Five Issues For Shipping Today

Transcription

1 Martin Stopford President, Clarkson Research Five Issues For Shipping Today Are you worrying about the right thing? The Seventh City of London Biennial Meeting 12 th November 213 Issue 1: Shipping Cycle How Long? Issue 2: Globalization Phase 2 Issue 3: A New Regulatory Strategy Issue 4: The Fuel Cost Revolution Issue 5: Gathering & Using Information Look beyond the Cycle, shipmate" What makes the business climate so difficult today is that shipping investors must deal with several major changes taking place simultaneously. What are the challenges, how will they interact and where they might lead? Prof Martin Stopford, President, CRSL 1

2 Issue 1: Shipping Cycle How Long? 6 5 (Clarksea Index is a weighted average of earnings by tankers, bulkers, containerships & gas.) 198s 1 YEARS s 1 YEARS 2s 1 YEARS s 1 YEARS? $22,8/day Clarksea Index $/day $8,5/day $12,/day $11,882/day Since s Recession The Great Shipping Boom Shipping Supply & Demand Balance Fleet M dwt 1st Jan 1,6 1,4 1,2 1, Index of sea trade (black line) compared with fleet (m dwt) s Supply bubble still delivering, trade OK Shipping caught in pincers of supply bubble and demand 196s collapse Supply lags demand & triggers investment Other bubble Other 2-28 Supply lags demand & triggers an investment bubble Bulk carrier Tanker Sea Trade OBOs Source: FearnleysAnnual Review (cargo), CRSL (fleet) Prof Martin Stopford, President, CRSL 2

3 5 Year Shipping Cycle Pattern Still a Way to Go The blue line shows the % gap between supply and demand in the previous slide. The red line is the linear trend fitted to the line by regression 5% 4% 3% 2% 1% % -1% -2% -3% -4% The trend surplus/deficit over the 5 years in this chart is 8.3% y = 7E-5x +.83 Not here yet!! Forty year cycle from trough to trough About 25%surplus capacity Issue 2: Globalization Phase 2 Japan Europe N. America China S & E Asia S America billion Non-OECD population moving towards OECD levels OECD s 1.3 billion population dominate sea trade Africa Tonnes of sea imports per person a year Prof Martin Stopford, President, CRSL 3

4 OECD & Non OECD Share of Sea Trade 9% OECD % Trade Non OECD % Trade % World Sea Trade 8% 7% 6% 5% 4% 3%. Non OECD reaches 77% in 225 2% 1% % OECD decline to 2% in Forecast made with polynomial trend forecasting 225 equation Shipping Prepares for New Global Economy 72% of the merchant fleet is now registered offshore Going up at 1-2% pa Offshore Flag Tonnage Nudges 1 Billion GT We are evolving into a stateless industry 1, Foreign Flag Fleet Growing Fast M GT Foreign Flag National Flag Prof Martin Stopford, President, CRSL 4

5 Issue 3: New Regulatory Strategy 1. SOX: SO 2 control (.1% in ECAs 1 Jan 215) 2. NOx: Nitrous Oxide Tier III control 3. EEDI: Energy Efficiency Design Index 4. SEEMP: Ship Energy Efficiency Management Plan 5. WBM: Water Ballast Management 6. MRV: Monitoring, Reviewing & Verifying 7. MBM: Market Based Measures 8. MLC 26: Maritime Labour Convention 26 Issue 4: A Fuel Cost Revolution 4, 35, 3, 25, $/day cost SHIP FUEL Ship costs 3x fuel SHIP FUEL 212 Ship costs half fuel 2, 15, 1, 5, Bunker cost 1 Year TC Rate Based on Aframax tanker, 1 year TC rate and Rotterdam bunker price Prof Martin Stopford, President, CRSL 5

6 Ship Fuel Efficiency Not Much Improvement Fuel consumption 6, dwt Bulk Carrier Tonnes/day at 14.5 knots ECO-CARS ARE UP TO 5% MORE FUEL EFFICIENT New Japanese 6k dwt Supramax 28 m tpd - about 15% more efficient Year of Build The Road to Low Carbon & Low Cost - 77, Dwt Panamax Bulk Carrier 1. De-rate engine for improved grams/kwh 2. Cut out turbo chargers & use slide injectors 3. Tune Engine with electronic control system 7. Trim, sensors, big data, information management, logistics Crane Steering gear room Side rolling hydraulic hatch covers Hatch No 4 hold floodable for extra coaming water ballast in heavy weather 7 cargo holds, each with capacity for 12-13, m3 or 111, - tons depending on density of cargo being carried Anchor No 7 hold 12,2 m3 No 6 hold 13, m3 No 5 hold 13, m3 No 4 hold 12,3 m3 floodable No 3 hold 13, m3 No 2 hold 13,3m3 No 1 hold 12,6m3 Water line Prop shaft Main engine 12,67 HP at 89rpm Double bottom used for water ballast Corrugated bulkhead 14.2 metres draft 4. New propeller tuned to revised engine spec 5. Waste heat recovery system 6. Improved low load cylinder lubrication 8. Hull coatings, less ballast, air resistance etc. 225 m LOA, 77, dwt Prof Martin Stopford, President, CRSL 6

7 Issue 5: Information Creation and Application Gordon Moore Invented Moore s Law Fibre optic cable network Conclusions 1. The shipping cycle is in its 5 th year -surplus maybe 25% of the fleet - half way? 2. Surplus slow steaming must trickle out before real recovery. 3. Globalization Part 2 different and tougher than Part 1 (195-2) 4. New regulatory policies makes greater technical demands 5. Fuel costs and information also pose technical challenge 6. Expect less focus on finance and more on making shipping assets more productive The core business is transport, not financial speculation Prof Martin Stopford, President, CRSL 7