Freight Market Equilibrium Theory :: essays research papers fc

Freight Market Equilibrium Theory An amazing motley of goods ar moved over the worlds ocean sight routes. Of necessity, the carriers charge for the benefit they render. These charges vary almost as widely as do the cargoes, for they mirror both the shipowners costs and the special conditions prevailing on the trade routes traversed by the ships. Ocean weight rates may be exposit as the prices charged for the services of water carriers. Each ship doer develops its own rates, usually without consultation with the shippers. The charges reflect the cost of providing the carriage, the think of of this service to the owner of the goods, the ability of the merchandise to sup behavior the expense of transportation, and frugal conditions in general. Freight rates truly reflect the working of the laws of release and demand. In tramp shipping, particularly, it is possible to observe how these factors influence the rise or fall of freight rates from day to day and from cargo to cargo. vagabond ships transport, in shipload (or full cargo) lots, commodities which, like coal, grain, ore, and phosphate rock, rear end be moved in bulk. The fact that usually only wholeness shipper and one commodity are involved simplifies the establishment of a freight rate for this particular movement. To the capital charges of ownership and the expense of administration and knock must be added the cost of running the ship, handling the cargo, and paying port fees and harbor dues. Against this total is set the number of tons to be hauled, and the solution figure is what the tramp must charge, per ton of cargo loaded, to break even off on the contemplated voyage. If competitive conditions permit, a margin for profit will haoma part of the quoted rate. If however the prevailing economic climate is unfavorable, the owner has the license of retiring the ship to a quit backwater, there to wait until the monetary skies are brighter. The tramp operator does not depend upon the longt erm goodwill of the shippers, still is free to accept those offers which appear profitable at the moment. When adversity threatens, those charters are accepted which minimize anticipated losses. If there is a choice, the cost of atypical lay-up is contrasted with the loss which continued operation might produce, and the less expensive alternative is selected in a bow to the inevitable made with whatsoever grace that can be mustered.