GLOSSARY OF MARITIME & TRANSPORT TERMS (PART II)

Anchorage: Port charge relating to a vessel moored at approved anchorage site in a harbor.

Apron: The area immediately in front of or behind a wharf shed on which cargo is lifted. On the “front apron,” cargo is unloaded from or loaded onto a ship. Behind the shed, cargo moves over the “rear apron” into and out of railroad cars.

Backhaul: To haul a shipment back over part of a route which it has already traveled; a marine transportation carrier’s return movement of cargo, usually opposite from the direction of its primary cargo distribution.

Barge: A large, flat-bottomed boat used to carry cargo from a port to shallow-draft waterways. Barges have no locomotion and are pushed by towboats. A single, standard barge can hold 1,500 tons of cargo or as much as either 15 railroad cars or 60 trucks can carry. A barge is 200 feet long, 35 feet wide and has a draft of 9 feet. Barges carry dry bulk (grain, coal, lumber, gravel, etc.) and liquid bulk (petroleum, vegetable oils, molasses, etc).

Berth (verb): To bring a ship to a berth.                                                                           Berth (noun): The wharf space at which a ship docks. A wharf may have two or three berths, depending on the length of incoming ships.

Board of Commissioners: The members of the governing board of a port authority are called commissioners. Members of a Board of Commissioners can be elected or appointed and usually serve for several years.

Bollard: A line-securing device on a wharf around which mooring and berthing lines are fastened.

Bonded Warehouse: A building designated by U.S. Customs authorities for storage of goods without payment of duties to Customs until goods are removed.

Box: Slang term for a container.

Breakbulk Cargo: Non-containerized general cargo stored in boxes, bales, pallets or other units to be loaded onto or discharged from ships or other forms of transportation. Examples include iron, steel, machinery, linerboard and woodpulp.

Bulkhead: A structure used to protect against shifting cargo and/or to separate the load.

Buoys: Floats that warn of hazards such as rocks or shallow ground, to help ships maneuver through unfamiliar harbors.

Cabotage: Shipment of cargo between a nation’s ports is also called coastwise trade. The U.S. and some other countries require such trade to be carried on domestic ships only.

Capacity: The available space for, or ability to handle, freight.

Captive Cargo Port: When most of a port’s inbound cargoes are being shipped short distances and most of its export products come from nearby areas, the port is called a captive cargo port. (Contrast with a transit port.)

Cargo: The freight (goods, products) carried by a ship, barge, train, truck or plane.

Carrier: An individual, partnership or corporation engaged in the business of transporting goods or passengers (See also: ocean carrier.)

Cartage: Originally the process of transporting by cart. Today, the term is used for trucking or trucking fees.

Chandlers: Like a hotel at sea, a ship needs many supplies to operate and serve its crew– groceries; paper products; engine parts; electronics; hardware; etc. A chandler sells these supplies to the ship’s agent. Originally, chandlers (candle makers) provided illumination to ships. Over time they expanded the variety of products they could provide to ships.

Channels of Distribution: The routes by which products are transported from origin to destination. This includes the physical routes, as well as the different companies involved in ultimately delivering the goods to buyers.

Checkers: See Clerks.

Chock: A piece of wood or other material put next to cargo to prevent it from shifting.

Clerks: When cargo is unloaded from a ship, a clerk checks the actual count of the goods (number of boxes, drums, bundles, pipes, etc.) versus the amount listed on the ship’s manifest. He will note shortages, overages or damage. This is used to make claims if needed.

Common Carrier: Trucking, railroad or barge lines that are licensed to transport goods or people nationwide are called common carriers.

Conference rate: Rates arrived at by conference of carriers applicable to water transportation.

Consignment: A shipment of goods. The buyer of this shipment is called the consignee; the seller of the goods is called the consignor.

Consolidated Freight Station or Container Freight Station (CFS)– Location on terminal grounds where stuffing and stripping of containers is conducted.

Consolidator: The person or firm that consolidates (combines) cargo from a number of shippers into a container that will deliver the goods to several buyers.

Container: A box made of aluminum, steel or fiberglass used to transport cargo by ship, rail, truck or barge. Common dimensions are 20′ x 8’ x 8′ (called a TEU or twenty-foot equivalent unit) or 40′ x 8′ x 8′, called an FEU. Variations are collapsible containers, tank containers (for liquids) and “rag tops” (open-topped containers covered by a tarpaulin for cargo that sticks above the top of a closed box). In the container industry, containers are usually simply called boxes.

Container Freight Station: The facility for stuffing and stripping a container of its cargo, especially for movement by railroad.

Container Chassis: A piece of equipment specifically designed for the movement of containers by highway to and from container terminals.

Container Crane: Usually, a rail-mounted gantry crane located on a wharf for the purpose of loading and unloading containers on vessels.

Container Terminal: A specialized facility where ocean container vessels dock to discharge and load containers, equipped with cranes with a safe lifting capacity of 35-40 tons, with booms having an outreach of up to 120 feet in order to reach the outside cells of vessels. Most such cranes operate on rail tracks and have articulating rail trucks on each of their four legs, enabling them to traverse along the terminal and work various bays on the vessel and for more than one crane to work a single vessel simultaneously. Most terminals have direct rail access and container storage areas, and are served by highway carriers.

Containerization: The technique of using a container to store, protect and handle cargo while it is in transit. This shipping method has both greatly expedited the speed at which cargo is moved from origin to destination and lowered shipping costs.

Container on Flat Car (COFC): A container placed directly on a railroad flatcar without chassis.

Contraband: Goods prohibited in trade (such as weapons going to Iran, anything to Cuba). Smuggled goods.

Corps of Engineers: This department of the U. S. Army is responsible for flood protection and providing safe navigation channels. The Corps builds and maintains the levees, flood walls and spillways that keep major rivers out of low lying communities. The Corps is vital to keeping navigation channels open by dredging sand, silt and gravel that accumulate on river and harbor bottoms.

Craft: A boat, ship or airplane.

CAR CARRIER MV „TAKASAGO”

CAR CARRIER MV „TAKASAGO”

Customs: A duty or tax on imported goods. These fees are a major bonus to the economy. The Customs Department also works to prevent the importation of illegal drugs and contraband.

Customs Broker: This person prepares the needed documentation for importing goods (just as a freight forwarder does for exports). The broker is licensed by the Treasury Department to clear goods through U.S. Customs. Performs duties related to documentation, cargo clearance, coordination of inland and ocean transportation, dockside inspection of cargo, etc. (Also known as a customhouse broker.)

Deadhead: When a truck returning from a delivery has no return freight on the back haul, it is said to be in deadhead. Equivalent term is ballasting in shipping.

Deck Barge: Transports heavy or oversize cargoes mounted to its top deck instead of inside a hold. Machinery, appliances, project cargoes and even recreational vehicles move on deck barges.

Dock: (verb) – To bring in a vessel to tie up at a wharf berth. (One parks a car, but docks a ship.) (noun) – A dock is a structure built along, or at an angle from, a navigable waterway so that vessels may lie alongside to receive or discharge cargo. Sometimes, the whole wharf is informally called a dock.

Dockage: A charge by a port authority for the length of water frontage used by a vessel tied up at a wharf.

Drayage: Transport by truck for short distances; e.g. from wharf to warehouse..

Dredge: (noun) A waterborne machine that removes unwanted silt accumulations from the bottom of a waterway. (verb) The process of removing sediment from harbor or river bottoms for safety purposes and to allow for deeper vessels.

Duty: A government tax on imported merchandise.

Electronic Data Interchange (EDI): The exchange of information through an electronic format. Electronic commerce has been under intensive development in the transportation industry to achieve a competitive advantage in international markets.

Elevator: A complex including storage facilities, computerized loading; inspection rooms and docks to load and unload dry bulk cargo such as grain or green coffee.

Export Packers: Firms that securely pack export products into a container to crate to protect the cargo from damage during an ocean voyage.

Feeder Service: Ocean transport system involving use of centralized ports to assemble and disseminate cargo to and from ports within a geographic area. Commodities are transported between major ports, then transferred to feeder vessels for further transport to a number of additional ports.

Fender Piles: The wooden or plastic pilings on the outer edge of the wharf function like the fenders on a car. They are there to absorb the shock of a ship as it docks at the wharf and to protect the structural pilings that actually support the wharf. Fender piles are also called sacrifice piles since they are designed to be discarded after they are broken.

Fleeting: The area at which barges, towboats and tugs are berthed until needed. The operation of building or dismantling barge tows.

Foreign Trade Zone (FTZ) – Known in some countries as a free zone, a foreign trade zone (FTZ) is a site within the USA (in or near a U.S. Customs port of entry) where foreign and domestic goods are held until they ready to be released into international commerce. If the final product is imported into the U.S., duties and taxes are not due until the goods are release into the U.S. market. Merchandise may enter a FTZ without a formal Customs entry or the payment of Customs duties or government excise taxes. In the zone, goods may be: stored; tested; sampled; repackaged or relabeled; cleaned; combined with other products; repaired or assembled, etc.

Freight: Merchandise hauled by transportation lines.

Freight forwarder: An individual or company that prepares the documentation and coordinates the movement and storage of export cargoes. See also Customs house broker.

Containers Onboard (Image source: Courtesy of Hapag Lloyd)

Containers Onboard (Image source: Courtesy of Hapag Lloyd)

Gantry Crane: Track-mounted, shoreside crane utilized in the loading and unloading of breakbulk cargo, containers and heavy lift cargo.

General Cargo: Consists of both containerized and breakbulk goods, in contrast to bulk cargo. See: breakbulk, container, bulk, dry bulk). General cargo operations produce more jobs than bulk handling.

Grain elevator: Facility at which bulk grain is unloaded, weighed, cleaned, blended and exported.

Harbor: A port of haven where ships may anchor.

Heavy Hauler: A truck equipped to transport unusually heavy cargoes (steel slabs, bulldozers, transformers, boats, heavy machinery, etc.)

Heavy Lift: Very heavy cargoes that require specialized equipment to move the products to and from ship/truck/rail/barge and terminals. This “heavy lift” machinery may be installed aboard a ship designed just for such transport. Shore cranes, floating cranes and lift trucks may also adapted for such heavy lifts.

Home Port: Port from which a cruise ship loads passengers and begins its itinerary, and to which it returns to disembark passengers upon conclusion of voyage. Sometimes referred to as “embarkation port” and “turn around port.”

Hopper Car: A freight car used for handling dry bulks, with an openable top and one or more openings on the bottom through which the cargo is dumped.

Hostler (or Hustler): A tractor, usually unlicensed, for moving containers within a yard. An employees who drives a tractor for the purpose of moving cargo within a container yard.

Interchange: Point of entry/exit for trucks delivering and picking up containerized cargo. Point where pickups and deposits of containers in storage area or yard are assigned.

I.L.A. – International Longshoremen’s Association, which operates on the East and Gulf Coasts. See labor unions and longshoremen.

I.L.W.U.– International Longshore and Warehouse Union, which operates on the West Coast. See labor unions and longshoremen.

Intermodal Shipment: When more than one mode of transportation is used to ship cargo from origin to destination, it is called intermodal transportation. For example, boxes of hot sauce from Louisiana are stuffed into metal boxes called containers at the factory. That container is put onto a truck chassis (or a railroad flat car) and moved to a port. There the container is lifted off the vehicle and lifted onto a ship. At the receiving port, the process is reversed. Intermodal transportation uses few laborers and speeds up the delivery time.

IMX: This is transportation shorthand for intermodal exchange. In an IMX yard, containers can be lifted from truck chassis to rail intermodal cars or vice versa.

ISO: International Organization for Standardization. Worldwide organization formed to promote development of standards to facilitate the international carriage and exchange of goods and services. Governs construction specifications for ISO containers.

JIT: The abbreviation for “just in time,” which is a way to minimize warehousing costs by having cargo shipped to arrive just in time for its use. This inventory control method depends on extremely reliable transportation.

Labor Union: An organization of workers formed to serve members’ collective interests with regard to wages and working conditions. The maritime unions within ports can include locals of the larger union, such as the General Longshore Workers; Clerks and Checkers; Sack-sewers, Sweepers, Water boys and Coopers; Dock Loaders and Unloaders of Freight Cars and Barges; Dray Clerks, Weighers and Samplers; plus the Seafarer’s International Union; the National Maritime Union; the Marine Engineers’ Beneficial Association and the Teamsters. Some laborers don’t belong to a union.

Landlord Port: At a landlord port, the port authority builds the wharves, which it then rents or leases to a terminal operator (usually a stevedoring company). The operator invests in cargo-handling equipment (forklifts, cranes, etc), hires longshore laborers to operate such lift machinery and negotiates contracts with ocean carriers (steamship services) to handle the unloading and loading of ship cargoes. (See also: operating port.)

LASH: These 900-foot-long ships carry small barges inside the vessel. LASH stands for Lighter Aboard Ship. Just as cargo is transported by barge from the shallower parts of the Mississippi River to the Port of New Orleans for export aboard ocean-going ships, LASH barges are lifted into these unusual ships. Overseas, the ship can discharge clusters of barges in the open waters. Then several towboats will assemble the barges into tows bound for various ports and inland waterways, without the ship having to spend time traveling to each port.

Launch Service: Companies that offer “water-taxi” service to ships at anchor.

LCL: The acronym for “less than container load.” It refers to a partial container load that is usually consolidated with other goods to fill a container.

Length Overall (LOA): Linear measurement of a vessel from bow to stern.

Lift On-Lift Off (LO/LO): Cargo handling technique involving transfer of commodities to and from the ship using shoreside cranes or ship’s gear.

LTL: Means a shipment that is “less than truckload”. Cargoes from different sources are usually consolidated to save costs.

Longshoremen: Dock workers who load and unload ships, or perform administrative tasks associated with the loading or unloading of cargo. They may or may not be members of labor unions. Longshore gangs are hired by stevedoring firms to work the ships. Longshoremen are also called stevedores.

Manifest: The ship captain’s list of individual goods that make up the ship’s cargo.

Marine Surveyor: Person who inspects a ship hull or its cargo for damage or quality.

Master: The officer in charge of the ship. “Captain” is a courtesy title often given to a master.

Maritime: (adjective) Located on or near the sea. Commerce or navigation by sea. The maritime industry includes people working for transportation (ship, rail, truck and towboat/barge) companies, freight forwarders and customs brokers; stevedoring companies; labor unions; chandlers; warehouses; ship building and repair firms; importers/exporters; pilot associations, etc.

Marshaling Yard: This is a container parking lot, or any open area where containers are stored in a precise order according to the ship loading plan. Containers terminals may use a grounded or wheeled layout. If the cargo box is placed directly on the ground, it is called a grounded operation. If the box is on a chassis/trailer, it is a wheeled operation.

Mean Low Water (MLW): Lowest average level water reaches on an outgoing tide.

Mean High Water (MHW): Highest average level water reaches on an outgoing tide.

Mooring Dolphin: A cluster of pilings to which a boat or barge ties up.

Motor Ship (MS) or Motor Vessel (MV): A ship propelled by internal-combustion engines.

Neo-bulk Cargo: Uniformly packaged goods, such as wood pulp bales, which stow as solidly as bulk, but are handled as general cargoes.

Ocean Carrier: Diesel-fueled vessels have replaced the old steamships of the past, although many people still refer to modern diesel ships as steamships. Likewise, the person who represents the ship in port is still often called a steamship agent. (See: steamship agent)

On-dock Rail: Direct shipside rail service. Includes the ability to load and unload containers/breakbulk directly from rail car to vessel.

On-terminal Rail: Rail service and trackage provided by a railroad within a designated terminal area.

Operating Port: At an operational port like Charleston, South Carolina, the port authority builds the wharves, owns the cranes and cargo-handling equipment and hires the labor to move cargo in the sheds and yards. A stevedore hires longshore labor to lift cargo between the ship and the dock, where the port’s laborers pick it up and bring it to the storage site. (See landlord port.)

Pallet: A short wooden, metal or plastic platform on which package cargo is placed, then handled by a forklift truck.

Pier: A structure which just out into a waterway from the shore, for mooring vessels and cargo handling. Sometimes called a finger pier.

Piggyback: A rail transport mode where a loaded truck trailer is shipped on a rail flatcar.

Pilot: A licensed navigational guide with thorough knowledge of a particular section of a waterway whose occupation is to steep ships along a coast or into and out of a harbor. Local pilots board the ship to advise the captain and navigator of local navigation conditions (difficult currents; hidden wrecks, etc.).

Port: This term is used both for the harbor area where ships are docked and for the agency (port authority), which administers use of public wharves and port properties.

Port-of-call: Port at which cruise ship makes a stop along its itinerary. Calls may range from five to 24 hours. Sometimes referred to as “transit port” and “destination port.” (See also: home port)

Vessels in the Port of Hamburg

Vessels in the Port of Hamburg

Project Cargo: The materials and equipment to assemble a special project overseas, such as a factory or highway.

Quay: A wharf, which parallels the waterline.

Railhead: End of the railroad line or point in the area of operations at which cargo is loaded and unloaded.

Railyard: A rail terminal at which occur traditional railroad activities for sorting and redistribution of railcars and cargo.

Refrigeration or reefer units: The protective cooling of perishable freight by ice, liquid nitrogen, or mechanical devices

Ro/Ro: Short for roll on/roll/off . A ro/ro ship is designed with ramps that can be lowered to the dock so cars, buses, trucks or other vehicles can drive into the belly of the ship, rather than be lifted aboard. A ro/ro ship, like a container ship, has a quick turnaround time of about 12 hours.

Rubber-Tired Gantry (RTG): Traveling crane used for the movement and positioning of containers in a container field. RTG’s may also be used for loading and unloading containers from rail cars.

Sheddage: Regardless of the length of stay, a vessel is charged a one-time fee for use of shed space and/or marginal (waterside) rail track space. The charge is based on the length of a vessel.

Short Ton: A short ton equals 2,000. Lifting capacity and cargo measurements are designated in short tons.

Spreader: a device for lifting containers by their corner posts. The spreader bar on a container crane is telescopic to allow lifting various length containers.

Steamship: Today, ships that transport cargo overseas are powered by diesel fuel instead of steam. Many people still use the term “steamship,” but the more modern term for the service is “ocean carrier” and for the ship itself, “motor vessel.”

Steamship Agent: The local representative who acts as a liaison among ship owners, local port authorities, terminals and supply/service companies. An agent handles all details for getting the ship into port; having it unloaded and loaded; inspected and out to sea quickly. An agent arranges for pilots; tug services; stevedores; inspections, etc., as well as, seeing that a ship is supplied with food, water, mail, medical services, etc. A steamship agency does not own the ship.

Steamship Company: A business that owns ships that operate in international trade.

Steamship Line: A steamship (ocean carrier) service running on a particular international route. Examples: NSCSA (National Shipping Company of Saudi Arabia), American President Lines (APL), Maersk Sealand, Evergreen, etc.

Stevedores: Labor management companies that provide equipment and hire workers to transfer cargo between ships and docks. Stevedore companies may also serve as terminal operators. The laborers hired by the stevedoring firms are called stevedores or longshoremen.

Straddle Carrier: Container terminal equipment, which is motorized and runs on rubber tires. It can straddle a single row of containers and is primarily used to move containers around the terminal, but also to transport containers to and from the transtainer and load/unload containers from truck chassis.

Stripping: The process of removing cargo from a container.

Stuffing: The process of packing a container with loose cargo prior to inland or ocean shipment.

Tank barges: Used for transporting bulk liquids, such as petroleum, chemicals, molasses, vegetable oils and liquefied gases.

Tariff: Schedule, system of duties imposed by a government on the import/export of goods; also, the charges, rates and rules of a transportation company as listed in published industry tables.

Terminal: The place where cargo is handled is called a terminal (or a wharf).

Terminal Operator: The company that operates cargo handling activities on a wharf . A terminal operator oversees unloading cargo from ship to dock, checking the quantity of cargoes versus the ship’s manifest (list of goods), transferring of the cargo into the shed, checking documents authorizing a trucker to pick up cargo, overseeing the loading/unloading of railroad cars, etc.

Toplift: A piece of equipment similar to a forklift that lifts from above rather than below. Used to handle containers in the storage yard to and from storage stacks, trucks and railcars.

Towboat: A snub-nosed boat with push knees used for pushing barges. A small towboat (called a push boat) may push one or two barges around the harbor. A large towboat is used to push from 5 to 40 barges in a tow is called a line boat. From the Port of New Orleans, line boats deliver cargo to Mid-America via the 14,500-mile waterway system flowing through the Crescent City.

(See also tug boat)

Tractor-Trailer: Some trucks are a solid unit, such as a van, but many have three main units. The front section where the driver sits is called the cab or the tractor (because it pulls a load). Cargo is loaded into the metal box (container), which is loaded onto the wheel base called a chassis or a trailer. These big trucks are often also called 18-wheelers.

Trailer On Flat Car (TOFC): A container placed on a chassis that is in turn placed on a railroad car.

Tramp: A ship operating with no fixed route or published schedule.

Transit Port: When the majority of cargoes moving through a port aren’t coming from or destined for the local market, the port is called a transit (or through) port.

Transit Shed: The shed on a wharf is designed to protect cargoes from weather damage and is used only for short-term storage. Warehouses operated by private firms house goods for longer periods.

Transshipment: The unloading of cargo at a port or point where it is then reloaded, sometimes into another mode of transportation, for transfer to a final destination.

Transtainer: A type of crane used in the handling of containers, which is motorized, mounted on rubber tires and can straddle at least four railway tracks, some up to six, with a lifting capacity of 35 tons for loading and unloading containers to and from railway cards.

Trucks: Heavy automotive vehicles used to transport cargo. In the maritime industry, cargo is often carried by tractor-trailers. The tractor is the front part of the vehicle, also called a cab. The trailer is the detachable wheeled chassis behind the tractor, on which containers or other cargoes are placed. (See: common carrier; heavy hauler; drayage)

Tugboat: Strong v-hull shaped boat used for maneuvering ships into and out of port and to carry supplies. A ship is too powerful to pull up to the wharf on its own. It cuts power and lets the tug nudge it in. Generally barges are pushed by towboats, not tugs.

Twenty Foot Equivalent Unit (TEU): A unit of measurement equal to the space occupied by a standard twenty foot container. Used in stating the capacity of container vessel or storage area. One 40 ft. Container is equal to two TEU’s.

U. S. Army Corps of Engineers: See Corps of Engineers.

U. S. Customs: See Customs.

Vessel: A ship or large boat.

Vessel Operator: A firm that charters vessels for its service requirements, which are handled by their own offices or appointed agents at ports of call. Vessel operators also handle the operation of vessels on behalf of owners.

Warehouse: A place in which goods or merchandise is stored.

Way Bill: The document used to identify the shipper and consignee, present the routing, describe the goods, present the applicable rate, show the weight of the shipment, and make other useful information notations.

Wharf: The place at which ships tie up to unload and load cargo. The wharf typically has front and rear loading docks (aprons), a transit shed, open (unshedded) storage areas, truck bays, and rail tracks.

Wharfage Fee: A charge assessed by a pier or wharf owner for handling incoming or outgoing cargo.

Yard: a system of tracks within a certain area used for making up trains, storing cars, placing cars to be loaded or unloaded, etc.

NB: This glossary has been compiled from many sources, including information from the websites of The Port of New Orleans www.pola.com, Georgia Ports Authority www.gaports.comand the Port of Halifax www.portofhalifax.com.

© 2013 Basil M Karatzas & Karatzas Marine Advisors & Co.  All Rights Reserved.

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S&P, Newbuilding and Demolition Update (December 2nd, 2013)

In a shortened week due to the Thanksgiving Holiday in the USA (there were definitely thanks to give this year in shipping compared to the last couple of years), most indices continued their upward trajectory.  Incoming Federal Bank Chairwoman Janet Yellen is perceived more dovish than outgoing Chairman Bernanke, thus, the ‘risk on’ theme continues. There have been concerns that the underlying economic conditions do not ‘support’ such valuations, but again, private equity funds and institutional investors hold US$ 789 billion in ‘dry powder’, thus, it seems there are no many asset classes or projects that cannot be afforded generous pricing when there are more money than deals.

In the past week, for the first time in a month, there have been no transactions in the VLCC market to report, whether newbuildings, second-hand or demolition. The VLCC freight market has softened for the week, but nothing major to report. Following the sale of the Suezmax tanker MT „TENERIFE SPIRIT” (150,000 dwt, Daewoo, 2000) three weeks ago to Greek buyers (Eurotankers) at $16.3 million, the Suezmax tanker MT „RIO GENOA” (160,000 dwt, Universal, 2007) has been committed from MPC Steamship in Germany to financial buyers in the US at about $35.5 million subject to charter by Koch at about $13,500 pd.   The price seems in line with the ‘market’ to slightly above market, which is OK given the level of the freight markets, and of course one has to look up for the cost basis of such tanker (would be value significantly above $50 million three years ago).  The LR1 tanker MT „ASHLEY SEA” (74,000 dwt, New Century, 2007) was sold to Greek buyers at $25 million, but we understand the creditors had involvement with the transaction and pricing, and the price looks significantly below market.  Staying with bank-related transactions, a bank from the lending syndicate to Denmark’s Torm exercised the option to sell four of their MR tankers to Oaktree Capital Management; the vessels were placed back under Torm’s management; the vessels were MT „TORM ALEXANDRA” (50,000 dwt, GSI, 2010), MT „TORM AGNETTE” (50,000 dwt, GSI, 2010), MT „TORM ARAWA” (53,000 dwt, GSI, 2012) and MT „TORM ANABEL” (2012); pricing is sketchy as this is not really an open market transaction, but it seems that the vessels had $162 million cost basis but sold at $107 mil, the outstanding loans, which loans seem slightly above vessels’ present fair market price.

Panamax Bulker MV „CAROL” (Image source: Halifax Shipping News)

Panamax Bulker MV „CAROL” (Image source: Halifax Shipping News)

The dry bulk market has been more active than the tanker market, and the transaction of the week has been the sale of the panamax bulker MV „CAROL” (75,600 dwt, Mitsui, 1999) at the very strong price of $14.2 million. The vessel was conveniently inspectable at a central port (Hamburg) where we understand there was a line of inspectors waiting for their turn.  As a matter of comparison, we recently reported the sale of a very comparable vessel but two years newer, MV „BOTAFOGO” (76,500 dwt, Imabari, 2001) at $14.6 million, almost same price, and the sale MV „MULBERRY PARIS” (76,500 dwt, Tsuneishi, 2004) at $19.5 million.  The older Japanese panamax bulker MV „BEL EAST” (68,500 dwt, Sasebo, 1995) which was sold at $8.5 million.  The also 1995-built post-panamax bulker MV „HOKURIKU MARU” (94,500 dwt, Mitsubishi Nagasaki, 1995) was sold to Chinese buyers at $9 mil.  In the supramax market, it is understood that Geden Line of Turkey was motivated to sell four (or two according to other sources) vessels to Olympic Shipping at either $100 mil for four (or $50 mil for two); vessels were sisterships MV „SOUTH”, MV „EAST”, MV „WEST” and MV „METROPOL” (55,400 dwt, Hyundai Vinashin, 2012, C4x35t).  The good supramax MV „MAPLE CREEK” (53,500 dwt, Imabari SB, 2005, C4x30t) was sold at $19.5 million on the back of strong buying interest.  Handysize market has been active as well on firm overall pricing: MV „FRAGA” (28,700 dwt, Shin Kochi HI, 2003, C4x30t) was sold at $13 million (noting that the vessel is special survey / dry dock due), the MV „IVS KWAITO” (32,000 dwt, Kanda, 2005) was committed at excess $15 million. MV „TIMOTHY R” (32,500 dwt, Jinse, 2009) was sold at $18.5 million.

For a change, the newbuilding market has been subdued during the past week. The demolition market has also been quiet: fairly decent freight rates with no many determined sales demolition candidates. All along, the major buying markets for demolition vessels are working on their on ‘stabilization’ issues, whether it’s about stabilization of exchange for the Indian Rupee (INR), the recent weakness of the Pakistani Rupee (PKR), and the political unrest and declaration of elections in January 2014 in Bangladesh.

© 2013 Basil M Karatzas & Karatzas Marine Advisors & Co.  All Rights Reserved.

IMPORTANT DISCLAIMER:  Access to this blog signifies the reader’s irrevocable acceptance of this disclaimer. No part of this blog can be reproduced by any means and under any circumstances, whatsoever, in whole or in part, without proper attribution or the consent of the copyright and trademark holders of this website. Whilst every effort has been made to ensure that information herewithin has been received from sources believed to be reliable and such information is believed to be accurate at the time of publishing, no warranties or assurances whatsoever are made in reference to accuracy or completeness of said information, and no liability whatsoever will be accepted for taking or failing to take any action upon any information contained in any part of this website.  Thank you for the consideration.

S&P, Newbuilding and Demolition Update (November 10th, 2013)

It has been a week dominated by the news of Twitter’s IPO (Ticker: TWTR) when the stock leaped 73% on its first day of trading on an approximate $18 billion pre-opening valuation; such an eye-popping valuation for a company that lost $130 million so far this year makes anything in shipping imaginable.  In Europe, the ECB lowered interest rates by 25 basis points to 0.25% to further stimulate the European economies, while Friday’s job market report showed an unexpectedly stronger economic picture (despite the two-week government shutdown; rumors that there is a direct inverse relationship and should be done more often could not be substantiated), raising the prospects that the Fed may have to start tapering off the QE by probably early next year.  Late last week, the Royal Bank of Scotland (Ticker: RBS:LSE) announced that they were to split the bank in a ‘good’ and an ‘internal bad’ bank (NCA); to the extent that the bank has about £28 billion shipping exposure, the news are material to shipping (and the bank).  It has been reported this week that RBS has sold approximately $ 777 million of shipping debt with Eagle Bulk Shipping (Ticker: EGLE) (their total present outstanding exposure after last year’s restructuring) to a buyer reported being a US-based bank (rumored Bank of America, ticker: BAC) at a rumored price of 85-89% of face value. In more shipping-related corporate news, Commerzbank AG (Ticker: CBKX:GER) reported earnings that pleased the market as the bank seems to handle risk better than expected by writing down NCAs ahead of target; however, the shipping portfolio has not showed much improvement in performance and the bank remained cautious for the year ahead.

MT „FRONT CHAMPION”  (Image Source: Ship Finance International)

MT „FRONT CHAMPION” (Image Source: Ship Finance International)

In the freight market, the BDI improved by about 3.5% despite the weakness in the panamax bulker market. In the crude tanker market, VLCC rates have showed good improvement for the week and surpassing the $40,000/d market for many MEG-East routes, mostly on lower tonnage availability at load ports. It’s to be seen whether this is the tanker version of the cape-blip we saw two months ago, or a rather more fundamental improvement.  Rates for Suez and Aframax tankers were utterly uninspiring for the week, and so were in the product tanker market as well.

MT „GOLDEN VICTORY”  (Image Source: Ship Finance International)

MT „GOLDEN VICTORY” (Image Source: Ship Finance International)

On pure S&P matters, it has been an interesting, and rather busy week to report. It’s definitely ‘deal peaking’ season, and even people in shipping know to make hay when the sun shines (actually, the proper saying should be to ‘hoist your sail when the wind is fair’.)  In the VLCC market, there has been reported the sale of MT „KUMANOGAWA” (300,000 dwt, Kawasaki, 2000) to undisclosed buyers at a price in excess of $30 million, which is relatively strong price in comparison to last week’s sale of MT „ARDENNE VENTURE” (320,000 dwt, Hyundai HI, 2004) at $41.5 million.  Still in the VLCC market, there has been the interesting ‘in house’ sale of two older VLCCs: specifically, Ship Finance International (Ticker: SFL) has agreed to sell two VLCC tankers to third parties for an en bloc cash consideration of  $32 million, believed to be for demolition purposes. The vessels were MT „FRONT CHAMPION” (300,000 dwt, Hyundai Heavy I., 1998) and MT „GOLDEN VICTORY” (300,000 dwt, Hitachi Zosen, 1999) whose owner has been the affiliated company Frontline (Ticker: FRO) who has terminated the charter in exchange of $90 mil in total compensation ($11 mil in cash and the balance of the cost for terminating the charter $79 mil in 7.5% amortizing Frontline notes.) It’s interesting noting that the vessels are sold for scrap at a relatively young age instead of the owner (FRO) undertaking the costly (and commercially) risky third Special Survey due shortly; also worth noting, the Fredriksen Group has for some time now advocated earlier-than-usual scrapping of vessels in order to partially alleviate tonnage oversupply.  It’s nice for once seeing an owner acting upon what they are preaching and showing self-discipline! Further to our reporting last week of the Suezmax tanker MT „OLIVER JACOB” (157,000 dwt, Daewoo, 1999) at reportedly $16.5 mil, this week the similar vessel from Teekay MT „TENERIFE SPIRIT” (150,000 dwt, Daewoo, 2000) was sold to also Greek buyers (Eurotankers) at $16.3 million. We now understand that MT „OLIVER JACOB” possibly has been misreported in reference to the price, as she’s dry dock due by the end of the year and her sale price has to be adjusted downwards by a couple of million to reflect the survey cost (and would make the sale of MT „TENERFIFE SPIRIT” ‘in line’ with the market.)

The dry bulk has had an exceptionally busy week with several transactions to report: Precious Shipping PCL of Thailand (PSL:Bangkok) has agreed to acquire two 2014-resales of ultramax bulkers built at Sainty S.B. Yangzhou at $27.5 million each (rather ‘in line with the market’ transaction at present, but definitely 10% higher over last year’s pricing), while Greek buyers were busy in the hot ultramax market with the acquisition of sisterships MV „SUPRA CHALLENGER 1” and MV „SUPRA CHALLENGER 2” (61,500 dwt, Iwagi Zosen, 2012/2013-built, respectively) at en bloc pricing of $60 mil (rather strong pricing, but again, much desirable Japanese-built tonnage.)  There has been the sale of a post-panamax bulker 2013-built vessel of 82,000 dwt at Guangzhou Longxue (Hull No L0027) at a competitive price of $26.5 million.  Looking for smaller vessels, there has been the sale of the panamax bulker MV „OCEAN LION”  (75,500 dwt, Sanoyas, 2005) at $20 million to Greek buyers (Hellenic Star), the sale of the gearless panamax bulker MV „VOLUMNIA” (76,000 dwt, Tsuneishi Zosen, 2002) to Greek buyers (Rainbow Shipmanagement) at $15.5 million, and the sale of the Italian-built (but no much enamored with when it comes to shipbuilding of commercial vessels) MV „PRIDE OF INDORE” (75,000 dwt, Fincantieri, 1996) at $7.4 million to Chinese buyers.  Still, there was the sale of the supramax bulker MV „MEDI CHENNAI” (55,800 dwt, Kawasaki S.B., 2005) at $19 mil to client’s of Hong-Kong traded Pacific Basin Shipping Ltd (2343:HK). Also, it has been rumored that Pacific Basin had been busy acquisring the similar supramax MV „MEDI SHANGHAI” (56,000 dwt, Mitsui, 2005) at also $19 million.  Finally, MV „FRONTIER ANGEL” (52,500 dwt, Shin Kurushina, 2001) was sold to Greek buyers at a solid pricing of $14.8 million (similar tonnage MV „OCEAN MORNING” (52,000 dwt, Tsuneishi, 2001) was sold in September at $13.1 million, a definite market improvement over a short window of time.) This has been a busy week in the dry bulk, with a great deal of the modern, quality tonnage going to private, independent Greek buyers.

The demolition market has been rather subdued due to local holidays in India (Diwali), but still the market has been relatively strong with five vessels having been beached in India so far this month (vs. 25 vessels for the month of October.)  It’s interesting that the Indian currency (INR) has softened again this week despite the recent interest rate increase by the Reserve Bank of India (RBI).  Presuming that freight rates will remain seasonally strong, tonnage availability for crapping will decrease allowing for a chance for good performance for transactions that took earlier on speculator prospects.

© 2013 Basil M Karatzas & Karatzas Marine Advisors & Co.  All Rights Reserved.

IMPORTANT DISCLAIMER:  Access to this blog signifies the reader’s irrevocable acceptance of this disclaimer. No part of this blog can be reproduced by any means and under any circumstances, whatsoever, in whole or in part, without proper attribution or the consent of the copyright and trademark holders of this website. Whilst every effort has been made to ensure that information herewithin has been received from sources believed to be reliable and believed to be accurate at the time of publishing, no warranties or assurances whatsoever are made in reference to accuracy or completeness of said information, and no liability whatsoever will be accepted for taking or failing to take any action upon any information contained in any part of this website.  Thank you for the consideration.

S&P, Newbuilding and Demolition Update (October 27th, 2013)

This isn’t the time to be shy!

Another week and another step toward a cyclical recovery in shipping!  No doubt!  At least that’s what the present market activity implies.  A year ago, even six months ago, it seems that there were some doubters about the recovery; for now, if there are any doubters, they are sure very low profile.

Let’s start with the newbuildings: this past week, it has been reported that Maersk Tankers has placed an order for ten (10) product tankers. The order is yet to be confirmed, but this is just another ‘massive’ order in the product tanker sector.  Navig8 Product Tankers also placed an order for four coated aframax tankers (LR2) at Guangzhou S.Y., at $48 mil apiece, and d’Amico another order for four handy products (MR1) at Hyundai Vinashin at a reported $31 mil each.  Approximately seventy (70) MR1 and MR2 tankers were ordered in each calendar 2011 and 2012, but year-to-date about 120 such vessels have been ordered.  As a matter of comparison, the world fleet of MR1 and MR2 tankers stands at approximately 1,425 double-hull vessels with 35,000 to 60,000 dwt and built after 2000 (with the outstanding orderbook at about 250 vessels.)

In the MR2 market still, it has been reported that the good vessel MT „ARISTARCHOS” (52,000 dwt, 2013, HMD) was sold at $38 mil, a definite step up on pricing in this market.  The more interesting point on this sale is that buyer and seller are other than Scorpio Tankers, the prime mover of this market in a while and active player in the resale market (besides their massive newbuilding program); there has been criticism in the past that Scorpio on purpose were paying up for resales to pull up the market, which would reflect favorably on their existing fleet and move (their original cost basis in this market is just below $33 mil per vessel.)  With the sale of MT „ARISTARCHOS” it seems that there is at least another buyer who does have conviction in the market; but again, we suspect that a higher price perhaps was justified for the vessel to be chartered to a premier credit oil company and then sail off to an MLP. In still same asset class, the pump-room design MT „WAWASAN CELESTE” (45,750 dwt, 2006, Minami Nippon) was reported sold to publicly traded Ardmore Shipping at $20.6 mil (vs. sale of sistership vessel in September of MT „TWINKLE EXPRESS” at $20 mil.)

And just to make it clear that asset prices are not just moving higher, but also on en bloc deal basis and on the back of funding form institutional investors and with a focus for the capital markets – whether Oslo or New York, Hafnia Tankers was successful at raising $235 mil from a private placement in Oslo, and promptly confirmed the purchase of ten product tankers from co-patriot J. Lauritzen.  The four LR2 tankers ordered by Navig8 Product Tankers – mentioned earlier, were on the back of a second private placement by the company in Oslo raising an additional $150 mil ($170 mil were raised during the first phase.)  Eletson Holdings (Kertsikoff) created a $700 million JV with Blackstone (Tactical Opportunities fund) and intend to place orders for eight semi-refrigerated gas tankers. And just in case one thinks that the US markets are playing second fiddle to Oslo, American Petroleum Tankers, a Jones Act Blackstone-sponsored tanker company has filed for an IPO with the SEC intending to raise about $170 million for the purpose of repaying debt.

On Sunday, the Financial Times reported on the private equity and institutional investors looking to invest in shipping; the transactions mentioned above are just the top line major transactions that register on the radar; there are several more transactions on smaller scale and on project basis acted upon institutional investors that are purposefully are kept off the radar.

MV „BIG WAVE” - A vessel aptly named for our times

MV „BIG WAVE” – A vessel aptly named for our times

And, not to think that bulkers are falling behind, it has been reported that the capesize vessel MV „ATLANTIC BRIDGE” (177,000 dwt, 2005, Namura) was sold at $27 mil; it’s tough make an assessment on the ‘strength’ of the price as the buyers were also her charterers (Cargill International) where obviously information has been symmetrical, but the vessel was also on charter till 2015 at about $16,000 per diem (Cape FFA curve for CAL14 and CAL15 slightly above $17,000 pd.)  However, the panamax bulker MV „ENERGY ROSE” (70,000 dwt, 1997, Sanoyas) was sold to Greek buyers at just below $10 mil, a definite sign that the market for dry bulk is strengthening as well (please see our previous report for additional sales in this segment.)  There are also rumors that MV „HOUHENG 3” (180,000 dwt, 2012, HHIC-PHIL) is under firm negotiations at $52 mil, a very firm price (despite the continued softening in the cape freight market.)  The handysize bulker MV „VOGE FELIX”  (24,300, 1997, Hakodate) was sold at $6 mil, having failed last month at similar levels.  The bigger handy MV „TREMONIA” (28,100 dwt, 2001, Bohai) was sold at mid $7-mil-range, while her exact sistership MV „HIBERNIA” was sold last month at $7 mil, another solid sign of an improving market. And of course, players in the dry bulk market could not satisfy themselves with secondary market alone!  Alpha Tankers & Freighters of Greece has been rumored to have firmed an order for two high-spec capes at Hyundai Mipo with 2015/2016 deliveries at $56 mil, a definitely gutsy call in the cape market.  [However, this is one of the few Greek owners with really long-term view of the market, and in gesture of getting closer to strategic players in the market, the company established Pantheon Maritime Services in Singapore to commercially manage the fifteen-vessel-strong capesize fleet]. Fredriksen’s Frontline 2012 in the same market and expected delivery proceeded with an order of two capes at New Times at about $50 mil each.

No doubt that our summary report does not imply any signs of market depression, distress or navigating under ‘mackerel skies’.  But, as they say, things are great until they are not.

© 2013 Basil M Karatzas & Karatzas Marine Advisors & Co.  All Rights Reserved.

IMPORTANT DISCLAIMER:  Access to this blog signifies the reader’s irrevocable acceptance of this disclaimer and other important information and terms. No part of this blog can be reproduced by any means and under any circumstances, whatsoever, in whole or in part, without proper attribution or the consent of the copyright and trademark holders of this and related websites. Whilst every effort has been made to ensure that information herewithin has been received from sources believed to be reliable and believed to be accurate at the time of publishing, no warranties or assurances whatsoever are made in reference to accuracy or completeness of said information, and no liability whatsoever will be accepted for taking or failing to take any action upon any information contained in any part of this website.  Thank you kindly for your consideration.

What’s Sale & Purchase (‘S&P’) in Shipping?

What does ‘S&P’ stand for in the shipping industry?  It definitely doesn’t stand for Standard & Poor’s, although a few shipping companies have been aspiring to be part of the well-respected ‘S&P 500’ index.  It doesn’t stand for ‘Salt and Pepper’, although sailors and the Navy are dressed seasonally in Summer Blue (“Salt and Pepper”.)  It doesn’t stand for Shipping & Processing, even evocatively, although we are still talking about the shipping industry.  It doesn’t stand for Standards & Practices applied in the broadcasting industry, Standards and Protocols or Security and Privacy used in the computer science, Sensation and Perception in psychology, Subcontract and Procurement in workflow analysis, or Strategy and Policy used in consulting and business analysis.

It simply stands for Sale & Purchase (S&P), the business practice of buying and selling commercial ships in the open market.  As grandiose ships as they may look, there is a need for their brokerage, whether as newbuilding contracts to be ordered at the shipbuilders when they first are getting built, or as ‘used’ vessels in the secondary market, or finally as old vessels now are destined sale for scrapping (demolition.) The professionals who are brokering the vessels are called ship brokers (or S&P brokers,) and are offering different services from charter brokers (who are brokering the freight / employment for the vessels but not the vessels themselves; brokers focusing on the tanker market are called tanker brokers.)

Capesize Vessel

Capesize Vessel

S&P brokers, much like real estate agents, do not hold any inventory on their balance sheets, that is that they do not own the vessels they sell; they just sell other people’s vessels to buyers without actually undertaking any risk at all (besides the time and effort they put into a transaction) or making any capital commitment in the transaction.  As such, the barriers to enter the industry are relatively low, and when times are good, there are many entrants, a great deal of which will wash out during the next market trough.  As great as this may be for most of the time for the principals (shipowners) looking to buy or sell vessels, since brokers usually provide liquidity, efficiency and, yes, more transparency than otherwise in the market, it’s not always an accretive situation for the market and its interests; low barriers mean that jetsam and flotsam enters and leaves the market depending on whether quick buck can be made without necessarily contributing value to the market.

S&P brokers may specialize in certain market segments by asset class such as dry bulk vessels or containerships  or tankers, of gas carriers, etc; they may specialize in certain geographic markets dealing with clients or types of vessels in certain ‘contained’ markets such as vessels in the cabotage business or customized vessels for a certain trade such as mini-bulkers or shallow draft vessels, etc; ship brokers may also specialize by function such as focus on newbuilding vessels or scrap brokers – there are distinct intricacies dealing with a newbuilding contract to a shipbuilding yard where financing and technical details for a vessel expected to be market competitive for the next twenty-five years are extremely vs. selling a vessel by the pound (actually by lightship deadweight tonnage (ldt)) for her last voyage of no return to the scrap pile.  There are specialist ship brokers who have been working with clients lacking shipping market expertise, such as leasing companies or equity investors or lenders, who have to depend on proven track-records of solid experience and dedication at accessing not only top notch ship brokerage services but also hands-on expertise and logistical support (since unlike an operating shipowner cannot depend on in-house expertise.) Finally, ship brokers can be ‘competitive’ brokers offering their services to any potential buyer or seller, while there are also ‘in-house’ brokers who work exclusive for a ship owner (usually larger or active shipowners who trade fairly often and need in-house, dedicated expertise which they can control.)

What are the services that ship brokers usually offer in their regular course of their business?  The short, sweet answer is that they ‘broker ships’ between buyers and sellers and make a commission from the sale; that’s life and destiny for most of the ship brokers and fulfillment of many dreams. The degree of competence and success increases exponentially with access to market information in general, and information about the vessels themselves, their owners, the circumstances of the transaction, their skill and dedication to negotiate great price for their client (above-market-level price for a seller, below-market-level price for a buyer), and can follow up the documentation and closing of the transaction in a professional and competent level.

Ship brokerage, is a great and value-added service to the maritime industry. Selecting a ship broker to do business with is more complicated, but often, one of the most rewarding professional relationships that can be built!  A great deal of shipowners started out as shipbrokers. And another great deal of shipowners make fortunes based on the dedicate work and advise of their brokers…

© 2013 Basil M Karatzas & Karatzas Marine Advisors & Co.

No part of this blog can be reproduced by any means and under any circumstances, whatsoever, in whole or in part, without proper attribution or the consent of the copyright and trademark holders.