What does Part Cargo mean? Understand it!

Given the large capacity of vessels to carry cargo, many entrepreneurs are afraid to export imagining that prices will be prohibitive or that their production volume is not enough to get good freight.

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Part Cargo is proof that this is far from being true. With the help of specialized agents and by negotiating the best conditions, it is possible to hire your space on a ship and still share costs with other customers.

Do you want to know more about how this procedure works? Adriano Cunha, Wilson Sons Coordinator, and Roberto Brandão, partner-director of TAP Consultoria e Treinamento em Logística, are our guests in this article to explain how shared loading works. Read on and check it out!

What is Part Cargo?

Every transport vessel has stipulations about the amount and types of cargo that can be carried. The idea of these limits is always to create the optimum balance between vessel safety and the greatest economic gain for the parties involved in maritime chartering.

Therefore, the financial ideal for international trade is that every shipment should be as close to this value as possible. However, these holds are such large structures that only large companies with large productions are able to close an entire ship in one contract.

But this does not mean that smaller exporters cannot use shipping to conquer other markets. For this type of situation, there is a model called Part Cargo.

As the name suggests, it is the hiring of space for partial cargo hold, when the volume of the product is not sufficient for maximum occupancy – called Full Cargo. With this, “the carrier or the charterer makes this remaining space available to another player, generating different contracts,” says Adriano. It is a way to get your place on a ship in the most optimized way possible, without losses for both parties.

The difference between Part Cargo and Co-Loading

Co-Loading is a term similar to Part Cargo and can cause confusion when researching the best contract option for your cargo. Therefore, we asked Roberto to explain more clearly the difference between the two.

According to him, the difference lies more in the market in which the concepts are used. Co-Loading has a similar meaning but is more common for the container shipping market. On the other hand, “Part Cargo is a specific chartering term, which involves break bulk cargo (non-containerized general cargo) or bulk cargo,” he clarifies.

How is the payment split in these cases?

When part-load trading is carried out on the ship, contracts are made independently. In this scenario, the cargo agent or ship broker assumes the function of monitoring the market and intermediates with the owner/charterer to find the vessel for the customers. These professionals negotiate a certain volume of cargo and, when necessary, open the negotiation for the remaining space.

What are the advantages of shared shipping?

Since each customer pays only for the space used and the ship still sails at maximum capacity, Part Cargo is fundamental to optimize the gain in the entire maritime transport chain – from the producer, who gets cheaper freight, to the carrier, who makes the maximum possible in each trip.

“If there is a ship in the market offering space for Part Cargo that is convenient in terms of dates, ports of call, all the costs of the trip will be shared among the other owners of the ship’s cargo, and the shipowner himself will be able to offer a more competitive freight, consequently,” concludes Roberto.

Adriano agrees with this advantage as being the most important, giving flexibility to the market in a macro vision. “Even in difficult times, when there is an increase in freight and a decrease in demand, it is possible to be more flexible in the use of Part Cargo in your favour,” he adds.

The result of this is the popularization of the contract model, which has grown a lot in the last few years and has become common in the shipping world. An example that the coordinator gives is the increase in this type of contract for the importation of fertilizers.

The only challenge pointed out by specialists in this case is that Part Cargo is not as easy to find available as its similar in container transport. “Relying on a conventional ship with space to spare to accept Part Cargoes, in the ports of origin and to the same destinations, and even on the desired dates, is not something that is a rule,” says the TAP professional.

According to him, “the charterer of a 5,000mt lot has much less bargaining power than one with 60,000mt, for example. And, consequently, he will pay higher freight than he would if he had 60,000mt and could charter an entire ship for his cargo (Full Cargo). But, also in this case, it is better to have the Part Cargo option than not having the means to deliver the cargo to the buyer.”

How can a shipping agent help in this situation?

It is precisely because it is often a contract of opportunity and planning that the partnership of a shipping agent is recommended when negotiating a Part Cargo. It is the shipping agent’s responsibility to attend the ship’s call at the port on behalf of the nominating shipowner or charterer.

There are some key points for this division to work as efficiently as possible. There must, for example, be compatibility in a loading plan between characteristics and volumes so that cargoes can be stored properly in the same vessel.

Furthermore, because there are more parties involved, an alignment of interests that serves all professionals and companies is very important. It is a mapping and communication job that requires intelligence and data integration to work in the best possible way.

The Part Cargo contracts, in this sense, are another example of how this care makes the difference when it comes to finding the best possible freight and maximizing profits. As Adriano concludes, “our biggest challenge will always be to provide good service that is recognized by all those who are part of this business chain”.

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