Cargo Ships: Types, Classification, Sizes and How They Work (2026 Guide)
- Capt. Anuj Chopra
- Feb 23
- 19 min read
Updated: 2 days ago
I have stood on the bridge of general cargo vessels working the South Asian coast and later spent years managing vessel vetting assessments for hundreds of cargo ships at RightShip. The term "cargo ship" gets used loosely. In public, it often means any large ship at sea. In the industry, it carries a precise technical meaning that shapes everything from insurance pricing to chartering to whether a vessel can enter a particular port.
This guide covers both uses. If you are a student, a logistics professional, or someone trying to understand how maritime trade moves, read it start to finish. If you already know what a VLCC is and came here for the freight market mechanics, skip ahead.
Quick Answer: What Is a Cargo Ship? A cargo ship, also called a freighter or cargo vessel, is any commercial ship built to carry goods rather than passengers. The category includes container ships, bulk carriers, tankers, general cargo ships, roll-on/roll-off vessels, refrigerated cargo ships, heavy-lift ships, and multipurpose vessels. Each type is designed around a specific cargo form, handling method, and trade route. Cargo ships move more than 11 billion tonnes of goods per year and account for roughly 90% of global trade by volume.
What Is a Cargo Ship?
A cargo ship is a merchant vessel whose primary purpose is transporting goods for commercial hire. That definition excludes passenger ships, naval vessels, and offshore support vessels, even though those may carry supplies or equipment. The distinction matters legally, cargo ships operate under different SOLAS chapters, carry different certificates, and follow different chartering conventions than other vessel types.
The commercial logic of a cargo ship comes down to four parameters: deadweight tonnage (DWT), cargo hold configuration, handling equipment, and draft limits.
DWT is the maximum weight a vessel can carry, cargo, fuel, freshwater, stores, and crew combined. A Handysize bulk carrier at 28,000 DWT can carry roughly 25,000 tonnes of cargo after subtracting fuel and stores. A Very Large Crude Carrier at 300,000 DWT can load around 280,000 tonnes of crude oil in a single voyage. The difference in economics between those two numbers is the entire logic of the tanker market.
Hold configuration determines what goes where. A general cargo ship has multiple holds divided by tweendecks — intermediate decks that let the crew stow different cargo types at different levels. A container ship has no holds in the traditional sense; it has bays, rows, and tiers for standardized boxes. A bulk carrier has open holds with no internal divisions, loaded by conveyor or grab crane.
Handling equipment is where things get commercially interesting. A geared vessel carries its own cranes — critical for calling at ports in West Africa, South Asia, or the Pacific islands where shore-based cranes either do not exist or cannot handle the cargo in question. A gearless vessel depends entirely on port infrastructure and is limited to well-equipped terminals. Gearless vessels are cheaper to build and operate but constrained in their trading range. For a shipowner deciding between the two at the time of ordering, that trade-off defines the vessel's commercial life.
Draft limits determine which ports and waterways a vessel can enter. A vessel drawing 21 metres cannot transit the Suez Canal fully loaded. A 400-metre ULCV cannot call at most Asian feeder ports. Draft changes with cargo loaded, fuel burned, and water density (salt versus fresh water). Every master calculates trim and stability before entering a port with tight restrictions.
Cargo Ship Type | Typical DWT | Hold Type | Handling | Primary Cargo |
Container Ship | 10,000–240,000 GT | Bay/row/tier for TEUs | Shore cranes only | Containerized goods |
Bulk Carrier | 10,000–400,000 DWT | Open holds | Grab crane / conveyor | Iron ore, coal, grain |
Tanker | 5,000–550,000 DWT | Integrated tanks | Pumps | Crude oil, LNG, chemicals |
General Cargo | 2,000–20,000 DWT | Multi-hold, tweendeck | Own cranes | Breakbulk, mixed cargo |
RoRo | 2,000–80,000 GT | Vehicle decks with ramps | Drive-on/off | Cars, trailers, machinery |
Reefer | 2,000–15,000 DWT | Refrigerated holds | Own cranes | Perishables |
Heavy Lift | 5,000–50,000 DWT | Open deck, semi-submersible | Heavy cranes / ballasting | Offshore modules, turbines |
Multipurpose | 5,000–30,000 DWT | Combined holds, tweendeck | Own cranes | Mixed: containers, breakbulk, project |
Source: Clarksons Research, UNCTAD Review of Maritime Transport 2024
The evolution from sailing cargo vessels to today's 24,000 TEU container ships tracks one consistent pressure: how to move more cargo at lower cost per tonne-mile.
Containerization, standardizing cargo into intermodal boxes in the 1960s — was the biggest single step in that direction. Before containers, a general cargo ship might spend as many days in port loading and discharging as it spent at sea. Containerization changed that ratio. Port turnaround times that once took weeks collapsed to hours for major terminals.
The 7 Main Types of Cargo Ships Explained
1. Container Ships
Container ships carry standardized metal boxes — ISO 668 standard containers, most commonly 20-foot (TEU) or 40-foot (FEU) units. The standardization is what makes the whole system work. The same box loaded at a factory in Vietnam arrives at a distribution center in Germany without being opened at any intermediate port. The vessel, the rail car, and the truck chassis are all designed around the same box dimensions.
Container ships are classified by capacity:
Feeder vessels (under 1,000 TEU) serve secondary ports and transshipment hubs. They collect boxes from smaller ports and carry them to a main hub — Singapore, Port Klang, Colombo — where the boxes transfer to ocean-going vessels.
Regional vessels (1,000–3,000 TEU) work intra-regional trades: South Asia, the Caribbean, West Africa. Routes where full ocean-going capacity is not commercially justified.
Panamax vessels (3,000–5,000 TEU) were designed around the original Panama Canal lock dimensions: 294 metres in length maximum, 32 metres in beam. That constraint shaped container ship design for three decades.
Post-Panamax and Neo-Panamax vessels (5,000–14,000 TEU) exceeded those dimensions and were locked out of the Panama Canal until the expansion in 2016. Neo-Panamax vessels now fit the new locks, with beams up to 49 metres.
Ultra Large Container Vessels (ULCVs) (18,000–24,000 TEU) operate exclusively on Asia-Europe and Transpacific trunk routes. Their draft and dimensions exclude smaller ports entirely. The HMM Algeciras, CMA CGM Jacques Saade, and MSC Irina class sit in this category.
Container freight rates are tracked by the World Container Index (WCI) from Drewry and the Shanghai Containerized Freight Index (SCFI). In 2024–2025, Houthi attacks in the Red Sea forced widespread re-routing around the Cape of Good Hope, adding 10 to 14 days to Asia-Europe voyages and tightening effective capacity without any change in fleet size. The lesson, that geopolitical disruptions translate directly into freight rate spikes, keeps repeating.
2. Bulk Carriers
Bulk carriers transport unpackaged dry commodities in large volumes. Iron ore, coal, grain, bauxite, phosphate, fertilizers. The cargo sits loose in open holds, loaded by conveyor belt, grab crane, or pneumatic system.
Size classification matters more in the bulk sector than almost anywhere else in shipping, because it determines both port access and commodity access:
Handysize (10,000–35,000 DWT) is the most port-flexible bulk carrier in existence. It can call at minor ports with tight draft and length restrictions. Usually geared. Carries minor bulks — steel, cement, fertilizers, forest products — and sometimes grain.
Handymax / Supramax / Ultramax (40,000–65,000 DWT) is the workhorse of the dry bulk market. Usually geared with four or five cranes. The Ultramax (61,000–65,000 DWT) has become the preferred newbuild standard in this size range, replacing older Handymax tonnage on most routes. These vessels trade the widest range of commodities across the widest range of ports.
Panamax (65,000–80,000 DWT) was designed for the original Panama Canal. Typically gearless. Trades coal, grain, and minor bulks on major routes.
Capesize (100,000–200,000 DWT) cannot transit the Panama Canal or the Suez Canal fully loaded. It rounds either the Cape of Good Hope or Cape Horn — hence the name. Trades iron ore on the Brazil-China and Australia-China routes, and some coal. Gearless. Reliant entirely on terminal equipment.
Valemax (380,000–400,000 DWT) was built by the Brazilian mining company Vale specifically to reduce per-tonne freight costs on the Brazil-China iron ore route. Fewer than 50 in operation globally.
The Baltic Dry Index (BDI) and its sub-indices — BCI (Capesize), BPI (Panamax), BSI (Supramax), BHSI (Handysize) — are the primary market indicators for dry bulk freight. The BCI is the most volatile because Capesize trades are dominated by iron ore, and iron ore demand tracks Chinese steel production. When Chinese steel mills slow down, Capesize rates fall fast.
3. Tankers
Tankers carry liquid cargo in tanks integrated into the hull. The range of liquid cargoes — and the variety of tanker types — is broader than most people outside the industry appreciate.
Crude oil tankers carry unrefined crude from producing regions to refineries. They are classified by the AFRA scale:
General Purpose (GP): 10,000–24,999 DWT
Medium Range (MR): 25,000–44,999 DWT
Large Range 1 (LR1): 45,000–79,999 DWT
Large Range 2 (LR2): 80,000–159,999 DWT
Very Large Crude Carrier (VLCC): 160,000–319,999 DWT
Ultra Large Crude Carrier (ULCC): 320,000 DWT and above
VLCCs dominate the Middle East Gulf-to-Asia crude trade. The longest regular commercial voyage for a VLCC is roughly 22,000 nautical miles — from the Arabian Gulf to the US Gulf Coast via the Cape of Good Hope.
Product tankers carry refined petroleum products — gasoline, diesel, jet fuel, naphtha — from refineries to distribution terminals. They use coated tanks to prevent cargo contamination.
Chemical tankers carry industrial chemicals, vegetable oils, and specialty liquids. Stainless steel tanks, sophisticated manifold systems, and strict cargo segregation protocols define the operation. Chemical tanker work demands more technical training than crude tanker work.
LNG carriers transport liquefied natural gas at -162 degrees Celsius. The cargo must be kept at cryogenic temperatures through insulation and reliquefaction equipment. These are among the most technically complex merchant vessels in regular commercial service.
LPG carriers transport liquefied petroleum gas — propane and butane — serving both residential energy markets and petrochemical feedstock trades.
All tankers built since 2003 must have double hulls under MARPOL Annex I requirements, following the Erika and Prestige disasters. The phaseout of single-hull tankers, completed by 2010 for most sizes, was one of the most consequential regulatory changes in the modern tanker market.
4. General Cargo Ships (Breakbulk)
General cargo ships are what most people picture when they think of a traditional freighter: multiple cargo holds, cranes or derricks on deck, and the ability to carry a wide variety of goods on a single voyage. Bagged rice next to crated machinery next to bundles of rebar.
This vessel type predates containerization and has declined sharply since the 1970s. Fleet numbers have fallen by more than 70% since the container revolution took hold. But the general cargo ship has not disappeared.
I spent considerable time on general cargo vessels working the India-East Africa trade in earlier years of my career. What you learn quickly is that the flexibility of a multipurpose hold is genuinely useful in ways that are hard to appreciate from shore. A container ship cannot carry a 15-metre steel fabrication. A bulk carrier cannot carry 200 tonnes of bagged fertilizer alongside a shipment of passenger vehicles. A general cargo vessel can handle both, given careful stowage planning.
General cargo ships operate in the 5,000 to 20,000 DWT range, carry three to five cargo holds divided by tweendecks, and are almost always geared. They dominate trades in West Africa, the Pacific islands, the Bay of Bengal, and wherever port infrastructure limits more specialized vessel operations. The segment still accounts for roughly 20% of global maritime trade value despite representing a much smaller share of total ton-miles — a ratio that reflects the high-value, low-density nature of the cargo.
5. Roll-on/Roll-off (RoRo) Ships
RoRo vessels load and discharge cargo that moves on wheels: automobiles, trucks, trailers, heavy machinery, rolling stock. The key design feature is a stern ramp — and sometimes side ramps — that allows vehicles to drive directly on and off the vessel. No cranes, no lifting.
The automobile carrier market is dominated by Pure Car Carriers (PCCs) and Pure Car and Truck Carriers (PCTCs). Japan, South Korea, Germany, and the United States are the major origin points for new vehicle shipments. Toyota, Volkswagen, and Hyundai move large proportions of their production on dedicated PCC services.
RoRo vessels also serve the trailer ferry market, where trucks drive on in one port and off in another. This is the dominant model for short-sea shipping in Europe — between the UK, Ireland, and continental Europe, and throughout the Baltic.
Heavy machinery — mining equipment, construction plant, agricultural equipment — moves on RoRo vessels when pieces are too large for a container but can be driven or towed aboard under their own power.
6. Refrigerated Cargo Ships (Reefers)
Reefer vessels carry temperature-sensitive cargo: meat, fish, fruit, vegetables, dairy, pharmaceuticals, cut flowers. The holds maintain precise temperature ranges — from -30 degrees Celsius for frozen meat to +12 degrees Celsius for bananas in transit.
The dedicated reefer fleet has declined sharply since the 1990s as refrigerated containers took over the trade. Reefer boxes can be carried on any container ship with power points in the bays, which gave container operators a decisive cost advantage over dedicated reefer vessels.
Dedicated reefers persist where cargo volumes, vessel sizes, and port infrastructure still favor them. Chilean fruit exports to Europe during the Southern Hemisphere summer, New Zealand meat exports to Asia, and some fresh fish trades still use dedicated vessels. The advantage is speed and cargo care — a specialist reefer crew is trained specifically for the cargo they carry.
7. Heavy-Lift and Project Cargo Ships
Heavy-lift vessels carry cargo that cannot be containerized and cannot move under its own power: offshore oil platform components, wind turbine jackets, naval vessels, large transformers, industrial reactors, modular construction units.
Two vessel types dominate this market:
Crane vessels carry one or more large ship-mounted cranes capable of lifting hundreds or thousands of tonnes. Heerema's Thialf has a combined lifting capacity of 14,200 tonnes — sufficient to lift an offshore platform jacket in a single operation. These vessels work primarily in offshore oil and gas installation but occasionally carry heavy cargo in transit.
Semi-submersible heavy transport vessels ballast down by taking on seawater to lower the deck below the waterline, float the cargo onto the deck, then de-ballast to rise and carry. This method handles drill rigs, naval vessels, and — in one documented case — entire container ships being moved to a repair yard. Boskalis (Dockwise), COSCO Heavy Transport, and Jumbo Shipping are the dominant operators.
Project cargo chartering is almost entirely bespoke. Voyages are planned around specific cargo dimensions, weights, and route constraints. Standard charter party forms exist but are modified heavily for each fixture.
8. Multipurpose (MPP) Vessels
Multipurpose vessels sit between general cargo ships and specialized carriers. They can handle containers on tweendecks, breakbulk in holds, heavy cargo on reinforced deck sections, and sometimes bulk cargo in lower holds. Flexibility is the value proposition.
MPP vessels typically operate in the 5,000 to 30,000 DWT range. Open-hatch designs — where the full width and length of the hold is accessible — allow loading of long or wide pieces that tweendecked vessels cannot accommodate.
The MPP sector is dominated by smaller operators and is structurally different from the container or bulk trades: no dominant carriers, more tramp trading, direct competition with specialist vessel types for individual cargo lots. Average fleet age is higher than for container ships or modern tankers — many MPP vessels are 20 to 25 years old and still commercially active in trades where port infrastructure limits newer, larger vessel types.
Cargo Ship Size Classifications
Size determines canal access, port access, draft limits, charter market liquidity, and freight rate levels. The same cargo shipped on a Handysize vessel and a Capesize vessel attracts a different rate per tonne precisely because the vessels operate in entirely different market segments.
Size Class | Typical DWT | Primary Vessel Type | Canal Restrictions | Key Trade Route |
Handysize | 10,000–35,000 | Bulk carrier, general cargo | None | Minor bulk trades, regional |
Handymax / Supramax | 40,000–65,000 | Bulk carrier | None | Minor/major bulks worldwide |
Panamax | 65,000–80,000 | Bulk carrier, container | Old Panama locks | Coal, grain, containers |
Neo-Panamax | 80,000–120,000 | Container, bulk | New Panama locks | Transpacific, containers |
Aframax | 80,000–120,000 | Tanker | Suez (loaded) | Mediterranean, Caribbean crude |
Suezmax | 120,000–200,000 | Tanker | Suez Canal maximum | West Africa-Europe crude |
Capesize | 100,000–200,000 | Bulk carrier | Neither canal | Iron ore, coal (Australia/Brazil-China) |
VLCC | 200,000–320,000 | Crude tanker | Neither canal | Middle East-Asia crude |
ULCV / Megamax | 18,000+ TEU | Container | New Panama, Suez | Asia-Europe, Transpacific |
Valemax | 380,000–400,000 | Bulk carrier (iron ore) | Neither canal | Brazil-China iron ore |
Source: Clarksons Research, Baltic Exchange, IMO
The Panama Canal expansion completed in 2016 introduced a third set of locks for Neo-Panamax vessels up to 366 metres in length and 49 metres in beam. Trade route economics shifted noticeably — more container ship tonnage could transit both ways between the Pacific and Atlantic without routing via Suez.
Draft restrictions at specific ports often bind more tightly than canal dimensions. Rotterdam's Europoort handles VLCCs fully loaded. Chittagong has a bar draft limitation that prevents fully loaded Panamax vessels from entering the port. Colombo's South Asia Gateway Terminal was built specifically to handle Post-Panamax vessels and position Sri Lanka as a South Asian transshipment hubs.
How Cargo Ships Are Chartered and Operated
Most cargo ships do not sail with their own cargo. They are hired out to shippers, commodity traders, or freight operators under charter party agreements, legal contracts defining what cargo is carried, at what price, for how long, and who bears which costs.
Three main structures govern the market:
Voyage charter: the shipowner carries a specific cargo from port A to port B and receives a lump-sum freight payment. The shipowner pays operating costs — fuel, port charges, crew. The charterer pays for loading and discharging time through demurrage and dispatch mechanisms.
Time charter: the charterer hires the vessel for a defined period — weeks, months, or years — paying daily hire. The charterer pays for fuel and port costs. The shipowner covers crew, maintenance, and insurance. Time charters transfer more commercial risk to the charterer in exchange for lower hire rates than the spot market during strong conditions.
Bareboat charter: the charterer hires the vessel bare — no crew, no management from the owner. The charterer operates it as if they own it, appointing their own crew and handling all technical and commercial decisions. Bareboat charters are typically long-term and are often used as financing instruments.
Freight rates form through the interaction of fleet supply and cargo demand, measured in ton-miles. A disruption in one major trade route — Red Sea, Suez, Panama — increases ton-mile demand sharply even without any change in total cargo volumes being traded. That is why geopolitical events in distant waterways translate quickly into freight rate movements that eventually reach consumer goods prices.
Cargo Ship Regulations Every Shipper and Investor Should Know
Commercial cargo ships operate under a layered regulatory framework. The key instruments are:
SOLAS (Safety of Life at Sea Convention): the fundamental safety treaty. Chapter VI covers the carriage of cargoes — stowage, securing, cargo information requirements. Every master bears personal responsibility for SOLAS Chapter VI compliance before departure.
MARPOL (Marine Pollution Convention): Annex I covers oil pollution from tankers and machinery spaces. Annex II governs noxious liquid substances in chemical tankers. Annex VI — which came into force in stages through 2020–2023 — introduced the Energy Efficiency Existing Ship Index (EEXI) and Carbon Intensity Indicator (CII) requirements. These now affect all cargo ships above 400 gross tonnage trading internationally.
The CII rating is assigned annually based on actual fuel consumption and distance sailed. A vessel rated D or E for three consecutive years faces corrective action, up to and including flag state refusal to issue the International Energy Efficiency Certificate required for port entry. This has begun affecting the commercial value of older, less fuel-efficient cargo ships in ways the market is still digesting.
ISM Code: every shipping company operating internationally must implement a Safety Management System and hold a Document of Compliance. Individual vessels hold a Safety Management Certificate. Flag states and Port State Control officers inspect both.
MLC 2006 (Maritime Labour Convention): covers seafarer rights — working hours, rest periods, wages, medical care, repatriation. Port State Control officers conduct MLC inspections alongside SOLAS and MARPOL checks.
Classification societies — Lloyd's Register, DNV, ABS, Bureau Veritas, ClassNK — conduct structural and equipment surveys on behalf of flag states and insurers. A vessel that loses class is effectively unmarketable. P&I clubs will not cover it. Most ports will not admit it.
Cargo Ship Freight Market: How Rates Are Determined
Three separate freight markets govern cargo ship commercial activity, each with its own indices and dynamics.
Container market: tracked by the World Container Index (WCI) from Drewry and the Shanghai Containerized Freight Index (SCFI). Both measure spot rates on specific trade lanes. During 2021–2022, pandemic-related port congestion drove WCI rates above $10,000 per 40-foot container on some lanes. Rates normalized by late 2023. The 2024–2025 Red Sea disruptions caused a second spike that has yet to fully resolve.
Dry bulk market: the Baltic Dry Index (BDI) is the primary benchmark — a composite of BCI (Capesize), BPI (Panamax), BSI (Supramax), and BHSI (Handysize). The BCI is the most volatile component. Capesize rates swing hard with Chinese iron ore import volumes. The BDI touched a multi-year low below 800 points in early 2024 before recovering on improved demand signals from China.
Tanker market: the Baltic Dirty Tanker Index (BDTI) covers crude tankers; the Baltic Clean Tanker Index (BCTI) covers product tankers. VLCC rates on the Middle East Gulf-to-China route are the most closely tracked. Russian crude re-routing following 2022 Western sanctions added significant ton-mile demand — Russian oil moved to India and China on longer voyages using shadow fleet tonnage, tightening the supply of conventional tanker capacity.
What moves rates: fleet utilization, port congestion, canal disruptions, and commodity demand cycles — particularly Chinese imports of iron ore, coal, and crude oil. Scrapping of older vessels tightens supply. New deliveries loosen it. The timing mismatch between ordering decisions (made years in advance) and market conditions at delivery creates the freight market cycles that have always defined shipping economics.
FAQ On Cargo Ship
What is the difference between a cargo ship and a container ship?
A container ship is one type of cargo ship. The broader cargo ship category includes bulk carriers, tankers, general cargo ships, RoRo vessels, reefers, heavy-lift ships, and multipurpose vessels. Container ships carry standardized boxes. Other cargo ships carry everything from iron ore to automobiles to wind turbine components.
How many types of cargo ships are there?
Eight main commercial categories: container ships, bulk carriers, tankers, general cargo ships, roll-on/roll-off vessels, refrigerated cargo ships, heavy-lift and project cargo ships, and multipurpose vessels. Each category has further sub-types based on cargo carried and vessel size.
What is DWT and why does it matter?
Deadweight tonnage (DWT) is the total weight a vessel can carry when fully loaded — cargo, fuel, freshwater, stores, and crew. It is the primary capacity measure for bulk carriers and tankers. Container ships are measured in TEU (twenty-foot equivalent units) rather than DWT.
What is the largest cargo ship in the world?
By carrying capacity, Valemax iron ore carriers at around 400,000 DWT hold the record. They operate the Brazil-to-China iron ore route for Vale, the mining company. By TEU capacity, the largest container ships are in the 24,000 TEU range — the MSC Irina class and similar vessels.
How long does a cargo ship take to cross the ocean?
A container ship crosses the Pacific from Asia to the US West Coast in 14 to 18 days at 18 to 22 knots. An Atlantic crossing from North Europe to the US East Coast takes 8 to 12 days. Tankers and bulk carriers travel at 12 to 15 knots, so the same distances take longer.
What cargo cannot be carried on a cargo ship?
IMDG Code regulations prohibit or restrict many substances. Explosives, radioactive materials, and certain toxic gases require special vessel approvals, segregation, and documentation. Some cargoes are prohibited entirely. MARPOL Annex V governs garbage disposal at sea.
How do cargo ships navigate at night?
Through AIS (Automatic Identification System), ECDIS (Electronic Chart Display and Information System), radar, and visual watch. Under SOLAS, all vessels above 300 gross tonnage trading internationally must maintain an AIS transponder and carry ECDIS. The bridge team operates watch schedules throughout the voyage — typically four hours on, eight hours off.
What is a Panamax cargo ship?
A Panamax vessel is sized to fit the original Panama Canal locks — maximum 294 metres in length, 32 metres in beam, 12 metres in draft. The term applies to bulk carriers, container ships, and tankers. The Canal expansion in 2016 created the Neo-Panamax category for larger vessels that fit the new third set of locks.
How much does it cost to charter a cargo ship?
Rates vary by vessel type, size, and market conditions. A Supramax bulk carrier on time charter traded between $8,000 and $20,000 per day in 2024. A VLCC crude tanker on a voyage charter can generate $20,000 to $80,000 or more per day equivalent depending on the route and Worldscale level. Container slot rates on time charter are quoted per TEU per day.
What is the crew size on a typical cargo ship?
A typical Panamax bulk carrier operates with 18 to 25 crew — officers and ratings. A large VLCC may carry 25 to 35. ULCVs often run with 20 to 25 crew despite their scale, reflecting high automation on modern vessels. MLC 2006 and STCW regulations set minimum requirements by flag state.
What regulations apply to cargo ships under MARPOL?
The key annexes: Annex I (oil pollution from machinery spaces and tankers), Annex II (noxious liquid substances — chemical tankers), Annex IV (sewage), Annex V (garbage), and Annex VI (air pollution — SOx, NOx, and the EEXI/CII framework for carbon intensity). All international cargo ships above 400 gross tonnage are subject to Annex VI.
How do freight rates on cargo ships affect global trade?
High freight rates increase the cost of imported goods, and consumers pay the difference. The 2021–2022 container rate spike contributed to consumer goods inflation across Europe and North America. High iron ore freight rates reduce Chinese steel margins and can slow construction activity. Low freight rates encourage commodity arbitrage — moving goods over longer distances becomes profitable when shipping costs fall.
Glossary
AIS (Automatic Identification System): transponder system that broadcasts a vessel's identity, position, speed, and course. Mandatory for most commercial vessels under SOLAS Chapter V.
Bareboat charter: a charter arrangement where the charterer hires the vessel without crew or management, taking full operational responsibility.
Bill of lading: a document issued by the carrier confirming receipt of cargo, specifying the goods, and serving as a title document.
BDI (Baltic Dry Index): composite freight rate index for dry bulk carriers, published daily by the Baltic Exchange.
Breakbulk: cargo that is not containerized and loaded as individual pieces — bags, bales, crates, drums, or loose items.
Bunkers: fuel oil used to propel a ship. The term originates from coal bunkers on steam vessels.
Charter party: a contract between a shipowner and charterer governing the hire of a vessel or cargo space.
CII (Carbon Intensity Indicator): an annual rating (A to E) assigned to vessels above 5,000 gross tonnage based on fuel consumption and distance sailed, under MARPOL Annex VI.
Classification society: an independent organization (Lloyd's Register, DNV, ABS, Bureau Veritas, ClassNK) that surveys and certifies the structural and mechanical condition of ships on behalf of flag states and insurers.
Deadfreight: freight paid by a charterer for cargo space that was booked but not used.
Demurrage: penalty charges paid by a charterer to a shipowner when a vessel is held beyond the agreed laytime for loading or discharging.
Dispatch: a payment made by a shipowner to a charterer for completing loading or discharging ahead of the agreed laytime.
DWT (Deadweight Tonnage): the total weight a fully loaded vessel can carry — cargo, fuel, water, stores, and crew.
ECDIS (Electronic Chart Display and Information System): the navigation system displaying digital charts and integrating GPS, AIS, and radar data. Mandatory for international trading vessels under SOLAS.
EEXI (Energy Efficiency Existing Ship Index): a one-time technical index measuring a vessel's carbon efficiency against a reference line. Ships that fail must implement technical modifications.
FEU (Forty-Foot Equivalent Unit): a standard 40-foot container; equal to 2 TEU.
Geared vessel: a vessel equipped with its own cargo cranes or derricks.
Gearless vessel: a vessel with no onboard cargo handling equipment, reliant entirely on port cranes.
GRT (Gross Register Tonnage): a measure of a vessel's total enclosed internal volume. Now largely replaced by Gross Tonnage (GT) under the 1969 Tonnage Convention.
ISM Code: the International Safety Management Code, requiring shipping companies to implement a documented Safety Management System.
Laycan: the agreed window (dates) within which a vessel must arrive at the loading port to commence a voyage charter.
MARPOL: the International Convention for the Prevention of Pollution from Ships. Six annexes cover oil, noxious liquids, harmful packaged substances, sewage, garbage, and air pollution.
MLC 2006: Maritime Labour Convention; the international framework governing seafarer rights and working conditions.
Port State Control (PSC): inspection regime under which foreign vessels can be inspected by port state authorities for compliance with international maritime conventions.
SOLAS: Safety of Life at Sea Convention. The primary international treaty governing ship safety.
TEU (Twenty-Foot Equivalent Unit): the standard measure of container shipping capacity. A standard 20-foot container equals 1 TEU.
Time charter: a charter arrangement where the charterer hires a vessel for a defined period, paying daily hire while the owner retains crewing and management responsibility.
Voyage charter: a charter arrangement where the shipowner carries a specific cargo between two ports for a lump-sum freight payment.
References
International Maritime Organization — SOLAS Consolidated Edition 2020
International Maritime Organization — MARPOL Annex VI: Prevention of Air Pollution from Ships
Baltic Exchange — BDI Methodology and Vessel Description
Clarksons Research — World Fleet Monitor 2024
BIMCO — Standard Voyage Charter Party (GENCON 1994)
Lloyd's Register — Ship Classification Overview
UNCTAD — Review of Maritime Transport 2024
Drewry — World Container Index Methodology
ICS (International Chamber of Shipping) — Shipping and World Trade: Driving Prosperity
ClassNK — Guidelines for Safe Carriage of Cargo
ITF — Maritime Labour Convention 2006: A Guide for Seafarers
DNV — CII Rating Explained: How Carbon Intensity Indicator Works
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Capt. Anuj Chopra
Advisor / Contributing Author
Capt. Anuj Chopra ExC FNI FICS is a maritime industry executive with over 40 years of experience. As former VP Americas at RightShip and co-founder of ESGplus LLC, he specialises in maritime risk, ESG, and environmental compliance. He is an Adjunct Professor at the University of Houston and Fellow of both The Nautical Institute and the Institute of Chartered Shipbrokers.
