Break Bulk and Cargo Management

Mark Rowbotham

• Publisher: Informa Law from Routledge
• Year: 2022
• ISBN:
  9781000563603
• Edition: 1
• Topic: Technology & Engineering
• Subtopic: Marine Transportation
• Index: Technology & Engineering

This book covers the subjects of break bulk cargo, general cargo and project cargo, and how these cargoes are shipped. It deals with the cargoes themselves, the vessels used for their carriage, and how the carriage is managed using the process of vessel chartering. Alongside these, it also covers offshore vessel management and how offshore supply vessels are used to carry cargoes to offshore oil and gas installations.

Break bulk cargo covers a wide variety of cargoes, from project cargo to more varied cargoes carried on an ad hoc basis, often between ports that are not equipped for container traffic. It also covers the carriage of specific cargoes that cannot fit inside or are unsuitable for containers. This includes the carriage of cargoes for major projects, and cargoes for the offshore sector, which is an area covered in a specific section in the book concerning the use of offshore supply vessels. To date, only minor elements of shipping books cover this kind of trade, hence the need for a new book that specifically covers this subject. The focus of this book is providing expert insights and detailed explanations of the practical issues related to all aspects of break bulk and general cargo management.

The book is written for legal practitioners, shipping managers, managers of project cargo, oil and gas companies, shipping professionals, charterers, shipbrokers, shippers and anybody else involved in ad hoc vessel chartering for the carriage of break bulk, general and project cargoes. It will also serve as a valuable resource for students of shipping.

CHAPTER 1 Break bulk shipping

DOI: 10.4324/9781003256359-2

The term “break bulk” relates to trades where the cargoes are carried in unitised form such as palletised, bagged, strapped, bundled, drummed and crated like below and also non unitised general cargo (vehicles, steel etc.). The ships that carry these break bulk cargoes are known as break bulk, multi-purpose or general cargo vessels and come in a variety of sizes and types such as Single Decker, ‘Tween Decker, Box Holds.

Break bulk ships are perhaps the oldest variety of cargo-carrying vessels which still operate at the sea. Unlike the present-day versions of cargo vessels, these types of ship were used to, as their name suggests, for bulk cargo without putting the cargo into shipping containers. In historic terms, there were two forms of break bulk shipping, namely the liner trades, based on fixed shipping schedules between designated ports, and the tramp trades, based on ad hoc trades between any port where trade was available.

The following table has been derived from the book Business of Shipping by Kendall and Buckley, Chapter 1, and ideally illustrates the differences between the liner and tramp shipping trades.

	Liner service	Tramp shipping
1.	Sailings are regular and as per a published schedule to and from designated ports on a trade route.	Sailings under voyage charters are based on cargo commitments and are usually different for every voyage. In certain trades a number of repetitive voyages carrying the same commodity can be arranged under time charters or contracts of affreightment (COA).
2.	Liners accept without discrimination any legal cargo which that ship is able to carry. “Break bulk” “general” and “container” (LCL/FCL) are descriptions applied to liners.	Tramps are private carriers which usually carry a full cargo of a single commodity in bulk, or individual cargoes belonging to different owners.
3.	Cargo carried by liners tends to be of a higher value and attracts higher freight rates. Frequently, the cargo carried aboard liners requires special care - e.g. refrigerated cargoes such as chilled meat.	Cargoes carried by tramps can be homogeneous and of low value, e.g. coal, grain and phosphate, etc. They can also comprise general or Project Cargo, depending upon the requirement for cargo carriage.
4.	Freight rates in liner services are stabilised by setting identical charges for a particular item for all shippers. Liner ships are associated with conferences. Although tariffs tend to remain unchanged for as long as possible, CAF and BAF may be applied to the freight tariff to take account of minor changes in rates of exchange and bunker prices.	Freight rates (“freight” in voyage Charter Parties (C/P), and “hire” in time Charter Parties) fluctuate according to the supply of and demand for the vessel. In terms of general or Project Cargo, freight rates are determined by W/M, i.e. freight per ton, or volumetric weight.
5.	A liner company issues a standard B/L, the provisions of which are not negotiable.	The tramp owner has to negotiate a separate C/P for each contractual employment of the vessel. Although there are standard C/P forms many of the details on these forms are negotiated. The final details depend on “supply and demand” (of ship) and the bargaining abilities of the owner and charterer. The resulting Bills of Lading are Charter Party Bills of Lading, and not standard Ocean Bills of Lading.
6.	Drastic changes in established liner operations are infrequent. The ships ply between the same ports at the same regular intervals. Nevertheless, within the year the capabilities of particular ships and ports of call may be adjusted to take account of the shippers’ requirements.	Services as well as rates are determined by negotiations between shipowner and charterer.
7.	Vessels deployed on liner routes usually reflect the special requirements applicable to their employment, i.e. the ships are designed as reefer vessels, container vessels and fitted with particular cargo handling gear.	Tramps are intended for general and bulk cargoes on a worldwide basis. Consequently, they are equipped with cargo handling gear to cope with a range of cargoes. Many of the small and medium sized tramp break bulk vessels are fitted with ‘tweendecks.
8.	Liner companies tend to have large shore organisations at the main ports of call and especially at the company’s headquarters.	Tramp owners tend to have small staff in their headquarters’ office. Since their services are on a worldwide basis, matters at the port of call are dealt with by agents.
9.	Procurement of cargo is effected by the company’s sales staff, supported by advertisements.	Procurement of cargo is effected through brokers. The owner’s broker negotiates with cargo brokers. There is virtually no public promotion.
10.	Some cargo liners are fitted with passenger accommodation. However, as the various SOLAS safety regulations place stringent requirements on vessels carrying more than 12 passengers, the number of passengers carried aboard cargo liners is in effect limited to twelve.	Although there may be an owner’s cabin suite for exceptional circumstances, passengers are almost never carried on tramps or break bulk vessels.

Essentially, the tramp, or ad hoc, market as it is also known, is based on vessels being available to carry ad hoc cargoes arranged at short notice on specific voyages from and to specific ports of origin and destination, on an ad hoc basis according to specific need. The basis of ad hoc states that the market is based on a specific demand for specific dedicated maritime carriage, rather than relying on fixed maritime schedules between a range of ports. This demand takes into account the specific nature of the cargo, rather than containerised cargoes, especially as many break bulk cargoes cannot fit inside a container, and, by nature, are unitised based on the cargo itself. The ad hoc market relies significantly on spot charters, based on the principle of specific voyage charters. This means that the specific break bulk vessel is chartered for a specific one-off voyage to carry a specific cargo or set of cargoes to a specific designated destination. Charter costs vary, but a sizeable six-figure sum of US Dollars is commonplace for a typical vessel charter, including freight costs.

A ship engaged in the tramp trade is one which does not have a fixed schedule or published ports of call, rather operating on an ad hoc basis according to the need to carry cargo from one port to another as such cargo became available for carriage. As opposed to cargo liners, tramp ships trade on the spot market, i.e. the market where commodities are traded on the basis of immediately delivery, with no fixed schedule or itinerary/ports-of-call. A steamship engaged in the tramp trade is sometimes called a tramp steamer; the similar terms tramp freighter and tramper are also used. Chartering is done mainly on the London, New York and Singapore shipbroking exchanges. The Baltic Exchange, based in the City of London, serves as a type of stock market index for the trade.

The term tramper is derived from the British meaning of “tramp” as an itinerant beggar or vagrant; in this context it is first documented in the 1880s, along with “ocean tramp” (at the time many sailing vessels engaged in irregular trade as well). The original image of the tramp market was old ships sailing between ports on a chance basis in search of cargoes to carry. The “tramp” notion was based on the image of tramps, or vagrant beggars, wandering the lanes in search of places to stay or jobs to do. This image has since diminished, indeed almost vanished, in favour of ships being chartered on an ad hoc (based on the time of need) basis to carry cargoes destined for shipment to a specific destination from a specific port of loading based on a specific requirement. Hence the use of ad hoc, or spot, voyage chartering, on the grounds that daily charter or freight rates could vary during and between voyages, resulting in differentials in charter and freight rates between one voyage and another. It must be remembered that charter rates can vary significantly between one day’s trading and another, and there is a constant need to refer to the Baltic Dry Index, reported on a daily basis by the London-based Baltic Exchange, on a daily basis to confirm these rates, as well as consult with shipping agents concerning freight rates on a regular basis. Charter rates are based on supply and demand. Where there is a glut of cargo to be carried but few ships available, the daily charter rates rise significantly. Conversely, where there is a glut of cargo vessels available but little cargo to be carried, the charter rates fall significantly.

The tramp trade first emerged in the UK around the mid-19th century, at the time of the development of steamships. The dependability and timeliness of steamships was found to be more cost-effective than sail. Coal was needed for ships’ boilers, and the demand created a business opportunity for moving large amounts of best Welsh coal, known for its efficient combustibility, to various seaports in Britain, a trade that was largely instrumental in developing shipping companies such as Cory Brothers, which specialised in the carriage of coal from South Wales. Within a few years, tramp ships became the workhorses of trade, transporting coal and finished products from British cities to the rest of the world.

The size of tramp ships remained relatively constant from 1900 to 1940, between around 7,000 and 10,000 deadweight tons (dwt). However, the British fleets suffered massive losses in the early months of the Second World War owing to U-boat attacks, resulting in the construction by the United States of the “Liberty” ships. These ships had a simple and single design that could be easily built at yards unaccustomed to building cargo ships, and used to carry just about any form of cargo, with a deadweight tonnage of 10,500 dwt. The US produced 2,708 Liberty Ships, and they were used on every international trade route. After the Second World War, economies of scale took over and the size of tramp ships rose rapidly to maintain pace with a booming supply and demand cycle. During this time, new types of cargo vessel were built as replacements for the Liberty ships, including the Freedom and Fortune classes of cargo vessels built in Japan, and the renowned SD14 cargo vessels built at the yards of Austin & Pickersgill at Sunderland, in the North-East of England in the 1960s and 1970s, each at a deadweight tonnage of 14,000 dwt and a cost of around £1 million per vessel. The bulk carrier, which evolved from these general cargo vessels, became the tramp of choice for many owners and operators. The bulk carrier was designed to carry coal, grain and ore, which gave it more flexibility and could service more ports than some of its ancestors, which only carried a single commodity. Today, dry bulk carriers range from the huge chinamax vessels (around 400,000 dwt) through capesize (100,00 dwt+), panamax (60,000 dwt+), supramax and handymax (37,000 dwt–59,000 dwt).

Today the tramp trade includes all types of vessels, from bulk carriers to tankers. Each can ...