Strategies and innovation in ocean transportation

"In 1994 world trade grew by 9%, the fastest annual increase since 1976. Dry cargo shipping rates are at an all time high.Panamax size bulk carriers are receiving19 000 US dollars per day for trans Atlantic round trip voyages. This is good news for the ship owners but not such good news for the industrial users of ocean shipping.The main emphasis of this paper will be on bulk carriers, the charter market and what industrial companies can do to reduce their costs of ocean transportation which is critical to Canadian exporters. Let us look at the charter market in general.Bulk carriers come in four main sizes:1.The Capesize bulk carriers of 110 000 to160 000 tons that are primarily used to transport iron ore and coal;2.the Panamax bulk carriers of about 70 000tons dwt. This is the largest size (with a beam of 105 ft) that can transit the Panama Canal.3.the Handymax bulk carriers of 40/45 000tons dwt; and4.the Handysize bulk carriers of 20/35 000tons dwt.The handysize vessels are usually craned or geared and carry a variety of bulk cargoes including steel. Ship sizes have increased over the years and the mining industry now uses primarily capesize or Panamax bulk carriers.International chartering is conducted through an international network of shipbrokers. There is usually one broker representing the ship owner and another broker who represents the charterer. The major chartering centers are London and New York but a great deal of chartering activity is conducted in regional markets such as Hongkong, Oslo, Montreal and Hamburg.The Biffex Index or Baltic Freight Index is a good measure of dry bulk freight rates. The Biffex is composed of ten major routes. In May1995, the Biffex was at 2310 points. A year earlier it was at 1354, an increase of about 56%."