Thursday, February 10, 2011
Sunday, December 26, 2010
Sunday, November 15, 2009
SNAPS NOTICE FOR BROCHURE
THIS IS TO INFORM TO ALL THE STUDENTS OF THE DEPT . THAT SNAPS FOR BROCHURE WILL TAKE PLACE . EVERYBODY MUST BE THERE IN THE FOLLOWING DRESS CODE .
-BLACK COAT
-BLUE SHIRT
-BLACK PANT
-BLACK TIE
SCHEDULE :
17 NOV 1 PM ONWARDS MIB,MFC,MMT&MRLM (PREVIOUS)
18 NOV 1PM ONWARDS MIB,MFC,MMT &MRLM (FINAL)
-BLACK COAT
-BLUE SHIRT
-BLACK PANT
-BLACK TIE
SCHEDULE :
17 NOV 1 PM ONWARDS MIB,MFC,MMT&MRLM (PREVIOUS)
18 NOV 1PM ONWARDS MIB,MFC,MMT &MRLM (FINAL)
Saturday, November 14, 2009
UN CONVENTION ON SHIPPING
UN CONVENTION ON SHIPPING BY NEERU AND RAJDEEP
· UNCTAD
· Develop country’s hegemony in shipping
· Complaints against conference system
· Battle for liner code
· UN Convention-The final act
· Convention on liner code: Highlights
UNCTAD
[United Nations Conference on Trade and Development]
UNCTAD was establish in the year 1964.One special feature is that, it has a committee on shipping, which deals mainly with the commercial and international trade aspects of shipping.
The work programme in the field of shipping adopted by the UNCTAD‘s committee on shipping at the committees first session held from eight to 23rd Nov. 1965 and at its special session held from 18th to 25th July 1966 and as amended at subsequent sessions constitutes the foundation of the numerous reports and studies on various aspects of shipping and shipping economics prepared and issued by the unctad.
Before establishment of the unctade of few shipping economist and the institute of shipping economist at Bergen in Norway and the institute of shipping economist at Bremen in German had brought out very valuable studies on some aspect of shipping and shipping economist. The reports and the studies prepared by the unctad secretariat in pursuance of the work programme in the field of shipping admirably further the cause of economist of shipping in as much as they covered wide and various aspects of shipping and there economist significance.
The research and studies included in the work program adopted by the unctad committee on shipping cover the following topics:
Establishment of National and Regional Consultation Machinery;
Level and structure of Freight Rates, Conference Practices and Adequacy of Shipping Services;
Improvement of port and connected facilities;
Establishment of merchant marines in developing countries;
Technological program of shipping;
Review of current and long-term aspects of maritime in shipping;
International seminars on shipping economics; and
International legislation on shipping.
Developed Countries Hegemony in Shipping
Although many developing countries were aware that the development of their shipping industry world contributes their economic growth, the shipping circles in the developed countries had propagated many misconceptions and myths. The later contended that the establishment of shipping industries by the developing countries was insufficient of their scarce of their resources, which could be more beneficially employed by them in the improvement of their infrastructure such as ports. Such connection is move by the developing countries to develop their shipping; they argued, would trade and were not in interest of world economy. Shipping, according to them was a highly capital-incentive and sophisticated industry in the provision of which developed countries had a great economic advantage over developing countries. The specialization of developed countries in shipping was economically most desirable and viable and any interference with this state of affairs would be at the cost of the world trade and economy. The developed countries had convinced themselves that on the basis of “sound economic criteria”, the development of merchant marine by developing countries was not desirable.
Complaints against conference system
Conference system serves the general trade of the world and spreads in monopolistic and oligopolistic tentacles.
The most importance institutional arrangement in shipping which preponderantly influences and acquisition and operation of liner ships, freight rate and important aspects of carriage of cargo in liner trades in the conference system, which has been in existence for a country. Although world sea-borne system, which is carried by linear ships, in much best in quantity than world sea-borne trade in dry bulky cargo and in oil cargoes, it far out weighs other cargoes in value.conferances which consisted almost exclusively until nineteen-fifties and thereafter predominantly of shipping lines from developed countries, possess semi-monopoly powers, and they control entry of new shipping companies into linear trades, control competition among their members and by competitive action among their member eliminate outside competition. This has the effect of preventing new shipping lines from participating in the trades and also of fixing and setting the freight rates, of adopting practices and of providing services which in many case of providing services which in many cases were not in the best interests of the trades to which they catered.
The developing countries were adversely affected in two ways.
Firstly, they could not build up liner fleets for participation in their own trades.
Second, their import and export trades also suffered because the conferences were in a very strong position and the shippers or consignees of cargo who were unorganized could not negotiate on equal terms with the conferences. The shipping circles and even the government of the developed countries resented the criticism on the ground that the critics did not understand the basic tenets of shipping economics in regard to provision of regular liner services.
Most of the complaints against the conference related to:
1. Fright rates: General insurance of freight rates, fixation of specific freight rates, and promotional freight rates;
2. Participation and share: Participation of share of national shipping line; that is; entry into conferences covering trades;
3. Unfair clauses: Unfair clauses in loyalty agreements and imbalance of obligations between shippers and ship-owners.
4. Inadequacy shipping: The inadequacy of shipping services, e.g. failure to serve particular port or range of ports.
5. Quality of shipping services: The quality of shipping services particularly the suitability of vessels and their cost of operation.
6. Unreasonble withholding: The unreasonable withholding of dispensation to use non-conference vessels.
In some circumstances, a shipping may not have an option on the vessels to be used. Because of certain laws enacted to protect a country’s interest, mandatory use of a particular vessel is not uncommon.
In general the rates changed by U.S. conference lines are higher than threats changed by lines of other nations. Operators of certain countries are able to charge lower rates because of subsidies and support received from their government. Some ships at one time were able to quote rate as much as two-thirds lower than U.S. conference lines published prices. Subsequently, conference lines decided to give illegal rebates to major customers in order to win bank cargo shipments lost to the soviets.
Recognizing both that nations have shipping interests and that subsidies cause problem, the UNCTAD proposed the UNCTAD code of liner conduct.
According to UNCTAD code. Each trading partner is allowed to reserve 40% of the total liner cargo for its national flag lines and to allocate 20% cargo to third flag operators
Battle for code of conduct:
The battle for the code began in right earnest at UNCTAD-3rd in Santiago in April-May 1972. It was at that conference that developing countries were able to agree upon the unified draft of a code of conduct for liner conferences and get it remitted to the UN general assembly for further necessary processing and adoption as an international convention any multilateral legally binding instrument.
· UNCTAD
· Develop country’s hegemony in shipping
· Complaints against conference system
· Battle for liner code
· UN Convention-The final act
· Convention on liner code: Highlights
UNCTAD
[United Nations Conference on Trade and Development]
UNCTAD was establish in the year 1964.One special feature is that, it has a committee on shipping, which deals mainly with the commercial and international trade aspects of shipping.
The work programme in the field of shipping adopted by the UNCTAD‘s committee on shipping at the committees first session held from eight to 23rd Nov. 1965 and at its special session held from 18th to 25th July 1966 and as amended at subsequent sessions constitutes the foundation of the numerous reports and studies on various aspects of shipping and shipping economics prepared and issued by the unctad.
Before establishment of the unctade of few shipping economist and the institute of shipping economist at Bergen in Norway and the institute of shipping economist at Bremen in German had brought out very valuable studies on some aspect of shipping and shipping economist. The reports and the studies prepared by the unctad secretariat in pursuance of the work programme in the field of shipping admirably further the cause of economist of shipping in as much as they covered wide and various aspects of shipping and there economist significance.
The research and studies included in the work program adopted by the unctad committee on shipping cover the following topics:
Establishment of National and Regional Consultation Machinery;
Level and structure of Freight Rates, Conference Practices and Adequacy of Shipping Services;
Improvement of port and connected facilities;
Establishment of merchant marines in developing countries;
Technological program of shipping;
Review of current and long-term aspects of maritime in shipping;
International seminars on shipping economics; and
International legislation on shipping.
Developed Countries Hegemony in Shipping
Although many developing countries were aware that the development of their shipping industry world contributes their economic growth, the shipping circles in the developed countries had propagated many misconceptions and myths. The later contended that the establishment of shipping industries by the developing countries was insufficient of their scarce of their resources, which could be more beneficially employed by them in the improvement of their infrastructure such as ports. Such connection is move by the developing countries to develop their shipping; they argued, would trade and were not in interest of world economy. Shipping, according to them was a highly capital-incentive and sophisticated industry in the provision of which developed countries had a great economic advantage over developing countries. The specialization of developed countries in shipping was economically most desirable and viable and any interference with this state of affairs would be at the cost of the world trade and economy. The developed countries had convinced themselves that on the basis of “sound economic criteria”, the development of merchant marine by developing countries was not desirable.
Complaints against conference system
Conference system serves the general trade of the world and spreads in monopolistic and oligopolistic tentacles.
The most importance institutional arrangement in shipping which preponderantly influences and acquisition and operation of liner ships, freight rate and important aspects of carriage of cargo in liner trades in the conference system, which has been in existence for a country. Although world sea-borne system, which is carried by linear ships, in much best in quantity than world sea-borne trade in dry bulky cargo and in oil cargoes, it far out weighs other cargoes in value.conferances which consisted almost exclusively until nineteen-fifties and thereafter predominantly of shipping lines from developed countries, possess semi-monopoly powers, and they control entry of new shipping companies into linear trades, control competition among their members and by competitive action among their member eliminate outside competition. This has the effect of preventing new shipping lines from participating in the trades and also of fixing and setting the freight rates, of adopting practices and of providing services which in many case of providing services which in many cases were not in the best interests of the trades to which they catered.
The developing countries were adversely affected in two ways.
Firstly, they could not build up liner fleets for participation in their own trades.
Second, their import and export trades also suffered because the conferences were in a very strong position and the shippers or consignees of cargo who were unorganized could not negotiate on equal terms with the conferences. The shipping circles and even the government of the developed countries resented the criticism on the ground that the critics did not understand the basic tenets of shipping economics in regard to provision of regular liner services.
Most of the complaints against the conference related to:
1. Fright rates: General insurance of freight rates, fixation of specific freight rates, and promotional freight rates;
2. Participation and share: Participation of share of national shipping line; that is; entry into conferences covering trades;
3. Unfair clauses: Unfair clauses in loyalty agreements and imbalance of obligations between shippers and ship-owners.
4. Inadequacy shipping: The inadequacy of shipping services, e.g. failure to serve particular port or range of ports.
5. Quality of shipping services: The quality of shipping services particularly the suitability of vessels and their cost of operation.
6. Unreasonble withholding: The unreasonable withholding of dispensation to use non-conference vessels.
In some circumstances, a shipping may not have an option on the vessels to be used. Because of certain laws enacted to protect a country’s interest, mandatory use of a particular vessel is not uncommon.
In general the rates changed by U.S. conference lines are higher than threats changed by lines of other nations. Operators of certain countries are able to charge lower rates because of subsidies and support received from their government. Some ships at one time were able to quote rate as much as two-thirds lower than U.S. conference lines published prices. Subsequently, conference lines decided to give illegal rebates to major customers in order to win bank cargo shipments lost to the soviets.
Recognizing both that nations have shipping interests and that subsidies cause problem, the UNCTAD proposed the UNCTAD code of liner conduct.
According to UNCTAD code. Each trading partner is allowed to reserve 40% of the total liner cargo for its national flag lines and to allocate 20% cargo to third flag operators
Battle for code of conduct:
The battle for the code began in right earnest at UNCTAD-3rd in Santiago in April-May 1972. It was at that conference that developing countries were able to agree upon the unified draft of a code of conduct for liner conferences and get it remitted to the UN general assembly for further necessary processing and adoption as an international convention any multilateral legally binding instrument.
DRY PORTS
DRY PORTS by shivani and Megha Nayyar
India has a long coastline spanning 7600 kilometres forming one of the biggest peninsulas in the world. It is serviced by 12 major ports and 185 notified minor and intermediate ports].
Major ports handled over 80% of all cargo traffic . However, the words "major", "intermediate" and "minor", do not have a strict association with the traffic volumes served by these ports. As an example, Mundra Port, a newly developed minor port in the state of Gujarat registered a cargo traffic of around 28.8 million tonnes per annum during the financial year of 2008, which is higher than that of many major ports
The classification of Indian ports into major, minor and intermediate has an administrative significance. Indian government has a federal structure, and according to its constitution, maritime transport falls under the "concurrent list", to be administered by both the Central and the State governments. While the Central Shipping Ministry administer the major ports, the minor and intermediate ports are administered by the relevant departments or ministries in the nine coastal states of West Bengal, Orissa, Andhra Pradesh, Tamil Nadu, Kerala, Karnataka, Goa, Maharashtra and Gujarat. Several of these 185 minor and intermediate ports are merely "notified", with little or no cargo handling actually taking place. These ports have been identified by the respective governments to be developed, in a phased manner, a good proportion of them involving Public-private partnership.
Cargo handling is projected to grow at 7.7% until 2013-14. Some 60% of India’s container traffic is handled by the Jawaharlal Nehru Port Trust inMumbai. It has just 9 berths compared to 40 in the main port of Singapore. It takes an average of 21 days to clear import cargo in India compared to just 3 in Singapore.
IMPORTANCE OF MARINE SECTOR
• Marine transportation plays a key role in Global economy
• 90% of the world’s trade involves shipping
• Importance of water transport is increasing with economic Globalization
• Only mode of transport that can effectively linked the centers of industrial production to their markets . Ports in developing countries represent a key asset for economic development
• They need to operate efficiently and be properly structured in order to support an increase in trade and GDP by linking countries, both coastal and land locked, productive hinterland and consumers to global markets
• Through their nodal role of facilitating intermodal transport ports have a significant role in contributing towards achievement of the Millennium Development Goals,
• They need to operate efficiently and be properly structured in order to support an increase in trade and GDP by linking countries, both coastal and land locked, productive hinterland and consumers to global markets
• Through their nodal role of facilitating intermodal transport ports have a significant role in contributing towards achievement of the Millennium Development Goals,
INDIAN PORT SECTOR SCENARIO
At the central level, the Department of Shipping of the Ministry of Shipping, Road Transport and Highways (MoSRTH) is responsible for formulating policies and overseeing the sector.
} At the state level, the maritime boards oversee non-major ports in Gujarat, Maharashtra and Tamil Nadu. In other states, port departments of the respective state governments oversee non-major ports.
WHAT IS MAJOR AND NON-MAJOR PORTS
The Indian port sector has been broadly divided into - Major ports and Non-major ports.
The technical nomenclature Major and Non-major is based on the legal distinctions made under the two key source laws viz. Indian Ports Act 1908 and Major Ports Act 1963.
The distinctions between the Major and Non-major Ports is in terms of the distribution of maritime jurisdiction between the Central and State governments.
Major ports are listed in serial 27 of the Constitution and are administered under Major Port Trust Act of 1963. All ports, other than major ports are listed under the concurrent list of the Constitution and administered jointly by Central and State governments under the Indian Port Act 1908.
LEGAL FRAMEWORK OF PORTS
} In 1998, the foreign direct investment (FDI) limit in the port sector was raised to 74 per cent and subsequently, in 1999, 100 per cent FDI in the sector.
} In 1998, the shipping ministry came out with Guidelines for Private Sector Participation in Ports” through JVs and foreign collaborations.
} In 2000, the Major Port Trusts Act, 1963 was re-amended to allow major ports to form JVs with non- major foreign ports and companies.
} During 2003, Rail Vikas Nigam Limited (RVNL), a Special Purpose Vehicle (SPV), was created to undertake rail-port connectivity projects under the National Rail Vikas Yojana (NRVY) which was initiated in 2002.
} In August 2004 - Formulation of the Draft Maritime Policy. The draft maritime policy, which is still awaiting final cabinet approval, has been partially implemented.
} In July 2004, the ISPS Code, which is a set of regulations designed for maritime security, came into force.
} Sethusamudram Ship Canal Project (SSCP) and the National Maritime Development Programme (NMDP)- were launched in 2005, in May and December respectively.
} The Rs 993.44 billion NMDP aims to increase capacity levels, enhance private investment, improve service quality and promote competition in the maritime sector.
} In January 2006 beginning of port based SEZ - approval of Vallarpadam and Puthuvypeen within the Cochin Port Trust area
} The main highlight of 2008 was the approval of the new model concession agreement (MCA) by the union government in January.
} PRIVATE SECTOR PARTICIPATION
· Inter-port and intra-port competition.
◦ Generally by tender; provision for nomination for captive facilities.
◦ Obligation to take workers in case of lease of existing facilities.
◦ Provision to handle operations outside strikes / breakdowns, etc.
◦ Preference to Indian companies except in few ports.
◦ Trade to be consulted before charges affecting them are amended.
} LAND MATTER
◦ Full powers to ports for leasing of land up to 30 years.
◦ Ports to be allowed to renew lease in favour of sitting occupants.
◦ Provision for subletting / partially subletting.
◦ Port Land not to be given for religious purposes.
◦ Change of land use as per land use. be allowed.
◦ Annual escalation reduced from 5% to 2%.
REGULATORY FRAMEWORK
◦ TAMP will be strengthened.
◦ Cost plus approach will be replaced by normative approach.
◦ Increase in efficiency by the private investor to be rewarded.
◦ Enforce and extend ISPS code implementation and adhere to IMO Conventions
◦ Measures for Wreck Removal, Oil Spill Management at Ports consistent with international norms.
NATIONAL MARITIME DEVELOPMENT PROGRAM- (NMDP)
} Introduction:
◦ National Maritime Development Programme launched in December 2005
◦ Programme being formulated to enhanced private investment
◦ Utmost importance is given to development of Infrastructure
◦ This programme would assure a good framework for facilitating Public and Private investments and competitions and improved efficiency.
} Focus Area :
◦ Deepening port channels - higher drafts
◦ Modernization of the system and usage of latest technology
◦ To exploit potential of hinterland
◦ Setting up Maritime Universities
◦ Promote training for better manpower
◦ Encouragement to inland water transport
◦ Development of sea waterways and SPMs through private sector participation
◦ Enhancement of coastal shipping
◦ Navigational safety
◦ Ship building and repairing yard
◦ Minor ports have to play important role in creation of capacity
INDIAN PORTS- AREAS ALLOWED FOR PRIVATE SECTOR PARTICIPATION
(a) Leasing out existing port assets;
(b) Construction/creation of additional assets, such as:
(i) Construction and operation of container terminals;
(ii) Construction and operation of bulk, break-bulk, multi-purpose and specialized cargo berths;
(iii) Warehousing, container freight stations, and storage facilities;
(iv) Cranage/handling equipment;
(v) Setting up of captive power plants; Dry docking and ship repair facilities.
(c) Leasing of equipment for port handling and leasing of floating crafts from the private sector;
(d) Pilotage;
(e) Captive facilities for port-based industries.
PORT LED DIRECT DEVELOPMENT
Capital goods
Ship Building
Fisheries
Refineries
Core Industries
Power Projects
POL Chemical
Cement Plants
PORT LED OTHER DEVELPOMENT
· Cold Chain
· Warehouses
· Area Development
· Revenue Generation
· Ancillary Industries
· Employment
· Tourism
· Green development
ISSUES
} Way behind international developments.
} Not a single port in top ten
} Severe connectivity issues
} No major shipping line in the country
} Poor levels of containerization
} Lack of seamless customs procedures
} Crippling man-power constraints
} Economy not export driven
} Hiatus between centre and State
OVERVIEW
SIZE
· Indian ports handled cargo of 510 million tonnes in 2004-05, 10.8% increase over 2003-04
· 80% of the port traffic by volume is dry and liquid bulk, remaining 20% is general cargo, including containers
o Containerised cargo has grown at a rate of 15% p.a. over the last 5 years
· India has 12 Major Ports and 185 Minor Ports along 7,517 km long Indian coastline
o Cargo handled by Major Ports has increased by 9.5% p.a. over last 3 years
o Major ports handle 75% of the total traffic
The JNPT port where thecapacity will be over3 million TEU by 2006
The port sector has seensignificant investment bymajor global port operators
· Of the 12 Major Ports, 11 ports are run by Port Trusts while the port at Ennore is a corporation under the Central Government. These ports handled 383 million tonnes of cargo in 2004-05
· Two major Government projects underway:
o Project “Sethusamundram”: Dredging of the Palk Strait, in Southern India to facilitate maritime trade through it
o Project “Sagarmala”: $22 billion project for the modernisation of Major and Minor Ports
STRUCTURE
· Government of India dominated maritime activity in the past. Policy direction is now oriented to encouraging the private sector to take the lead in port development and operations
· Many Major ports now operate largely as landlord ports - International port operators have been invited to submit competitive bid for BOT terminals on a revenue share basis
· Significant investment on BOT basis by foreign players including Maersk (JNPT, Mumbai) and P & O Ports (JNPT, Mumbai and Chennai), Dubai Ports International (Cochin and Vishakhapatnam) and PSA Singapore (Tuticorin)
· Minor ports are being developed by domestic and international private investors: Pipavav Port by Maersk, Mundra Port by Adani Group (with a terminal operated by P & O)
POLICY
· 100% FDI under the automatic route is permitted for port development projects
· 100% income tax exemption for a period of 10 years
· Tariff Authority of Major Ports (TAMP) regulates the ceiling for tariffs charged by Major ports/port operators (not applicable to Minor ports)
· A comprehensive National Maritime Development Policy is being formulated to facilitate private investment, improve service quality and promote competitiveness.
Cargo handled by Major Ports in India
Major Port
Trade(04-05, MMT)
Container Traffic(04-05)(million TEU*)
Chennai Port
44
0.62
Cochin Port
14
0.19
Ennore
9.5
—
Haldia
36
0.13
JNPT
33
2.37
Kandla Port
42
0.18
Kolkata Port
10
0.16
Mormagao
31
0.01
Mumbai Port
35
0.22
New Mangalore Port
34
—
Paradip Port
30
—
Tuticorin Port
16
0.30
Vizag Port
50
0.05
Source: Indian Ports Association
* Twenty foot equivalent unit
OPPORTUNITY
OUTLOOK
· Cargo handling at all the ports is projected to grow at 7.7% p.a. till 2013-14 with Minor ports growing at a faster rate of 8.5% compared to 7.4% for the Major ports
o Traffic estimated to reach 960 million tonnes by 2013-14
o Containerised cargo is expected to grow at 17.3% over the next 9 years
· The New Foreign Trade Policy envisages doubling of India’s share in global exports in next five years to $150 billion
o A large portion of the foreign trade to be through the maritime route: 95% by volume and 70% by value
POTENTIAL
· Growth in merchandise exports projected at over 13% p.a. underlines the need for large investments in port infrastructure
· Investment need of $13.5 billion in the major ports under National Maritime Development Program (NMDP) to boost infrastructure at these ports in the next nine years
o Under NMDP, 219 projects have been identified for the development of Major ports
o Public–Private partnership is seen by the Government as the key to improve Major and Minor ports
§ * 64% of the proposed investment in Major ports envisaged from private players
· The plan proposes an additional port handling capacity of 530 MMTA in Major Ports through:
o Projects related to port development(construction of jetties, berths etc.)
o Procurement, replacement or up-gradation of port equipment
o Deepening of channels to improve draft
o Projects related to port connectivity
· Investment need of $4.5 billion for improving Minor Ports
DRY PORTS
In recent times, global trade, in line with it the Indian foreign trade has grown phenomenally both in terms of volume and complexities. Infrastructure needs and innovative methods in logistics management are growing hand in hand with the International trade needs. Ports these days mainly act as gateways and cater to the hinterlands of India which are now serviced by the advent of ICDs. ICDs thus generate business opportunities, general employment and global competitiveness of the local industry.
} A DRY PORT IS AN INLAND INTERMODAL TERMINAL DIRECTLY CONNECTED TO A SEAPORT BY RAIL, WHERE CUSTOMERS CAN LEAVE AND / OR COLLECT THEIR STANDARDISED UNITS AS IF DIRECTLY TO THE SEA PORT
} “Dry port is a yard used to place containers or conventional bulk cargo, usually connected to a seaport by rail or road”. - Wikipedia
CONTAINER TERMINALS(ICD/CFS)
REGIONAL TALLY
Region
CONCOR’s
Others
Total
Northern India
15
22
37
Southern India
10
58
68
Western India
13
39
52
Central India
9
-
9
Eastern India
8
3
11
Total
55
122
177
RATIONALE & SIGNIFICANCE
} An ICD or a CFS, located away from a seaport, providing facilities for cross-border trade in close vicinity of production/consumption in hinterland, with linkages to gateway ports.
◦ A common user facility, for handling and temporary storage of import/export, laden/empty containers, for clearance by Customs for home consumption, warehousing, onward transit, or export.
◦ A CFS: generally on off-dock facility close to servicing port, helping decongest port by shifting cargo and customs-related activities outside the port.
◦ Also set up inland for linkage to a regional rail-linked ICD and to gateway port(s) by road.
} In India, only 40 dry ports close to seaports; all others – 137 – inland.
INSTITUTIONAL FRAMEWORK: A VITAL FACTOR
} IMC (Inter-Ministerial Committee):
◦ for appraisal and approval of applications for ICDs/CFSs
◦ Ministry of Commerce and Industry: nodal agency, coordinating with Ministry of Shipping, Roads and Highways; Ministry of Railways; Ministry of Finance
} IMC approval implies:
◦ single-window facility for mandatory clearances, payments, and incentives certification: presence of Customs, banks, shipping lines and agents, NVOCCs, CHAs, transport operators.
LEGAL AND LIABILITY FRAMEWORK:
◦ Multimodal Transportation of Goods Act, 1993
◦ Refinement of Motor Vehicles Act
◦ Single document of carriage – for inland transportation with clear liability and quick claim settlement terms.
Public-Private Partnership
— Consistent with country’s concerted strategy, towards blending synergy and strength of state and private sectors in finance, management and technology, PPP steadily materialises in infrastructure sectors.
- All recent container terminals at ports heralded PPP concept, e.g., at JN port, Chennai, Tuticorin, Visakhapatnam, Cochin.
- New large CFSs developed in PPP mode in collaboration with CONCOR.
- Intermodal rail networks developed as PPP projects, linking Gujarat coast ports by Pipavav Rail Corporation and Kutch Railway Co.
- Public sector Central Warehousing Corporation generated an ingenious model for its CFSs being managed and operated by private sector enterprises.
- Several inland CFSs uniquely managed as public-public partnership – CONCOR as a Central sector PSU joined hands with many state warehousing corporations to optimally manage and operate them.
- Dry port development in India itself a good blend of private sector and state sector: 108 of them set up by different public sector corporations, 69 others by private companies.
- Some 14 private sector companies now registered with IR for owning rolling stock and operating container trains in addition to CONCOR.
} Customs clearance made easy
◦ Risk Management System (RMS) for selective screening of only high-risk cargo for customs examination.
◦ Faster delivery system by creating separate area in port premises earmarked for instant delivery of cargo to specified accredited importers.
◦ Simplified procedure for amendment of IGM
◦ Simplified customs procedure for transshipment between gateway port and dry port (ICD/CFS).
◦ LCL carrying containers allowed movement from one CFS to another CFS for final consolidation/stuffing.
◦ Customs messages exchange with ports, airports, ICDs/CFSs, CONCOR, banks and DGFT.
◦ Facility of customs duty payment through more banks and via e-banking.
◦ 24x7 operations.
Conclusion
India’s ports are working well and their use is increasing at high speed , due to increase in its work ICD have developed which decrease its work load and helps in increasing efficiency of ports. Indian govt. is going to develop more ICD
in north region due to its effectiveness.
Today India’s most of the exports are send through ships and custom clearances are done their only.
India has a long coastline spanning 7600 kilometres forming one of the biggest peninsulas in the world. It is serviced by 12 major ports and 185 notified minor and intermediate ports].
Major ports handled over 80% of all cargo traffic . However, the words "major", "intermediate" and "minor", do not have a strict association with the traffic volumes served by these ports. As an example, Mundra Port, a newly developed minor port in the state of Gujarat registered a cargo traffic of around 28.8 million tonnes per annum during the financial year of 2008, which is higher than that of many major ports
The classification of Indian ports into major, minor and intermediate has an administrative significance. Indian government has a federal structure, and according to its constitution, maritime transport falls under the "concurrent list", to be administered by both the Central and the State governments. While the Central Shipping Ministry administer the major ports, the minor and intermediate ports are administered by the relevant departments or ministries in the nine coastal states of West Bengal, Orissa, Andhra Pradesh, Tamil Nadu, Kerala, Karnataka, Goa, Maharashtra and Gujarat. Several of these 185 minor and intermediate ports are merely "notified", with little or no cargo handling actually taking place. These ports have been identified by the respective governments to be developed, in a phased manner, a good proportion of them involving Public-private partnership.
Cargo handling is projected to grow at 7.7% until 2013-14. Some 60% of India’s container traffic is handled by the Jawaharlal Nehru Port Trust inMumbai. It has just 9 berths compared to 40 in the main port of Singapore. It takes an average of 21 days to clear import cargo in India compared to just 3 in Singapore.
IMPORTANCE OF MARINE SECTOR
• Marine transportation plays a key role in Global economy
• 90% of the world’s trade involves shipping
• Importance of water transport is increasing with economic Globalization
• Only mode of transport that can effectively linked the centers of industrial production to their markets . Ports in developing countries represent a key asset for economic development
• They need to operate efficiently and be properly structured in order to support an increase in trade and GDP by linking countries, both coastal and land locked, productive hinterland and consumers to global markets
• Through their nodal role of facilitating intermodal transport ports have a significant role in contributing towards achievement of the Millennium Development Goals,
• They need to operate efficiently and be properly structured in order to support an increase in trade and GDP by linking countries, both coastal and land locked, productive hinterland and consumers to global markets
• Through their nodal role of facilitating intermodal transport ports have a significant role in contributing towards achievement of the Millennium Development Goals,
INDIAN PORT SECTOR SCENARIO
At the central level, the Department of Shipping of the Ministry of Shipping, Road Transport and Highways (MoSRTH) is responsible for formulating policies and overseeing the sector.
} At the state level, the maritime boards oversee non-major ports in Gujarat, Maharashtra and Tamil Nadu. In other states, port departments of the respective state governments oversee non-major ports.
WHAT IS MAJOR AND NON-MAJOR PORTS
The Indian port sector has been broadly divided into - Major ports and Non-major ports.
The technical nomenclature Major and Non-major is based on the legal distinctions made under the two key source laws viz. Indian Ports Act 1908 and Major Ports Act 1963.
The distinctions between the Major and Non-major Ports is in terms of the distribution of maritime jurisdiction between the Central and State governments.
Major ports are listed in serial 27 of the Constitution and are administered under Major Port Trust Act of 1963. All ports, other than major ports are listed under the concurrent list of the Constitution and administered jointly by Central and State governments under the Indian Port Act 1908.
LEGAL FRAMEWORK OF PORTS
} In 1998, the foreign direct investment (FDI) limit in the port sector was raised to 74 per cent and subsequently, in 1999, 100 per cent FDI in the sector.
} In 1998, the shipping ministry came out with Guidelines for Private Sector Participation in Ports” through JVs and foreign collaborations.
} In 2000, the Major Port Trusts Act, 1963 was re-amended to allow major ports to form JVs with non- major foreign ports and companies.
} During 2003, Rail Vikas Nigam Limited (RVNL), a Special Purpose Vehicle (SPV), was created to undertake rail-port connectivity projects under the National Rail Vikas Yojana (NRVY) which was initiated in 2002.
} In August 2004 - Formulation of the Draft Maritime Policy. The draft maritime policy, which is still awaiting final cabinet approval, has been partially implemented.
} In July 2004, the ISPS Code, which is a set of regulations designed for maritime security, came into force.
} Sethusamudram Ship Canal Project (SSCP) and the National Maritime Development Programme (NMDP)- were launched in 2005, in May and December respectively.
} The Rs 993.44 billion NMDP aims to increase capacity levels, enhance private investment, improve service quality and promote competition in the maritime sector.
} In January 2006 beginning of port based SEZ - approval of Vallarpadam and Puthuvypeen within the Cochin Port Trust area
} The main highlight of 2008 was the approval of the new model concession agreement (MCA) by the union government in January.
} PRIVATE SECTOR PARTICIPATION
· Inter-port and intra-port competition.
◦ Generally by tender; provision for nomination for captive facilities.
◦ Obligation to take workers in case of lease of existing facilities.
◦ Provision to handle operations outside strikes / breakdowns, etc.
◦ Preference to Indian companies except in few ports.
◦ Trade to be consulted before charges affecting them are amended.
} LAND MATTER
◦ Full powers to ports for leasing of land up to 30 years.
◦ Ports to be allowed to renew lease in favour of sitting occupants.
◦ Provision for subletting / partially subletting.
◦ Port Land not to be given for religious purposes.
◦ Change of land use as per land use. be allowed.
◦ Annual escalation reduced from 5% to 2%.
REGULATORY FRAMEWORK
◦ TAMP will be strengthened.
◦ Cost plus approach will be replaced by normative approach.
◦ Increase in efficiency by the private investor to be rewarded.
◦ Enforce and extend ISPS code implementation and adhere to IMO Conventions
◦ Measures for Wreck Removal, Oil Spill Management at Ports consistent with international norms.
NATIONAL MARITIME DEVELOPMENT PROGRAM- (NMDP)
} Introduction:
◦ National Maritime Development Programme launched in December 2005
◦ Programme being formulated to enhanced private investment
◦ Utmost importance is given to development of Infrastructure
◦ This programme would assure a good framework for facilitating Public and Private investments and competitions and improved efficiency.
} Focus Area :
◦ Deepening port channels - higher drafts
◦ Modernization of the system and usage of latest technology
◦ To exploit potential of hinterland
◦ Setting up Maritime Universities
◦ Promote training for better manpower
◦ Encouragement to inland water transport
◦ Development of sea waterways and SPMs through private sector participation
◦ Enhancement of coastal shipping
◦ Navigational safety
◦ Ship building and repairing yard
◦ Minor ports have to play important role in creation of capacity
INDIAN PORTS- AREAS ALLOWED FOR PRIVATE SECTOR PARTICIPATION
(a) Leasing out existing port assets;
(b) Construction/creation of additional assets, such as:
(i) Construction and operation of container terminals;
(ii) Construction and operation of bulk, break-bulk, multi-purpose and specialized cargo berths;
(iii) Warehousing, container freight stations, and storage facilities;
(iv) Cranage/handling equipment;
(v) Setting up of captive power plants; Dry docking and ship repair facilities.
(c) Leasing of equipment for port handling and leasing of floating crafts from the private sector;
(d) Pilotage;
(e) Captive facilities for port-based industries.
PORT LED DIRECT DEVELOPMENT
Capital goods
Ship Building
Fisheries
Refineries
Core Industries
Power Projects
POL Chemical
Cement Plants
PORT LED OTHER DEVELPOMENT
· Cold Chain
· Warehouses
· Area Development
· Revenue Generation
· Ancillary Industries
· Employment
· Tourism
· Green development
ISSUES
} Way behind international developments.
} Not a single port in top ten
} Severe connectivity issues
} No major shipping line in the country
} Poor levels of containerization
} Lack of seamless customs procedures
} Crippling man-power constraints
} Economy not export driven
} Hiatus between centre and State
OVERVIEW
SIZE
· Indian ports handled cargo of 510 million tonnes in 2004-05, 10.8% increase over 2003-04
· 80% of the port traffic by volume is dry and liquid bulk, remaining 20% is general cargo, including containers
o Containerised cargo has grown at a rate of 15% p.a. over the last 5 years
· India has 12 Major Ports and 185 Minor Ports along 7,517 km long Indian coastline
o Cargo handled by Major Ports has increased by 9.5% p.a. over last 3 years
o Major ports handle 75% of the total traffic
The JNPT port where thecapacity will be over3 million TEU by 2006
The port sector has seensignificant investment bymajor global port operators
· Of the 12 Major Ports, 11 ports are run by Port Trusts while the port at Ennore is a corporation under the Central Government. These ports handled 383 million tonnes of cargo in 2004-05
· Two major Government projects underway:
o Project “Sethusamundram”: Dredging of the Palk Strait, in Southern India to facilitate maritime trade through it
o Project “Sagarmala”: $22 billion project for the modernisation of Major and Minor Ports
STRUCTURE
· Government of India dominated maritime activity in the past. Policy direction is now oriented to encouraging the private sector to take the lead in port development and operations
· Many Major ports now operate largely as landlord ports - International port operators have been invited to submit competitive bid for BOT terminals on a revenue share basis
· Significant investment on BOT basis by foreign players including Maersk (JNPT, Mumbai) and P & O Ports (JNPT, Mumbai and Chennai), Dubai Ports International (Cochin and Vishakhapatnam) and PSA Singapore (Tuticorin)
· Minor ports are being developed by domestic and international private investors: Pipavav Port by Maersk, Mundra Port by Adani Group (with a terminal operated by P & O)
POLICY
· 100% FDI under the automatic route is permitted for port development projects
· 100% income tax exemption for a period of 10 years
· Tariff Authority of Major Ports (TAMP) regulates the ceiling for tariffs charged by Major ports/port operators (not applicable to Minor ports)
· A comprehensive National Maritime Development Policy is being formulated to facilitate private investment, improve service quality and promote competitiveness.
Cargo handled by Major Ports in India
Major Port
Trade(04-05, MMT)
Container Traffic(04-05)(million TEU*)
Chennai Port
44
0.62
Cochin Port
14
0.19
Ennore
9.5
—
Haldia
36
0.13
JNPT
33
2.37
Kandla Port
42
0.18
Kolkata Port
10
0.16
Mormagao
31
0.01
Mumbai Port
35
0.22
New Mangalore Port
34
—
Paradip Port
30
—
Tuticorin Port
16
0.30
Vizag Port
50
0.05
Source: Indian Ports Association
* Twenty foot equivalent unit
OPPORTUNITY
OUTLOOK
· Cargo handling at all the ports is projected to grow at 7.7% p.a. till 2013-14 with Minor ports growing at a faster rate of 8.5% compared to 7.4% for the Major ports
o Traffic estimated to reach 960 million tonnes by 2013-14
o Containerised cargo is expected to grow at 17.3% over the next 9 years
· The New Foreign Trade Policy envisages doubling of India’s share in global exports in next five years to $150 billion
o A large portion of the foreign trade to be through the maritime route: 95% by volume and 70% by value
POTENTIAL
· Growth in merchandise exports projected at over 13% p.a. underlines the need for large investments in port infrastructure
· Investment need of $13.5 billion in the major ports under National Maritime Development Program (NMDP) to boost infrastructure at these ports in the next nine years
o Under NMDP, 219 projects have been identified for the development of Major ports
o Public–Private partnership is seen by the Government as the key to improve Major and Minor ports
§ * 64% of the proposed investment in Major ports envisaged from private players
· The plan proposes an additional port handling capacity of 530 MMTA in Major Ports through:
o Projects related to port development(construction of jetties, berths etc.)
o Procurement, replacement or up-gradation of port equipment
o Deepening of channels to improve draft
o Projects related to port connectivity
· Investment need of $4.5 billion for improving Minor Ports
DRY PORTS
In recent times, global trade, in line with it the Indian foreign trade has grown phenomenally both in terms of volume and complexities. Infrastructure needs and innovative methods in logistics management are growing hand in hand with the International trade needs. Ports these days mainly act as gateways and cater to the hinterlands of India which are now serviced by the advent of ICDs. ICDs thus generate business opportunities, general employment and global competitiveness of the local industry.
} A DRY PORT IS AN INLAND INTERMODAL TERMINAL DIRECTLY CONNECTED TO A SEAPORT BY RAIL, WHERE CUSTOMERS CAN LEAVE AND / OR COLLECT THEIR STANDARDISED UNITS AS IF DIRECTLY TO THE SEA PORT
} “Dry port is a yard used to place containers or conventional bulk cargo, usually connected to a seaport by rail or road”. - Wikipedia
CONTAINER TERMINALS(ICD/CFS)
REGIONAL TALLY
Region
CONCOR’s
Others
Total
Northern India
15
22
37
Southern India
10
58
68
Western India
13
39
52
Central India
9
-
9
Eastern India
8
3
11
Total
55
122
177
RATIONALE & SIGNIFICANCE
} An ICD or a CFS, located away from a seaport, providing facilities for cross-border trade in close vicinity of production/consumption in hinterland, with linkages to gateway ports.
◦ A common user facility, for handling and temporary storage of import/export, laden/empty containers, for clearance by Customs for home consumption, warehousing, onward transit, or export.
◦ A CFS: generally on off-dock facility close to servicing port, helping decongest port by shifting cargo and customs-related activities outside the port.
◦ Also set up inland for linkage to a regional rail-linked ICD and to gateway port(s) by road.
} In India, only 40 dry ports close to seaports; all others – 137 – inland.
INSTITUTIONAL FRAMEWORK: A VITAL FACTOR
} IMC (Inter-Ministerial Committee):
◦ for appraisal and approval of applications for ICDs/CFSs
◦ Ministry of Commerce and Industry: nodal agency, coordinating with Ministry of Shipping, Roads and Highways; Ministry of Railways; Ministry of Finance
} IMC approval implies:
◦ single-window facility for mandatory clearances, payments, and incentives certification: presence of Customs, banks, shipping lines and agents, NVOCCs, CHAs, transport operators.
LEGAL AND LIABILITY FRAMEWORK:
◦ Multimodal Transportation of Goods Act, 1993
◦ Refinement of Motor Vehicles Act
◦ Single document of carriage – for inland transportation with clear liability and quick claim settlement terms.
Public-Private Partnership
— Consistent with country’s concerted strategy, towards blending synergy and strength of state and private sectors in finance, management and technology, PPP steadily materialises in infrastructure sectors.
- All recent container terminals at ports heralded PPP concept, e.g., at JN port, Chennai, Tuticorin, Visakhapatnam, Cochin.
- New large CFSs developed in PPP mode in collaboration with CONCOR.
- Intermodal rail networks developed as PPP projects, linking Gujarat coast ports by Pipavav Rail Corporation and Kutch Railway Co.
- Public sector Central Warehousing Corporation generated an ingenious model for its CFSs being managed and operated by private sector enterprises.
- Several inland CFSs uniquely managed as public-public partnership – CONCOR as a Central sector PSU joined hands with many state warehousing corporations to optimally manage and operate them.
- Dry port development in India itself a good blend of private sector and state sector: 108 of them set up by different public sector corporations, 69 others by private companies.
- Some 14 private sector companies now registered with IR for owning rolling stock and operating container trains in addition to CONCOR.
} Customs clearance made easy
◦ Risk Management System (RMS) for selective screening of only high-risk cargo for customs examination.
◦ Faster delivery system by creating separate area in port premises earmarked for instant delivery of cargo to specified accredited importers.
◦ Simplified procedure for amendment of IGM
◦ Simplified customs procedure for transshipment between gateway port and dry port (ICD/CFS).
◦ LCL carrying containers allowed movement from one CFS to another CFS for final consolidation/stuffing.
◦ Customs messages exchange with ports, airports, ICDs/CFSs, CONCOR, banks and DGFT.
◦ Facility of customs duty payment through more banks and via e-banking.
◦ 24x7 operations.
Conclusion
India’s ports are working well and their use is increasing at high speed , due to increase in its work ICD have developed which decrease its work load and helps in increasing efficiency of ports. Indian govt. is going to develop more ICD
in north region due to its effectiveness.
Today India’s most of the exports are send through ships and custom clearances are done their only.
SHIPPING OPERATIONS
SHIPPING OPERATIONS BY VIKAS AND ANIL MUNDAY
The shipping operations policy formally sets out the Bank’s strategy in this sector. Previous to the approval of the policy, there was a Shipping Guidelines document, approved by the Board in December 1994 (BDS 94-161). The shipping operations policy was approved by the EBRD board on 31 October 2001.
Since the early 1990s, the Bank has been active in financing the Shipping Sector and has been catalytic in introducing western financial institutions to shipping companies in the region. The Bank’s role continues to be relevant because many banks are still unable or reluctant to consider investing or providing long-term finance directly to companies operating in the region without the comfort and involvement of the Bank. This is demonstrated by the fact that out of a cumulative commitment to-date of Euro 664 million, assisting a total investment cost of Euro 1.19 billion, the Bank has mobilized more than 50% of its total financing, involving 22 commercial banks, in its co-financing efforts.
The Bank’s involvement has so far concentrated on debt financing for the acquisition and construction of various types of cargo vessels. The Bank will continue to finance deep-sea ship-owners, including its existing clients, in their on-going efforts to modernize their fleets. However, the Bank will also seek to diversify its portfolio to finance the renewal of other types of vessels including passenger and river ships. The majority of the shipping fleet (including river vessels) in the region is in imminent need of replacement and this renewal process is critical for the sector if it is to maintain or improve its competitiveness, and eliminate sub-standard vessels in order to improve crew safety and address environmental concerns. All Banks financed shipping projects should comply with IMO standards for safety and protection of the environment and ships should be operated in open and commercial markets.
Although the Bank has reviewed several proposals from a number of shipyards, it has not completed any operations in this sub-sector to-date. The Bank is intensifying its efforts to develop appropriate structures for projects in the shipbuilding industry.
Besides acting as a catalyst in channeling long-term financing to the region, the Bank’s involvement will provide the opportunity to achieve its transition goals. For the Bank’s future operations in the Sector, the following transition objectives have been identified:
Promotion of competitiveness through fleet renewal
Promotion of privatization and restructuring
Transfer of technical know-how and management skills
Promotion of good corporate governance and best business practice
Promotion of safety and environmental consciousness
Development of appropriate regulatory and legal framework
Facilitation of regional trade
These objectives will be appropriately adapted depending on the transition stage of the relevant country. Russia, where most of the Bank’s existing shipping projects have been located, will continue to be an important country for the Bank's operations. However, in order to expand and diversify the country profile in this Sector a new focus is being developed in other countries of operation, notably in the BAL tics, Caucasus and Caspian regions.
The Bank will face a considerable challenge in the river shipping sub-sector in which companies operate along many of the large inland waterways located in the region. This is because domestic legislation governing mortgagees’ rights in this sub-sector has still to be fully developed.
In shipbuilding, the Bank will continue to explore and structure projects that are not only sustainable, but also encourage the much needed and invariably difficult restructuring process. In shipbuilding, including conversion and repair, the Bank will not finance projects which receive state subsidies in excess of levels permitted under any applicable (EU, WTO and OECD) guidelines. In this sub-sector the Bank will seek to identify shipyards which have either benefited from strategic investors, have proven strong management or where the relevant national government has a clear commitment to the restructuring and privatization of their shipbuilding activity.
Service Routes
Currently, shipping lines operate three general types of deep-sea itineraries: end to end, pendulum and round the world service routes, End to end services schedule vessels back and forth between two continents. Pendulum services schedule vessels back and forth between three continents with one of these continents as a fulcrum, with the points at either end of the pendulum swing linked only through the fulcrum. This type of service offers a way to fill container slots four times on the same voyage and to eliminate certain overlapping port calls in the fulcrum area. The merging of separate end-to-end services into a pendulum or round the world service serves the two main purposes of broadening the range of through services and reducing the number of ships required to provide the same coverage. This gives a major cost saving by merging the previously duplicated port calls in the central region of the pendulum. Also round the world services can overcome the problems of end-to-end operations, by accommodating the needs of global corporations.
The world’s three principal trade corridors are tied together into one and this type of service can move in either direction, moving westward or eastward or in both directions. Intense competition in container markets not only makes it necessary for ship owners to offer high quality services between major trading regions but also makes it imperative for them to optimize fleet utilization. Such pressures have led to the development of multi-route operating patterns, notably ‘Round-the-World’ and ‘Pendulum’ services, enabling carriers to maximize vessel employment and slot utilization. North America-Europe-Asia, with vessels continually circling the globe in an eastbound or westbound direction. ‘Pendulum’ services, operated by a large number of carriers including Hanjin and Yang Ming, typically operate over all or some portion of the route linking the East Coast of North America, via Europe and Asia to the West Coast of North America, returning via the same route. Since vessels employed on ‘Pendulum’ services, unlike those employed in RTW services, are not required to transit the Panama Canal, post-Panamax vessels may be used.
A ship routing and scheduling problem for the industrial shipping industry is far from unique, and this review will give us an overview of the variety of problems. The objective of a classical industrial ship scheduling problem is to minimize the transportation costs for each ship in the fleet while ensuring that all cargoes are lifted from their loading port to their port of discharge. Normally, a cargo consists of a designated number of units of a product.
Liner Operation
Agreement between two or more shipping companies to provide scheduled cargo and/or passenger service on a particular trade route under uniform rates and common terms also called shipping conference. Cargo and/or passenger carrying shipping line operating a scheduled service between fixed points (ports) on a trade route.
Liner service is the backbone of international trade in manufactured goods. Liners, sailing on regular schedules along established ocean trade lanes, move vast quantities of consumer, industrial and military commodities ranging from video cameras to night-vision scopes, perfume to paint, jeans to milling machines.
Tramp Operation
Charter shipping is a tramp service. The term tramp, as used in the ocean shipping, refers to a cargo ship not operating on regular routes and schedules, and picking up cargo only when it is chartered (hired) from the ship operator.
While conference and non-conference shipping are for general cargoes, charter shipping usually is for bulk cargoes like oil, coal, ore, and grain. Charter shipping has the lowest freight rate per unit of weight or measure.
A charter party is required in charter shipping. A charter party---charter party contract---is a written contract between the ship operator and the charterer (shipper). The contract normally includes the ports, freight rate and time involved in the voyage(s).
The ship operator issues a charter party bill of lading. Unless a letter of credit (L/C) permits or calls for a charter party bill of lading, the bank will reject such transport document in the L/C negotiation
In tramp shipping, tramp ships are being used. As the name indicates, this branch of the shipping industry is very irregular in its activities. Tramp ships are sent in where the most paying freights are available. Therefore, tamping is very unstable and very little organized.
Tramp ships are, in accordance with the demand, contractually put at the disposal of charterers, to carry, for one or more voyages, a quantity of goods between named harbors (in voyage charter) or to carry out a number of transport assignments in a certain period of time (in time charter). In the broadest sense of the word, tramp shipping is the activity that is done with ships in voyage charter. Usually, under a charter agreement, they have to perform only one voyage so that each voyage stands completely apart from the other. The vessel is an independent operating and competing unit and its operation is highly individual. The sailing schedule of a tramp ship is consequently very irregular. The ship operator must see to it that his ship is rarely idle and in the port of discharge - or in a harbor as close as possible to the port of discharge - he must always try to get a new charter for the ship.
Tramp ships vary considerably in size and are sometimes of lesser quality than the liner ships. Because the cargoes usually don't have to be transported at a high speed and the ship doesn't need highly sophisticated equipment, tramp ships are relatively slow and cheap. However, the present-day tramp fleet counts numerous modern bulk carriers suitable for different sorts of cargoes, including tankers and specialized ships. Owners of modern and cost-effective tramp ships have a better chance than their competitors who offer inferior and less flexibility in the freight market.
Liner conferences are tolerated in other jurisdictions. What if the EU changes its regime and others do not?
The Commission is particularly aware of the international dimension of this dossier and of the fact that up to now conferences have been tolerated worldwide. That is why it has taken the initiative to establish close and frequent contacts with our major international partners (US, Canada, Australia, Japan). The outcome of those contacts is positive. We intend to keep up these bilateral contacts throughout discussions in Council.
If the EU were to repeal the present EU liner conference block exemption regulation this would mean that carriers (EU and non-EU) that are presently part of conferences operating on trades to and from the EU would have to stop their conference activities on those trades (namely price fixing and capacity regulation). Nothing would stop them from continuing being part of price fixing conferences on non-EU trade routes.
To give a concrete example, an EU carrier like Maersk, member of the Trans-Atlantic conference Agreement (TACA), could no longer be involved in price fixing and capacity regulation on the North Atlantic-EU and EU-North Atlantic trades, but could still do so on the US-Pacific trades. The same applies to non-EU carriers.
This is a logical consequence of the fact that there is not an identical competition regime in force world-wide. In fact, already today there are differences in what liner shipping companies are allowed to do in different jurisdictions. For example, today US law allows carriers to fix prices jointly on inland transport, while EU law does not. A conflict of law does not arise. This would only be the case if one jurisdiction were to require carriers to participate in conferences, whereas another was to prohibit it. This is not the case today.
The liner shipping industry is asking for a new regime to replace the conference block exemption. What will the Commission do about that?
Industry is divided on the need for a substantive alternative to Regulation 4056/86. The European Liner Affairs Association a carrier association representing roughly 80% of world capacity has proposed that the conference block exemption should be replaced with an exchange of information system.
The
European Shippers Association representing over 100,000 exporting companies, and generating around 90% of the EU's international maritime traffic, considers that a replacement regime is not necessary because carriers are already allowed to co-operate extensively under the consortia block exemption Regulation. This co-operation results in the provision of reliable liner services by groups of shipping lines in consortia and alliances. The European business organizations UNICE and consumer associations back this position.
To be acceptable, any new system for information exchange must respect the competition rules. Some elements of the current ELAA proposal appear to be in line with these requirements. However, others are problematic notably because they do not differ in effect from what conferences do today. Accepting the ELAA proposal as it is today would remove all the pro-competitive effects of the abolition of the conference system.
The Commission remains committed to continuing the dialogue with the ELAA with a view to assisting it in developing an alternative system compliant with EU competition rules. It has acknowledged that exchanges of information leading to greater market transparency may contribute to the improvement in the way liner services are provided, in the interest of carriers, transport users and the public in general.
Discussions will be focusing on the details of the various elements of the ELAA proposal. Thereafter, the Commission intends to issue guidelines on the application of the competition rules apply to liner and tramp shipping. The guidelines would treat issues such as an independent data warehouse, the creation of a trade association and of trade fore, the publication of a price index and common formulae for charges and surcharges. The guidelines would explain how the competition rules apply to the liner sector in general, including exchange and publication of capacity utilization information. As an interim step, the Commission will publish an issues paper on liner shipping in September 2006.
What is the impact of the proposal on small liner shipping carriers and on small short sea trades?
The European Community Ship owners’ Associations (ECSA) and the European Parliament have drawn the Commission’s attention to the needs of specific services, particularly short sea services and services to smaller trades. Since such trades generally do not require a large number of vessels to be serviced, relatively small carriers might be able to operate side by side with large carriers on these trades. ECSA and the European Parliament, therefore, questioned whether these relatively small carriers would be more affected by repeal than large ones.
The Commission is not aware of any liner shipping carrier that would fall with the scope of the Commission Recommendation concerning the definition of small and medium sized enterprises.1
After significant research, the Commission did not find that relatively small EU carriers would be adversely affected by a repeal of the conference block exemption. To the contrary, liberalization creates a market environment that allows for quicker growth than a regulated environment, in particular for small companies. It creates more new services and new niche markets which especially small companies are able to quickly enter. These market niches usually allow for rapid growth. Hence, small innovative companies are able to grow much quicker in a competitive environment – see for example the rapid growth of Ryan air that started as a small company with a new innovative business model in the recently deregulated aviation market. The success of small carriers depends on their ability to adapt to a competitive environment and not on their actual size.
the difference between the two…??
Some of you might have heard the terminology Tramp service or Tramper or Tramp vessel and also the terminology Liner Service. What is the difference between the two..??
Liner Service– Liner Service is a service that operates within a schedule and has a fixed port rotation with published dates of calls at the advertised ports. A liner service generally fulfills the schedule unless in cases where a call at one of the ports has been unduly delayed due to natural or man-mad causes.
Example: The UK/NWC continent 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..
Tramp Service: Tamper 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.
Example: A ship that arrives at Durban from Korea to discharge cargo might carry some other cargo from Durban to the Oakland in the West Coast of USA which in an entirely different direction. From Oakland say for example it could carry some cargo and go to Bremerhaven.
Liner shipping is distinct from tramp shipping. Liners operate as common carriers:-
1. They publish a freight tariff, operate on scheduled routes, and leave at scheduled times regardless of whether the ship has a full load of cargo. They usually carry a large number of smaller packages for a number of different shippers.
2. Tramp vessels, as distinct from liners, are usually chartered in some form by a shipper to carry a full shipload of cargo.
3. Both liner and tramp shipping have been subjected to a variety of different kinds of government regulation other than the self-regulation of the conference system (Fox and White, 1997).
It is useful to distinguish bulk from general cargo. Bulk cargo does not have to be packaged before loading; it is simply poured into holds in tramp ships specialized to bulk cargo. General cargo is anything that would be packaged in bags, bales, or boxes, and frequently comes from many small shippers. Since the late 1960s, general cargo has come to be carried largely in containers in specially designed container ships.
F.I.
(Free In)
The word "free" as used in the charter shipping term means not including. FI is a pricing term indicating that the charterer of a vessel (i.e., the shipper) is responsible for the cost of loading goods onto the vessel.
F.O.
(Free Out)
FO is a pricing term indicating that the charterer of a vessel (i.e., the shipper) is responsible for the cost of unloading goods from the vessel.
F.I.O.
(Free In and Out)
FIO is a pricing term indicating that the charterer of a vessel (i.e., the shipper) is responsible for the costs of loading goods onto the vessel and unloading goods from the vessel.
The dominant flows in the containerized trades are found on East-West arteries, such as those between Western Europe and the US. East Coast, and between Asia and the U.S. West Coast. The North-South lanes are of lesser density and, in some carrier networks, consist of feeder services linked to the East-West lanes at specific hub port locations.
Conclusion
Tramp/bulk shipping cannot effectively and appropriately be brought under an ETS scheme, due to its structure and operation.
The shipping operations policy formally sets out the Bank’s strategy in this sector. Previous to the approval of the policy, there was a Shipping Guidelines document, approved by the Board in December 1994 (BDS 94-161). The shipping operations policy was approved by the EBRD board on 31 October 2001.
Since the early 1990s, the Bank has been active in financing the Shipping Sector and has been catalytic in introducing western financial institutions to shipping companies in the region. The Bank’s role continues to be relevant because many banks are still unable or reluctant to consider investing or providing long-term finance directly to companies operating in the region without the comfort and involvement of the Bank. This is demonstrated by the fact that out of a cumulative commitment to-date of Euro 664 million, assisting a total investment cost of Euro 1.19 billion, the Bank has mobilized more than 50% of its total financing, involving 22 commercial banks, in its co-financing efforts.
The Bank’s involvement has so far concentrated on debt financing for the acquisition and construction of various types of cargo vessels. The Bank will continue to finance deep-sea ship-owners, including its existing clients, in their on-going efforts to modernize their fleets. However, the Bank will also seek to diversify its portfolio to finance the renewal of other types of vessels including passenger and river ships. The majority of the shipping fleet (including river vessels) in the region is in imminent need of replacement and this renewal process is critical for the sector if it is to maintain or improve its competitiveness, and eliminate sub-standard vessels in order to improve crew safety and address environmental concerns. All Banks financed shipping projects should comply with IMO standards for safety and protection of the environment and ships should be operated in open and commercial markets.
Although the Bank has reviewed several proposals from a number of shipyards, it has not completed any operations in this sub-sector to-date. The Bank is intensifying its efforts to develop appropriate structures for projects in the shipbuilding industry.
Besides acting as a catalyst in channeling long-term financing to the region, the Bank’s involvement will provide the opportunity to achieve its transition goals. For the Bank’s future operations in the Sector, the following transition objectives have been identified:
Promotion of competitiveness through fleet renewal
Promotion of privatization and restructuring
Transfer of technical know-how and management skills
Promotion of good corporate governance and best business practice
Promotion of safety and environmental consciousness
Development of appropriate regulatory and legal framework
Facilitation of regional trade
These objectives will be appropriately adapted depending on the transition stage of the relevant country. Russia, where most of the Bank’s existing shipping projects have been located, will continue to be an important country for the Bank's operations. However, in order to expand and diversify the country profile in this Sector a new focus is being developed in other countries of operation, notably in the BAL tics, Caucasus and Caspian regions.
The Bank will face a considerable challenge in the river shipping sub-sector in which companies operate along many of the large inland waterways located in the region. This is because domestic legislation governing mortgagees’ rights in this sub-sector has still to be fully developed.
In shipbuilding, the Bank will continue to explore and structure projects that are not only sustainable, but also encourage the much needed and invariably difficult restructuring process. In shipbuilding, including conversion and repair, the Bank will not finance projects which receive state subsidies in excess of levels permitted under any applicable (EU, WTO and OECD) guidelines. In this sub-sector the Bank will seek to identify shipyards which have either benefited from strategic investors, have proven strong management or where the relevant national government has a clear commitment to the restructuring and privatization of their shipbuilding activity.
Service Routes
Currently, shipping lines operate three general types of deep-sea itineraries: end to end, pendulum and round the world service routes, End to end services schedule vessels back and forth between two continents. Pendulum services schedule vessels back and forth between three continents with one of these continents as a fulcrum, with the points at either end of the pendulum swing linked only through the fulcrum. This type of service offers a way to fill container slots four times on the same voyage and to eliminate certain overlapping port calls in the fulcrum area. The merging of separate end-to-end services into a pendulum or round the world service serves the two main purposes of broadening the range of through services and reducing the number of ships required to provide the same coverage. This gives a major cost saving by merging the previously duplicated port calls in the central region of the pendulum. Also round the world services can overcome the problems of end-to-end operations, by accommodating the needs of global corporations.
The world’s three principal trade corridors are tied together into one and this type of service can move in either direction, moving westward or eastward or in both directions. Intense competition in container markets not only makes it necessary for ship owners to offer high quality services between major trading regions but also makes it imperative for them to optimize fleet utilization. Such pressures have led to the development of multi-route operating patterns, notably ‘Round-the-World’ and ‘Pendulum’ services, enabling carriers to maximize vessel employment and slot utilization. North America-Europe-Asia, with vessels continually circling the globe in an eastbound or westbound direction. ‘Pendulum’ services, operated by a large number of carriers including Hanjin and Yang Ming, typically operate over all or some portion of the route linking the East Coast of North America, via Europe and Asia to the West Coast of North America, returning via the same route. Since vessels employed on ‘Pendulum’ services, unlike those employed in RTW services, are not required to transit the Panama Canal, post-Panamax vessels may be used.
A ship routing and scheduling problem for the industrial shipping industry is far from unique, and this review will give us an overview of the variety of problems. The objective of a classical industrial ship scheduling problem is to minimize the transportation costs for each ship in the fleet while ensuring that all cargoes are lifted from their loading port to their port of discharge. Normally, a cargo consists of a designated number of units of a product.
Liner Operation
Agreement between two or more shipping companies to provide scheduled cargo and/or passenger service on a particular trade route under uniform rates and common terms also called shipping conference. Cargo and/or passenger carrying shipping line operating a scheduled service between fixed points (ports) on a trade route.
Liner service is the backbone of international trade in manufactured goods. Liners, sailing on regular schedules along established ocean trade lanes, move vast quantities of consumer, industrial and military commodities ranging from video cameras to night-vision scopes, perfume to paint, jeans to milling machines.
Tramp Operation
Charter shipping is a tramp service. The term tramp, as used in the ocean shipping, refers to a cargo ship not operating on regular routes and schedules, and picking up cargo only when it is chartered (hired) from the ship operator.
While conference and non-conference shipping are for general cargoes, charter shipping usually is for bulk cargoes like oil, coal, ore, and grain. Charter shipping has the lowest freight rate per unit of weight or measure.
A charter party is required in charter shipping. A charter party---charter party contract---is a written contract between the ship operator and the charterer (shipper). The contract normally includes the ports, freight rate and time involved in the voyage(s).
The ship operator issues a charter party bill of lading. Unless a letter of credit (L/C) permits or calls for a charter party bill of lading, the bank will reject such transport document in the L/C negotiation
In tramp shipping, tramp ships are being used. As the name indicates, this branch of the shipping industry is very irregular in its activities. Tramp ships are sent in where the most paying freights are available. Therefore, tamping is very unstable and very little organized.
Tramp ships are, in accordance with the demand, contractually put at the disposal of charterers, to carry, for one or more voyages, a quantity of goods between named harbors (in voyage charter) or to carry out a number of transport assignments in a certain period of time (in time charter). In the broadest sense of the word, tramp shipping is the activity that is done with ships in voyage charter. Usually, under a charter agreement, they have to perform only one voyage so that each voyage stands completely apart from the other. The vessel is an independent operating and competing unit and its operation is highly individual. The sailing schedule of a tramp ship is consequently very irregular. The ship operator must see to it that his ship is rarely idle and in the port of discharge - or in a harbor as close as possible to the port of discharge - he must always try to get a new charter for the ship.
Tramp ships vary considerably in size and are sometimes of lesser quality than the liner ships. Because the cargoes usually don't have to be transported at a high speed and the ship doesn't need highly sophisticated equipment, tramp ships are relatively slow and cheap. However, the present-day tramp fleet counts numerous modern bulk carriers suitable for different sorts of cargoes, including tankers and specialized ships. Owners of modern and cost-effective tramp ships have a better chance than their competitors who offer inferior and less flexibility in the freight market.
Liner conferences are tolerated in other jurisdictions. What if the EU changes its regime and others do not?
The Commission is particularly aware of the international dimension of this dossier and of the fact that up to now conferences have been tolerated worldwide. That is why it has taken the initiative to establish close and frequent contacts with our major international partners (US, Canada, Australia, Japan). The outcome of those contacts is positive. We intend to keep up these bilateral contacts throughout discussions in Council.
If the EU were to repeal the present EU liner conference block exemption regulation this would mean that carriers (EU and non-EU) that are presently part of conferences operating on trades to and from the EU would have to stop their conference activities on those trades (namely price fixing and capacity regulation). Nothing would stop them from continuing being part of price fixing conferences on non-EU trade routes.
To give a concrete example, an EU carrier like Maersk, member of the Trans-Atlantic conference Agreement (TACA), could no longer be involved in price fixing and capacity regulation on the North Atlantic-EU and EU-North Atlantic trades, but could still do so on the US-Pacific trades. The same applies to non-EU carriers.
This is a logical consequence of the fact that there is not an identical competition regime in force world-wide. In fact, already today there are differences in what liner shipping companies are allowed to do in different jurisdictions. For example, today US law allows carriers to fix prices jointly on inland transport, while EU law does not. A conflict of law does not arise. This would only be the case if one jurisdiction were to require carriers to participate in conferences, whereas another was to prohibit it. This is not the case today.
The liner shipping industry is asking for a new regime to replace the conference block exemption. What will the Commission do about that?
Industry is divided on the need for a substantive alternative to Regulation 4056/86. The European Liner Affairs Association a carrier association representing roughly 80% of world capacity has proposed that the conference block exemption should be replaced with an exchange of information system.
The
European Shippers Association representing over 100,000 exporting companies, and generating around 90% of the EU's international maritime traffic, considers that a replacement regime is not necessary because carriers are already allowed to co-operate extensively under the consortia block exemption Regulation. This co-operation results in the provision of reliable liner services by groups of shipping lines in consortia and alliances. The European business organizations UNICE and consumer associations back this position.
To be acceptable, any new system for information exchange must respect the competition rules. Some elements of the current ELAA proposal appear to be in line with these requirements. However, others are problematic notably because they do not differ in effect from what conferences do today. Accepting the ELAA proposal as it is today would remove all the pro-competitive effects of the abolition of the conference system.
The Commission remains committed to continuing the dialogue with the ELAA with a view to assisting it in developing an alternative system compliant with EU competition rules. It has acknowledged that exchanges of information leading to greater market transparency may contribute to the improvement in the way liner services are provided, in the interest of carriers, transport users and the public in general.
Discussions will be focusing on the details of the various elements of the ELAA proposal. Thereafter, the Commission intends to issue guidelines on the application of the competition rules apply to liner and tramp shipping. The guidelines would treat issues such as an independent data warehouse, the creation of a trade association and of trade fore, the publication of a price index and common formulae for charges and surcharges. The guidelines would explain how the competition rules apply to the liner sector in general, including exchange and publication of capacity utilization information. As an interim step, the Commission will publish an issues paper on liner shipping in September 2006.
What is the impact of the proposal on small liner shipping carriers and on small short sea trades?
The European Community Ship owners’ Associations (ECSA) and the European Parliament have drawn the Commission’s attention to the needs of specific services, particularly short sea services and services to smaller trades. Since such trades generally do not require a large number of vessels to be serviced, relatively small carriers might be able to operate side by side with large carriers on these trades. ECSA and the European Parliament, therefore, questioned whether these relatively small carriers would be more affected by repeal than large ones.
The Commission is not aware of any liner shipping carrier that would fall with the scope of the Commission Recommendation concerning the definition of small and medium sized enterprises.1
After significant research, the Commission did not find that relatively small EU carriers would be adversely affected by a repeal of the conference block exemption. To the contrary, liberalization creates a market environment that allows for quicker growth than a regulated environment, in particular for small companies. It creates more new services and new niche markets which especially small companies are able to quickly enter. These market niches usually allow for rapid growth. Hence, small innovative companies are able to grow much quicker in a competitive environment – see for example the rapid growth of Ryan air that started as a small company with a new innovative business model in the recently deregulated aviation market. The success of small carriers depends on their ability to adapt to a competitive environment and not on their actual size.
the difference between the two…??
Some of you might have heard the terminology Tramp service or Tramper or Tramp vessel and also the terminology Liner Service. What is the difference between the two..??
Liner Service– Liner Service is a service that operates within a schedule and has a fixed port rotation with published dates of calls at the advertised ports. A liner service generally fulfills the schedule unless in cases where a call at one of the ports has been unduly delayed due to natural or man-mad causes.
Example: The UK/NWC continent 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..
Tramp Service: Tamper 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.
Example: A ship that arrives at Durban from Korea to discharge cargo might carry some other cargo from Durban to the Oakland in the West Coast of USA which in an entirely different direction. From Oakland say for example it could carry some cargo and go to Bremerhaven.
Liner shipping is distinct from tramp shipping. Liners operate as common carriers:-
1. They publish a freight tariff, operate on scheduled routes, and leave at scheduled times regardless of whether the ship has a full load of cargo. They usually carry a large number of smaller packages for a number of different shippers.
2. Tramp vessels, as distinct from liners, are usually chartered in some form by a shipper to carry a full shipload of cargo.
3. Both liner and tramp shipping have been subjected to a variety of different kinds of government regulation other than the self-regulation of the conference system (Fox and White, 1997).
It is useful to distinguish bulk from general cargo. Bulk cargo does not have to be packaged before loading; it is simply poured into holds in tramp ships specialized to bulk cargo. General cargo is anything that would be packaged in bags, bales, or boxes, and frequently comes from many small shippers. Since the late 1960s, general cargo has come to be carried largely in containers in specially designed container ships.
F.I.
(Free In)
The word "free" as used in the charter shipping term means not including. FI is a pricing term indicating that the charterer of a vessel (i.e., the shipper) is responsible for the cost of loading goods onto the vessel.
F.O.
(Free Out)
FO is a pricing term indicating that the charterer of a vessel (i.e., the shipper) is responsible for the cost of unloading goods from the vessel.
F.I.O.
(Free In and Out)
FIO is a pricing term indicating that the charterer of a vessel (i.e., the shipper) is responsible for the costs of loading goods onto the vessel and unloading goods from the vessel.
The dominant flows in the containerized trades are found on East-West arteries, such as those between Western Europe and the US. East Coast, and between Asia and the U.S. West Coast. The North-South lanes are of lesser density and, in some carrier networks, consist of feeder services linked to the East-West lanes at specific hub port locations.
Conclusion
Tramp/bulk shipping cannot effectively and appropriately be brought under an ETS scheme, due to its structure and operation.
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