Shipping

Meaning

Shipping refers to the process of transporting goods, commodities, or cargo from one

location to another, typically by sea, although it can also involve transport by land or

air. It plays a crucial role in global trade and commerce.

History:

•Ancient civilizations like the Egyptians and Phoenicians were among the first to

engage in maritime trade, using ships to exchange goods across the Mediterranean

and other water bodies.

•During the Age of Exploration (15th-17th centuries), European powers expanded

their maritime routes, leading to the exploration of new continents and the
establishment of global trade networks.

•The 19th century saw the development of steamships, which replaced traditional
sailing vessels, significantly improving the efficiency and reliability of shipping.

•In the 20th century, containerization revolutionized the industry by standardizing

cargo containers, making loading and unloading more efficient and reducing costs.

•Today, shipping remains a critical component of the global economy, facilitating the
movement of goods between countries and continents, with various types of vessels,
including container ships, tankers, and bulk carriers, serving different purposes.

Evolution of Modern Shipping

Shipping continues to evolve with advancements in technology, environmental

concerns, and changes in global trade patterns.The transition journey of sea trade
from planks to boats and beyond showcases the evolution of maritime technology
and its impact on trade and transportation:
1. Primitive Rafts and Planks: Early civilizations used primitive rafts and simple
planks of wood to navigate waterways and engage in basic trade along rivers and
coastal regions. These methods were limited in terms of distance and capacity but
laid the foundation for future maritime endeavors.

2. Development of Canoes and Dugout Boats: As societies advanced, they began

constructing more sophisticated vessels such as canoes and dugout boats. These
were carved from large tree trunks and offered increased stability and cargo
capacity, enabling longer journeys and more extensive trade networks.

3. Sailboats and Trading Ships: The invention of sailboats revolutionized sea

trade, allowing for faster and more efficient navigation across open waters. Ancient
civilizations like the Phoenicians and Greeks pioneered the use of sail-powered
trading ships, expanding trade routes and facilitating cultural exchange.

4. Medieval Trade and Exploration: During the Middle Ages, European exploration
and trade flourished with the introduction of larger, more robust vessels such as cogs
and carracks. These ships enabled merchants to venture further into unknown
waters, establishing lucrative trade routes with distant lands.

5. Age of Discovery and Global Trade: The Age of Discovery saw the emergence
of exploration fleets equipped with technologically advanced ships like caravels and
galleons. Led by explorers such as Christopher Columbus and Vasco da Gama,
these expeditions opened up new trade routes and connected continents, leading to
the globalization of commerce.

6. Industrial Revolution and Steamships: The Industrial Revolution brought about

significant advancements in maritime technology, most notably the development of
steam-powered ships. Steamships revolutionized sea trade by significantly reducing
travel time and allowing for larger cargo capacities, leading to further expansion of
global trade networks.

7. Modern Containerization and Supertankers: In the 20th century,

containerization transformed the shipping industry, standardizing cargo handling and
revolutionizing logistics. Additionally, the introduction of supertankers enabled the
mass transportation of oil and other bulk commodities, further shaping the landscape
of global trade.

8. Technological Innovations and Automation: Today, the maritime industry

continues to evolve with advancements in technology, including automated vessels,
GPS navigation, and digital logistics systems. These innovations enhance efficiency,
safety, and sustainability in sea trade, paving the way for the future of maritime
transportation.

Role of Shipping in context of India's Foreign Trade

Shipping plays a crucial role in the context of India's foreign trade. India is a vast
country with a large coastline, and the majority of its international trade is carried out
through maritime transportation. Here are some key aspects of the role of shipping in
India's foreign trade:

1.Trade Facilitation: Shipping provides a cost-effective and efficient mode of

transportation for goods to and from India. It enables the movement of large volumes
of cargo, including raw materials, finished goods, and commodities, across long
distances. The availability of reliable shipping services is vital for facilitating
international trade.

2.Connectivity: Shipping connects India with major global markets and enables
access to a wide range of trading partners. Indian ports serve as important hubs for
transshipment, enabling goods to be efficiently distributed to various destinations
worldwide. This connectivity enhances India's competitiveness and market reach in
international trade.

3. Bulk Cargo Transportation: India is a significant exporter and importer of various

commodities, including petroleum products, coal, iron ore, fertilizers, and agricultural
produce. Shipping provides the most practical means of transporting bulk cargo over
long distances. Specialized vessels, such as bulk carriers and oil tankers, facilitate
the movement of such commodities, supporting India's foreign trade in these sectors.

4. Containerized Trade: The use of shipping containers has revolutionized global

trade, allowing for standardized handling, efficient logistics, and multimodal
transportation. Indian ports handle a significant volume of containerized cargo,
facilitating the export and import of manufactured goods, textiles, chemicals, and
other products. Container shipping enables economies of scale, faster turnaround
times, and seamless integration into global supply chains.

5 .Port Development: Shipping drives the development of ports and associated

infrastructure in India. The government has been investing in modernizing and
expanding port facilities to handle larger vessels, increase handling capacity, and
improve efficiency. Port-led development initiatives, such as the Sagarmala program,
aim to enhance port connectivity, logistics infrastructure, and hinterland connectivity,
further boosting India's foreign trade capabilities.
6. Employment and Revenue Generation: Shipping and maritime activities provide
direct and indirect employment opportunities in India. They support a wide range of
jobs, including seafarers, port workers, logistics personnel, and maritime
professionals. Shipping also contributes to government revenue through port dues,
customs duties, and other related fees, thereby bolstering the economy.

7.Coastal Trade: In addition to international trade, shipping plays a vital role in

India's coastal trade. Coastal shipping offers a cost-effective and environment-
friendly mode of transportation for goods along India's extensive coastline. It helps in
reducing road congestion, lowering transportation costs, and promoting regional
trade.

*Coastal vs. International Trade

Coastal trade and international trade are two distinct forms of trade that involve the

exchange of goods and services but occur on different scales and within different

geographic regions:

1. Coastal Trade:

I.Geographic Scope: Coastal trade primarily involves the movement of goods and
services between ports and regions within a single country or along its coastline. It
typically occurs within a nation's territorial waters.

II. Regulations: Coastal trade is subject to the regulations and trade laws of a single
country. It may involve less complex customs procedures compared to international
trade.

III. Transportation: It often utilizes smaller vessels such as coastal ships, barges, or
even road and rail transport for short distances along the coast.

IV. Purpose: Coastal trade mainly serves the domestic market, facilitating the
distribution of goods within a country or region.

2. International Trade:
I.Geographic Scope: International trade involves the exchange of goods and
services between countries and across international borders. It encompasses trade
between nations that are often thousands of miles apart.

II. Regulations: International trade is subject to complex international agreements,

tariffs, customs regulations, and trade policies of multiple countries. It requires
adherence to international trade laws.

III. Transportation: It typically relies on larger vessels such as container ships, air
freight, and extensive logistics networks to move goods across continents and
oceans.

IV. Purpose: International trade allows countries to access a global market, import
goods they may not produce domestically, and export their products to other nations,
promoting economic growth and specialization.

In summary, coastal trade is localized within a single country or along its coast, while

international trade spans across borders and involves various countries. The

regulatory, logistical, and economic aspects of these two types of trade differ

significantly based on their geographic scope and purpose.

Overall, shipping serves as a lifeline for India's foreign trade, enabling the efficient
movement of goods, enhancing connectivity with global markets, and supporting
economic growth. The development and modernization of port infrastructure, along
with the promotion of efficient logistics and multimodal connectivity, remain essential
for further leveraging the potential of shipping in India's foreign Trade.

Liners vs Tramps
"Liners" and "tramps" are terms commonly used in the shipping and maritime
industry to refer to two different types of cargo vessels.

•Liners: Liners are cargo ships or vessels that operate on fixed schedules and
specific routes, transporting goods and containers between designated ports. These
ships are often owned or operated by shipping companies that offer regular,
scheduled services to transport cargo. Liners typically adhere to a specific timetable
and follow a predetermined route, making scheduled stops at various ports along the
way to load and unload cargo. They provide a reliable and predictable service for
shippers who require regular transportation of goods.
•Tramps: Tramps, on the other hand, are cargo ships that do not operate on fixed
schedules or routes. They are known for their flexibility and operate on a voyage-by-
voyage basis, taking on cargo wherever it is available. Tramp ships are chartered by
cargo owners or charterers on a per-voyage basis to transport goods. These ships
do not follow a regular route or schedule and may travel to different ports depending
on the cargo available and market conditions. Tramps offer more flexibility in terms
of cargo type, quantity, and destination compared to liners.
It's worth noting that the terms "liner" and "tramp" are not used as frequently today
as they were in the past, as the shipping industry has evolved and become more
complex. Many modern cargo vessels operate with a combination of liner and tramp-
like characteristics, and there are various other specialized vessel types for specific
purposes such as bulk carriers, tankers, container ships, and roll-on/roll-off (Ro-Ro)
ships.

Difference between Liner Service and Tramp Service

S.No. Basis of Difference Liner Service Tramp Service

1. Schedule Schedule of a liner Tramp services may
service is fixed with trade among the wide
published dates of calls variety of ports
at advertised ports. according to the market
needs.
2. Carrier Carrier is for common Carrier under tramp
use ( as are roadways service is private and
buses for passengers). cargo is individually
Shipper must be negotiated .
prepared to pay the rate
quoted and abide by the
liner operators' terms and
conditions.
3. Type of cargo In Liner services cargo is In tramp services cargo
heterogeneous. Usually is homogeneous.
they are manufactured Usually it is raw
goods in small materials in bulk.
consignment.
4. Shippers In liner services there are In tramp services
numerous shippers. generally there is one
shipper.
5. Document In liner services bill of When tramp services
lading is prepared. are availed charter
party is prepared.
6. Segments In a liner there are A chartered vessel is
various segments to hold without any specific
 variety of cargo eg. holds, divisions and
drums, boxes etc. shelves.

7. Quick turn around Liners are not delayed Tramps are usually
. because they spend less delayed due to no fixed
. time on port and more schedule.
time in transit due to
quick loading.
8. Expensive Liners are fitted with In Tramps instead
Machinery expensive machinery to simple elevators, pump
ensure speedier carriage. etc are employed. Also
usually old ships are
used in tramp services
that have lesser speed.

B/L vs Charter Party

.
.

A bill of lading and a charter party are both important documents used in the
shipping industry, but they serve different purposes and have different implications.
Here's an overview of the differences between the two:

S.No Basis of Bill of Lading Charter Party

. Difference
1. Definition: A bill of lading is a document A charter party is a
issued by a carrier (such as a contract or agreement
shipping line or a freight between the owner of a
forwarder) to acknowledge the vessel (the "shipowner")
receipt of goods and to and a charterer who
provide evidence of the wishes to hire the vessel
contract of carriage. It serves for a specific period or
as a receipt for the cargo and voyage. It outlines the
also represents a title terms and conditions of
document that can be used for the charter, including the
transferring ownership or rights, responsibilities,
claiming the goods at the and obligations of both
destination. parties.The name "charter
 party" is an Anglicization
of the French charter
party, or "split paper", i.e.
a document written in
duplicate so that each
party retains half.

2. Parties The parties involved in a bill of The parties involved in a

Involved: lading are the shipper/exporter charter party are the
(consignor), the carrier shipowner (who owns or
(shipping line or freight operates the vessel) and
forwarder), and the recipient the charterer (who hires
of the goods (consignee). the vessel).

Purpose: The primary purpose of a bill The purpose of a charter

3. of lading is to serve as party is to define the
evidence of the contract of terms of the agreement
carriage, document the between the shipowner
condition of the goods at the and the charterer,
time of shipment, and facilitate including details such as
the transfer of ownership or the duration of the
the claiming of the goods by charter, the agreed-upon
the consignee. freight rate, the loading
and unloading ports, and
any specific obligations or
responsibilities of each
party.

4. Scope of A bill of lading typically covers A charter party covers the

Coverage: a specific shipment of goods entire charter period or
from one port to another, voyage and addresses
documenting the details of the broader aspects of the
cargo, such as the quantity, vessel's use, such as the
description, and packaging. It hire rate, laytime (the time
may be negotiable or non- allowed for loading and
negotiable, depending on the unloading), demurrage
type. (charges for exceeding
the allowed time), and
other commercial terms.

5. Types: The bill of lading can be Charter Party can be

classified on the following classified into three main
basis- types:

A. On the basis of i) Time Charter : In a

‘execution’: time charter the ship is
hired for a specifed time
I. Straight bill of lading- It period.Example- from
reveals that the goods are January 1st ,2023 to June
consigned to a specified 30,2023.During this
person and it is not negotiable period the ship may
free from existing equities. It undertake any voyage or
means any endorsee acquires voyages. Further the
no better rights than those charterer may sub-charter
held by the endorser. This the vessel on a time
type of bill is also known as a charter or voyage charter
non-negotiable bill of lading, basis.
and from the banker’s point of
view, this type of bill of lading ii) Voyage Charter:
is not safe. This type of bill is When the ship is hired for
prominently used for military a specified journey/
cargo. voyage,it is known as
voyage charter wherein
II. Open bill of lading - This the Charterer hires the
is a negotiable bill of lading vessel for a single
where the name of Consignee voyage, for example from
can be changed with Bombay to London. In
consignees’ signature and such a case the time
thus transferred. This can be taken by the ship to
transferred multiple times. complete the voyage is
Switch bill of lading is a type not taken into
of open consideration.
bill of lading.
iii) Demise Charter : In a
demise or bareboat
III. Bearer bill of lading- This charter the charterer
is a bill states that delivery takes the responsibility
shall be made to whosoever for the crewing and
holds the bill. Such bill may be maintenance of the ship
created explicitly or it is an during the time of the
order bill that fails to nominate charter. He assumes the
the consignee whether in its legal responsibilities of
original form or the owner.
through an endorsement in In summary, a bill of
blank. A bearer bill can be lading focuses on the
negotiated by physical receipt, transport, and
delivery. They are used for delivery of goods, acting
bulk cargo that is turned over as a receipt and title
in small amounts. document, while a charter
party is a contract that
IV. Order bill of lading- This governs the hire of an
bill uses express words to entire vessel, outlining the
make the bill negotiable. This rights and obligations of
means that the delivery is to the shipowner and
be made to the further order of charterer over a specified
the consignee using words period or voyage.
such as “Delivery to A Ltd. or
to order/assigned”. It is the
most modern type of bill
widely used all over the world.
It also ensures safety to the
bonafide holder. Since the
ship visits several ports where
the language , practices and
procedure may be
different ,the master might be
inconvenienced during the
delivery of the cargo.people
might fraudulently collect the
cargo if it an open or bearer
bill of lading.

B. On the basis of Method

of Operation:

I. Received for shipment bill

of lading–This bill is sent from
agent /charterer to shipper.
The endorsement of this bill
ensures that the carrier
has received goods but does
not confirm it is onboard of the
assigned vessel.

II. Shipped B/L – This bill of

lading is Issued when cargo is
loaded on board. It binds the
ship owner and the shipper
directly.

C. On the basis of condition

of goods

I. Clean bill of lading- In this

bill of lading no remark is
made about the packing of
goods. It serves as a proof
that the packing was un-spoilt
at the time of loading of the
goods on the ship. It is one
which states that the
cargo has been loaded
onboard the ship in apparent
good order and condition.
Such a bill of lading will not
bear a clause or notation
which expressively declares a
defective condition of goods
and/or the packaging.
The opposite term is a soiled
bill of lading. It reflects that the
goods were received by the
carrier in anything with good
condition.

II. Dirty/Foul bill of lading-

This bill of lading mentions
that the packing of goods was
damaged or defective at the
time of loading. Such a bill of
lading is not favoured as a
document of title or as a
collateral security for raising
loans. If the ship owner raises
an objection about “the
condition of the cargo is in
good order”, he/she can
include a clause thereby
causing the bill of lading to be
“clauses or dirty” along with
the remarks as per the finding
of thecargo condition. E.g.
torn packing, broken cargo,
shortage in the quantity of
the goods etc.Therefore,
exporters do not prefer a dirty
bill of lading. If the exporter
wants to obtain a clean bill of
lading even when the packing
is defective, he has to sign a
letter of indemnity agreeing to
indemnify the shipping
company for any claim or
liability for loss.

D. On the basis of means of

transportation

I. Through B/L – When the

goods are carried partly in the
ship of the ship-owner issuing
the bill of lading and partly in
some other ship for an
inclusive freight, the bill of
lading is known as through bill
of lading. This bill of lading
is a legal document that
allows for direct delivery of
cargo from point A to point B.
The bill allows transportation
of goods both within domestic
borders and through
international shipment as it
serves as a receipt of the
cargo, a contract of carriage,
and sometimes title for the
products as well.

II. Combined B/L – This bill

gives information about cargo
being transported in large
containers by sea, air and
land, i.e. through multi-model
transport.
 E. On the basis of freight

I. Freight paid B/L- When

the freight has been paid in
advance by the exporter or his
agent, the bill issued is known
as freight paid bill of lading.

II. Freight collect B/L- When

freight has to be paid by the
importer or his agent at the
time of receiving goods from
the captain of the ship at port
of destination,the bill issued to
exporter is called freight
collect bill of lading.

F. On the basis of mode of

transportation used

I. Inland bill of lading- It is

issued by railroad or
trucklines. It authorizes
movement of goods from the
shipper’ warehouse to the port
or point of export.

II. Ocean bill of lading – it

applies to goods shipped by
waterand is issued by
steamship lines.

III. Airway bill – when the

document is issued by an air
carrier, it becomes an airway
bill.

6. Functions: I. Receipt of Goods: It is a A charter party is a

certificate of the fact that maritime contract
goods have been accepted for between a ship owner and
loading on the ship. a "charterer" for the hire
of either a ship for the
 II. Document of title: Bill of carriage of passengers or
lading is the proof of cargo, or a yacht for
ownership of goods. pleasure purposes.
Therefore, the owner of the bill
is considered as the owner of
the goods.

III. The agreement of

carrying of goods: It is an
agreement by the shipping
company to take away the
goods from one dock to the
other, it also mentions the
terms for such carriage of
goods.

IV. Acts as a Surety: The bill

of lading acts as a surety and
can be pledged to take loan.

V. Evidence :It acts as a

piece of evidence for the
carriage contract containing
the terms and condition under
which the goods
transportation will be carried
out.

7. Prepared by: A bill of lading is a legal A charter party is typically

document issued by a carrier prepared by one of the
to a shipper that details the involved parties or their
type, quantity, and destination representatives, such as
of the goods being shipowners, charterers, or
carried. shipbrokers.