Shipping’s resilience buffeted by threats
In 2024, the shipping industry has been caught in a maelstrom of challenges that threaten to destabilise global supply chains, endanger crew safety, and derail progress made on environmental sustainabilit.
Allianz Commercial’s annual Safety and Shipping Review, due to be published later this month, has examined emerging risk areas and proposed solutions to navigate this turbulent landscape and build a more resilient industry.
In an article adapted from the upcoming review, Allianz Commercial’s experts noted that the conflict in Gaza has transformed the Red Sea into a perilous environment for commercial shipping, with a drastic rise in attacks on merchant vessels. Allianz Commercial recorded more than 50 attacks against merchant shipping in the Red Sea by Houthi militants between November 19, 2023, and the beginning of April 2024.
Chinese ship owners take the lead over Greeks in newbuilding volume orders
While Greek newbuilding orders are still among the highest, Chinese owners appear to be taking the lead when it comes to total numbers. In its latest weekly report, shipbroker said that “we’ve been closely analyzing the Greek orderbook and the ongoing race for the top spot between Greece and China. Across the four main vessel categories – bulkers, tankers, containers, and gas carriers – the Chinese orderbook stands at 544 orders, with the Greek orderbook trailing closely behind at 525. Japan comes in a near third place, with over 200 more orders than the fourth-place contender (Singapore). Currently, Japan has 435 vessels on order, with a breakdown of 226 bulkers, 74 tankers, 24 containers, and 111 gas carriers. Nearly 40 percent of Japanese orders (173 out of 435) are placed in domestic Japanese yards. This translates to 117 bulkers, 25 tankers, 13 containers, and 18 gas carriers. Notably, Chinese shipyards hold a significant share of Japanese orders, accounting for roughly 33 percent (144 vessels).
Tankers: dark fleet servicing Iranian trade flows still in play
Tanker market delegates are closely monitoring the latest developments regarding Iran’s oil export trade and the potential for additional measures against it. This, in theory, could have an impact on future tanker supply. In its latest weekly report, shipbroker said that “despite operating under long running sanctions, Iranian crude exports continue to flow. The large shadow tanker fleet as well as the network of traders and financial intermediaries that make this trade possible has occasionally faced sanctions enforcement. US Treasury officials have recently been in Malaysia and Singapore to have discussions with local players about the ongoing presence of large-scale Ship-to-Ship (STS) operations of sanctioned Iranian, Venezuelan crudes off the Malaysian coast. The basis of this latest action involves concerns that Iran is using this region to generate revenue to finance its proxies and terrorism in the Middle East”.
Dry bulk market: capesize market under pressure
This week, the Capesize market saw a steady decline, with the BCI 5TC beginning at $25,773 and dropping daily, except for a modest rise of $962, ending the week at $22,180. Despite healthy cargo volumes in the Pacific, market activity was sluggish as the week got under way, partly due to holidays in Asia. The derailment of a Rio Tinto train in Western Australia did not significantly impact the market. Activity in the Pacific increased significantly throughout the week, leading to the market finding a level and a positive turn by the week’s end. The C5 index rose by 0.521, closing at $10.656. In the Atlantic, the South Brazil and West Africa to China market also softened, at the early part of the week with an increasing list of available tonnage in ballast, which contributed to declining rates. However, the week ends on a positive note, with reports of improved fixtures on C3, causing the index to rise by 0.314, reaching $25.094.
Bullish tanker market makes it harder to spot potential downward risk
The tanker market’s bullish nature lately, is making it harder to spot potential downward trends. In its latest weekly report, shipbroker said that “a closer look at the TD3C route (MEG/China) could help us argue that trend patterns look fairly consistent with those being noted in other size segments and types of trade (i.e. LR2 TC20 analysis a couple of weeks back). Year-to-date, this route indicates less upward potential too, as the short-term spikes being noted periodically have met lower resistance levels at the same time. Around 2 loadings per day above current mean of trailing 6-month (mid Dec ‘23—mid May ‘24) range of weekly average of daily loadings did stimulate the Feb ‘24 brief rally, while the later 2 peak levels that took place, this excess number of loadings was roughly halved”.
Ship recycling market sees steady flow of ships
The ship recycling market has seen a steady flow of vessels over the course of the past week, mainly from the container and dry bulk segments.
In its latest market report, Best Oasis (www.best-oasis.com), one of leading cash buyers of ships worldwide, said that “the recycling market across various regions exhibits varying trends and challenges. In India, the market is experiencing a robust upward trajectory, driven by strong local demand and a consistently healthy demand for steel, which bolsters the market’s overall health and maintains its growth. Conversely, in Bangladesh, market demand remains tepid and unchanged, displaying a lack of aggressiveness. Additionally, the Central Bank of Bangladesh’s adjustment of the Taka’s value complicates financial transactions, affecting the recyclers’ ability to arrange LC at a favorable rate. Pakistan’s recycling market is facing a period of stagnation, with no significant activity or momentum, making it difficult to predict when the market might pick up again”.