Page 206 - DMGT546_INTERNATIONAL_TRADE_PROCEDURE_AND_DOCUMENTATION

Unit 9: Characteristics of Shipping Industries

commodities; under the second category tariff specific commodities are grouped into a limited Notes
number of classes. The third category represents tariffs, which are a combination of the two
others.
Despite the existence of conferences and because of the increasing role of independent carriers in
the liner trades, the rates actually charged vary widely and often deviate substantially from
published tariffs. Carriers offer loyalty bonuses and apply rebates in violation of conference
agreements. Service contracts are gaining importance whereby individual shippers pledge a
minimum amount of cargo to be shipped during a certain period in return for specially discounted
rates offered by the contracted carrier.

9.7.3 Tramp Shipping

The environment in which tramp shipping takes place is close to the model of perfect competition,
and pricing is fully governed by the law of supply and demand. The charter rates are quoted on
a competitive basis through brokers in various exchanges throughout the world. The major
elements which influence the fixing of a specific rate are:
(a) Ship specification;

(b) Trade and route;
(c) General market conditions;
(d) Terms of charter party, i.e. distribution of costs between ship owner and chartered;
(e) Duration of charter;
(f) Urgency of the charter; and

(g) Convenience of the charter to the ship owner.

Task Discuss the significance of ocean freight structure.

Self Assessment

Fill in the blanks:
1. ....................................... method is by far the fastest and much safer, unless you are offering
some electronic product or service online which can be downloaded in real time.

2. ......................... is most probably the oldest method used in trade for overseas supplies.
3. .............................. is the most widely used method, especially in domestic trade.
4. Choosing an appropriate method is heavily dependent on ........................, the geographic
location of the desired destination, the nature of items, seller’s budget,
5. A ........................... is an association of two or more liner shipping companies.
6. ............................... shipping takes place in an environment which is totally different from
tramp shipping.
7. Two basic factors affect rate fixing in liner shipping- port and distance related factors and
...................... related factors.

8. In container shipping, different charges are applied to ‘less-than-container-loads’ (LCL)
and ‘........................................ .

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