Freight Rate Determination In Container Transportation By Sea

Tez (Yüksek Lisans) -- İstanbul Teknik Üniversitesi, Fen Bilimleri Enstitüsü, 1998Thesis (M.Sc.) -- İstanbul Technical University, Institute of Science and Technology, 1998Bu tez çalışmasında, konteyner taşımacılığı yapan gemiler için bir navlun hesap modeli oluşturulmuş ve bu model halihazırda serviste bulunan bir gemi için navlun hesabında kullanılmıştır. Bölüm L'de konuya genel bir giriş yapılmıştır. Böhlm 2'de deniz taşımacılığının genel bir tanımı yapıldıktan sonra tramp taşımacılık ve düzenli hat taşımacılığı üzerinde durulmuş,iki taşımacılık anlayışının birbirlerinden ayrılan noktalarına değinilmiştir. Deniz taşımacılığında konteyner kullanımı ve ayrıca konteynerler hakkında detaylı ve açıklayıcı bilgiler de bu bölüme dahil edilmiştir. Gemi maliyetleri ve bu maliyetlerin bileşenleri hakkındaki bilgiler Bölüm 3 'ün kapsamına alınmıştır. Geminin sabit ve değişken masrafları konulan üzerinde durulmuş ve yatırım, işletim, seyir ve yük elleçleme maliyetleri detaylı bir şekilde anlatılmıştır. Bölüm 4'te Net Şimdiki Değer yöntemi kullanılarak konteyner gemileri için bir navlun modeli oluşturulmuştur. Bu navlun modelinin daha iyi anlaşılabilmesi için paranın zamansal değeri ve nakit akış diyagramları anlatılmış, Net Şimdiki Değer yöntemiyle ilişküendirilmiştir. Son bölüm uygulama bölümü olup navlun değerleri, çeşitli istenen kazanç oranlarında ve çeşitli yatırım stratejilerine göre hesap edilmiştir.Because of many advantages of using containers to move cargoes from one place to another containerization is the most developing transportation system in the world. Containers are standard boxes which a) help to carry different type of cargoes within one box b) protect all cargoes in it from all bad conditions c) are resistant to weather and bad handling conditions that they are durable d) are convenient for nearly all transportation vehicles's dimensions The idea of putting cargo into containers for carriage is not a recent one; containers in one form or another have been used to carry cargo since the early years of this century. The through transport concept is new and involves the organization and management of the whole transport chain being undertaken by a single company regardless of how many modes of transport are used. To be a complete success for the system, it is essential that all operators of transport modes involved agree on standard size of container. This standard size has to consider the limitations in size imposed by allowable measurements of the various transport vehicles; in the majority of countries these relate to the permitted dimensions of the road truck. It is the size of the road truck that set the maximum limits on container size. There are two standard ISO (International Standarization Organization) containers, the first 8 ft high by 8 ft wide, the second 8 ft 6 inches high and 8 ft wide, both coming lengths of 20, 30 or 40 ft. 8 ft, 8 ft, 20 ft size is called as TEU. Movement control is vital if the containers are to be used to their full potential. This entails keeping the container full of cargo and moving through the system. A container filled with cargo but waiting in a port to be unloaded/loaded or waiting to be transported, is waste of money for the company unless adequate waiting time payments are charged. This form of control and utilisation can only be undertaken by the shipping company through their organization at each end of the route. The container system provides the opportunity to manipulate standard units of cargo by higly mechanical means throughout the journey from first packing place to final destination. There is an opportunity to make large cost savings in through transport costs by standardising the methods of carriage and transfer between modes. Essentially, the goods are packed into large boxes providing protection from the weather and bad handling throughout their transit. The boxes can transfered between modes efficiently and quikly. The most important advantages of containerization, is the reduction in total time taken to transport goods from manufacturer to consumer. To speed delivery, most manufacturers must store their products close to the market. But the speed of the transport mode has an effect on the amount of stock held in warehouses in order to make guraanteed deliveries. The time saving in delivery time is accomplished by containerisation by reason of the shorter transfer time needed moving the good between modes. The actual time saving is dependent on the installation and use of properly designed handling equipment througout the chain. It follows that if less time is taken in handling the actual goods and proper packaging is used, minimal loss or damage takes place. It is during the handling process both in the port terminal and elsewhere in the chain that greatest losses occur. Although the container has minimised these risks, there is the added danger that all the contents may be stolen by having the whole box taken. Handling containers in marine terminals leads to lower labour costs. The lower costs are due partly to the reduction in manpower needed to handle the same throughput across a container berth as compared to a conventional berth. Obviously, there are some major disadvantages attached to the container system. The container system sets out to give a door to door service which involves more complex control mechanisms, especially in keeping a record of where the individual containers have been sent. To create a system, a great deal of very sophisticated handling equipment must be provided. This calls for a large amount of finance for investment for both the equipment itself and for framing programmes for skilled people to operate it. There are lots of cash outflows during operating a ship, that's why the big importance was given to costs of operating a ship in this study. The level of a ship's running costs depends upon the owner's policies, the condition of the ship and the mode of operation. Within these parameters the ship manager has control, but there are other factors such as changing economic conditions and trading patterns over which he has no control and which, because of their potential overall adversa effects on costs, can make a profit-making ship lose money quickly. In these circumstances there is need for management flexibility and the ability to adapt to new situations. There is no internationally accepted standard cost classification in shipping, and this can easily lead to confusion over terminology. The classification of costs was assumed into four categories in this study:. Capital costs. Operating costs. Voyage costs. Cargo handling costs Shipping is a highly capital intensive business even a small bulk carrier can represent an investment of $10 million, so capital costs are certain to play a very major part in the cost of the operation. However the ship has a long life and great deal depends on how the cost of capital is actually charged to the business in cash terms. Generally, there are three principal methods of ship finance: shipyard credits, commercial bank loans and ship lesing. One major provider of credit is the shipbuilder. The ship owner ordering a new ship makes a series of cash payments to the shipbuilder to enable the latter to buy materials, the payments being 5-10 per cent on signing the contract with the balance in roughly equal installments on keel laying, framing, launching and delivery. xi To obtain a loan from commercial bank is the second option for a ship owner looking for finance source to purchase a new or second-hand ship. The length and terms of loans offered by commercial banks depends on the customer and the market. Loans may range in length from three to twelve years in exceptional cases, though five or eight years is more normal. The interest charged to the borrower reflects the base rate at which the bank borrows money plus an interest rate spread to cover the bank's risk. The base rate at which the bank borrows depends on the London Inter- Bank Offered Rate (LIBOR). A third method of raising finance to purchase a ship is leasing. The basic principle of leasing is that the ship is sold to the company providing the finance and leased back from them under a long-term agreement that gives the ship owner complete control to operate the asset but leaves ownership vested in the finance company. The principal components of operating costs are manning, stores, repairs & maintenance, insurance and administration. Except repair & maintenance costs, all the costs are the ongoing expenses depending on running of the vessel. Repairs & maintenance costs are irregular costs such as drydocking, classification, etc. Voyage costs can be defined as variable costs incurred in undertaking a particular voyage. The main items are fuel costs, port dues, pilotage and canal charges. Fuel is the single most important item in voyage costs. Although the ship owner cannot influence fuel prices, since this is determined by oil prices he has considerable control over the level of fuel consumption. The amount of fuel burnt in a ship depends upon the way it is designed and the care with which it is operated. The handling cost represent a significant component in the total cost equation and one to which considerable attention has been paid by shipowners, particularly in the liner business. The revenue received from operating the ship, the cash cost of running it and the costs of financing it are the key variables to determine cashflow in shipping. All the costs explained before and the revenues are assumed as negative and positive cahsflows during the operating period of the ship. In this study, to show cashflows which are related to expenditures and revenues better, firstly it was glanced at some engineering economics techniques. These techniques are very close related to time value of money. One dollar today is worth more to an individual or a company than one dollar a year from now. The change in the value of money over time as a result of its earning power is called the time value of money. It is not only sufficient to estimate the amounts of expenditures and revenues influenced by an investment decision, but also necessary to estimate the times of the cash flows. Money cannot be shifted through time without changing its value. In general, when it is moved forward through time, its value increases (compounding) and when it is moved backward, its value decreases (discounting). Two separate sums of money can be compared only if they are given at the same point in time. Otherwise, they have to be converted to an equivalent time base. This conversion process involves the use of interest formulas. The factors that affect the equivalence are (1) the amount of the cash flow, (2) the timing of the cash flow, and (3) the interest rate involved. Cash flow takes place whenever cash or its equivalent (e.g, check, transfer through bank accounts, or some other means) "flows" from one party to another. The cash flow diagram is a graphical illustration of economic transactions. It has two xii fundemental segments: (1) the horizontal time line, which inchxeds the complete study period, and (2) the vertical cash flow lines. Horizontal time line is subdivided into n periods. Zero (0) indicates the begining of the perios and it is usually associated with the present time. It is customary to assume that the cash flows occur at the end of a given period. The compounding can be defined as periodically adding to principal and therefore, the compounding proses can be considered as a mathematical toll by which the future of a present sum can be found at a particular interest rate. The future equivalent so found is defined as the future worth of present sum. On the other hand discounting can be defined as the mathematical process employed to reduce a principal given at some future time to its equivalent at the present time. Therefore, the dicounting process can be considered as a mathematical toll by which the present equivalent of a future sum can be found at a specific interest rate (discount rate). The present equivalent so found is defined as the present worth of a future sum. In this study, the cost of moving a container in a ship was calculated by assesing the cash operating costs of the ship and adding a sufficient level of profit to provide a Net Present Value (NPV) of zero at a given rate of return. By the help of this method, all pozitive and negative cash flows can be easly carried to their present values. Pozitive cash flows mean that freight revenues which are earnt from carrying containers from one place to another and negative cash flows mean that expenditures which are spent for operating a ship. The cost of moving a TEU in a ship of a given size over a voyage of a given length has been calculated by assessing the cash operating costs of the ship and adding a sufficient level of profit to provide a net present value (NPV) of zero at a given rate of return. Ai : the excess of cash revenues over cash costs in year i Co : the initial (capital) cost of the ship Cci : the cash costs in year i Cn : the second-hand (or scrap) value of the ship at the end of ship's operating life n d T Qi the ship's operating life the rate of return (%) the freight rate per TEU the total amount of TEU carried in year i Ai = (T.Qi-Cci) Strictly, tins is defined as: NPV = zero = NPV = zero = 2>-(i+rf)' Co + Cn.(\ + d)~n (1) ^(T.Qi-CdKl + dy i=l -Co + Cn(\ + d)" (2) X1H On the simplifying assumption that the cash costs (Cci) and carryings (Qi) do not vary from year to year over the ship's operating life, this can be simplified by using the annuity formula (used for reducing a time-series of constant sums to a present value) thus NPV = zero = (T.Q-Cc). 1-(1 +<*)- -Co + Cn.(l + d) (3) which can be transposed into T = Q Co \-(\ + d)~ -=i + Cc-Cn. (l+d)a-\ (4) The formula may now be developed in respect of a) annual carryings (Q) i) if Dc: the amount of TEU available for cargo and H : round voyages per year then Q = Dc.H (5) ii) if Hd : days on each round voyage and Sd : average days per year out of service for repairs and surveys rr 365 -Sd then H = (6) Hd iii) if Rd : days for turnround at each port where cargo is worked V : ship's speed in knots and m : round voyage in nautical miles then Hd = m 24V 2.Rd (7) iv) by substituting (7) in (6) and (6) in (5) annual carryings= Q = Dc.H Dc.(365-Sd) m 24~v + 2.Rd b) annual costs (8) i) if Cca : the average annual cash costs of operating the ship Cct : annual cash costs which depend upon the passage of time xiv and Ccf : annual fuel costs then Cca = Cct + Ccf (9) ii) if Fp : the daily fuel consumption in port in tons Fs : the daily fuel consumption at sea in tons Pfp : the average price of diesel oil per ton Pfs : the average price of fuel oil per ton m then Ccf = H.\2. M. Fp. PJp + ^-r. Fs. Pfs 4*T. V (10) Total annual costs = Cca = Cet + Hİ2. Rd. Fp. Pfp + -^. Fs. Pfs) (11) c) freigth rate per TEU ( T) If formula (11) put into the place in formula (4) the freigth rate per TEU can be calculated as 1 DcH A l-(l + d) ° r+Cct + H.[2.RdFp.Pfp + rrT:.Fs.Pfs|-Ca 24. V (l + d)n-l.Yüksek LisansM.Sc