2019 Ends with plethora of newbuilding and S&P deals
Ship owners have sought to seal a number of deals prior to the end of 2019, both in the newbuilding and the second hand markets. In its latest weekly report, shipbroker Allied Shipbroking noted that “things remained interesting for yet another week in the newbuilding market. In the dry bulk sector, we witnessed an another good rally for the Kamsarmax size segment, which saw its Orderbook boosted by 4 (optional + 4) units. This may have caught many by surprise, given the steep negative pressure that the overall dry bulk market is currently under. However, seeing the year-to-date decrease of more than 35percent of the Panamax-Kamsarmax Orderbook (while the orderbook to fleet ratio still remains below the 10percent mark), current trend makes more sense.
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Shippers urged to take another look at cargo insurance
A fundamental misconception of risk is causing many shippers of ocean freight to completely overlook the need for cargo insurance of any kind and to cover against a multitude of eventualities. Many industry professionals fear the endemic perception that insurance is unnecessary or not worth the expense is unlikely to change in the foreseeable future.
One estimate is that more than 90 percent of all cargo imported into the United States (US) does so without any insurance, according to the US-based Association for Trade Compliance (ATC). Steve Fodor, Director of the ATC said that cargo insurance costs less than half a percent of the shipments value, on average most importers don’t purchase coverage.
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A rollercoaster year for the capesize market
The Capesize dry bulk market experienced another rollercoaster year in 2019, beginning in dire straits, improving gradually, then rallying, before retreating once more as the year faded. In its latest monthly report, shipbroker Banchero Costa quoted as saying that “spot charter rates for Capesize bulkers started very poorly in 1Q2019 but recovered very strongly in Q2 and especially in Q3, before softening again towards the end of the year.
In the first 11 months of 2019, the Baltic Capesize TC index averaged 17,805 USD/day, +7.8percent compared to 16,510 USD/day during the same period of 2018. In the first 11 months of 2019, the Baltic C3 Route averaged 18.43 USD/t, -0.7percent y-o-y, the Baltic C5 Route averaged 7.63 USD/t, +0.9percent y-o-y, and the Baltic C7 Route averaged 9.58 USD/t, +0.6percent y-o-y”.
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IMO transition charges kick-in
Carriers test new IMO charges in the spot market, which are implemented and accepted on some routes. Huge disparity in charge levels. Most carriers have implemented so-called “IMO 2020 transition charges” from 1 December, leading to higher spot rates, although some forwarders are starting to pay them only from 1 January. Independent, verified market spot rate data from the World Container Index assessed by Drewry confirms that rates on from Shanghai to Los Angeles increased by 14percent in the first week of December and this was followed by an increase of 17percent in rates from Shanghai to Rotterdam in the second week. It is too early to say whether these increases are sticking. Previous general rate increases did not stick.
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Challenging the solas fire regulations for container vessels
Are – Alf Martin, you were one of the prime movers in putting together the Gard conference on containership fires in October. I think it is worth reiterating the point made by many at the conference – the approach to solving the problem with containership fires requires a holistic approach and contributions from all the various stakeholders. Container lines need to figure out how cargo can be safely booked and accepted. Contents of containers must be verified and booking information must be better communicated between the parties in the logistic chain. Problematic shippers, those that mistakenly or fraudulently mis-declare dangerous cargo, must be stopped.