Does Size Really Matter?

Posted by Mark Franklin, Operations Director, DA-Desk on 23-Oct-2016 15:04:56
0 Comments

Of course, it does! At least, when it comes to the size of a vessel and the impact on the port costs.

Often, very little consideration is taken of the specifications of the vessel to be used and the subsequent impact on port costs when fixing a contract. The actual carrying vessel is unknown at this early stage and also largely depends on availability. But in the current market, with excess tonnage available, there are a few considerations that could save thousands in port costs.

vessel size photo.jpgMost port tariffs worldwide are based on the vessel’s gross or net tonnage (GT/NT). Similar vessels calling the same port, loading the same cargo and volume, can have significantly different costs. This could be simply because a vessel has a slightly higher GT, which may result in a higher rate band, even though the main dimensions, and critically, the cargo carrying capacity, are largely identical.

I can use a real example of two vessels calling in an Australian port during the same time period. The port in question has a tariff based on the vessel’s dimensions and is structured in bands (or tiers) and the end result is remarkably different.

In this port, the Pilotage and Port Improvement Charges are slab-based. Vessel 1 has a GT of 40040 and is therefore subject to charges for the GT band of 40,000 to 59,999. Vessel 2 has a GT of 39964 and the applicable slab is from 20,000 to 39,999 tons. The difference between these two cost items alone is AUD 8,000 (USD 6,000) in higher costs for a vessel with only 76 more gross tonnage!

 

Also a consideration are the rules for ‘light dues’ or, in this case, the Marine Navigation Levy (MNL). In most countries, these are valid from 30 to 180 days, and can depend on the previous countries called, or even the flag of the vessel. In Australia, the MNL is valid for 90 days; therefore, if the same vessel can be used repeatedly with each voyage returning within the 90 days, it would save a further AUD 10,500 per voyage.

If you multiply both of these cost saving opportunities by the number of voyages the vessel may make, then it can be a significant amount.

So, although there may only be a few chances to apply this, imagine your colleagues’ surprise when you impart this knowledge simply by checking the structure of the port tariff prior to chartering the ship.

 

By Mark Franklin, Operations Director, DA-Desk

 

Learn More: DA-Desk