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SHIPPING INDUSTRY OVERVIEW

 

 

Throughout the last century the transportation sector has found a general trend of increases in overall trade volume. The liberalization of national markets and raising industrialization have fueled an increasing interest in consumer products and free trade. Improvements in technology also have made sending a speedy and efficient approach to transport. In 2008 overall seaborne commerce approximations have quadrupled, from only over 8 thousand million mile tons in 1968 to over 32 thousand million ton miles over the last four decades. As with all commercial sectors, yet, transport may be susceptible to economic slowdowns. Really, following several years of very buoyant transport marketplaces, in living memory the finest for many trades, much of the international transportation sector has fallen victim to the global economic slowdown.

 

 

SHIPPING MARKET OVERVIEW 2018

 

Six months ago, we described the shipping markets as experiencing “improvements filtering through after hitting rock bottom in 2016”. This trend has continued with the ClarkSea Index averaging $10,767/day in 2017, up 14% y-o-y, but still 8% below trend since the financial crisis. The bulk carrier and container market picked up significantly, with earnings increasing 77% and 25% y-o-y in 2017. Conditions in the LNG carrier market also improved last year, whilst the cruise, Ro-Ro and ferry markets have remained firm. However, tanker earnings fell by another 35% in 2017, to a 20-year low, with market conditions also depressed in 2018 so far. The LPG carrier sector also remains below trend, and whilst the offshore sector appears to have bottomed out, major challenges remain.

 

The economic upswing, we reported six months ago continues, with growth of 3.6% reported in 2017 and expansion of 3.9% projected in 2018 and 2019. There has been improved economic performance across the developed and developing world, including the maritime important Chinese economy. Improved commodity prices have also supported a number of regional economies.

 

Seaborne trade grew by 3.9% in 2017, encouragingly the fastest rate of expansion in five years. Volumes totalled 11.6bt, equivalent to 1.5t per capita and 85% of world trade. Our forecast for 2018 suggests trade will reach 12bt tonnes, healthy growth of 3.5% and with a tonne-mile trend of 4.1%. Dry bulk trade grew 3.7% in 2017, with 3% growth projected in 2018. Container trade is projected to grow robustly in 2018 at 5%, following expansion of 5.4% in 2017. Oil trade growth slowed in 2017, although crude tonne-mile trade expanded by 5%, with similar trends projected in 2018. Chemicals trade has picked up (5% in 2017), whilst LNG trade is projected to grow by over 10% in 2018. Risks to seaborne trade remain, including from the recent protectionist policies proposed, but there are a range of positive drivers, including underlying Asian growth, with China’s ‘Belt & Road’ programme a potentially important factor.

 

Industry benchmarks

The Baltic Dry Index (BDI) is a measure of the price of shipping major raw materials such as metals, grains, and fossil fuels across 22 different shipping routes around the globe. It is created by the London Baltic Exchange based on daily assessments from a panel of shipbrokers. The BDI is a composite of 3 sub-indices, each covering a different carrier size: Capesize, Panamax, and Supramax. It is reported around the world as a proxy for dry bulk shipping stocks as well as a general shipping market bellwether. The Baltic Dry Index is also a leading indicator into the global demand for commodities and raw materials.

 

 

The Baltic Exchange Dry Index which was listed in 1985 at 1000 points touched a year low of 933 in 2017, only to recover to 1,600 levels as last reported. The low freight rates are also indicative of-

o High competition in the industry

o Excess vessel supply

o In turn it has led to lowering of costs for transporting goods by sea.


Value of amount of world trade by ocean: It's hard to quantify the value of quantity of world seaborne trade in financial conditions, as amounts for commerce approximations are traditionally when it comes to tonnes or tonne miles, and are thus not comparable with financial established data for the value of the world market. On the other hand, the UN Conference on Development and Trade evaluates that the operation of merchant ships gives about US$380 billion in freight rates inside the international market, equal to about 5% of overall world trade. Transport commerce approximations in many cases are computed as a means of quantifying the volume of commerce, in tonne miles.



Security and Regulation: Transportation is the most environmentally benign and safest sort of commercial transportation. Maybe uniquely amongst businesses commitment to security, including physical danger has long pervaded almost all deep sea transport operations. Transportation was among the initial businesses to embrace broadly executed international safety standards. Due to its inherently international nature, the security of transport is controlled by various United Nations agencies, particularly the International Maritime Organization that has developed an extensive framework of world-wide marine security regulations.


Environmental Operation: Transportation is the least environmentally harmful type of commercial transportation and, compared with property based sector, is a relatively small contributor to marine pollution from human activities.

There continues to be a significant decrease marine pollution during the last fifteen years, particularly with respect to the quantity of oil spilled into the ocean, despite a huge increase in world seaborne commerce.

Number and nationality of the seafarers of world: The global population of seafarers serving on globally trading business ships is believed to be in the order of. Officers and 721, 000 evaluations 466, 000 The OECD states remain a vital source for officials, but growing numbers of policemen are actually recruited from Eastern Europe and the Far East. Many the evaluations of the transportation sector are recruited from developing nations, particularly the Far East and South East Asia. India and the Philippines are hardly insignificant marine seafarers supply states, with lots of seafarers from all of these states loving employment opportunities on foreign mains managed by shipping companies that are international

 

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