The Baltic is the world’s leading Sale & Purchase market. It is active both in fields of new buildings and second hand tonnage and features strongly in demolition sales.

The second-hand market is particularly significant in terms of value and turnover. A large percentage of this business is transacted via Baltic brokers. It is a general practice in the buying and selling of ships that owners will instruct brokers to place vessels on the market whilst the vessels are engaged in their normal trades. It is therefore an important part of the transactions that inspections and eventually deliveries under a sale contract are co-ordinated with the employment of the vessel.

A standard form of contract - the Norwegian Sale Form - is used in over 80% of transacted business. The latest edition, which was revised in 2012, has also been approved by BIMCO and incorporates further amendments to previous forms particularly with respect to terms applicable to delivery. Many Japanese owners use the Nippon Saleform. Although contrary to the printed Norwegian Sale Form, it is now more usual that vessels are inspected before being negotiated for sale as the value is very much dependent on a vessel's physical condition.

An important part of the purchase is also an inspection of classification records which will show the history of the vessel since it was delivered. The Sale Form deals mainly with price, terms of payment, where and when the vessel is to be delivered, and the seller's obligation towards the status of class certificates, etc. Sale & Purchase also covers the contracting of new ship construction, and a broker's role in this market lies in obtaining the best available shipyard price, payment terms and specification for all types of vessels.

The scrapping of vessels at the end of their commercial life is dealt with by brokers who offer the ships for recycling. Sale & Purchase brokers provide a service to the industry in estimating ships' values, and this is often formally done by way of certificates of valuation which are widely used by owners for insurance and banking requirements.

The Baltic Exchange offers an Escrow service for its Members whereby the deposit is held by it until the sale is completed and authorisation is given to release the money. For this it undertakes extensive Anti-Money Laundering and Client Due Diligence checks.

Vessel quality management

There are many regulations covering many aspects of the business of shipping. The main international regulator for ocean-based activity is the International Maritime Organization (IMO), which is the London-based UN agency concerned with maritime matters. It is responsible for among many others the SOLAS (Safety of Life at Sea) regulations as well as the MARPOL (Marine Pollution) rules governing environmental matters.

Vessel inspections for compliance with all applicable regulations are managed under a series of Memorandums of Understanding (MOUs) which operate on a regional basis and allow for what is known as Port State Control inspections and detentions. In Northern Europe for example the Paris MOU is the relevant agreement. Modelled on the Paris MOU, several other regional MOUs have been signed, including the Tokyo MOU (Pacific Ocean), Acuerdo Latino or Acuerdo de Viña del Mar (South and Central America), the Caribbean MOU, the Mediterranean MOU, the Indian Ocean MOU, the Abuja MOU (West and Central Atlantic Africa), the Black Sea MOU, and the Riyadh MOU (Middle East Gulf).

In addition to the over-riding authority of the IMO in setting rules for ocean transportation, each ship must be registered with a particular national regulator (the flag state). It then flies the flag of that state and is regulated by the authority within that state when it comes to a wide variety of vessel management issues, the most important of which is vessel safety.

In the past ships were registered with the flag of the state where they were owned. Subsequently it became the practice sometimes to "flag out" and be registered with other states. In recent years and in view of the Port State Control system, flagging to what is known to be a quality flag has generated significant commercial advantages, so it is incorrect to consider choice of a "foreign" flag as implying a desire to save money at the expense of quality or safety. Nonetheless there are quality league tables for different flags, recording for example the number of detentions worldwide of ships according to flag. 

Classification Societies

Although the flag state has overarching responsibility for the quality of vessels, much of the work is delegated to classification societies which survey ships and ensure their compliance with all relevant construction and maintenance requirements.

There are many ship classification societies throughout the world centred in the traditional maritime countries but the best known are the 12 belonging to IACS, the International Association of Classification Societies.

American Bureau of Shipping (ABS)

Bureau Veritas (BV)

China Classification Society (CCS)

Croatian Register of Shipping (CRS)

Det Norske Veritas Germanischer Lloyd (DNV GL)

Indian Register of Shipping (IRS)

Korean Register of Shipping (KR)

Lloyd’s Register of Shipping (LR)

Nippon Kaiji Kyokai (NK)

Polish Register of Shipping (PRS)

Registro Italiano Navale (RINA) 

Russian Maritime Register of Shipping (RS)