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What is tonnage? Know its meaning, importance, and types

Tonnage is a comprehensive metric that extends beyond a ship's weight. Learn more about its importance, types, and calculation in the blog.

Tonnage is a crucial aspect in shipping, impacting a ship’s capacity, costs, and regulatory requirements. For exporters and shipping companies, a clear understanding of tonnage and its various forms is key to making informed decisions and staying compliant. In this blog post, we’ll explore what tonnage is, its importance, types, and how it is calculated for different vessels.

What is tonnage in shipping?

Tonnage in shipping refers to a vessel’s size or cargo-carrying capacity, reflecting either the weight or volume of cargo and the ship’s internal space. It influences various factors like port tariffs, safety regulations, and operational limits for ships.

In the past, tonnage was used to calculate taxes based on the ship’s cargo capacity. Today, it remains crucial for assessing a vessel’s suitability for various operations.¹

Importance of tonnage

Tonnage plays a crucial role in the operational and financial aspects of shipping. Some key aspects where tonnage is crucial are:

1. Regulatory compliance

Tonnage helps ensure ships meet global standards and regulations, such as those from the International Maritime Organization (IMO). They enable accurate vessel capacity assessments, fair port fees, and adherence to safety and environmental standards.

2. Cost calculation

Accurate tonnage measurement helps businesses correctly assess fees and charges, leading to efficient logistics, improved profitability, and streamlined transportation.

3. Operational efficiency

Tonnage impacts a vessel's carrying capacity and helps logistics professionals make informed decisions on vessel selection, load distribution, and route planning, optimizing resource use and reducing costs.²

Types of tonnage

Some common types of tonnage used in shipping are as follows:

Gross tonnage (GT)
Gross tonnage (GT) is a measurement of a ship’s total internal volume, including all enclosed spaces. GT does not quantify weight; it calculates the vessel's total holding capacity. Gross tonnage is useful when defining safety requirements, and assessing a ship’s size and operational capabilities.

Net tonnage (NT)
Net tonnage (NT) measures the volume of a ship’s cargo space, focusing only on areas used for carrying cargo. It’s usually about 30% less than gross tonnage because it doesn’t include spaces like crew quarters, engine rooms, or machinery.

Deadweight tonnage (DWT)
Deadweight tonnage (DWT) measures the total weight that a ship can transport, including cargo, fuel, water, provisions, and passengers. Unlike gross or net tonnage, DWT focuses solely on the weight of the load, allowing shipping companies to determine their cargo-handling capability.

Displacement tonnage (DT)
Displacement tonnage (DT) is the amount of water that a fully laden ship displaces when floating, and indicates the ship's actual weight. This is a very relevant measure for battleships and other naval vessels where stability and balance are crucial components.³

Who issues international tonnage certificates?

International tonnage certificate (ITCs) is issued by the flag state, or the country where the ship is registered. It is based on the guidelines established by the International Maritime Organization (IMO) and the Tonnage Measurement of Ships Convention of 1969, after determining the ship’s gross and net tonnages.⁴

What is tonnage tax in shipping?

Tonnage tax is an optional taxation system for Indian shipping companies where they are taxed based on the size of their fleet instead of profits. It offers lower and more predictable tax rates, encouraging investment in shipping. This system reduces paperwork, offers financial stability, and helps companies reinvest in growth and cut costs.⁵

How is tonnage calculated?

Depending on what kind of tonnage is being measured, different calculations must be made. The formulae and procedures for each type are as follows:

1. Gross tonnage calculation

The whole internal volume of a ship, including all enclosed areas like staterooms, cargo holds, and machinery rooms, is measured by gross tonnage (GT). The formula to compute it is GT = K1V, where "V" is the volume of all enclosed areas in cubic meters and "K1" is a constant number (0.2 + 0.02 × log₁₀V). In essence, rather than measuring weight, gross tonnage indicates the ship's overall dimensions based on its internal volume.⁶

2. Net tonnage calculation

Net tonnage (NT) represents the usable or revenue-generating space of a ship, such as cargo holds and passenger areas. The formula for net tonnage is NT = K2 × Vc × (4d/3D)² + K3(N1+N2/10), where "Vc" is the volume of the cargo spaces, "d" is the molded draft (the depth at which a ship rests in the water when loaded), "D" is the ship's depth.

Additionally, "N1" refers to the number of passengers allowed as per the ship’s passenger certificate, and "N2" represents the number of other passengers. If the total number of passengers (N1 + N2) is fewer than 13, both N1 and N2 are treated as zero. This computation aids in estimating the cargo-carrying capacity of the ship by emphasizing areas that directly impact revenue generation for the vessel.⁷

Tonnage of container ships

Container ships are some of the largest ships used in commercial operations and their capacity is largely determined by their tonnage. The tonnage of container ships is calculated using the same formulae as for other vessels. For instance, a large container ship with a capacity of 20,250 Twenty-Foot Equivalent Units (TEU) might be approximately 1,445 feet long and 195 feet wide, with a tonnage capacity of about 220,000 tons.⁸

Conclusion

Tonnage is important in the shipping industry because it affects cost estimates, compliance with environmental rules, and a vessel’s operational efficiency. Understanding different tonnage types and their calculation can help businesses assess shipping costs. Small businesses or companies that are exporting via e-commerce should consider partnering with trusted logistics providers to avoid complex regulations and streamline international shipping. For more assistance, exporters can leverage the tools and services offered by e-commerce export programs like Amazon Global Selling.

Amazon Global Selling: Easy e-commerce exports and hassle-free shipping

If you are a business owner and you want to sell your products to the world, Amazon Global Selling enables you to list and sell ‘Made in India’ products on 18 Amazon global marketplaces. As an e-commerce export program, Amazon Global Selling provides support and guidance at every step of your export journey, connecting you to Amazon’s Service Provider Network for tailored compliance, payments, and logistics support.

Registered sellers can choose to ship their products by themselves through Merchant Fulfilled Network (MFN) or they can opt for fulfilment by Amazon (FBA) and outsource order fulfilment to Amazon including packing, storage, delivery, and returns. Amazon Global Selling simplifies the process of international shipping to the world, helping businesses navigate customs and reach a vast audience.

Frequently Asked Questions

1. What is tonnage length in shipping?

Tonnage length refers to the overall length of the ship used to calculate various types of tonnage. It helps define the dimensions that influence gross and net tonnage. Also, it is a critical factor in determining the tonnage certificates issued to a ship.

2. What is the net tonnage of a ship?

Net tonnage is a measure of a ship’s usable capacity, focusing on spaces available for revenue-generating activities such as carrying cargo and passengers. It excludes non-productive spaces like the engine room and crew quarters.

3. What is unit tonnage?

Unit tonnage refers to the tonnage assigned per unit of cargo, such as per container or per bulk unit. This measurement helps in determining the cargo-carrying capacity and efficiency of a ship in terms of standardized units like TEUs.

Published on November 6, 2024.

Sources:

1. https://sinay.ai/en/maritime-glossary/tonnage/

2. https://geocommerce.ge/everything-you-need-to-know-about-tonnage-in-shipping/

3. https://www.credlix.com/blogs/things-you-must-know-about-tonnage-in-shipping

4. https://www.credlix.com/blogs/things-you-must-know-about-tonnage-in-shipping

5. https://www.credlix.com/blogs/things-you-must-know-about-tonnage-in-shipping

6. https://www.britannica.com/technology/tonnage

7. https://www.credlix.com/blogs/things-you-must-know-about-tonnage-in-shipping

8. https://www.credlix.com/blogs/things-you-must-know-about-tonnage-in-shipping

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