Indian_Shipping_Industry

Familiarisation to the Maritime Industry Great Eastern Shipping Marine Transportation and Logistics Sector Shipping Liner service Containers/Reefers and others Tramp service Freight Freight Dry bulk Wet bulk Ferry Passenger Cruise Cross -section of a cargo carrying ship Factors affecting tradeability of ships ..hull types.. Double Hull After Grounding Single Hull After Grounding Factors affecting tradability of ships INSURANCE/P &I COVER CLASS OIL MAJOR APPROVALS SPECIFICATIONS FLAG STATE OWNER CHARTERER AGE/HULL TYPE ..global nature of industry.. UK USA India UK BANK MEG CHARTERER UK P& I CLUB INDIA KOREA Concepts • • • • Draft: Depth upto which the ship is immersed in water Load Line: The maximum draft to which the vessel may load Bunker: Fuel for vessels Deadweight Tonnage (DWT): The weight of cargo, water, bunkers and accommodation that may be carried when a vessel is down to her load line marks • Net Registered Tonnage (NRT):The internal capacity of a vessel measured in units of 100 cubic feet less the space occupied by boilers, engines, shaft alleys, chain lockers, officer's and crew quarters and other spaces not available for carrying passengers or freight • Classification Society: The professional organizations which vet and certify the strength and seaworthiness of vessel • Flag of Convenience: A flag of convenience ship is one that flies the flag of a country other than the country of ownership DWT based classification - Crude oil carriers • Panamax - 50,001 DWT to 80,000 DWT • Aframax - 80,001 DWT to 120,000 DWT • Suezmax - 120,001 DWT to 200,000 DWT • VLCC (Very Large Crude Carrier) - 200,001 DWT to 350,000 DWT • ULCC (Ultra Large Crude Carrier) - 350,001 DWT and Larger DWT based classification - Product carriers • Small - 3,001 DWT to 10,000 DWT • Handy - 19,001 DWT to 25,000 DWT • Medium Range - 25,001 DWT to 45,000 DWT • Long Range One - 45,001 DWT to 70,000 DWT • Long Range Two - 70,001 DWT to 100,000 DWT DWT based classification - Dry Bulk • Handy Size - 10,000 DWT to 30,000 DWT • Handy Max - 30,001 DWT to 50,000 DWT • Panamax - 50,001 DWT to 80,000 DWT • Capesize - 80,000 DWT and above Surveys and drydocking • Class Survey – Carried out by Classification Society – Certifies the construction of Hull and Machinery of ships • Statutory Survey – Carried out by classification societies on behalf of Government/ Flag administration through their own surveyor’s – Requires ship to be dry docked twice in five years with gap not exceeding three years – Without valid Statutory survey certificate a ship is not considered seaworthy restricting sailing from port Deployment of ships •Time Charter - employment for a fixed period •Voyage Charter - employment for a voyage Revenue Concepts: Shipping • Baltic Dry Index: It is a combination of three induces: Baltic Capesize Index, Baltic Panamax Index and Baltic Handymax Index. The indices are based on assessments of the cost of transporting various dry bulk cargoes (e.g. coal and iron ore), made by leading shipbroking houses located around the world • World scale : The standard to express market levels of freight for tankers in terms of % of scale rates published annually Time Charter Yield (TCY) Time charter Fixed for a period of time Rate is $/day Calculation of Time charter Yield ($/day) * No. of op. days Commission/brokerage Gross Income ($/ton) * Qty. of cargo Less Commission, bunker cost, Operating lighthouse charges,canal Expenses dues, port dues Net Freight TCY $/day Net Freight/ No. of op. days Voyage charter Fixed for a route Rate is $/ton Net Freight/No. of op. days Oil field services Seismic Studies •Support Services: Drilling: Exploratory & Development -Logistics Support -Well Testing -Casing -Mud Engineering -Well Logging -Directional Drilling -Cementing Production Offshore Activities Offshore activities include: – carriage of passengers, goods and other materials – supporting or performing activities like i) port related services ii) oil field services – dredging services, diving support, maintenance supports, towage, anchor handling, cable laying, survey, pipe laying, marine construction etc. – all other services to which above mentioned functions are subsidiary like production platforms, floating structures, floating storage etc. Drilling Rig Jack-up Floaters Drilling Rig Jack-up Independent leg Mat supported Cantilever Slot Drilling Rig Floaters Drill Ships Semi submersibles Barges Offshore Support Vessels • Offshore Support Vessels: Vessels that support offshore production activities e.g. – Offshore Supply Vessels: Vessels engaged in carrying fuel, fresh water and other provisions between shore base and offshore installations. – Platform Supply Vessel: Vessel specially designed for providing support services viz. transporting fuel , fresh water and other materials such as pipes, cement, tools and provisions to offshore oil and gas platforms and drilling rigs. – Anchor Handling Tug: A vessel specially designed to handle anchoring/ mooring of offshore rigs and work barges. Also used for maritime towage and salvage. – Anchor Handling Tug Supply Vessel: A hybrid between anchor handling tug and supply vessel. This vessel is specially designed to supply various cargo between shore-base and offshore installations along with handling maritime towage and anchor handling activities. Barge A floating vessel , propelled or otherwise which is used for storing purposes, offshore construction and pipe laying. Barge Flat top Construction Pipe laying Jacket launching and storage Offshore hook up and maintenance Laying sub sea pipeline and hook up to sub sea plems Port/Terminal support services Harbour Tug A vessel available at a port/terminal to give assistance to ships entering or departing from their berth or moorings. Harbour tug Azimuthal Cycloidal Revenue Concepts: Offshore • Operating Day Rate: The daily charter rate paid for a vessel/ rig operations. • Non- operating Day rate: Rate payable when the vessel is on charter but is not operating due to repairs, or breakdown or maintenance within contractual terms or due to some fault of the charterer. • Moving day rate: Applicable to rigs when they move from one location to another for further drilling within the same contract Acts governing Indian Maritime Industry • Coasting Vessels Act, 1838 • Inland Vessels Act, 1917 • Merchant Shipping Act, 1958 Merchant Shipping Act, 1958 Some of the salient features of the Act • Flag administration • Registration of Ships • Certification of officers & crew • Liability related issues • Investigation and Enforcement • Cabotage Guidelines • Penalties and Procedures Types of risk & coverage : Following are the basic coverage requirements for ships – H & M Risks ( asset coverage) – Third party Risks ( liability coverage) – War Risk Hull and Machinery Insurance • Insures physical asset: hull of ship, machinery and equipment installed in the ship • Agreed Value Policy • Governed by wording of Institute Time Clauses (ITC) Hull • Covers asset against perils, new for old , pollution hazards, 3/4th collision liability and others • Indian shipping companies to insure H&M in India only • 4 nationalised insurance companies write H&M risks in India • The policy issued is identical to London market w.r.t. cover • The insurance is taken for market value of the ship • Premium rates is based on tariff devised by IRDA • Policy deductibles • In India underwriter is sovereign risk • Generally issued in Indian Rupees however, policies can be issued in USD if the borrowing is in USD Third Party Risks • Covered by P&I Clubs, which are non profit making bodies • Covers liability like cargo liability, liability towards employees on ship, damage to fixed and floating objects, oil pollution etc. • Covers 1/4th collision liability • Limit of club cover • Covers liability for oil pollution upto USD 1bn War Risk Insurance • All Indian companies insure their ships against war risk with GOI • It is a package policy covering H&M and Third Party liability • Nationalised insurance companies act as agents • Original cover is a peace time cover • In case of war or war like situation “notice of termination of war cover” in relation to excluded area but automatic “reinstatement” with additional premium • GOI scheme liberal on exclusions • Any liability exceeding GOI war risk scheme is insured by P&I insurance upto USD 400 mn • Also covers terrorist attack