What is shipping & its terminology ?
The international shipping industry is responsible for the carriage of around 90% of world trade. Without shipping,
intercontinental trade, the bulk transport of raw materials, and the import/export of affordable food and manufactured goods would simply not be possible.Seaborne trade continues to expand, bringing benefits for consumers across the world through competitive freight costs.
In this blog we will try to understand the shipping terminolgy.
Tankers:- Crude Tankers (VLCC, Suexmax and Aframax)
VLCC – These are Very large crude carriers (VLCC) which have a capacity ranging between 180,000 to 320,000 DWT.
They are extensively used in North Sea, Mediterranean and West Africa.
Suezmax – They are named after the Suez Canal. They are mid-sized cargo vessel with a capacity between 120,000 to 200,000 DWT.
Aframax – These vessels are ideal for short to medium haul oil trades and have a capacity between 80,000 to 120,000 DWT.
They are used in regions which lack large ports to accommodate giant oil carriers.
Product Tankers– These are used for bulk transporting of petroleum products such as gasoline, kerosene, naptha and gas oil.
LR1, LR2, MR1, MR2 fall under the product tanker category.
Bulk Carriers– These vessels are designed to carry dry, unpackaged cargoes in large quantities like coal, ore, cement, grains, cargoes whose containerized transportation would be highly uneconomical. Capsize, panamax, handymax, handysize fall under the bulk carrier category of tankers.
Tanker Trade Terminology –
DWT – Dead weight tons, which refers to the carrying capacity of a vessel by weight.
Freight Revenue – Money paid by a charterer to the ship owner for the use of a vessel under a voyage charter.
TCE – Time charter equivalent, a standard industry measure of the average daily revenue performance of a vessel.
The TCE rate achieved on a given voyage is expressed in $/day and is generally calculated by subtracting
voyage expenses, including bunker and port charges, from voyage revenue and dividing the net amount
(time charter equivalent revenues) by the round-trip voyage duration.
Voyage Expense – Expenses incurred due to a vessel traveling to a destination, such as fuel cost and port charges.
Vessel Operating Expense – The costs of operating a vessel that are incurred during a charter, primarily consisting
of crew wages and associated costs, insurance premiums, lubricants and spare parts, and repair and maintenance costs. Vessel operating expenses exclude fuel and port charges, which are known as “voyage expenses.”
Dry Docking – The removal of a vessel from the water for inspection or repair of those parts of a vessel which are below the water line.
During dry dockings, which are required to be carried out periodically, certain mandatory classification society inspections are carried out and relevant certifications issued. Dry dockings are generally required once every 30 to 60 months.
Special Survey – An extensive inspection of a vessel by classification society surveyors that must be completed at least once during each five year period. Special surveys require a vessel to be drydocked.
Time Charter – A charter under which a customer pays a fixed daily or monthly rate for a fixed period of time for use of the vessel.
Subject to any restrictions in the charter, the customer decides the type and quantity of cargo to be carried and the
ports of loading and unloading. The customer pays the voyage expenses such as fuel, canal tolls, and port charges.
The ship owner pays all vessel operating expenses such as the management expenses, crew costs and vessel insurance.