In tramp shipping, tramp ships are being used. As the name indicates, this branch of the shipping industry is very irregular in its activities. Tramp ships are sent in where the most paying freights are available. Therefore, tamping is very unstable and very little organized.
Tramp ships are, in accordance with the demand, contractually put at the disposal of charterers, to carry, for one or more voyages, a quantity of goods between named harbours (in voyage charter) or to carry out a number of transport assignments in a certain period of time (in time charter). In the broadest sense of the word, tramp shipping is the activity that is done with ships in voyage charter. Usually, under a charter agreement, they have to perform only one voyage so that each voyage stands completely apart from the other. The vessel is an independent operating and competing unit and its operation is highly individual. The sailing schedule of a tramp ship is consequently very irregular. The ship operator must see to it that his ship is rarely idle and in the port of discharge - or in a harbour as close as possible to the port of discharge - he must always try to get a new charter for the ship.
Ballast voyages must be avoided at all cost and are, for the ship operator the main problem.
The three main elements of tramp shipping are:
Tramp ships vary considerably in size and are sometimes of lesser quality than the liner ships. Because the cargoes usually don't have to be transported at a high speed and the ship doesn't need highly sophisticated equipment, tramp ships are relatively slow and cheap. However, the present-day tramp fleet counts numerous modern bulk carriers suitable for different sorts of cargoes, including tankers and specialized ships. (See Types of Ships.) Owners of modern and cost-effective tramp ships have a better chance than their competitors who offer inferior and less flexibility in the freight market.
The cargo consist of unpackaged bulk goods (ore, coal, grain, phosphates, and others) or a massive amount of general cargo (e.g. saw wood) or seasonal products; with preferably a full cargo which belong to one shipper. No special care is given to manipulation and stowage; speed of delivery is not of primary importance.
Compared with the liner trade, the freight is low and is consequently in accordance with the relative low value of the goods. The freight is established on the international freight market, in the accordance with the rules of offer and demand. The Baltic Exchange in London is the main market. The freights are not fixed because they follow the feverish fluctuations of the freight markets.
The Organization of a Tramping Company
Fundamentally, the organization of a tramping company will be simpler than the organization of a liner company. The fact, that tramp ships are solely destined to transport bulk goods and that they are usually chartered as a whole in one harbour, allows the tramping company to operate without many departments and personnel. In the liner trade, a separate bill of lading has to be drawn up for each parcel. The number of bills of lading can be so great that the manifest that records them is often as thick as a book. Not only the paperwork requires a large number of personnel, but the carefully sorting, handling and stowage of encumbered general cargo parcels also needs many and competent staff members. This is superfluous for the tramping company or at least reduced to its minimum. In the tramping, the owner does not determine the freight but the fluctuations of the freight markets. More than in the liner trade, the tramp owner has to keep down expenses so as to ward off competition. Sometimes, the freight is so low that only the running costs are covered.
The organization of a tramping company depends mainly on the number of ships it owns. The fewer ships, the simpler the organization. With only one ship, the company can be reduced to a one-man business.
Usually though, a tramping company with a reasonable number of ships, will have a similar organization as the one of a liner company. There will also be operating, technical, administrative and financial divisions, however with strongly reduced personnel. Some departments such as the "Research and Development Department" and the "Conference Department" are totally absent in a tramping company. The operating department and in particular the department for inward and outward freights, cargo handling and stowage, insurance and claims, and agencies will be far less important. This is because the goods being carried are mainly homogeneous which are cheaper and are less prone to damage.
On the other hand, the chartering department will be much more extensive than in the liner trade because it is the main activity of tramping. The personnel of this department must consequently be much more qualified, with a number of experts for certain kinds of goods such as coal, ore, grain, and others. They must be in continuous communication - by telex, fax, telephone, data transmission, e-mail - with brokers and shipping exchanges and be well informed about the freight markets and freight prices.
In the smaller tramping companies, the business division is often left in the care of specialized firms such as shipping operators, shipping managers or managing companies.
Often, tramping companies maintain a strong relationship with large industries to whom they will let part of their fleet or even their whole fleet for a long period of time. In that case, the organization of the company will be still more simplified.