the countries, whose trade is served by the liner conference, as well as implementing the principles of volume and freight distribution. Shipping companies of the third countries have the right to participate in transportation not exceeding 20% of the total cargo traffic (the principle 40:40:20). However, today in the world the principles of the Code apply only to 17-18% of liner transportation.

Containerization of transportation, intensification of cargo transshipment operations, growth of specialized ships use resulted in line shipping acquiring two forms of service:

  • Regular Shipping Lines provided for: definite route and direction of voyage, i.e. base ports which vessels of the line necessarily call and optional ports which vessels could call; definite frequency of vessel departures (usually 2-3 departures per month distributed in ten-days or weeks); cargo categories, including restrictions on consignment weight and dimensions of cargo items; cargo transportation tariffs between pairs of ports.

  • Container and Ro-Ro Lines (Container Lines; Ro-Ro Lines) were separated from regular shipping lines. They were called urgent, as vessels working on these lines keep a schedule of calls to ports with the accuracy of - date of the month or day of the week.

In order to provide transportation of cargoes on urgent lines feeder transport-technological systems are created, which envisage the use of small feeder ships by shipping companies to transport cargoes in addition to the trunk ships. In this case big lots of containers or general cargoes delivered by high-speed ships along the main lines are concentrated in 2-4 basic largest ports equipped with highly mechanized terminals which are used for cargo transshipment to other means of transport and which play the role of international transshipment centers - Distribution Centers. Then feeder ships distribute containers and general cargoes for short and medium distances in small batches, serving the areas, gravitating to the distribution center. Such centers are Hong Kong, Singapore, Hamburg, New York, Rotterdam, Yokohama and other similar ports.

Commercial and industrial shipping

Its emergence is connected with the necessity of regular supplies of different kinds of mineral raw materials to its consumers - large industrial companies, divided by the sea space: firstly coal and ores, and later oil, bauxites, apatites, phosphates, etc. These cargoes are characterized by the following features:

  • relatively low price;

  • Delivery in batches of tens or hundreds of thousands of tons evenly throughout the year;

  • stability of the cargo flow over many years.

A cargo owner (industrial company) enters into a contract with a ship owner not for transportation of a particular batch, but for regular cargo transportation of certain cargo in agreed quantities on a regular basis. The subject of the contract is not a ship owner's putting a certain ship at charterer's disposal, but regular performance of certain voyages under the agreed schedule over a long period of time. Theoretically, a fixed group of vessels can perform the same voyages for the benefit of the same cargo owner under one contract which is repeatedly renewed.

Affreightment on Consecutive Voyages. Usually such contracts are concluded with a condition that the ship upon completion of discharging shall immediately return to the original port of loading for the next voyage and so on until the whole agreed number of voyages is completed. During the entire term of the contract, the cargoes of other cargo owners may not be carried on the ship without the charterer's approval, even in the direction of the ship's cargoes, even in the opposite or ballast direction. The agreement is usually executed by one charter with indication of the number of voyages to be made by the vessel. Substitution of the vessel stipulated in the agreement must also be agreed upon with the charterer. The freight rate is set for each voyage separately or an average rate for all voyages - in it the shipowner tries to compensate expenses related to ballast crossings of the ship;

A General Contract is an agreement by which a shipowner undertakes to carry a specified quantity of cargo over a specified period of time (usually a year or several years). In order to fulfill his obligations the carrier has the right to use not only his own but also leased vessels and replace them during the term of the contract.

Each contract contains the basic conditions: the period of the contract with exact indication of the dates of the first and last shipping; ports of loading and unloading; type and total quantity of cargo and size of its individual lots; type or carrying capacity of vessels which the carrier may use for execution of the contract; minimum interval of supply of vessels for loading. Usually the contract provides for a rather flexible program of carriage, and its more detailed scheme is defined later, when a separate voyage charter is issued for each voyage of the ship performing carriage under a freight or other similar contract, which specifies the vessel name, specific ports of loading and discharge and other conditions not stipulated in the contract.

C miscellaneous and multimodal transport

In the international carriage of goods is becoming more widespread so-called multimodal transport, which involves several modes of transport (sea, river, rail, road, air), providing transportation of goods throughout the transport chain. Abroad, mixed transportations are called combined (Combined Transport), intermodal (Intermodal Transport) or multimodal (Multimodal Transport) transportation.

Combined transportation is not an independent form of shipping organization. It is a modern, most competitive form of organization of transportation of valuable general cargoes, which is a result of containerization process and implementation of progressive transport-technological systems.

In multimodal transportation a new participant with its own peculiar status appears - a contract carrier, the so-called Combined Transport Operator (Combined Transport Operator), or COT for short. Common Transport Operator is not a carrier of any particular type of transport in the traditional sense: it enters into a complex contract - a combined transport document, which includes the carriage of goods by several modes of transport, related services at transshipment points and full freight forwarding service.

In relations with consignors of goods, OSP enters into a contract as a carrier. Large freight forwarding companies, which have been actively mastering the status of a "carrier" since the 1970s, most often act as FSAs. In the U.S. the new type of forwarder came to be called - Non Vessel Operating Common Carrier (NVOCC).

Shipping companies can conclude a contract for carriage of goods in intermodal traffic as well, and then they assume the obligations of overland transportation and freight forwarding service. In relations with actual carriers and other transportation companies, OSP acts as a shipper and concludes with them contracts of carriage of goods and terminal services - stevedore agreements on an ordinary basis. FSR performs forwarding functions both independently and through its representatives and agents at transshipment points.

Thus, for international multimodal transport of goods, in contrast to unimodal transport (transportation of goods by one mode of transport), the following characteristics are inherent:

  • transportation of goods by two or more modes of transport;

  • the place of departure and destination of goods are in different countries;

  • there are special tariff rates, which cover transportation of cargo to the places of destination (Intermodal Tariff);

  • One of the participants in the transportation (OSP) organizes the entire transport process under a single document (combined transport document or combined transport bill of lading), enters into transport contracts with individual carriers, coordinating their actions and ensuring the entire transport cycle, and is responsible for the cargo from the place of origin to destination;

  • cargoes are transported mainly in containers. The contract of multimodal transport is governed by the UN Convention on International Multimodal Transport of Goods in 1980 and the UNCTAD / ICCPR-95. In the understanding of the said Convention, the main purpose of multimodal transport is to deliver goods to the destination just in time, in good condition and at possibly low cost. Both the Convention, which has not yet entered into force, and the Regulations are optional norms. Therefore, each of these documents regulates the terms of a multimodal transport contract only when the parties to the contract have deemed it appropriate.

Mixed transport fits in seamlessly with the concept of logistics, which has become very practical in recent years and which involves the implementation of the principles of "Just In Time" and "Door-to-Door" for the delivery of goods, using a consolidation of packages (goods in containers, packages, etc.).

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