containerships taking over drybulk biz

On the chartering market, today’s index BDI is back to the 800pts mark, back to 8th september 2016 level. In order to compare :

• at his peak last year on 21st nov 2016, it was at 1,257pts
• this is a decline by 36% in 2 months
• To be positive, about the same increase happened in less than 1 month from 26th oct 2016 to 21st nov 2016

Let’s hope for the maritime industry :

• 2017 raises will be and remain quicker than the losses.
• Each bottom will be higher than the previous one.

Having a look at today’s Baltic fixture report, afraid the mv ‘oriana c’ fixture said done

• ‘Oriana C’ 2012 34,417 dwt dely Recalada prompt trip redel Skaw-Passero intention Tunisia @ $8,000 daily’

is not matching with BMTI comment “Grain cargoes of 25-30,000mt from ECSA to North Africa are rated around $30.50/31.50/mt ”

unless this stem is for a Upr to tunisia with 7000/2000x.

• Same basis Algeria destination but with 2’500x out would mean today freight at 28.50/28.75usdpmt
• when 10 days ago it was worth 30usdpmt and tce was in the mid $9’000
• when for your perusal, around 10th january similar vessel could hope to grasp $10’500 daily for similar cargo and 34usdpmt on the freight.

Today’s HS3 and HS4 (respectively ECSA to Skaw pass and USG to Skaw pass) are both losing more than 550 each and BHSI is getting back to the 400pts, back to mid August 2016 level. Also worth to noticeToday’s baltic fixture list is kind of shrinking with only 8 fixtures reported under timecharter. Surely the side effect of the chinese holidays.

What else ?

We are all of us playing in the drybulk sector of the seaborne business and again let’s try to take a different prospective, thanks to BMTI today’s market report. Let’s go straight to the 2^nd page, the BMTI’s container market review. The current overall situation in this sector is not really bright and unlikely to be better in 2017 according to the TEU capacity entering the water in 2017 compared to the ones going to scrap. According also to this interesting point of view also on the goods consumptions in the developped market. On one hand, the youngsters (we can also call them millenials) are more into renting goods rather than buying (therefore need less and less goods as virtually 1 good will be used by 20 (or even more) houseolds) and population which gets eldery is more in needs of services than buying goods (and ships whichever the type are not really good in transporting services). In case of doubt on what I’m telling you above, you can also have a picture here :

• container prospects
•  sharing economy

So where containership sector may find his way to sustain ? In switching from shipping goods to shipping commodities.

As container ships owners are like all others in the Drybulk sector they try to find new employments for their ladies, which is coming off the traditional Dry sector. BAGGED SUGAR is one of these commodities being fairly well set up for the containerships. This move from drybulk ladies to containership is not new but with containerships being cheaper and cheaper this commodity is likely to become less and less available for the traditional geared bulk carriers. SCRAP is also another commodity being moved via Containerships. I’m not an expert of the key decisions drivers for this commodity but seems reducing the delay between loading and discharging is one of the main driver. Sure these modern Teu ships are designed to be going through the sea at a much quicker pace than a modern drybulk. Apparently, it’s becoming more and more common to see what would be a drybulk Supramax job to be done on a 1,500 TEU ship. You can find here also how to fill in a container with bulk wheat loading bulk wheat in container and unload

And unlike containerships, drybulk ladies can very hardly ship goods and containers.

As if it were not enough, ageing population also means needs for less food… you can read this about our (g)oldies… hungry oldies

looking great right?

 

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time to invest in shipping? ask the planets

 

Astrology is a good expertise while advising about investing in shipping as per Baltic Exchange article proposed today.

“The nine planets are aligned”, time to invest then. This is according to Baltic Exchange linked here : 9 planets says : INVEST

Interesting analysis proposed by Andrew Hampson on the link above. If I may add a couple of comments

• Maybe the Shipping planet system is bit more than a 9 planets.
• Maybe some planets which are not counted down in the demonstration can put down the whole planets plan.

What if this planet is called « shaky economic outlook a concern »?

Talking about shaky economic outlook you can make up your mind (whether it’s time to invest or nor) by reading this article proposed by same people but posted on line on 27th january 20107 the 10th planet says maybe everything won’t be as easy…

Looks like it’s been a very busy and succesful week-end on the Baltic Exchange team.

Whatever experts say I remember about one year ago (March 2016 some others assests managers where coming to exactly the same conclusion : « Time to invest in shipping and time to buy second hand drybulk ships ».

 

And between us, let’s not be naive:

• Very few assets managers in shipping will declare « guys, keep you money, we’ll find a better timing to invest in shipping »…
• a bit like brokers, very few of them will say « no, let’s not fix this cargo/ship now, let’s wait for better days and you’ll make a better fixture next week/month »…
• A bit like the car sellers, none of them will tell you « think twice, do you really need the brand new BMW I can sell you now ? very openly, I invite you to think again and come back to me next week ? »

For those of you who are running ships right now it’s for sure a tough task to make money out of the chartering activity. This week is likely to be fairly quiet (eventhough you don’t trade with chinese) and should you need a bit of a picture of what’s going on, you can still call us and we’ll try to evaluate in good faith if you have to fix it today or wait for tomorrow.

Jerome

week-end is NOW can still read this before / during your break

Rare enough to be mentionned according to BMTI a SBM cargo has been fixed in the low 20usdpmt ex Lagos to Russia. According to the quotations we received here, could be this one : 25-30,000 MT 10 % MOLOO BULK SOYA BEANS LOAD : 1 SB 1 SP LAGOS LOADRATE : 3,000 SHINC / CHOPT 3,000 FRI 1700 – MON 0800 DISCH : 1-2 SB(S) 1 SP KALINGRAD DISRATE 7,000 SHINC L/CAN 20-30 JAN 2017 FRT TO BE BSS 1/1  INCLUSIVE OF EWRI FREE D/A IN NIGERIA ONLY

To many options mentioned in the cargo requirement to be able to run some accurate estimate to try to find out the Time charter Equivalent.

According to BMTI still, « hanjin bankruptcy is said to have the same devastating potential of Lehmann Brothers in 2008 »… I’m honestly not quite sure this is/will be the case. Remember Lehmann Brothers drama was on front pages of all economics newspaper… Hanjin remain an unknown company for most of the world population (and journalists).

Glad to see BTMI is making some comments on the BHP brokersfree plateform… said with a different tone, the story and analysis remain somehow the same as what I proposed you yesterday. (Maybe BMTI’s reading my prose who knows)

BHP Billiton again… is it time to do some « BHP bashing » ? as a broker I don’t risk much being banned from their panel because of this anyway. Maybe, (repeat Maybe), BHP is planning to put aside 1.25% of each fixture they’re going to make in the future to clean the mess left in Brazil 16 months ago. See more info here

Bunkers ? When OPEC members doing their best to control the overall world production, USA are doing the exact opposite « U.S. oil production, however, has risen by around half a million bpd since mid-2016 to 8.96 million bpd, offsetting significant amounts of any OPEC-led supply cut. »

What else? Tomorrow is the start for new Chinese year, so let’s wish them some great festivities (when we’ll be all bored at the office for 1 week), and in case you managed to make and save some money in 2016, and you’re wondering where to invest, some Feng shui visions are proposed here to go together with the « Rooster year » how to cook the rooster

xīn nián kuài lè

Jerome

are brokers more usefull than a loyal german Shepherd?

Handies Market wise :

USG

Index, today’s BHSI HS4 (USG to Skaw pass) losing bit more than 100pts, with daily value at $11’118 when the mv ‘LAVAUX’ (34,350dwt blt 2010) is reported fixted by MUR at $12,500 dely USG to Morocco. Converted into voyage bss 30’000 10pct wheat Miss River 7000x to Morocco 5000x with 5pct ttl com, this is giving a voyage equivalent at something along 26usdpmt (bss 31500mt loaded). Same biz on an index type at today’s index value and bss 26500mt loaded is giving something like 26.20/26.25 usdpmt.

 

BLSEA :

As mentionned earlier, this area’s looking like not the right place to be for the time being for owners, MUR again reported fixed a 32kdwat dely Canakkale to egypt Med via blsea at 5,250 daily is not really encouraging. This is the kind of level which were done in August 2016, for your records beg december this similar biz was worth close to $9,000 daily.

 

CONTINENT :

We shall remind to the traders some ports are in this area and some of these countries shall be able to produce some good commodities ready to be exported.

 

ECSA :

HS3, is losing today more than 200$ and heading near the 900$ daily mark.Not really encouraging to realize despite the numerous cargoes being done from there, Owners not finding the tools to resist more bravely to charterers ideas.

 

SEASIA/FEAST : don’t bother too much china is about to close for one week.

BROKER’s JOB

Finally, shall I report this info today or shall I try to keep it as secretive as possible ? this is my shakspearean today’s question… The info about BHP Billiton who opened the pandora box and in the meantime trying to close the brokers’ mouth mailbox. The info about BHP Billiton opening up their dutch auction online plateform where owners can enter into the tenders and offer directly their service. The kind of Ebay thing but the other way,which we may call Yabe : the lowest offer making it. You can find details on this news here http://splash247.com/bhp-billiton-bypasses-brokers-new-online-auction-platform/ splash probably overmaking it a bit, trying to be as sensational as the Sun in UK. « Shipbrokers around the world waking up to the shock news […] ». In case you’re interested, I woke up this morning very nicely and quietly, had a breakfast with the kids, walked with the little one to her school and then went to the office. The 3 kids were allowed to put butter AND jam on their french baguette (I know it’s probably bit unreasonable nowadays to put butter AND jam on the same toast but between us, the baguette was the yesterday’s one, so no bread wastage which is a start about savings).

So my morning was ok and very openely this BHP Billiton thing is obviously not the greatest news about our whole industry. But shall we do a drama about it? as

1. we kind of knew this was going to happen at some stage,
2. same methods are already in place on the commodities (see for instance Gasc or Oaic -to name few- tenders)
3. Even when brokers are involved, all charterers asking for BOFFER.

 

BOFFER !

think about it twice, BOFFER standing for BEST OFFER. What’s the point to add this word in the cargo quotation ? It’s fairly obvious charterers looking for the Best Offer. And never ever, even in 2008 we saw charterers quoting a stem on the market, inviting for « an average proposal » or the « worst proposal will win the jackpot ». On a case by case basis, the best offer can be based on so many differents criterias (Laydays, owners counter party, vsl’s intake, freight, vsl’s specs and fitting into restrictions etc.). This BOFFER will be found thanks to people exchanging information.

So we can question:

• how will BHP Billiton handle their on-line brokerfree plateform when they need something bit different ?
• Do they really believe owners will forget the way they were treated when (one day) the market will get back into their favor. Again see how many offers GASC got from the traders when the Egyptians went with their 0 tolerance in regards to ergot (for those who did not follow, they got 0 offer… neither a BOFFER nor a WOFFER (Worst Offer)).

All in all this brokerfree system might be the future for the big guys. Then it mainly concern the big brokers houses. Trading houses (not industrials) will surely still need the work of brokers to fit into their needs and Owners will still need brokers to have a visibility on what’s going on the market. These traders will still need niche brokers with some specific expertises. These niche brokers, bringing back market news, without barking but with a waiving tail. As a loyal companion these niche brokers will remain gently waiting for the orders from their principals.

So far Pelagos have managed to remain a niche broker and you bet we invite all of the readers of this report to do their outmost to remain niche players, if not, then to keep doing from time to time niche businesses in this case we’ll remain your loyal German shepherd.

Have a nice day

Rin Tin Tin

 

shipping market needs pills, a therapy, and good prays

Therapy first

I know some of the readers are sometimes complaining about my reports being negative and not very encouraging for Owners. Believe me I would have loved to be in position to write down these reports back in 2006/2008 and making great comments about the craziness of the shipping market. But we are something like ten years after and unfortunately the market is everything but not crazy. We can assess unreasonably low or boringly depressed, probably still crazy but not in the sense of what shipping people were having in mind 10 years ago. Talking about depression, maybe shipping market need less experts and more psychologists work. Our salvation may come from a deep market therapy. Who wants to start ?

then swallow the pills

On 18th jan, I was highlighting you the panamaxes fixed delivery ECSA for beginning february for destination to Spore Japan range done on average at $9,250 + $420,000 for the ballast bonus. BPI at that time was on the P1A_03 skaw gib trans atlantic round voyage at $10,083. Today, according to BDI, same route is at $9,637 and fixtures done remain almost on the same level. We can just realize (for those of you doubting about the interest of the ballast bonus) ballast bonus seems to be the perfect tools for charterers to negotiate with owners. You get your rate at roughly $9,000 daily. And what about Ballast Bonus ? some lucky owners getting $430,000 some others bit less lucky (depressed or on the way to be depressed ?) getting almost half of this money. On DOP basis (yes it still exists, market is not dead), owners of mv «’SUDESTADA » obtained $6,900 daily. Without doing the maths and the equivalent on the aps + bb easy to conclude owners are happy to have the ship hired for probably 90/100 days. And charterers happy to have a low daily hire, in case loading operations getting delayed, as it can easily be in ECSA.

On the handies, we can wonder what’s going on in continent. Wondering what’s going on with the grains, leaving a « boulevard » for fertilizers players to drag down their fixing ideas to go to USG. Ex BLSEA, according to information we can gather, rough weather conditions seems to be freezing the supply chain, leading to a slow down in stem availibity, hence less ships demand.

On the commodity market, according to reuters,  here . Algerian are investing money to develop 25,000 hectares for covering various agriculturals needs (a step to become less dependant to oil exportation). For sure, still more to be done to the road of wheat autonomy as 25,000 hectares (assuming all for wheat) with generously 8mt of wheat/hectare/year bring something like 200,000mt of wheat. This would be the equivalent of six to seven stem of 30’000 10pct. It does not necessarly means less shipments in total but to the contrary, to be positive, it could means shipments from Algeria to France in the future (if the French wheat crop is crap again)…

Do your homework

Shall we talk a bit about politic ? no we shall not as we want to remain friends right. So let’s take it on the economic side of it. As you know Mexicans seem not to be best Donald J. Trump’s friends (when the mexicans coming into USA) but according to below figures, American’s seems to be fairly happy to help mexicans knowing the US agricultural sector in 2015 exported agric goods worth $17.69 bn to Mexico. To try to summarize in Donald J Trump’s style “why do they need to cross the border illegally, we are selling them the whole food they need?”. See below the details of exports from USA to Mexico in $.

usa agri prods to Mexico

and pray

Shall we talk about Religion ? really no but be sure we religiously do our best to fix in respecting your own interests.

Have a nice afternoon

Jerome

#Shipping is a risky business. Be aware

Tom Cruise knows what’s risky, what about our Owners? and Charterers?

Today’s jan 24th 2017 London is holding the 2017 Maritime Risk Forum 2017. Where people will talk about insurance in shipping. Who knows, maybe the speakers at this event read my market report sent to you on 5th jan post, the one talking about Lloyds who bet (and lost) $50million on Carrie Fisher’s presence for the next Star war episod. I doubt they did.

Despite this forum being surely full of very interesting guys, with lot of very good insight, really, I think none of us shall read and follow what’s reported being said during this event on twitter under the #mrf2017.

Insurers remain insurers and their job is to try to anticipate every kind of risks on which they could put an insurance policy against some $ for the coverage. Is their job about warning the shipping community about the risks which are likely to happen or scare all of us so nothing being done without getting covered with the belt and the braces ?

Every single business and company need to be well covered. I’m afraid then you’ll have no other choice than, at some stage, understand what’s said during this forum and to be fair, from what I have seen, some interesting information can be found

To start with something, on cover page, the organizer of this forum make the following statement :

« Minimizing risk and reaping the financial benefits requires the attention and focus of senior management. But when Moore Stephens reported recently that 20% of survey respondents report that managers only get involved if risks materialise, that 10% show only passing interest in risk management, and 1% have no involvement at all[…] ».

You then out of a sudden realize when your risks has become an incident or accident or a reality, you can count on insurers assistants/ junior teams to help you find out the solution at your issue. During that time, the managers are probably doing wonderful power point/ key notes to the attention of the shareholders of the Company.

About autonomous ships :

On one side, some stating the emergence of « Autonomous ships » will be driven by economics, when on the other side same guy stating that safety should come first in the drive for autonomous ships, not economics, (said by Mark Dickinson from Nautilus). After autonomous ships, without being sarcastic, in the same agenda, the theme « risk mitigation in crewing » is proposed. The solution is obvious : launch 100% autonomous ships at sea and you’re done with the crewing issues.

About Cyber risks :

You can read « It is not an exaggeration to say that cyber crime has the potential to destroy maritime companies » That’s scary !! and that is probably true (we can ask Hillary Clinton what she thinks about this). And to face it, Cyber crime is not anymore a concept on which only dumbs/unaware people replying to the email sent by Mr Cresus Widow proposing to share her fortune.

Finally, still on the agenda page of this forum, we can read our « insurers also facing both internal and external risk » and « underwriters have to justify their performance at a time when their clients are struggling in a flat maritime market » see here … Clients of the insurers are Owners right ? So who’s a volunteer to disclose to insurance companies the shipping market has not been flat in the last couple of years but to the contrary let’s call it a declining environment. Trust some owners would be more than pleased to face a market declining by only 10.5% as mentionned still by insurers « With global marine premiums falling by 10.5% in 2015 »

 Talking about risks still

Bmti is mentionning about the Piracy (Containers market review section) and noticeable facts :

• 2015 : 246 piracy incidents reported
• 2016 : 191 piracy incidents reported
• 2016 : lowest piracy incidents reported year since 1998

2016 5 hot spots for piracy in 2016 :

• Indonesia (49)
• Nigeria (36)
• India (14)
• Peru (11)
• Philippines (10)
• These 5 areas counting for close to 50% of the worldwide piracy incidents.

And this section is concluded with the following « As the IMB (International Maritime Bureau) depends on information from shipmasters and owners it can’t be sure that all of the incidents that happened were reported as some owners probably prefer to hide the incidents for the risk of higher insurance costs being demanded thereafter. »

Piracy seems not to be on the agenda of the Maritime Risk Forum… is it because now Owners aware of the higher costs to get covered ?

What about chartering market ?

The time to make money to pay underwriters is not yet arrived. Again all BDI indexes (yesterday and today) are in the red (except today panamaxes +2pts… the pre Chinese new year expected surge !)

On the handies, to convert the BMTI mentionned« USG 30’000mt wheat to algeria in the high US$20s/mt » into Tct and bss 1sp Miss River 7000x to 1sp algeria 32’with 2500x out. According to our abacus equivalent made on a 34kdwt modern able to load something like 31’500mt:

• 28 usdpmt = tce @ usd 9’600/ day aps
• 29 usdpmt = tce @ usd 10’325,22/day (sometime important to be precise) aps
• 30 usdpmt = tce @ usd 10’987/day aps

Same but bss a ship able to load 33’000mt

• 28 usdpmt = tce @ usd 10’220/ day aps
• 29 usdpmt = tce @ usd 10’900/day
• 30 usdpmt = tce @ usd 11’560/day aps

When for your perusal, today’s index is at $11’286 on index type lady for the HS4.

And the mentionned of « same cargo ex plate to algeria being fixable at similar level » bss 31’500mt 1sp upr 7000x to algeria 2500x equivalent made on a 34kdwt modern able to load something like 31’500mt:

• 28 usdpmt = tce @ usd 8400/ day aps recalada
• 29 usdpmt = tce @ usd 9’000/day aps recalada
• 30 usdpmt = tce @ usd 9’650/day aps recalada

Same but bss a ship able to load 33’000mt

• 28 usdpmt = tce @ usd 9’000/ day aps recalada
• 29 usdpmt = tce @ usd 9’600/day aps recalada
• 30 usdpmt = tce @ usd 10’200/day aps recalada

When for your perusal, today’s index is at $9’519 on index type lady for the HS3.

When also please note these estimates are based on APS bss and are pretty unlikely to be exact owners final revenue, being understood the local candidates shall have to swallow at least 3-4 days on average of ballast.

4 days being a minimum, today’s panamax fixture reported in the BDI, mv’Georgios S’ 2001 74249 dwt dely ECSouth America 10 /12 Feb trip redel Mediterranean $12,400 daily – Nidera  this ship is according to our Marinetraffic research ballasting from Mundra, she’s then doing a 28days ballast for a $12’400 deal. Which calculated bss DOP is giving to owners a poor sub US$ 6’000 daily. Out of this $6’000 daily, how much is going to the various underwriters ?

Have a nice fixing day and be safe

Rgds

Jerome

 

 

 

happy or sad shipbrokers? #shipping

For once, let’s take it from a broker prospective.

You have the happy one

(“OMG, they just lift the subs!”)

the one who fixed this well named mv« Majestic Sky » for 62’000 10 ferts from Klaipeda to N.china reported done at 29usdpmt. Assuming the broker took the standard 1.25% (unless this is done via a big broker house pretending to be direct with both owners and charterers but in reality Paul in the asian office is handling the relationship with the owners and Patrick based in Geneva is handling the relationship with the charterers, which makes 1 company in between but 2 offices and 2 brokers payroll), then on the basis of 1 brok com, it’s something like this is the kind of fixture any brokers would be pleased to fix once per day. On the basis of 68200mt loaded (majestic sky is a 82kdwat) this ends up to be a $23’000 commission ($11’500 for Paul and Patrick alternatively).

Then you have ones wondering if they shall have been involved in the fixture

(“OMG, don’tell me they just lifted the subs!”)

The one who fixed the mv « nautical Amethyst » 57kdwat from CJK to West Africa reported done at $1’500/day for 70 days then $5’500 daily afterwards. Assuming the broker took the standard 1.25% (unless this is done via a big broker house pretending to be direct with both owners and charterers but in reality Jack  in the asian office is handling the relationship with the owners and Philip based in Geneva is handling the relationship with the charterers, which makes 1 company in between but 2 offices and 2 brokers payroll), then on the basis of 1 brok com, it’s something like this is the kind of fixture any brokers would be pleased to fix max once per day. On the basis of 70 days duration this ends up to be a $1’312.50 commission ($656.25 for Jack and Philip alternatively). If duration is 71 days, then you can add 68.75usd to be shared equally. If Jack and Philip have to call each other more than once to sort out some issue on this fixture, let’s hope they have access to skype. Otherwise it’s ending up to be a costy fixture for the brokers.

Trust the above is summarizing quite well the market situation. So much unbalanced between Atlantic and FEAST. We have not tried to understand Owners key decision maker to make them accept $1500 daily but no needs to be a genius to understand for owners it pays the ballast bunkers, it’s pays the cigarets and then once open in Wafr, he may be able to get $10’000 daily dely ecsa redel Skaw.

It’s still bit early to know if next fixture of mv ‘nautical Amethyst ‘ is going to be fixed by  Paul and Patrick or by Jack and Philip.

If you still have a bit of time ahead of you, you should find out Bmti today report somewhere as they’re talking about our friend UBER (or a looklike) who’s knocking at shipping doors. Does it mean brokers will become one day useless. As brokers I don’t think so. For sure not the ones bringing you bright market reports. I like to believe in it anyway.

Then you have us, always happy to fix

(fixed! what’s next?)

As you know our fuel here is the joy of fixing, the joy of bringing the right service, the commission is only the cherry on the cake. We are like that at Pelagos.

Jerome