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Everything You Need To Know About Tonnage in Shipping

05/05/2022 6 Min Read

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The process of shipping involves numerous calculations, combinations, and approvals. Tonnage is one such metric that helps ensure safety and smoothness in shipping.

What is Tonnage in Shipping?

Tonnage in shipping is the carrying capacity of the ship measured in terms of volume or weight. The word 'tonnage' is derived from the practice of levying dues on ships. These dues were collected based on 'tons' that a vessel could accommodate.

In the past, the tonnage was calculated based on the ship's internal volume. But today, the measurement procedure has changed to a system where the cargo's weight is considered the unit of measurement. Ton is the standard unit of measure for this capacity.

Although the technical definition of tonnage has changed several times, it is usually expressed in terms of weight or volume. To sum up, tonnage in shipping is the total number of tons registered or the total carrying capacity of the ship.

Who Issues International Tonnage Certificates in Shipping?

Manning regulations, registration fees, port dues calculation, and safety rules are devised based on the tonnage of ships. All ships should have an International Tonnage Certificate (ITC), which is issued by the flag states in consultation with the Tonnage Measurement of Ships 1969 and the International Maritime Organization (IMO) International Convention.

The vessel's certificate society carries out the required calculations before delivery. It also issues the certificate on behalf of the flag state. Even though the certification has an expiry date, it has to be amended in the case of changes in the vessel's framework.

What is Tonnage Tax in Shipping?

Tonnage tax is a taxing method levied on shipping companies instead of conventional corporate taxation. The tax amount is usually less than the traditional government taxes and, therefore, is often considered one of the leading maritime subsidies offered by the government in recent times. The tax is levied based on the total tonnage value of the entire fleet of vessels under the operation of a single enterprise.

Another upside of this taxation mechanism is that it is not dependent on the profit of the company and the volume of the total shipments, making it easy and convenient for shipping companies and authorities to calculate tax.

For example, it doesn’t matter if the freight is carrying its total capacity of 500 Kg of load; the tonnage will remain the same.

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How is Tonnage Calculated?

Before understanding how shipping tonnage is calculated, it is vital to understand the meaning of two crucial terms.

Gross Tonnage

Gross tonnage is the total size of the vessel, expressed in terms of volume, of the enclosed area within the ship, right from the keel to the funnel.

The following formula allows for an easy method for calculating the gross tonnage:

Gross tonnage (GT) = K1 x V

Where, k1 = 0.2 + 0.02LogV , and V + total number of enclosed spaces in cubic meters.

Net Tonnage

Net tonnage is the molded volume of the entire cargo space of the ship. It only considers the volume of the vessel that can be used for loading the cargo. The net tonnage is expected to be somewhere around 30% less than its gross tonnage.

The following formula facilitates the method of calculating the net tonnage:

Net tonnage = k2 x Vc x (4d/3D)^2 + k3 x (N1 + N2/10)

Where, K2 = 02. + 0.2LogVc

Vc = Entire volume of cargo spaces in cubic meters K3 = 1.25 x (GT + 10000)/10,000 d = Summer load line draught in meters D = Molded depth amid ships in meters N1 + Number of passengers in the cabin with as many as eight berths N2 = Number of other passengers N1 + N2 = The total Number of passengers that the ship is allowed to carry according to its passenger certificate. If N1 + N2 is less than 13, N1 and N2 should be taken as zero. GT = Gross tonnage of the vessel

Here are a few other considerations to keep in mind:

  • The factor (4d/3D)^2 should be greater than unity.
  • The term K2Vc(4d/3D)^2 should not be taken as less than a quarter of the gross tonnage.
  • Net tonnage should not be less than 0.30 x gross tonnage.

Tonnage of Container Ship

The tonnage of container ships is measured by applying the same formulas as discussed above. On average, a large container ship of 20,250 TEU would measure around 1,445ft x 195ft compared to 1,304 ft x 185 ft for the other ship classes. It would have an estimated capacity of approximately 220,000 tons.

What Does Deadweight Tonnage Mean in Shipping?

Deadweight tonnage is the measurement of a ship's contents, including cargo, fuel, passengers, crew, food, and water. It is measured in long tons of 2,240 pounds (approximately 1,016 Kilograms).

What Does Displacement Tonnage Mean in Shipping?

A ship's displacement equals the volume of water it displaces while floating. It is measured in cubic meters. The measurement of the water the ship displaces while it is floating with its fuel tanks full and all sources on board is called the displacement tonnage. It is measured in metric tones.

It is the actual weight of the ship since a floating object displaces the same amount of water as its weight. On the other hand, the light displacement of a ship is the amount of water it displaces with no passengers, crew, cargo, fuel, water, or food onboard.

FAQs On Tonnage In Shipping

1. What is tonnage length in shipping/container?

Tonnage length refers to 96% of the total distance covered by a ship's waterline at 85% of the least molded depth when measured from the top of the keel. It can also be the size from the front side of the stem to the axis of the rudder stock on the waterline if that is greater.

2. What is the net tonnage of a ship?

The net tonnage of a ship is a metric that determines the actual capacity of cargo that the vessel can carry.

3. How big is a 100-ton ship?

Depending on its construction and primary uses, a 100-ton ship can be around 65 feet or more.

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Avani Ghangurde

Senior Associate Communications at Drip Capital

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