LINER SHIPPING &

FREIGHTING
PRACTICES

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 CHAPTER OBJECTIVES
• To discuss the concept & role of liner shipping in international
trade logistics. .
• To explain the evolution of liner conference system in international
shipping.
• To explain the important elements for designing the liner services
schedules.
• To explain the global nature of liner shipping industry.
• To appraise the causes, impact and future repercussions due to
concentration in liner shipping.
• To discuss the freighting practices & principles of ocean liners for
freight determination.

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 CHAPTER OUTLINE
• Introduction
• Liner Shipping Defined
• Concept & Evolution of Liner Conference System
• Designing a Liner Service Schedule
• Global Nature of Liner Industry
• Concentration in Liner Shipping
• Freighting & Tariff Practices of Ocean Liners
• Principles of Conferences Freighting
• Liner Freight Rebate System
• Liner’s Freight Payment Practices

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 INTRODUCTION

• Liner container shipping has played a pivotal role in enabling easier access to the
exchange of goods all around the world, thus opening the global markets for
increased export and import activity.
• Liner shipping has provided the mechanism and opportunity to international
marketers to expand to overseas markets without sacrificing with the quality of
distribution and has provided on-time logistics solutions without incurring a
major increase in high freight costs.
• A conference is an unincorporated association between two or more liner
companies in order to coordinate their shipping services on a specific trade route
for return, one-way, or for relay services.
• Shipping lines, under such conference system, seek to rationalize their shipping
schedules, arrange the vessel capacity deployed on that shipping route, and set a
common freight rate to be charged on their customers.

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 Liner Shipping Defined
• “Liner shipping service, in international logistics operations,
refers to fleet of ships, under common ownership or
management of one company, which provides a fixed
schedule of shipping services at regular intervals between
named ports. The services of such liner are that of “general
carriers” and can be for all kinds of cargo i.e. containerized,
break-bulk, bulk, liquid or dry between the named ports of
calls of a liner shipping company. The beauty of liner shipping
services is that it has a fixed itinerary, regular service on the
pre-decided dates, and a commitment to accept the cargo
from shippers and to sail for onward voyage on the promised
and pre-intimated dates. Liner shipping company is
committed to sail whether it get cargo on port of call or not
on the date fixed by a published schedule by itself”.
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 Types of Liners

• Passengers Liners
• Cargo Liners

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Liner Connectivity Index for Main Production
Centres and Markets
Country 2007 2008 2009 2010 2011 2012
Name
Belgium 73.93 77.98 82.79 84.00 88.47 78.85

China 127.84 137.37 132.46 143.56 152.06 156.18

Germany 88.94 89.26 84.30 90.87 93.32 90.63

Spain 71.25 67.66 70.22 74.32 76.58 74.44

France 64.83 66.24 67.00 74.93 71.84 70.09

U.K. 76.76 77.98 84.82 87.53 87.46 83.99

India 40.47 42.17 40.96 41.39 41.52 41.29

Singapore 87.52 94.46 99.47 103.76 105.02 113.16

United 83.67 82.45 82.43 83.79 81.63 91.69

States

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History of Liner Shipping in India
List of Members of Kolkata Conference

P&O (Peninsular and Oriental Steam Navigation Co.),

B.I. (British India) Shipping

City Shipping

Clan Shipping

Anchor Lines

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 Year of Beginning of Various Shipping
Conference in Maritime Trade
Name of the Country/ Region Year of
Beginning
a. Australia Conference 1884

b. South African Conference 1886

c. West African Conference 1895

d. Northern Brazil Conference 1895

e. River Plate Conference 1896

f. South America Conference 1904

g. North Atlantic Conference 1900

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 Designing a Liner Service Schedule

• Planning Service Frequency of Liners

• Planning Fleet Size, Vessel Size and Fleet Mix in Liner
Operations
• Planning the Exact Number of Port of Calls in Liner Operations

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 Global Nature of Liner Industry

• Worldwide Port Development

• Regionalization of Trade
• Infrastructure Development in Asia, Africa & Latin
America
• The Future Of Liner Shipping Alliances
• The Impact of Information Technology
• Improving Supply Conditions with Hub-And-Spoke
Networks

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 List of Top Five Exporter and Importer of
Containerized Cargo in World Economy
RANK EXPORTE 2010 RANK IMPORTE 2010
R TEUS R TEUS
(MILLION (MILLIO
S) NS)
1 China 31.3 1 United 17.6
States
2 United 11.2 2 China 12.0
States
3 Japan 5.7 3 Japan 6.1

4 South 5.2 4 South 4.5

Korea Korea
5 Taiwan, 3.4 5 Germany 2.8
China

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MCQ
Which of the following is not an essential feature of liner shipping? a) Definite route
in international logistics b) One owner of the shipping line c) Fixed date of call on
port d) Definite frequency in shipping operation
Which of the following is not a cause of concentration in global liner industry a)
Enhanced government facilitation b) Formation of WTO C) Fast changing economic
background d) increased technological innovation
Which of the following freight will be charged when space is booked but actually not
used by the shipper a) Dead Freight b) Back freight c) Pro-rata freight d) Ad-valorem
freight
Which of the following factors are considered in designing the liner service schedule?
a) Planning service frequency of liners b) planning fleet size, vessel size and fleet mix
in liner operations c) Planning the exact number of port of calls in liner operation d)
All of the above
 Concentration in Liner Shipping

Figure : Globalization led to higher Growth in Global Trade &

Containerization

Liberalization of Regionalization of Technological

world Trade Production Centers Advances

Economies of Scale & Scope

Larger Vessel Sizes,
Alliances, mergers and
Consortia, Liner Conferences,
Increased Use of Hub &
Spoke Model

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Trends Evidencing Concentration in Global
Shipping Markets
The top 20 carriers have 75% of total global slots

The top 5 carriers have 40% of total global slots

Maersk Sealand has approximately 14% of total global slots

and

Maersk Sealand has 17-23 % market share on the

Transatlantic market

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Causes of Concentration in Liner Shipping

Causes of Concentration in
Liner Shipping

Fast Changing Increased Enhanced

Economic Technological Governmental
Background Innovation Facilitation

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Impact of Concentration on Liner Shipping
Options ForInSmall
Reduction Liner Operators
Unit Costs

Freight Rate Fluctuations

IMPACT OF Higher Frequency Of Mergers And Alliances
CONCENTRATI
ON ON LINER Superficial Perception Of Overcapacity In Shipping
SHIPPING Business
Increased Long Term And Sustainable Profits
Growing Global Trade Among Nations
Growing Importance Of Shipping And Logistics In
Governments Policy Decisions
Increased Use Of Hub & Spoke Model By Liners

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Freighting & Tariff Practices of Ocean Liners

• Advance Freight
• Lump Sum Freight
• Dead Freight
• Back Freight
• Pro-Rata Freight
• Ad-Valorem Freight

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 Bases of Liner Freight Rates

Bases of Liner Rates

Storage Factor Market Value of the

(Rate of Bulk to Competitive Cargo
Weight) Situation

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 Factors Affecting the Choice of Liner
Freight Rates

Market Market
Basic Features Special Features Transportation
Condition Of Condition For Port Condition
Of The Cargo Of The Cargo Cost Factors
The Cargo The Carrier
• Nature of cargo • Susceptibility to • Availability of • Competition • Direct cost of • Port facilities
• Volume of damage cargo from other operation • Port regulations
cargo • Susceptibility to • Competition corners • Distance • Port charges and
• Relationship of pilferage with goods from • Rates attractive • Cost of handling dues
weight to • packing other sources enough to get • Special • Port locations
measurement or • stowage factor • Cargo via cargo from deliveries • Possibility of
density competitive shippers.
• Heavy lifts, if • Fixed charges securing return
any, needed ports • Insurance cargo
• Extra length

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Conference Lines Freighting Principles

Overall Fixed Costs

Value of Service or Overheads
Principles Principle
in
Voyage Specific
Conferenc Cost of Service Principle Fixed Costs
es Freights
Rates What “the Traffic Can
Bear" Principle Voyage Specific
Variable Costs

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 Key Principles of Liner Freighting

• Cost of Service Principle

• Value of Service Principle
• “What the Traffic Can Bear” Principle

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 Rebate System in Conferences

Deferred Rebate System

Rebate
System in Dual Rebate System
Conferences Immediate Rebate
System

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 Thank You

धनयवाद
Merci

Gracias Danke
Schon

Thank You
谢谢