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Liner Company


Shipping Companies

The Liner Company

Characteristics of the Liner Trade

In the liner trade, ships are assigned to regular lines;  and they sail in accordance with a well established, guaranteed and in pre-published schedules from a defined harbour to one or several other harbours. The distinctive characteristics of the liner trade are regularity, punctuality, speed, reliability in good as well as in bad times, and stable prices.

The sailing schedules of liner ships include usually several harbours in order to find a sufficient quantity of goods. For ships calling at two harbours only and which are close to one another (e.g. Calais and Dover) such traffic falls within the category of liner trade and ferry service.

The purpose of the liner trade is mainly to carry small lots of goods from numerous shippers in designated harbours to a large number of receivers who can also be reached via all these ports of call.

The transport of goods between well defined harbours are made in accordance with the conditions of price and responsibility which are laid down in a bill of lading. In accordance with the terms of the bill of lading, the shipping operator acts as carrier.

The three main elements of the liner trade are:

The Ships

Liner ships are costly, of relatively large size, which must always be  kept in the best condition to stand up to competition. The design of these ships must enable them to carry a wide range and types of goods in a variety of holds, deep tanks, cold rooms, cold storage, special storerooms. Design and speed, make the liner ship relatively expensive.

Most companies have several ships on the same line (with regular schedules - weekly, fortnightly, ..). If the cargo offer is greater than the transport or carrying capacity of the company, additional ships are added to the service, which are requisitioned from the tramp shipping. When the cargo offer is rather small, the liner ships must sail partially empty or compete with the tramp shipping, on which goods are carried at a lower price.

The Goods

As a rule, the goods are composed of all sorts of packaged general cargoes of great value and belonging to a large number of owners, for whom, the quick and prompt dispatch is of the utmost importance. Bulk cargoes are only carried if the quantity is too small for the tramping where only full cargoes are transported. A characteristic of the liner trade is that the ships not only have ongoing (or outward) cargoes but that they can also count on return cargoes.

In the home port and in some important ports of call, liner companies have their own quays and loading and discharging equipment. In all their ports of call and hinterlands, liner companies are, to a large extent, backed by an international and many-branched organization with (usually owned) agencies, representations and canvassing services.

Some liner companies use feeder services.  These are local branches of another regular line service such as coastal trade, inland shipping, air carriers, railway or road carriers, which may or may not be owned by the company and which are responsible for the supply and conveyance of the goods to or from the main ports of call.

Liner ships such as container ships, pallet ships, ro/ro ships and others are often adapted for the carriage of unit loads. These ships are usually very fast, with the aim to shorten the time spend at sea and in the harbour, so as to carry as much cargo as possible per year and per ship.

Liner ships usually also carry passengers. Some liner ships carry mainly passengers - the so-called passenger ships - and guarantee to the passengers a high degree of safety, speed and comfort with a stylized and skilled personnel. A number of passenger ships specialize in cruises and are consequently aimed at tourism.

The Freights and Tariffs

In the liner trade, the freights and tariffs are often established by the shipping conferences, on a contractual base for a certain period or for a specific quantity or type of goods. By doing so, they offer a maximum of stability and provide a fixed base for freight calculations; on the other hand, the freights and tariffs are considerably higher than in tramping.

The maintenance of a liner trade requires an expert organization and an industrial equipment (or operating equipment), the cost of which exceeds largely those from the tramping.

The Organization of a Liner Company

The organization of a liner company may vary from country to country and from company to company and will mainly depend on the number of ships the company owns: in ownership, in time charter or in bare boat charter. The total tonnage and the specialization of the company are also elements which can determine the organization of the company.

Click here to see the organization chart of an average liner company.

The internal organization of a liner company mainly consist of the following three large divisions or departments:

  • Operating division.
  • Technical division.
  • Administrative and Financial division. Here, certain departments or competencies may depend from other departments, or may even be independent.

Each large liner company is under the supervision of the general management, which is headed by a Director-General or an Administrator-General. Usually, only one department is attached to the general management, i.e. the General Secretariat, who is responsible to the management and the Board of Directors for the coordination and the supervision of all other divisions.

The general management is concerned with the overall policy of the company: contracts, capital and shares, the appointment of executive personnel, etc.

The Director-General  (Am. President or Chief Executive Officer) coordinates all activities of the whole company and is responsible for the results obtained. He pursues the policy of the company.  Because of his particular function, the Director-General must be appropriately qualified. 

In particular, he needs to:

  • have management experience in shipping operations;
  • know how all divisions or departments of the company operate, together with their respective responsibilities;
  • establish and define the activities of all the heads of divisions;
  • see that all activities are geared to one another;
  • ensure that between the different divisions, departments or services there is good collaboration and communication flow;
  • be open to new ideas or new projects;
  • be well informed of the activities of his agencies abroad;
  • have a good general knowledge of national and international economy;
  • maintain good relations with the Administration.

THE OPERATING DIVISION

The operating division, also called commercial division, is as it were, the heart of the maritime company. It is the primary activity of the company which is composed of several other departments such as:

  • inward and outward freight
  • chartering
  • marketing
  • bunkering
  • cargo handling and stevedoring
  • shipping operations
  • accounting
  • insurance and claims
  • agencies
  • public relations  (see Figure 7.1).
The Inward and Outward Freight Department

The inward and outward freight department takes care of everything that concerns the goods, usually with sub-departments, depending on the destination. If the company serves more lines, there is a separate department for each line, with at its head, the "head of line".

Regarding the outward freight, this department collects the goods destined for the ships of the company. It also draws up the necessary cargo documents (e.g. the manifests, the bills of lading), handles the bookings of the ships, etc.

This department can also recruit new customers and handle dispatch of the goods to the harbour. The regularity of the sailings demands that, as best as one can, a full and diversified cargo always be ready on the quay.

For the inward freight, this department looks after the clearance of the ships, the collection of the bills of lading, the delivery of the delivery orders and other required documents.

This department can also be responsible for cargo handling, unless the company has a separate service therefore. (See further Cargo Handling and Stevedoring Department.)

The service "passengers" delivers the passenger tickets and acts often as a travel agency and maintains contact with the travel offices.

The Chartering Department

The chartering department is responsible for the chartering of extra tonnage for the company during the periods of increasing amounts of cargo, or for withdrawing of owned  ships from the line, or for chartering of ships on the tramping market in times of insufficient cargo offer.

The head of this department needs to be an expert in chartering techniques, to be very well informed about the freight markets and the trends in the international sea-born trade.

The Marketing Department

The marketing department takes care of the promotion and the sale of the company's services. It provides the necessary information to the public, procures  the necessary publicity and publishes the sailing schedules in the specialized newspapers (e.g. the Lloyds).

This department must be in constant contact with the shippers to encourage them to continue to use the company's services. This department must also work  closely with the "Public Relations Department".

The Bunkering Department

The bunkering department draws up the bunker contracts with the oil companies and sees to purchase fuel at the most advantageous conditions. It establishes the programs with regard to the ships' fuel consumption in accordance with their sailing schedules. This department must work closely with the "Technical Department" and make sure that the fuel meets the quality and viscosity requirements.

The Cargo Handling and Stevedoring Department

Some large companies have a separate department for the reception of the goods, their handling and stowage on board, and for drawing the stowage plan. The head of this department will also be responsible  for negotiating and drawing up of contracts with stevedores. He must work closely with the "Inward and Outward Freight Department".

This department can have a number of sub-departments such as the dangerous goods department, the container logistics department, planning and research department, etc.

The Shipping Operations Department

The shipping operations department takes care of the estimates of costs and incomes, prepares the sailing lists, makes the itineraries of the voyage, the positions reportings, looks after the broker's addresses, etc.

The Accounting Department

The accounting department, which works closely with the shipping operations department, controls the settlements of harbour accounts, the freight charges, the operating costs and prepares statements or reports on  incomes and costs.

The shipping operations and accounting departments must closely work with the inward and outward freight department; sometimes they are simply merged with this last department to form a single department.

The Insurance and Claims Department

The insurance and claims department is responsible for insuring the ships (hull and machinery), the conclusion of the P & I insurance and ultimately insuring for the  loss of earnings, the settlement of claims and/or loss of cargo, etc.

The insurance and claims department is usually a department within the operating division but may, in larger companies, be an independent department with important sub-department district-offices. In the main harbours, there are then district claim agents who mediate the claims settlements.

The personnel of this department must be highly qualified and have sufficient experience in the insurance field as well as in negotiating with underwriters via insurance brokers. Often, a number of lawyers are attached to this department.

The Agencies Department

The operating division is also responsible for the appointment, the training and  control of the agencies.

Important agencies also have several other departments such as:

  • commercial
  • operating
  • documentation (traffics, line operation, canvassing, etc.)
  • financial
The Public Relations Department

Only the larger companies have a public relations department which is responsible for the image of the company relative to the outside world. This department publishes brochures, publicity, organizes receptions for home and overseas visitors, participates at conferences, represents the company at produce exchanges, etc.

THE TECHNICAL DIVISION

The technical division is responsible for the secondary or complementary activities of the company and usually has two large departments: the marine department also called nautical department and the engineering department (see Figure 7.1).

The marine Department

At the head of the marine department there is usually an ex master (e.g. a port captain). He is responsible for the nautical operation of the ships and particularly, the personnel (sailing as well as shore-gangers), the nautical equipment, the ship's supplies: provisions, deck equipment, safety equipment, etc.

The Engineering Department

At the head of the engineering department there is usually an ex chief engineer. He is responsible for the technical operation of the ships and particularly for the good working and maintenance of the main engines, the auxiliary engines, the boilers, the electrical installations, the cranes, the winches, the windlasses, the cargo pumps, etc.

The head of the engineering department is also responsible for eventual repairs to the ship. He must prepare the plans, the specifications of the ship, directives to the wharf, etc. He must also verify if the ships comply with the required certificates (international safety certificates, classification certificates - See  Ship's Documents and Certificates or click Administrative Documents and/or Classification Certificates) and he must make all preparation with regard to yearly and four yearly surveys, the dry docking of the ships, etc. In case of new ships being build or ships being converted, this department shall carefully study the tenders from the wharfs and lead the negotiations as regards to the construction and the equipment of the ships. When buying second-hand tonnage he must examine the ships thoroughly and make a substantiated report before the bill of sale is signed. In case of a time charter agreement, he needs to make the "on-hire" and "off-hire" reports. He is also responsible for the purchase of spare parts, lubricating oil, negotiations with the insurers and the representatives of the classification society and other surveyors in case of damage to the ship.

The port captain and the chief engineer must always work in close cooperation with one another and must mutually agree on the hiring or the eventual promotion of deck or engine officers, sailing schedules and leave arrangements of the crew etc.

REMARK

Some very large companies have a department "Research and Development" This department occupies itself mainly with the:

  • analysis of freight markets;
  • study of new concepts regarding the handling of goods;
  • diversification of the company's activities;
  • study of new investments policies;
  • study of new or more efficient types of ships;
  • maintain competence within the company by keeping pace with computer techniques.

Such a department uses very high qualified personnel such as: economists, civil engineers, naval architects, computer specialists, etc.

ADMINISTRATIVE AND FINANCIAL DIVISION

The Administrative and Financial division is usually composed of five departments: the personnel department, the accounting department, the statistics and control department, the legal department and the conference department.

The Personnel Department/Human Resources Department

The Personnel department is responsible for office staffing , at home as well as abroad (in their own agencies). It takes care of all matters concerning:

  • recruiting personnel;
  • dismissing personnel;
  • wages;
  • leave arrangements;
  • insurance  (work accidents);
  • social contributions;
  • medical intervention (eventually);
  • training of personnel;
  • pension scheme.
The Accounting Department

The accounting department or financial department is responsible for maintaining the books of accounts (all incomes and costs) and draws up the balance sheet  and the profit/gain and loss account. It also is responsible for  banking transactions, cash management,  portfolio management, company tax liability and payment, etc.

The Statistics and Control Department

The statistics department develops statistics on operating costs of the ships,  fuel and oil consumption, productivity, etc. This department will also evaluate the financial situation of the company: liquidities, credits, share capital, the borrowed capital ratio, etc. and will establish the long and short term financial planning.

Under its authority also falls analysis of the shipping accounts (control department) i.e. a typical maritime document which shows all expenses for every voyage, the balance of which is an indication of the profitability of a particular ship or line.

The Legal Department

The legal department protects the interests of the company relative to the application and interpretation of law and often in very difficult and constantly developing jurisdictions.

The jurists will also intervene in the inevitable disputes concerning damages, insurance and other matters.

Part of the activities of the legal department are often passed on to the P & I Clubs.

The Conference Department

Liner companies are part of shipping conferences where, a number of companies, which operates the same line, join together to regulate competitive activity and to protect their interests. Some companies are involved in no less than 20 - 30 conferences, so that a separate department has to follow all activities closely and in particular: the memberships, the tariff agreements, cargo allocations, rebates and surcharges, policy, code of conduct towards outsiders, participation to the activities and meetings of the conferences.

The administrative and financial division is supported by the general secretariat who coordinates all departments and who is also responsible for external communication. It also organizes the procurement of office and computer equipment 

As mentioned before, in some companies, some of the above mentioned departments may be different. Some departments are merged into one department and others are subdivided into subsections. Some companies also use different names for their departments and this can sometimes be confusing. Most large companies therefore maintain an Information desk.

All the divisions, departments, services.. must be accommodated in buildings, which, for a company with a name, and as a matter of prestige, may not neglect the location, nor the appearance, nor the way it is organized. Mostly they own their own quays, sheds, cranes, buildings, repair shops, etc.