Freight Markets

The Freight Market • The shipping industry consist of four markets namely • • • •

Newbuilding market Freight market Sale and purchase market Demolition market

Freight Market • The freight market trades in sea transport . • There are no physical market places due to the international nature of the business with the exception of the Baltic Exchange and other major shipping centers in traditional maritime countries like New York, Oslo, Tokyo, Hong Kong, Singapore, Piraeus, Hamburg etc

Freight market On the freight market, shipowners have vessels for hire, charterers have cargo to transport and brokers put the deal together. This is known as the

Key Market Features • Fixing of many contracts in an ‘open market’ situation • - most contracts between charterers and shipowners/ ship managers become known to all participants thorough the activities of shipbroking companies • - openness in the market means that all agents know prevailing freight rates and can

Key features Markets publish details of all types of contracts:  Voyage charter  Contracts of affreightment (COA)  Time charters of varying duration  Bareboat charter

Open Market- UNCTAD • UCTAD definition of an Open market is as follows: ‘ the open market embraces the aggregates at any given time of tramp ship owners seeking employment for their vessels and shippers requiring the services of tramp ships for a limited period. The key note of the open market is the quick and easy communication of closely and continuously linked by

Open Market –UNCTAD 1 Thus , any charterer needing a ship of a certain size and type available at a specific port on or about a specific date can be assured that his needs will be made known to shipowners in all countries which possess merchant fleets

Open Market Fixtures ( Contractual Arrangement)

 Voyage charter  Contracts of affreightment (COA)  Time charters of varying duration  Bareboat charter

Economic Characteristics The freight Market is considered to be a very competitive market close to the perfectly competitive model used by economists: • The reasons:

Main Features of the Model 1. Every supplier in the industry seeks to maximise their profits 2. There are numerous buyers and sellers in the market 3. The service is homogeneous 4. There is easy exit from and entry to the market 5.There is full information Under these circumstances , a perfectly competitive market is said to exist