DEDE LAW AND BUSINESS SERIES: A brief comparison on liner ship and tramp ship operations (1)

By Foluke Akinmoladun

In the engagement of vessels for the carriage of cargo, be it dry bulk cargo, liquid bulk cargo, manufactured or semi-manufactured goods, the vessel engaged maybe either one on a schedule of ports of loading and ports of discharge or may be one that is engaged on an individual basis based on the market. Such fixture of the vessel for a voyage in carriage of cargo has its different dimensions. This writeup will look briefly into the advantages and disadvantages of the different vessel carriage arrangement in describing their operations, examples of their operations and the best-suited cargo for such vessel arrangement.

Some ships in carrying her cargo, run a regular published timetable similar to a scheduled airline or railway. Potential customers wanting to ship cargo can easily find out when a ship is sailing to the port of discharge or disembarking from the port of loading. These vessels adhere to a published timetable, with clearly stated dates of call on set conditions of carriage. This type of vessel arrangement is referred to as liner vessels and the trade they engage in is referred to as liner trade. The cargos carried by liners are referred to as liner cargo.

Liner operation involves an adequately sized fleet and a fairly large shore establishment. Today the modern liner cargo service is multi-modal and is sophisticated in terms of its logistics and computerized operations. Liner companies are continuously striving to improve efficiency and reduce overall transit times to stimulate trade development and improvement in market share. The liner company therefore tends to be a large concern and in more recent years it operates its container tonnage on a consortia basis.

Liner cargos are usually made up of manufactured or partly manufactured goods. The vast majority of almost 90% of liner cargo are carried in containers.

Liner shipping however do not only relate to containers, but also to other types of cargoes which have a regular and fixed routing/service like RoRo services, Bulk cargo services on a Contract of Affreightment or long-term charter.

Liner shipping at times incorporates, high-capacity, ocean-going ships that transit regular routes on fixed schedules.

There are approximately 400 liner services in operation today, most providing weekly departures from all the ports that each service calls. Liner vessels, primarily in the form of containerships and roll-on/roll-off ships, carry about 60 percent of the goods by value moved internationally by sea each year.

Liner services offer cargo space to all shippers who require them. They sail on scheduled dates, irrespective of whether they are full or not. The vessels in a liner service generally fulfils the schedule unless in cases where a call at one of the ports has been unduly delayed due to natural or man-mad causes. Hence in liner operations, the regular scheduled service is the basis of a particular division/ cargo type or specialisation. It is vitally important to the ship-owner that everything is done to ensure punctual sailing and arrival dates, otherwise the company’s reputation and prestige quickly declines and this can adversely affect the profitability and the solvency of the shipping company in the long term.

An example of a liner shipping service is: The UK/NWC continent container service of MSC which has a fixed weekly schedule calling the South African ports of Durban, Cape Town and Port Elizabeth and carrying cargo to the UK/NWC ports of Felixstowe, Antwerp, Hamburg, Le Havre and Rotterdam.

A Tramp Service or tramper, on the other hand, is a ship that has no fixed routing or itinerary or schedule and is available at short notice (or fixture) to load any cargo from any port to any port according to demand. They do not follow a schedule but sail to wherever the market draws them. They routinely operate on an opportunistic basis, picking up suitable cargo as and when it becomes available, without necessarily a predetermined route or timetable. They will often have to sail from a port of discharge to their next port of loading with no cargo on board. This is known as a ’ballast voyage’ when the vessel is ’in ballast’ – without cargo.

One of the ways in which ship owners of tramp ships have tried to reduce the incidence and cost implications of ballast voyage has been to design and develop tramp ships that can carry both dry cargo and wet cargo. An example of such vessel is an ore-bulk-oil carrier, also known as combination carrier or OBO.

The idea behind its design is to reduce the number of empty (ballast) voyages and thus carry either dry or wet cargo from the port of discharge. One disadvantage is the huge maintenance costs of an OBO and the fact that there is a limit to the type of dry and wet cargo combinations that an OBO can carry. An example is an OBO for crude oil maybe be used for iron ore but not for grains.

These vessels are a common feature of the larger bulk trades for example crude oil from the Middle East, iron ore and coal from Australia, South Africa and Brazil. The ore/bulk/oil OBO however continues to fall, representing less than 1% of the world fleet. This is due to the high maintenance cost and absence of trades to support such tonnage.

Another example of a tramp ship operation is a ship that arrives at Durban from Korea to discharge cargo and might carry some other cargo from Durban to the Oakland in the West Coast of USA, which is in an entirely different direction. From Oakland, it could then carry some cargo to Bremerhaven. As this example shows, the movements of a tramp ship is dependent on the markets for the cargo it carries, its design, whether or not it has cargo handling equipment and the kind of ports that it can load and discharge at.

Finally, Tramps may be used for dry bulk cargo or for bulk liquids depending on the design of the vessel. In addition, to generate business, a contract to lease the vessel known as a charter party is drawn up between the ship owner and the charterer. There are three types of charters, voyage, time and demise.