The digital journey shipping companies are making to recover from the pandemic years
Shipping companies are focusing on the future and increasingly turning to digital technology to streamline operations, become more efficient and make cost savings.
Whilst prior to the COVID-19 pandemic many had been slow to embrace digital technology, now companies recognise it can be a way to become more agile, adaptable and competitive.
A report by Inmarsat last year highlighted that the pandemic was a “universal disruptor and catalyst for digital transformation” and the adoption of digital technology in the maritime sector will be three years ahead of previous estimates by the end of this year.
The reasons for this is that, like all industries when the pandemic struck, shipping companies needed to find new ways of working as lockdowns, remote working and people stuck on ships for months on end changed how they worked.
EU now responsible for 24.3pc of global seaborne LNG imports
Europe’s demand has been driving a surge in US LNG exports. In its latest weekly report, shipbroker said that “global seaborne LNG trade has continued to surge this year, helped also by the events in Ukraine. In the first 9 months of 2022, global shipments of LNG increased by +6.0 percent y-o-y to 300.6 mln tonnes, based on Refinitiv vessel tracking data. By far the biggest increase in demand this year came from Europe. In Jan-Sep 2022, the European Union imported 73.2 mln tonnes of LNG, an increase of +69.3 percent y-o-y from the 43.3 mln tonnes imported in the same period of 2021. The EU27 now accounts for 24.3 percent of global seaborne LNG imports. In the same period, the United Kingdom also imported 13.7 mln tonnes of LNG, up +73.5 percent y-o-y from the 7.9 mln tonnes in the same period of 2021. The UK now accounts for 4.6 percent of global LNG imports”.
Transparency in shipping’s digital age
Digitalisation may prove one of the maritime industry’s most effective tools to face multiple challenges posed by decarbonisation, recruit-ment and even diversity, according to WISTA International President Despina Panayiotou Theodosiou.
As co-CEO of leading satellite communications and digital solutions provider Tototheo Maritime, Despina Panayiotou Theodosiou knows all about the impact connectivity has on commercial ship efficiency, but her mind is also constantly probing for links between progressive technology and Environmental, Social and Governance concerns.
“New technologies and digitalisation are there to help us achieve our goals, but it is important to remember that they are not the solution in themselves,” she says. “The focus should be on how technology is used and the benefits or opportunities it can offer.”
Tanker market’s course to be determined by demand, not supply
OPEC’s decision to move ahead with significant oil production cuts, will add pressure to the tanker market as well. However, according to shipbroker, any downward pressure will likely be a product of lower demand, rather than supply. In its latest weekly report, shipbroker said that “last week, OPEC+ agreed to make production cuts of 2 mbd for the next 14 months from November 2022 to December 2023, representing a 2 percent reduction in global oil supply. This stemmed from a concern that the oil market is now out of balance which has put downward pressure on oil prices. Meanwhile a stronger dollar and a deteriorating economic outlook are impacting the demand outlook and thus reinforcing the pressure on oil prices. Crude prices rose on the news of OPEC’s decision but have yet to breach the $100/bbl mark due to the broader demand concerns outweighing the reduction in supply. The question now arises as to how effective these cuts will be in supporting oil prices and what impact this could have on the tanker market. In addition, it also raises further questions about the future of OPEC relations with leading oil consumers such as the US, following President Biden’s criticism of the plan and how this could accelerate the energy transition”.
Dry bulk market softens this week
The Capesize market softened this week as a lack of fresh cargo and activity, particularly in the Atlantic hampered, efforts to push higher. The Capesize 5TC lowered 1909 over the week to settle at $17,965. A small uptick in sentiment to end the week may be a sign of resistance by owners to not allow rates to fall lower. The Pacific market had a flurry of West Australia to China fixtures at the close, which pushed the Transatlantic C10 up to $13,318, while the Transatlantic C8 still provides a healthy premium now pricing at $25,139. Brazilian trade activity to the Far East was an area that looks likely to continue softening. The C3 dropped 1.434 over the week to $23.233 with earnings on the route pricing slightly lower than the Pacific and North Atlantic. Some owners considering a last long-haul ballasting trip before the year ends will be met with limited options in what has been a largely disappointing final quarter to date.
Tanker market gathered strength during September
The tanker market recovered part of the lost ground, as the month of September shows clear signs of improvement. In its latest monthly report, OPEC said that Very Large Crude Carrier (VLCC) rates continued to gather strength in September, with gains seen on all major routes. Spot VLCC rates on the Middle East-to-East route rose 26 percent, while on the West Africa-to-East route, they gained 23 percent. Suezmax and Aframax rates came down from the elevated levels seen since March. Suezmax rates on the US Gulf Coast (USGC)-to-Europe route declined by 7 percent, while Aframax spot rates on the Cross-Med route declined by around 13 percent. All monitored routes were well above the levels seen in the same month last year. Clean rates saw diverging trends, with gains East of Suez and declines West of Suez. On the Middle East-to-East route, clean spot rates rose by 13 percent m-o-m in September.