THE BUSINESS OF SHIPPING

THE BUSINESS OF SHIPPING

THE BUSINESS OF SHIPPING Fifth Edition by LANE C. KENDALL London CHAPMAN AND HALL

Fifth edition published in the UK 1986 by Chapman and Hall Ltd. 11 NewFetterLane,LondonEC4P4EE Published in the USA by Cornell Maritime Press, Inc. Centreville, Maryland 21617 Copyright 1986 by Cornell Maritime Press, Inc. Softcover reprint of the hardcover 1st edition 1986 All rights reserved. No part of this book may be reprinted, or reproduced or utilized in any form or by any electronic, mechanical or other means, now known or hereafter invented, including photocopying and recording, or in any information storage and retrieval system, without permission in writing from the publisher. British library Cataloguing in Publication Data Kendall, Lane, C. The business of shipping. - 5th ed. I. Merchant marine-management I. Title 387.5'068 HE 735 ISBN-13: 978-94-010-8326-3 e-isbn-13: 978-94-009-4117-5 001: 10.1007/978-94-009-4117-5 Manufactured in the United States of America First edition, 1973. Fifth edition, 1986

For my sister ELISABETH KENDALL THOMPSON Fellow, American Institute of Architects in appreciation of her lifelongfriendship and unswerving support in many times of crisis

Contents Preface IX Introduction 3 1. Liner Service and Tramp Shipping 5 2. Tramp Shipping 12 3. The Management of Tramp Shipping 38 4. Chartering and Tramp Ship Operation 62 5. Organization of a Liner-Service Company 80 6. Terminal Management 104 7. Terminal Operation 133 8. The Stevedore Contract 152 9. Procurement of Vessel Stores and Supplies 163 10. Containerization: The Beginning 192 11. The Ramifications of Containerization 217 12. The Ocean Bill of Lading 253 13. How Freight Rates Are Made 269 14. The Traffic Study 294 15. Steamship Conferences 301

viii THE BUSINESS OF SHIPPING 16. The Logic of Steamship Scheduling 323 17. Scheduling and Bunkering 336 18. Planningfor a New Ship 352 19. Passenger Cruises. 376 20. Industrial and Special Carriers 410 21. Tanker Management 428 22. The American Shipping Subsidy System 458 23. The Business of Shipping 482 Notes 489 Index 505 About the Author 513

Preface T HIS VOL U M E has been written to describe the business side of a commercial enterprise whose field is the entire civilized world. Historically, the theory and knowledge of shipping management, as distinguished from the practical skills of seamanship, have been transmitted from one generation to the next by word of mouth. Little has been put on paper, primarily because the finest exponents of the art of steamship management have been too busy with their day-to-day concerns to do so. The "working level" personnel often are superbly competent, but rarely qualify as literary craftsmen. It has been my aim, in preparing this analysis of the principles of the "business" of commercial shipping, to describe that which transpires in the various divisions of a shipowning and operating organization. Insofar as possible, the procedures followed in the offices have been described and explained, as well as the underlying principles of management by which their decisions are reached. In the process of learning the principles and practices that are set forth in these pages, I have spent ajoy-filled lifetime in association with ships. It has been my good fortune to work in large and small American steamship offices, to operate a major cargo terminal, to participate in establishing and putting into effect the policies of a world-girdling American steamship organization, and to teach young men these principles learned from experience as well as from precept. My years with ships and seamen have been filled with much toil and many strains. They also have been crowded with pleasant associations and fascinating experiences. I have discovered that with increased knowledge of the endless ramifications of the steamship business my interest in each day's work has deepened and grown more rewarding. May I hope that those who read this book

x THE BUSINESS OF SHIPPING also will gain greater understanding of a worthwhile way oflife, and thus heighten their appreciation of the achievements of each passing day? This volume is the fifth edition; the first appeared in 1973. While much of the material found in the fourth edition has been retained, a significant amount of new information has been added in order to reflect new developments in the industry and to bring the book up to date. It is my hope that the depth of detail and analysis which characterize this present volume will prove to be of value to the readers of these pages. The names of those who have assisted me throughout the decades of my association with the steamship industry are far too numerous to list, even if all of them were known to me. Some who have contributed importantly to my knowledge were nameless to me, but I have not forgotten their generous sharing of experience and hard-earned wisdom. Friends and correspondents in every type of shipping office around the world have been more than gracious in their willingness to contribute in some measure to my professional edification. To them all, I extend my heartfelt thanks. Any errors, of course, are my own, and I assume full responsibility. - Lane Carter Kendall