Intl Ocean Transportation

• Sea Freight Introduction

• Shipment Transit Times

• Vessel Types

Containerships

Roll-On/ Roll-Off Ships

Break-Bulk Ships

Dry-Bulk Cargo

Wet-Bulk Cargo

• Freight Charges

Ocean Freight Transit TimesSea freight is the most economic form of international transportation. The use of containerization for packing and carrying goods has greatly increased the volumes of cargo moved by sea, the speed of transit and the safety of the cargo in question.

The following factors should be taken into account when considering the transit times for goods being carried by sea:• The frequency of sailing • The actual sailing time between the port of loading and the port of discharge If the sailing is a direct sailing or a trans-shipment sailing; that is to say will the vessel sail directly to the port of discharge or will the cargo be placed on a second vessel and then delivered to a final port of discharge.

Ocean Freight Transit TimesAccording to the Schenker (Freight Forwarder) website:ANL have a dedicated fleet of 11 vessels offering fixed day / weekly sailings from Australia. ANL are able to offer direct calls into all of the major North and East Asian ports in:- Japan- Korea- China- Hong Kong- TaiwanCarriers: ANL, China Shipping and OOCL

Yokohama Osaka Busan Qingdao Shanghai Ningbo Hong KongMelbourne 12 13 15 16 19 20 22

Sydney 10 11 13 14 17 18 20Brisbane 7 8 10 11 14 15 17

*Adelaide: Add one day to Melbourne. Tasmania: Add two days to Melbourne.

Ocean Vessel Types• Containerships:

Approximately 60% of the world trade is containerized, and this percentage is continuing to grow. The majority of manufactured goods are shipped in containers. Many goods that were traditionally shipped in bulk are now shipped through containers.

Vessels dedicated to the container trade can carry up to 10,000 TEUs (a unit/ space equivalent to a 20 ft Container size). Plans are for the building of container ships

capable of holding up to 18,000 TEUs. This increasing capacity of ships is testing the capacity of intl seaports to cater for the larger containerships.

Ocean Vessel Types• Containerships:

Traditional containerships store containers “under deck” and also stacked on top of each other “on deck”. Many of the new style of containerships only carry containers on deck in order to speed up the process of loading and unloading containers.

Ocean Vessel Types• Roll-On/ Roll-Off Ships:

The Ro-Ro, or more fully the Roll on - roll off vessel. In it's rectangular design, is purpose built to carry large numbers of cars.

Manufacturers of cars, mainly in Japan and Europe, use these vessels to ship large quantities of their products around the world.

Ocean Vessel Types

• Dry-bulk Carriers:

Dry-bulk carriers ("bulkers"), are the great work horses of the shipping world, carrying raw dry cargoes in huge cavernous holds, such as coal, iron ore, grain, sulphur, scrap metal. Until recently, there had been a huge demand for these vessels, driven by the extraordinary expansion of the Chinese economy. Imports of iron ore into China boosted the earnings of bulk carrier owners as freight rates went through the roofinto uncharted territory. Then came the downturn in late 2008 and freight rates have slumped.

Ocean Vessel Types• Wet-bulk Carriers (Tankers):

Tankers are designed to carry liquid cargoes. Oil tankers come in two basic flavours, the crude carrier, which carries crude oil, and the clean products tanker, which carries the refined products, such as petrol, gasolene, aviation fuel, kerosene and paraffin. Over 60% of the world's oil is transported by these tankers. Tankers range in size from 1000 DWT (Dead-weight Tonnage) tons up to the ULCC (Ultra Large Crude Carrier) of over 300,000 DWT.

Ocean Vessel Types• Wet-bulk Carriers (Tankers):

Tankers are designed to carry liquid cargoes. Oil tankers come in two basic flavours, the crude carrier, which carries crude oil, and the clean products tanker, which carries the refined products, such as petrol, gasolene, aviation fuel, kerosene and paraffin. Over 60% of the world's oil is transported by these tankers. Tankers range in size from 1000 DWT (Dead-weight Tonnage) tons up to the ULCC (Ultra Large Crude Carrier) of over 300,000 DWT.

Sea Freight Charges

Break bulk cargo calculations

Break bulk cargo, is cargo that is unitised, palletised or strapped. This cargo is measured along the greatest length, width and height of the entire shipment. The cargo is also weighed. Shipping lines quote break bulk cargo per "freight ton", which is either 1 metric ton (1,000 kg) or 1 cubic metre, which ever yields the greatest revenue.

Example:A case has a gross mass of 2 Metric tonnes.The dimensions of the cargo are:2.5 X 1 X 2 metresThe tariff rate quoted by the shipping line is: USD 110.00 weight or measure

Sea Freight Charges

Break bulk cargo calculations

Step 1Multiply the metres 2.5 X 1 X 2 = 5 metres Compare to the mass = 2 Mt.

Step 2Calculate the freight with the greater amount either the mass or the dimension. 5 X USD 110.00 = USD 550.00Freight would be paid on the measurement and not the weight. All shipping lines carrying cargo in a break-bulk form insist on payment based on a minimum freight charge which is equivalent to one cubic metre or one metric ton.

Sea Freight ChargesFull Container load calculations and surcharges:Freight rates for containers are based on the container as a unit of freight irrespective of the commodity or commodities loaded therein, (FAK) Freight All Kinds. The shipping lines quote per container: usually a 20 Ft or 40 Ft container.

From time to time, abnormal or exceptional costs arise in respect of which no provision has been made in the tariffs. For example a shipping line cannot predict the movement of the currency or the sudden increase of the international oil price. These increases have to be taken into account by the shipping line in order to ensure that the shipping line continues to operate at a profit. These increases are called surcharges. All shipping lines accordingly retain the right to impose an adjustmentfactor upon their ratestaking into account these fluctuations. Allsurcharges are expressed as a percentage of the basic freight rate. Surcharges are regularly reviewed in the light of unforeseen circumstances.

Sea Freight Charges

Bunker Adjustment Factor (BAF)"Bunkers" is the generic name given to fuels and lubricants that provide energy to power ships. The cost of bunker oil fluctuates continually and with comparatively little warning.

Example:Freight rate: Port Elizabeth to SingaporeFreight rate: US Dollar: 1,250.00 per 20 Ft container+ BAF 5.2%

US Dollar 1,250.00 X 5.2% = US Dollar 65.00Add the two amounts together

Freight rate: U S Dollar 1,315.00

Sea Freight ChargesCurrency Adjustment Factor (CAF)The currency adjustment factor is a mechanism for taking into account fluctuations in exchange rates, these fluctuations occur when expenses are paid in one currency and monies earned in another by a shipping company. The currency adjustment factor is a mechanism for taking into account these exchange rate fluctuations. It is always expressed as a percentage of the basic freight and is subject to regular review.

Example:Freight rate: Port Elizabeth to SingaporeFreight rate: US Dollar: 1,250.00 per 20 Ft container+ CAF 6.3%

US Dollar 1 250.00 X 6.3% = US Dollar 78.75Add the two amounts togetherFreight rate: U S Dollar 1,328.75

Sea Freight ChargesWar SurchargeThe outbreak of hostilities between nations can have a serious effect upon carriers servicing international trade even though they may sail under a neutral flag. Carriers sailing within the vicinity of a war zone may impose a war surcharge on freight to compensate for the higher risks involved and the higher levels of insurance premium, which they may be obliged to pay.

Example:Freight rate: Port Elizabeth to SingaporeFreight rate: US Dollar: 1,250.00 per 20 Ft container+ WAR 5%US Dollar 1,250.00 X 5% = US Dollar 62.50

Add the two amounts togetherFreight rate: US Dollar 1,312.50

Sea Freight Charges

All of the above surcharges may be applied to a single freight rate. Example:Freight rate: Port Elizabeth to SingaporeFreight rate: US Dollar: 1,250.00 per 20 Ft container+ BAF 5.2%+ CAF 6.3%+ WAR 5%Total amount of surcharge 16.5%US Dollar 1,250.00 X 16.5% = US Dollar 206.25(add to freight rate)US Dollar 1,456.25

Sea Freight Charges

Other Charges

Port Congestion SurchargeCongestion in a port for a period of time can involve considerable idle time for vessels serving that port. When a ship lies idle, this creates a huge amount of loss for the ship's owner. Shipping lines therefore have the right to impose a surcharge on the freight to recover revenue lost. Another factor which influences port congestion surcharge would be labour disputes. Port congestion surcharges are calculated as a percentage of the freight rate as expressed in the previous examples.

Sea Freight ChargesOther ChargesConsolidation servicesThe consolidator (usually a freight forwarder) hires a container from a shipping line and then sells that space to his clients/exporters. The benefit for the exporter is that small quantities which, would not fill a full container load, can be shipped by sea freight in a shipping container as an alternative to air freighting the goods. The consolidator would charge per metric ton or cubic metre, which ever yields the greatest (as per the break-bulk rate) - Example: US Dollar 89.00 Weight or Measure.

The shipping line would have a contract of carriage with the consolidator and in turn the consolidator would have a contract of carriage with the exporter.