The Freight Market

• The shipping industry consist of four

markets namely

• Newbuilding market
• Freight market
• Sale and purchase market
• Demolition market
 Freight Market
• The freight market trades in sea
transport .
• There are no physical market places
due to the international nature of the
business with the exception of the
Baltic Exchange and other major
shipping centers in traditional
maritime countries like New York,
Oslo, Tokyo, Hong Kong, Singapore,
Piraeus, Hamburg etc
 Freight market

On the freight market,

shipowners have vessels
for hire, charterers have
cargo to transport and
brokers put the deal
together.
This is known as the
 Key Market Features

• Fixing of many contracts in an ‘open

market’
situation
• - most contracts between charterers and
shipowners/ ship managers become
known to all
participants thorough the activities of
shipbroking
companies
• - openness in the market means that all
agents
know prevailing freight rates and can
 Key features
Markets publish details of all types of
contracts:
 Voyage charter
 Contracts of affreightment (COA)
 Time charters of varying duration
 Bareboat charter
 Open Market- UNCTAD
• UCTAD definition of an Open market is
as
follows:
‘ the open market embraces the
aggregates at any given time of tramp
ship owners seeking employment for
their vessels and shippers requiring the
services of tramp ships for a limited
period. The key note of the open
market is the quick and easy
communication of closely and
continuously linked by
Open Market –UNCTAD 1

Thus , any charterer needing a ship

of a
certain size and type available at a
specific
port on or about a specific date can
be
assured that his needs will be made
known to shipowners in all countries
which possess merchant fleets
 Open Market Fixtures
( Contractual Arrangement)

 Voyage charter
 Contracts of affreightment (COA)
 Time charters of varying duration
 Bareboat charter
 Economic Characteristics
The freight Market is considered to
be a very competitive market close to
the
perfectly competitive model used by
economists:
• The reasons:
 Main Features of the Model
1. Every supplier in the industry seeks to
maximise their profits
2. There are numerous buyers and sellers in
the
market
3. The service is homogeneous
4. There is easy exit from and entry to the
market
5.There is full information

Under these circumstances , a perfectly

competitive
market is said to exist