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Economic principles of the freight market Essay

Tankers are usually vessels utilised in the process of transporting liquid materials such as oil or oil derived commodities. Sometimes tankers may contain chemicals, foods, wine and other commodities. Consequently, the crude oil tanker freight market or the wet bulk freight market is the area where consumers and suppliers meet and conduct transactions.

It should be noted that ‘area’ does not refer to a physical location but it refers to the mechanisms which traders use to exchange commodities with one another. This market is composed of a series of suppliers who are usually ship owners. The consumers are made up of crude oil owners who want to transport their commodities to another location. (Market Watch, 1999)

The deep sea container freight market is composed of a series of vessels that transport commodities between various ports. It should be noted that deep sea freight markets mostly deal with the transportation of manufactured goods to their respective destination or transportation of raw materials to areas of manufacture.

The world’s most economically stable countries depend on deep sea transportation to keep their economies intact. This also implies that deep sea markets are heavily affected by prevailing economic conditions between respective markets. Sometimes the deep sea transportation

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service are successful in transportation of military commodities or supplies. This is an aspect that is particularly common in countries such as the US.

The crude oil freight tanker market is made up of three major players; transporters, crude oil owners and shipping agents. The latter normally participate in the trade in order to represent either party in transactions. Revenues that shipping companies get for offering transportation services are largely determined by freight rates at any time. However, these areas are usually fixed over a certain period of time. On the other hand, freight charges largely depend upon the nature of vessel used to transport the crude oil.

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