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ECONOMCS CH3
ECONOMCS OF SEA TRANSPORT AND INT TRADE
| WHAT HAS BEEN LEARNT ABOUT SHIPPING CYCLES | 1. THEY ARE UNPREDICTABLE AND CANNOT BE FORECAST. 2 THE CYCLES REMOVES THE IMBALANCE BETWEEN SUPPLY AND DEMAND. |
| HOW MANY STAGES OF THE CYCLE ARE THERE AND WHAT ARE THEY | 1 TROUGH 2 RECOVERY 3 PEAK/PLATEAU 4 COLLAPSE. |
| WHAT ARE THE CHARACTERISTICS OF A TROUGH | 1 A TROUGH IS EVIDENCE OF OVER SUPPLY 2 OWNERS CONSIDER SLOW STEAMING 3 FREIGHT RATES FALL TO NEAR OP COST 4 LAY UP LEAST EFFICIENT VESSELS 5 CASH STRAPPED OWNERS SELL SHIPS AT DISTRESS PRICES. |
| EXPLAIN THE CHARACTERISTICS OF THE RECOVERY STAGE. | 1 SMALL INCREASE IN FREIGHT RATES AS SUPPLY & DEMAND MOVE TOWARD BALANCE 2 FALLS IN LAID UP SHIPPING 3 MKT UNCERTAINTY STILL REMAINS |
| EXPLAIN WHAT HAPPENS AT THE PEAK/PLATEAU POINT. | 1 NO SURPLUS CAPACITY AND FREIGHT RATES ARE HIGH 2 ONLY UNTRADEABLE VESSELS ARE LAID UP 3 BANKS ARE KEEN TO LEND 4 SHIP BUILDING ORDER BOOK ON THE UP |
| EXPLAIN WHAT HAPPENS DURING THE COLLAPSE. | 1 OVERSUPPLY OF VESSELS AS NEW BUILDS FLOOD THE MKT 2 SPOT VESSELS ARE ON TE INCREASE PUSHING FREIGHTS DOWN. 3 SHIPS START TO SLOW STEAM. |
| WHAT TWO WAYS CAN THE SUPPLY OF SHIPPING BE ALTERED | 1 ALTERING THE STOCK OF VESSELS BY SCRAPPING OR NEW BUILDS 2 CHANGING THE UTILISATION OF EXISTING STOCK |
| WHAT USES CAN VESSELS BE USED FOR STORAGE. WHAT ARE THE PRO'S AND CONS | FOR TANKERS JAPAN USE THEM AS STRATEGIC SUPPLIES. C 57 IN 2010. ALSO DRY BULK CAN BE USED AS GRAIN SILO'S. THERE ARE COSTS TO CONVERTING AND MAY NOT BE QUICKLY PUT BACK IN THE FLEET |
| WHY WOULD YOU LAY UP VESSELS | WHEN FREIGHT RATES DONT COVER THE OPERATIONAL COSTS, SOME OF THE VARIABLE COSTS ARE AVOIDED.MAINTENANCE WILL STILL BE REQUIRED AND VESSELS CAN BE BROUGHT BACK ON STREAM WHEN MKTS PICK UP. |
| WHAT IS THE BENEFIT OF SLOW STEAMING | ALL VESSELS HAVE DIFFERENT RANGES. LARGE SAVINGS OVER THE FLEET IF DONE AND ALSO SERVES TO REDUCE THE AVAILABLE SUPPLY. |
| WHY ARE SHIP OWNERS LOOKING TO HAVE CARGOES BOTH WAYS | TANKERS FIND THAT THEY ARE INVARIABLY IN BALLAST FOR THE RETURN LEG, BUT OWNERS OF OTHER VESSELS TRY TO LOAD ANOTHER CARGO TO CONTRIBUTE TOWARD COSTS. |
| WHY IS REDUCING PORT TIME IMPORTANT | WHEN THE VESSEL IS IN PORT IT IS NOT EARNING. THEREFORE QUICK TURNAROUND INCREASES AVAILABILITY. MANY OWNERS NOW OPERATE THEIR OWN TERMINALS LIKE MAERSK. |
| WHATS BEEN THE TREND IN THE MERCHANT FLEET OVER THE LAST 40 YEARS. | AVERAGE FLEET GROWTH OF 3.41 % ON GRT AND 3.19% ON DWT. STRONG GROWTH BETWEEN 1971-1977 AND 2002 - 2008. |
| HOW DID THE GROWTH START IN THE EARLY DAYS 1957-66 | 1.SUEZ CANAL WAS BLOCKED BY EGYPT 2 SAILING AROUND THE CAPE CREATED SHORTAGE IN SUPPLY 3 HIGH FRATES AND INVESTMENT FOLLOWED 4 COMPANIES SIGNED C/P FOR VESSELS NOT YET BUILT ON HIGH FRATES. 5 SHIP YARD DOUBLED OUTPUT PUSHING RATES LOW AND PROFITS HIT. |
| WHAT HAPPENED DURING 1966 - 1975 | 1 7 PROSPEROUS YRS. FRATE ON TANKERS HIGH 2. OBO CARRIERS SHIFTED TO CARRY OIL 3 INDUSTRIAL OUTPUT INCREASED 1972-73 4 LYBYAN OIL RESTRICTED NEW REGIME 5 ECONOMIC GROWTH MAJOR COMPONENT 6 SHIP YARDS COULDNT COPE - FLOOD 7 TANKER MKT COLLAPSED IN 73 |
| WHAT HAPPENED DURING 1975-88 TANKERS | 1 TANKER MKT DEPRESSED UNTIL 1988 2 OVER SUPPLY OF TANKERS FROM GOOD YEARS 3 HIGH OIL PRICES REDUCED DEMAND 4 SHIP BUILD CAPACITY INCREASED MARKEDLY 5 CRUDE SHIPMENTS DECLINED BY 30% 6 SHIPS SCRAPPED TO REDRESS S/D BALANCE 7 1986 1ST SIGNS OF RECOVE |
| WHAT HAPPENED DURING 1975- 1980 BULKERS | 1 1975-1978 VERY DEPRESSED 2 SOME DRY TRADES SHOWED SEASONAL FLUCTUATIONS 3 1978 SAW RECOVERY START 4 BULK COMMODITIES STARTED TO GROW 5 HIGH OIL PRICE MEANT THERMAL COAL TRADE BENEFITED 6 PORT CONGESTION REDUCED SUPPLY |
| WHAT HAPPENED DURING 1980 - 1989 BULKER | 1 WORLD RECESSION HITS 2 FALLING OIL PRICE AND STAGNANT COAL TRADE PUSHED RATES TO UNPRECEDENTED LEVELS. 3 OWNERS BUY CHEAP VESSELS IN HOPE 4 WHEN DELIVERED ECONOMY HADNT RECOVERED LEAVING MASSIVE SPARE CAPACITY 5 DISTRESS SALES AND FORECLOSURE |
| THE SHIPPING CYCLE 1989 ONWARDS TANKERS | 1 HEAVY SHIP ORDERS BETWEEN 1988-91 BASED ON AGEING FLEET REQ REPLACEMENT, SHIP BUILDING CAPACITY SHRUNK AND EXPECTED DEMAND 2 NONE OF THE ABOVE HAPPENED AND MIDDLE EAST TRADE STAGNATED AS RECEIVERS LOOKED CLOSER TO HOME. 3 TANKER RECESSION 1992-1995 |
| THE SHIPPING CYCLE 1989 ONWARDS DRY BULK | 1 VERY FEW SHIP ORDERS DURING 1988-1991 2 RECESSION IN 92 - NEW SHIPS EASILY ABSORBED 3 FIVE GOOD TRADING YRS. PEAK IN 1995 4 HEAVY INVESTMENT IN SHIPS 1993-95 5 SHIPS DELIVERED AND RECESSION HIT. |
| WHAT ARE THE TRENDS IN NEW BUILDS NOW | 1 39% OF GT MADE BY CHINA (2011) 2 ORDERS IN 2009-11 SLOWED 3 BOOM OF DELIVERIES FOR VESSELS ORDRED PRE 2009 4 MOST SHIP YARDS REDUCED CAPACITY |
| WHATS TRENDING IN THE DEMOLITION MKT NOW | 1 INDIA MAIN PLACE FOR OLD CONTAINER SHIPS 2 SHIPS MOSTLY AGED BETWEEN 20-40 YRS (30 MOST) 3 TANKERS YOUNGER AS REGULATIONS BITE 4 2011 SAW 3% RISE IN SCRAPPING YR ON YR 5 MAIN INCREASE DRY BULK AS NEW VESSELS FUEL EFFICIENT. 3 |
| WHATS HAPPENING IN THE IDLE TONNAGE CURRENTLY | 1 LESS THAN 1% OF THE MERCHANT FLEET IDLE 2 LNG CARRIER LARGEST % IDLE |
| WHAT ARE THE TRENDS IN SLOW STEAMING | 1 HAS ALLOWED CONTAINER VESSELS TO ABSORB OVER CAPACITY 2 CONTAINER RANGE IS NOW 15-20 KOTS 3 BUSINESS HAS NOW ADAPTED THEIR STOCK LEVELS TO ACCOUNT FOR THE SLOWER DELIVERY TIMES SO ITS UNLIKELY TO CHANGE 4 SAVINGS OF 3-4% |
| SHORT TERM: IF THE STOCK OF VESSELS WAS FIXED AND THE FLEET RELATIVELY IDLE, HOW WOULD SUPPLY REACT TO INCREASED DEMAND | THE SUPPLY OF VESSELS CAN REACT QUICKLY AT FIRST AND SO THE SUPPLY LINE WOULD BE ALMOST HORIZONTAL. AS SUPPLY AVAILABLE REDUCES THE LINE GOES TO NEAR VERTICAL IN A REVERSE L SHAPE. NO MATTER WHAT FREIGHT RATE IS OFFERED. |
| LONG TERM: |
Created by:
KJPARKER28
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