General principals of liner traffic
In liner traffic, ships navigate through predetermined routes via particular harbors and by pre – announced timetables. Some of the liner traffic function by daily schedules, in shorter routes even by time. Especially in long routes, timetables can be also suggestive, for example, departures are every third week or once a month and a route can often include loading and unloading ports, although all of them will not be visited on every trip. Departures can also be expressed by main points to north and south or respectively to east and west. In some routes, the operating area can be expressed also by larger regional entirety such as Finland – western Mediterranean route or Gulf of Mexico – Baltic Sea route. So, the loading and unloading ports are selected and appointed primarily by transportation needs and other ports in the region are served by using feeder traffic and transshipments.
Nowadays also overseas container traffic operate mostly by day fixed principle. Container and freight unit traffic have become as well as in amount and importance a key part of the liner traffic market and in overall widely spoken global container transport systems. Overseas and feeder liners often form a seamless liner traffic chain. For short feeder liners schedules are particularly accurate because of ocean vessel schedules as well as berths and stowage equipment reservations.
The cargo space in the liner traffic vessels is available in principle to all shippers. Trafficking is mainly operated by reported schedules and ports regardless of whether the vessel is full or not.
In the liner traffic vessels, mainly processed products are being transported. Only twenty percent of amount of the goods of world trade tonnage transported by liner traffic, but majority of cargo transported in terms of value.
The liner traffic capacity can be presented within the so-called N.V.O.C.C (Non Vessel Operating Common Carrier) system. It is the carrier that provides transportation services and cargo space without operating under his own name or owning vessels. This activity is practiced mainly in the container traffic.
The operating areas of liner traffic vary from a few dozen nautical miles (for example, Helsinki-Tallinn is about 60 nm) to more than 10 000 nautical miles. For example, Australia’s ocean liner traffic is becoming increasingly more container traffic of more than 10 000 TEU (Twenty foot Equivalent Unit) container vessels, although there are still large, with many loading methods equipped ro-ro (roll on – roll off) vessels in use in the traffic between continents.
Due to rapid growth of ocean container vessel size and transportation capacity ocean feeder traffic has become very important part of the container transport chain in Europe. For example, North Sea area has a dozen ocean traffic harbors or parts of main harbors for ocean traffic where feeder vessels operate from Baltic Sea, Biscayn bay and from other ports of North Sea bringing and taking containers further to be transported to other ocean harbors and respectively, bringing in the main harbor loaded containers to recipient ports in the regions.
Liner traffic freights
Basis for determining liner traffic freights are numerous and vary in different routes and maritime transport market. Determining basis result from cargo itself, some are influenced by other factors of transport process. Freight rates are naturally affected by hard competition based on open markets and fast fluctuations of balance in supply and demand.
Following factors determine basis of freights:
- Most common freight basis is either weight, cargo is determined per unit or volume (the volume of cargo, measurement)
- In ro -ro cargo ships freight can be based on the amount of lane meters or used space.
- There are ‘unit based freights for different kinds of large units (containers, vehicles, machinery, equipment, etc.).
- For particularly valuable products freight can be calculated, for example, as a percentage of the value of the goods.
- Freight tariffs (freight rates) are based also on the quality of transporting goods such as IMDG Code (International Maritime Dangerous Goods Code).
- For special products such as cold temperature cargo have their own freights.
- For heavy cargoes (heavy lifts), extra long, wide or high as well as for difficult to handle cargos additional fees are defined.
- There are numerous determining basis of freight in container traffic. The most important of these are:
- FCL i.e. the entire container is delivered to the sender of the goods, which he loads by himself or alternatively delivers goods to carrier for container loading
- LCL when the goods are sent to the port or terminal (container freight station, CFS) for loading container and for unloading respectively in the port of landing. In the same LCL container are also cargoes of different shippers.
- Container traffic also include a variety of container handling additional charges, some to mention
- THC (Terminal Handling Charge) and
- CSC (Container Service Charge) charged for the handling containers
- ETC (Equipment Transfer Charge).
- If the harbor is not a part of the route, additional regional fees will be charged
Other separate additional charges are:
- port charges, for ports, which have a particularly high level of costs
- additional congestion charge for those cases in which the vessel remains in port longer than expected due to shipping congestion
- additional war threat charge, if a ship charters to the area where there is a risk of war
- additional season charge, which, for example, in Finland can mean higher freights during the winter
- small cargo freight can be based on minimum freight.
Changing factors of freight
Freight is based on, for example, annual basic level. If certain factors change, for example, percentage rate changes in certain factors, table freights will be changed accordingly. The most common special surcharges in liner freight are fuel surcharge BAF (Bunker Adjustment Factor) and currency surcharge CAF (Currency Adjustment Factor).
Freight is usually paid, for example, in accordance with trade or documentary credit as prepaid i.e cash freight or collect freight, which is charged from the recipient of the goods before releasing them.