Essays on Cargo Selection for Bulk Carrier MV Lotus Dawn Case Study

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The paper 'Cargo Selection for Bulk Carrier MV Lotus Dawn" is a good example of a management case study. This report will examine the cargo selection options for a voyage of the bulk carrier MV Lotus Dawn from Manila, the Philippines to New York via the Cape of Good Hope, the route that was determined to be the most practical in terms of trip safety and costs. In order to make the correct selection among the available options – coal, iron ore, or mineral concentrate – the carrying capacity of the ship within the parameters set by the selected route must be considered, along with the handling and carrying hazard risks each of the possible cargoes presents and the procedures and safeguards that must be employed to minimise those risks.

The liability of the ship for loss or damage to the cargo will also be considered, along with the steps that must be taken to minimise any potential claims. The parameters that apply to the MV Lotus Dawn for this voyage are as follows: Winter loading and draft deadweight apply – Those are given as 13.8 metres and 74,650 tonnes, respectively.

Lotus Dawn will be departing Manila on 28 December 2010 and arriving in New York on 15 February 2011. This is further restricted, however, by the draft limit at Manila, which is 13.4 metres. (World Shipping Register, n.d. ) At 72 tonnes per centimetre, that reduces the draft deadweight of Lotus Dawn to 71,770 tonnes. Freshwater, constants, and fuel on board – 100 tonnes of freshwater, 250 tonnes of constants are the specified ROB, and 848.31 tonnes of fuel is required to reach the bunker port at Cape Town with the specified 10% reserve.

These reduce the cargo capacity to 70,570 tonnes. Total cargo volume available for a bulk cargo is 89,300 cubic metres. Ship performance is the same for any of the available cargoes – The assumption is made that the performance of the ship given for the calculation of the route options (11.5 knots average speed and 1.3 tonnes per hour bunker consumption) are not affected by the type of cargo. 2. Maximum Cargo Weights and Volumes Given the above parameters, the maximum amounts of each of the cargo options that the MV Lotus Dawn can carry are as follows: Iron Ore: Iron ore has a weight of 0.35 tonnes per cubic metre, making it the lightest cargo.

89,300 m3 x 0.35 tonnes/m3 amounts to 31,255 tonnes, less than half of the cargo weight capacity available for this voyage. Mineral Concentrate: Mineral concentrate has a weight of 0.48 tonnes per cubic metre, so the cargo volume available on the Lotus Dawn will accommodate 42,864 tonnes. Coal: Coal is the heaviest cargo at 1.42 tonnes per cubic metre. The maximum available weight capacity of 70,570 tonnes if loaded in coal will only account for 49,697 cubic metres’ of the ships available volume and will easily be accommodated. Because many of the available cargoes will constitute a full load for the Lotus Dawn either in terms of weight or volume it is most likely that the ship would be hired by the customer on a charter basis, meaning that the shipping cost would be relatively equal for any of the loads, and only be adjusted based on the special handling, safety risks, risks of loss associated with each of the cargoes.

This is not actually good news for the owners of the Lotus Dawn, as dry bulk cargo rates measured and guided by the Baltic Dry Index have been declining rapidly since the first quarter of 2008. (Bockman, 2010; InvestorTools. com, 2010) Therefore, the cargo that presents the minimum amount of risk to the ship, risk of loss, and the least amount of special handling precautions should be preferred to maximise the revenue from the voyage.

References

Bockman, M.W. (2010) “Freefalling rates spark fears dry bulk crash has arrived”. Lloyd’s List, 8 July 2010. Available from: http://www.lloydslist.com/ll/sector/dry-cargo/article173189.ece.

“Carriage of Direct Reduced Iron [DRI]”. (2009) North of England P & I Association, 23 September 2009. Available from: http://www.nepia.com/cache/files/1303-1272281074/LPBriefing-CarriageofDRI.pdf.

“Coal Cargoes from Indonesia”. (2010) Assuranceforeningen Skuld, September 2010. Available from: http://www.skuld.com/templates/Page.aspx?id=1502.

“Coal Mining in the Philippines”. (2010) MBendi Information Services, updated 25 September 2010. Available from: http://www.mbendi.com/indy/ming/coal/ as/ph/p0005.htm.

InvestmentTools.com. (2010) Baltic Exchange Dry Index (BDI) & Freight Rates. Available from: http://investmenttools.com/futures/bdi_baltic_dry_index.htm#bdi.

“Liquefaction of cargoes of iron ore”. Loss Prevention Circular 08-10. Gard AS, June 2010. Available from: http://www.gard.no/ikbViewer/Content/4836393/08-10%20Liquefaction%20of%20cargoes%20of%20iron%20ore.pdf.

Roberts, S.E., and Marlowe, P.B. (2002) “Casualties in dry bulk shipping”. Marine Policy, 26: 437-450. Available from: http://202.114.89.60/resource/pdf/1892.pdf.

Transport Canada. (1994) “Carriage of Cargoes: Solid Bulk and General”. Ship Safety Bulletin 11/1994, 2 September 1994. Available from: http://www.tc.gc.ca/eng/marinesafety/bulletins-1994-11-eng.htm.

Transport Canada. (1994) “Vessels Loading Coal”. Ship Safety Bulletin 04/1996, 29 March 1996. Available from: http://www.tc.gc.ca/eng/marinesafety/bulletins-1996-04-eng.htm.

World Shipping Register. (n.d.) “Philippines, Manila”. (Port information). Available from: http://e-ships.net/ports/Philippines/3392.htm.

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