International Shipping Market

Published On: Sun, Feb 19, 2023

International Shipping Market-featured-image

The international shipping market determines the sale and purchase of ships, how the ships are chartered and what would be done for a ship after its life span and also how the prices of these are established. The players in International shipping market are ship owners, ship brokers, ship builders, demolition merchants  and charterers .The international shipping market is formed by the following interactive market which are New Building Market, Freight Market, Sale and Purchase Market and Demolition Market. Guiders Education gives project on the above subject so that the students can understand the topic in better manner.
1.    The New Building Market
The New Building Market consists of Ship Owners, ship builders and Ship Brokers. Contract negotiation can be very complex and goes beyond pricing, the market is set by ship builders and the brokers who acts as mediators between ship owners to be and ship builders. The largest difference to New Building Market with other market is that the product traded does not exist yet at the time of trading. Anticipation of the market is crucial for those contracting the construction of a ship. The contract covers ship specifications, delivery date, payment method and availability of finance etc.The prices of new building market is volatile and sometimes follow the prices of sale and purchase market. Payment is usually done in five parts. Ten percent upon signing contract.The rest in even parts during different phases of construction,cutting of steel, laying of the keel, launching and delivery. Prices are determined, as always, by supply and demand. The New Building market are not necessarily more expensive than similar second hand ships. This is because the time it takes for the ship to be available and the current fluctuation of offer and demand.
2.    The Freight Market

The Freight Market consists of ship owners, charterers and brokers. The freight market is the trading of freight and the means to transport this freight. Most of this trade now goes by the internet. As shipping companies sell the use of ships, the way these ships are deployed must be agreed upon. Whether the charterer has full control or a certain degree of it. This is done by the charterer. The agreement between the ship owner and the charterer is known as charter party.  In this contract the obligations of both parties are described. Ship owners contract to carry cargo for an agreed price per ton while the charter hires the ship for a certain period. Shanghai Shipping market is the first electronic Shipping Freight Exchange in the world. In the Charter party obligations of both ship owners and charterers are described.  This can be done on basis of time, voyage, freight etc. Even the party responsible for maintenance and crewing is hereby settled.
3.    The Sale and Purchase Market

In The Sale and Purchase Market, second hand ships are traded between ship owners. The administrative procedures used are roughly the same as in the real estate business, using a standard contract. Trading of ships is an important revenue for ship owners, as the prices are very volatile, the second hand value of ships depends on freight rate, age, inflation and expectations. The participants in this market are the same as other markets i.e. Ship owners, ship brokers and prospective ship owners. Despite the reason of sale, this is typically done free of any financial obligations tied to the ship and with instant delivery, Ship brokers usually acts as middle man these sales, but the internet replaces more of them. The price of the ship depends on many factors. The Most important is the momentary demand for transport which that type of ship could deliver. Despite any debt, that a selling owner may have, or the interest that a third party may have, in a ship being sold, the crew always has first lien to the value of the ship if they are still to be paid.
4.    Demolition Market:-

On the demolition market ,ships are sold for scrap. The transactions happens between ship owners and demolition merchants.A ship’s life span is about 25-30 years. When a ship’s life span is exceeded it will be demolished for the purpose of scrap. Its steel and other components will be dismantled and sold. This is a hard, dangerous and badly paid. Demolition market is based mainly in Far East countries like Korea, Taiwan etc.