Dede's Law and Business Series:

Introduction To Shipping Business (2)

CLASSIFICATION OF MERCHANT SHIPPING

Merchant shipping is broadly classified into Liner services and Tramp shipping. While there are some similarities, there also exist some differences in the theory and techniques of management of these two types of maritime transportation. The service rendered, the geographic area covered, the operational problems, the relationship between vessel owner and vessel user, and the actual employment of the ship, vary between the two categories.

Liner service is the service of transporting goods by means of high-capacity, ocean-going ships that transit regular routes on fixed schedules. While a tramp service on the other had is a service that has no fixed routing, itinerary or schedule and is available at short notice to load any cargo from any port to any port.

In liner services, sailings are regular and repeated from and to designated ports on a trade route, at intervals established in response to the quantity of cargo generated along that route. Although the frequency of sailings is related directly to the amount of business available, it is general practice to dispatch one ship each month. Vessels engaged in liner service may be owned or chartered.

While sailings under tramp shipping are based on contracts, repetition of voyages is not a normal part of tramp operation. Each trip is scheduled individually, subject to the requirements of the cargo to be carried and the particular route to be followed. Liners are usually common carriers required by law to accept without discrimination between offerers of any legal cargo which the ship is able to transport while tramps are private carriers, and normally carry full shiploads of a single commodity usually in bulk.
Common carrier and private carrier
It is common to find the word “carrier” used in the shipping business, the word carrier means a vessel user or transporter. At common law, whether it was transportation by road or by sea, there were two types of carriers or transporters- the common carrier and the private carriers.

As regards transportation by sea, a common carrier is one who holds himself out as being available to carry cargo for anyone, often referred to as a shipper, and who agrees to pay his charges, provided the cargo is suitable for carriage on the carrier’s vessel, and is not incompatible with other cargo the carrier has already accepted to carry for another cargo-owner.

As such, the carriage of goods by sea concept and law developed from the concept of a common carrier. A common carrier does not discriminate and is available and obliged to carry cargo for any shipper. A private carrier on the other hand reserves the right to carry or not to carry cargo. He also chooses where to go at any given time. The private carrier, just like the common carrier, also holds a bargaining position superior to that of the individual or company that requires the use of his vessel in that, subject to market forces, he determines the terms of the carriage.

A good example of a private carrier in land transportation is the car hire/taxi operator whilst the common carrier is typified by the bus operator who puts his bus at the disposal of all those at the bus stop going in his chosen direction.
Ship Usage

The ship owner who can be a company or an individual may choose to use the vessel as a common carrier to transport goods from country ‘A’ to ‘B’. The owner may on the other hand hire or charter the ship to a charterer under a charter party for a period (time), voyage or by demise.

Where the ship owner lets out parts of a ship for carrying cargoes other than his, he enters into Bill of lading contracts with the shipper of such cargo. Where the ship owner gives out his ship under a time or voyage charter party, the ship is run by the owner who employs the master and crew and maintains control of the ship. In a charter party by demise, the charterer steps into the shoes of the owner and takes over responsibility for hire of master, crew and even insurance of the vessel. The demise charterer takes over possession and control of the vessel for the period of the charter.

Conclusion
It is pertinent to note that shipping business is a sine qua non to the export and import of goods between nations. It has become specialised and cover a wide range of business environment and critical issues which are expected to be of interest to key players like the cargo owner, maritime lawyers, carriers, charterers, agents and brokers.

Foluke Akinmoladun is the Managing Solicitor of Trizon Law Chambers Nigeria. She is a lawyer, accountant, mediator and arbitrator. Her work experience covers both domestic and international commercial legal matters and she belongs to the panel of neutrals of numerous arbitral institutions.She was a onetime Director General of the African Ship owners Association of Nigeria and is a member of the Presidential National Action Committee on Nigeria’s Implementation of the African Continental Free Trade Agreement (AfCFTA) (Transportation stream). She is also the secretary of the Lagos Chamber of Commerce (LCCI) Maritime Sector.
She can be reached at: [email protected]

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