Baltic Dry Index Jumps 3.4 Percent as Iron Ore-Shipping Rates Extend Surge
The Baltic Dry Index has jumped 34 percent this month while capesize rates have doubled as the market shrugs off the effects of a fleet that has expanded at twice the pace of demand. The additional shipments may be worsening delays at capesize ports, meaning vessels become unavailable for rehire for longer periods, Webb said.
Today’s increase in the Baltic Dry Index was the measure’s largest since Aug. 11. The gauge has risen or fallen at least 10 percent in 10 of the past 12 months, based on monthly averages.
The supply demand balance in dry-bulk shipping oscillates depending on the amount of cargo, the profit margins of companies that import raw materials, port delays, and how far vessels are sailing to make deliveries.
Rates for capesizes, ships the length of three soccer fields that mostly haul iron ore, climbed to $32,066 a day from $30,344 yesterday. Panamax-class vessels strengthened 2.1 percent to $24,365; supramaxes added 3.1 percent to $21,272; and handysizes rose 1.1 percent to $15,508.
Fleet Expansion
The fleet has expanded 14 percent to 500 million deadweight tons since August 2009, according to data from Clarkson Research Services Ltd., a unit of the world’s largest shipbroker. World seaborne trade in commodities will expand 7 percent this year, it estimates.
Running costs including crewing and repairs range from $5,008 for handysizes to $7,773 for capesizes, according to London-based Drewry Shipping Consultants Ltd. The estimates exclude finance costs.
A five-year-old capesize vessel costs $57.3 million, according to the exchange. Its assessments are based on carrying capacities of 172,000 deadweight tons for capesizes, 74,000 tons for panamaxes, 52,454 tons for supramaxes and 28,000 tons for handysizes.
Source: Bloomberg
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Shipping industry picks up speed
J. Lauritzen general manager Torben Janholt told Business.dk that he expects the demand for sea transport to be relatively strong for the second part of 2010.
For 2010 as a whole, J. Lauritzen expects a post tax profit of 120-125 million dollars. It’s a figure which is affected by the high amount of ships the company takes over during the last part of the year, but an impressive figure nonetheless. The ships were all ordered before the start of the economic crisis, but are only now ready from the Asian shipyards.
Fellow shipping firm A.P. Møller-Mærsk recently posted its results for the first half of the year, figures which were similarly impressive and showed a positive adjustment to the projected results for the year’s profits.
In general, the expectations to the 2010 profits for the Danish shipping firms are a lot more promising than at the beginning of the year. This is thought to be linked to the fact that world trade is starting to pick up again and Chinese export and import figures have also grown significantly.
Source: The Copenhagen Post Online
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Utilisation, charter line rates up, says shipping industry expert
There has been an improvement in freight rates for the Aframax vessels in the crude oil sector. International oil companies have increased their exploration activities in the North Sea, West Africa and Brazil which have improved the demand of AHTS (Anchor Handling & Tug System) vessels, he said.
The company owns a diversified fleet of 20 vessels including 10 LPG carriers which is the largest LPG fleet in India. It owns three Aframax crude oil tankers and seven AHTS vessels. According to Mehta, the previous year was bad for the shipping industry as a whole due to the global recession, which resulted in a sharp drop in freight rates across sectors.
Though utilisation levels in the LPG sector was better last year, Indian vessels had to match the lower rates offered by foreign players which resulted in sub-optimal returns for the company, he said.
Crude oil tankers were affected by lower oil consumption all over the world while AHTS vessel charter rates were down due to a sharp cut-down in deep sea exploration activities by oil companies, he said.|
Source: PTI
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Somali pirates, Saudi ship owner say ransom agreed
“$20 million was our initial demand but not the final amount agreed upon, and the ship is not worth $20 million ransom when you consider its capacity.”
The Arab News newspaper on Monday said a $20 million ransom from insurers had been approved by Saudi Arabia’s central bank.
However, the newspaper said on Tuesday that the figure was a misquotation and it would correct its story.
Pirates from impoverished Somalia, which is battling an Islamist insurgency, have stepped up attacks in recent months, making tens of millions of dollars in ransoms from seizing ships in the Indian Ocean and Gulf of Aden.
The al-Nisr, with 13 Sri Lankans and one Greek crew member, was seized on March 1 as it returned from Japan to the Saudi port of Jeddah and was not carrying any oil.
Munir Gondal, head of operations at Saudi firm International Bunkering Co., which owns the ship, said the agreed ransom was slightly less than $2 million.
“This is a human problem: You have 14 crew members held aboard the ship,” he told Reuters. “$20 million was demanded five months ago, but the ship itself is not worth $2.4 million. The insurer will never pay the full value of the ship.”
Gondal said Saudi IAIC Cooperative Insurance Co (SALAMA) was the ship’s insurer. Salama is 30-percent owned by UAE-based Islamic Arab Insurance. The Saudi central bank was waiting for the Interior Ministry to approve the payment before the funds could be released, he said.
The London-based International Maritime Bureau said its piracy reporting centre logged 196 pirate incidents globally from January to June, including 31 successful hijackings, 27 of which were off the coast of Somalia or in the Gulf of Aden.
Source: Reuters
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AT & S May Get 24 More Orders For New Ships
Hj Abdul Wahab said in an interview with The Brunei Times recently that the additional 24 vessels may be built in the next phase when the first four ships are delivered.
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Higher shipping cost seen as demand rises
Expectations for higher shipping costs suggest the 79 percent plunge in capesizes since June 2 doesn’t point to a new global economic slump. While last month’s Chinese steel output was the smallest since February, the nation still accounted for 45 percent of global supply. Three consecutive months of lower iron-ore imports may mean mills are running down inventories.
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Supertanker Returns Slump 24% to Nine-Month Low on Excess Supply of Ships
“Fundamentally, the fleet is too big for today’s volume, and that’s the big reason” charter rates are declining.
Ships that were previously storing oil at sea for traders are once again seeking cargoes, worsening the slide in rental rates, Mansson said.
“We’re down to break-even levels, and that can only continue so long. Then the owners will stop trading.”
“Also, winter markets have a nice impact on rates, both because of colder weather, but also worse weather that gives delays.”
Source : Bloomberg
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Seafarer wage hikes hit Asian flags
The minimum average pay rate per ship on the Singapore Registry, for example, is expected to jump 17% to $42,326 from the current International Labour Organisation minimum, with the minimum pay rate set to increase a hefty 60% by 2014.
Inside this week’s e-paper we ponder whether it was a grenade, a freak wave or another vessel that dented an MOL VLCC in the Middle East in this week’s most mysterious shipping story. Also analysed are the likely penalties facing shipowners from irate US politicians in the tough post-Deepwater Horizon climate.
Seatrade Asia Week comes out 50 times a year, with exclusive reports from an experienced, dedicated network of journalists across the region and is priced at just $300 a year.
Source: Seatradeasia-Online
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Shipping goods from Asia more costly
Mr. Lo’s company, which serves as an intermediary between ocean-going vessel owners and retailers, will have pay an extra $900 (U.S.) for each larger-sized container transported, starting this Sunday. The increase comes on top of $1,500 in new charges since February, raising the total cost of importing each container to more than $6,000 – nearly triple the rates from early 2009, when the recession crushed global shipping.
The market is bustling for “intermodal freight,” or goods transported inside standardized metal containers that are readily transferred between ships, trains and trucks. CP reported Wednesday that it had $336-million (Canadian) in intermodal freight revenue in the second quarter, up 14.5 per cent from the same period last year.
But the railway sector, locked into long-term transport contracts, isn’t reaping a windfall. Instead, it is multinational shipping firms that are pushing through a series of sharp price increases, trying to recoup some of their losses in the painful recession, industry experts say.
During the recession, major shipping companies reduced capacity, resulting in a shortage of available containers when demand start to pick up in the fall of 2009. As well, some vessels embraced “slow steaming” to conserve fuel during the economic downturn, meaning some shipments took 15 days to reach Canada instead of the usual 10 days, thereby tying up more containers.
Numerous shipping companies halted production of containers during the recession, but they are starting to resume manufacturing to help gradually replenish scarce supplies of the large metal boxes.
Industry observers say that it’s too early to determine the effect on consumer prices, with some retailers willing to absorb the higher container costs, if they prove to be short-term spikes.
Evergreen Shipping Agency (America) Corp., agents for Evergreen Line, has served notice that cargo shipments will be subject to a “peak season surcharge” that takes effect Sunday. Goods going from Asia to Canada, for instance, will cost an extra $640 (U.S.) to $1,013 to ship, depending on the size of each container. Rates to ship from other parts of the world are also soaring.
“The container prices are going up, up, up,” said Ruth Snowden, executive director of the Canadian International Freight Forwarders Association.
Maersk Line is another major shipping firm that has instituted peak season surcharges, saying it estimates that “there will be significantly higher demand for liner transport, coupled with a shortage” of containers across the industry. “We expect the shortage to last through the third quarter of this year,” Maersk said.
Others slapping on surcharges include Zim Integrated Shipping Services, Hyundai Merchant Marine Co. Ltd., CMA CGA Group and Kawasaki Kisen Kaisha Ltd.
Industry analysts say Canada’s railway industry benefits from a robust intermodal business – a key component of revenue, especially when exports of some bulk commodities to China appear headed for a slowdown later this year.
In the second quarter, Calgary-based CP’s profit jumped 23 per cent to $166.6-million (Canadian), beating analysts’ estimates. RBC Dominion Securities Inc. analyst Walter Spracklin said the adjusted share profit of 92 cents shows CP’s strength, considering that flooding forced the shutdown of the railway’s main line in southern Alberta for 11 days in June.
“Our progress is on track,” said Fred Green, CP’s chief executive officer. But he cautioned that demand for the railway’s services will be volatile due to “limited visibility” on the global economy.
Source: Globe and Mail
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Middle East supertanker surplus falls for 2nd week
Frontline Ltd, the world’s largest operator of supertankers, said on July 23 that owners were reducing speeds and rejecting cargoes to counteract increased fuel prices and slumping returns. When ships travel at lower speeds, fewer vessels are available to collect consignments.
The supply of ships for August’s first 10 days was diminished by ‘busy activity’, said Imarex ASA, an Oslo-based freight derivatives broker. More vessels became available for loading in the second 10 days of the month, Imarex said.
Rental income from shipping Saudi Arabian crude to Japan, the industry’s benchmark route, climbed 5.3 per cent to US$17,453 a day on Tuesday, after slumping 23 per cent last week, according to the London-based Baltic Exchange. In industry-standard Worldscale terms, rates advanced 1.2 per cent to 56.56 points.
Worldscale points are a percentage of a nominal rate, or flat rate, for more than 320,000 specific routes. Flat rates for every voyage, quoted in US dollars a ton, are revised annually by the Worldscale Association in London to reflect changing fuel costs, port tariffs and exchange rates.
Each flat rate assessment gives owners and oil companies a starting point for negotiating hire rates without having to calculate the value of each deal from scratch.
The Baltic Dirty Tanker Index, a wider measure of crude oil-transportation costs, fell 1.7 per cent to 844 points on Tuesday, according to the exchange.
Source: Bloomberg
