Dry Bulk Carriers Case Analysis

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THE FLEET The chart below shows the fleet and the orderbook for dry bulk as at 1 January 2012. The total fleet numbers 8,890 vessels with a combined size of 610 million dwt. Measured in dwt, the Capesize is the dominant vessel type accounting for 40% of the fleet and 44% of the orderbook. The chart shows the tendency towards launching more and more large vessels. Moreover, during the past couple of years, the dry bulk segment has had a large orderbook, and that still applies today, with an orderbook of 200 million dwt (2390 vessels), corresponding to 33% of the fleet as at 1 January 2012. Charter Market: Dry bulk carriers are employed in the market via a number of different chartering options. The general terms typically found in these …show more content…

Most of these charters are of a single voyage nature, as trading patterns do not encourage round voyage trading. The owner of the vessel receives one payment derived by multiplying the tons of cargo loaded on board times the agreed upon freight rate expressed on a per-ton basis. The owner is responsible for the payment of all expenses including voyage, operating and capital costs of the vessel. Chartering on a single voyage or a trip charter basis may be referred to as spot chartering activity. A "contract of affreightment" relates to the carriage of multiple cargoes over the same route and enables the COA holder to nominate different ships to perform the individual sailings. Essentially it constitutes a number of voyage charters to carry a specified amount of cargo during the term of the COA, which usually spans a number of years. All of the ship's operating, voyage and capital costs are borne by the ship owner. The freight rate normally is agreed on a per cargo-ton …show more content…

In general, a larger cargo size is quoted at a lower rate per ton than a smaller cargo size. Routes with costly ports or canals generally command higher rates than routes with low port dues and no canals to transit. Voyages with a load port within a region that includes ports where vessels usually discharge cargo or a discharge port within a region with ports where vessels load cargo also are generally quoted at lower rates, because such voyages generally increase vessel utilization by reducing the unloaded portion (or ballast leg) that is included in the calculation of the return charter to a loading

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