Exam Kits: Advantages and Disadvantages of Sea Transport

Water transport in general may be classified as: (1) river and canal transport by boats and steamers i.e. inland waterways, and (2) sea or ocean transport by ships.

In the case of inland water transport, loading and unloading of goods can be arranged by setting up private jetties on the route. For instance, transport of jute takes place along the Hooghly river for jute mills in the Calcutta industrial area. The cost of transport is relatively lower than road or rail transport. However, it is a slow-moving means of transport. Natural calamities like rains, floods and droughts make inland water transport unreliable. Its limited use is due to the limited areas served by waterways.

Transportation by sea and Ocean is most useful in coastal areas and for international trade. Rail and road connections do not exist between many countries and sea transport is the only means for imports and exports.

For overseas transport, two types of vessels are available: (1) Liners which undertake regular voyages between ports according to a fixed schedule and itinerary, and (2) Tramps which do not have any fixed schedule or itinerary of voyages, but move from port to port and undertake transportation of goods as per agreement with the shippers

Look at Figure 15.1 carefully and examine the classification of shipping. Shipping can be broadly divided into three segments viz., coastal, offshore and overseas. The coastal shipping segment encompasses the movement of cargo between different ports belonging to the same country. The offshore shipping segment is limited to the supply of manpower, spares and necessities to offshore installations. The overseas shipping encompasses import and export of merchandise between different countries. This overseas segment can be further divided into two categories as bulk cargo which is concerned with the movement of commodities in bulk and general cargo which involves in the movement of various items in various quantities. Bulk Cargo is further divided into:

(1) dry bulk cargo which includes dry commodities like grain, coal, iron ore, etc. and (2) liquid cargo which includes liquids like crude oil, diesel, furnace oil, etc.

Procedure of Sea Transport

1. Whenever goods are desired to be transported by sea, it is essential for the consignor to enter into a contract with shipping company. This is known as a contract of affreightment whereby the shipping company agrees to carry goods, and there is hiring of space in a ship for transportation of cargo of the consignor as per terms and conditions laid down in the contract. When the contract of affreightment involves hiring of a ship or a part of it for a particular voyage or for a specified period, it is known as Charter Party. If it is for a particular voyage, the contract is known as voyage Charter, whereas if it relates to a specified time period, it is known as Time Charter.

2) Having booked the cargo to be carried, the shipper obtains a Shipping Order from the shipping company or its agent. This is an order hereby the captain of the ship is asked to receive on board the ship specified goods from the shipper.

3) At this stage, to comply with customs formalities, you have to fill up Shipping Bill in triplicate and submit to the customs office, which scrutinizes the Bill and passes an order for export of the goods. Then you have to pay warfare at the office of the port trust upon which a Customs Export Pass is issued to the shipper.

4) You have to deliver the goods at the dock and receive Dock’s Receipt. When the goods are loaded, the Shipping Order and the Shipping Bill are to be handed over to the Mate, the captain’s assistant. After checking the number of packages and packing, the Mate issues a receipt to the shipper, known as the Mate’s Receipt which is an acknowledgement of receipt of the goods specified in it on board the ship.

5) The Mate’s Receipt is a provisional receipt which has to be produced at the office of the, shipping company for obtaining the Bill of Lading. This is a document which is issued by the master of the ship or the ship owner or an agent, stating that the goods mentioned in it have been taken on board the ship for transportation as per terms and conditions specified in it. The Bill of Lading, besides being an acknowledgement of receipt of the goods, also serves as a contract of affreightment and as a document of title to the goods. It is freely transferable by delivery, with or without endorsement and the transferee, as a holder in due course, obtains valid title to the goods.

6) A freight note is then sent to the shipper giving details of the freight payable on the consignment plus a charge for supervision of the loading, known as primage. Payment of the amount may be arranged by the shipper. However, if the freight is to be paid by the consignee, the Bill of Lading is marked ‘Freight Forward‘.

7) When the consignor (exporter) has shipped the goods, he sends an advice note to this consignee (importer) intimating the date of shipment and the probable date by which the ship is likely to reach the port of destination. The exporter also draws a bill of exchange on the importer for the full amount as per the invoice of the goods sent. Along with the bill of exchange, exporter also sends the invoice, bill of lading, insurance policy, etc. These are forwarded to a branch or agent of the exporter’s bank, with the instruction that the documents may be handed over to the importer either on acceptance or payment of the bill of exchange.

8) When the ship has reached the port of destination, the importer has to arrange payment of the freight, if it has not been already paid by the shipper. The shipping company then makes an endorsement on the back of the Bill of Lading which is known as ‘Endorsement for Delivery’.

9) At the same time, a Bill of Entry giving details of the goods is prepared by the importer in the form supplied by the customs authorities for payment of customs duties, if the goods are dutiable. He is also supposed to pay Port Trust dues and obtain a receipt.

10) Delivery of goods is finally obtained when the above formalities have been completed and the documents of title to the goods are surrendered.

Advantages of Sea Transport

Transportation of goods by sea or ocean is relatively more economical for bulky goods to be carried over a long distance. This is because there is no necessity of constructing or maintaining tracks on sea routes. Countries with a long coast line as India, can also make use of sea transport for movement of goods by coastal shipping.

Disadvantages of Sea Transport

Although sea transport is the only means of transporting goods economically where land connections do not exist between countries, it is a relatively slow-moving means of transportation as compared with air transport or land transport. Moreover, seas and oceans in some parts of the world e.g., in Northern Europe (Scandinavia), North America, etc., are not navigable round the year, although modem devices have made such waterways navigable, but it is more expensive.

Suitability of Sea Transport

Sea transport is the cheapest mode of transport particularly for heavy and bulky goods. However it is so suitable, even though cheap, for the fast movement of goods. None the less, it is indispensable for trade between countries which are separated by seas.