Sea Views: Dry bulk predicted to give way to containers

According to a leading shipping consultant, the border between dry bulk and container shipping is about to be breach-ed. Quoted by Schednet Newsletter, Niels Kim Balling, of Econships Ltd, is confident that container shipping is about to gain significant tonnage from the dry bulk sector due to various new operating factors.

Balling said: "Dry bulk spot rates have now reached a new high (in recent times) of about $30 per ton for basic raw materials. This could set the stage for a significant containerisation of some of the 'minor bulk' markets, as much of it moves in the so-called 'empty legs' of the container trades."

He went on to say that, including inland transport and handling costs, the container lines can now compete very effectively with bulk transport, for example, scrap and animal feed from the US to China.

He also said the trend was applicable to other regions such as Europe and Latin America and that he believed these markets were about to show marked improvement helped by the consistency of demand from China – the 'China factor' – which was unlikely to stall in the foreseeable future.
Balling predicts that these factors will cause an improved container equipment balance to ease one of the most costly issues the industry has had to contend with for the past decade.

He added: "What we might see in the next decade or so is, therefore, a slightly lower top-line growth but a fundamental improvement of the container operators' profitability." Commenting on the 'China factor' as a significant mover in the containerisation-dry bulk scenario, he said: "Obviously many parties are questioning whether the China effect is actually sustainable.

The answer is a clear yes when one considers the two statistical facts that the China economy is already split 50:50 between trade and domestic demand, with the domestic demand growing slightly faster than trade."

IRA plans four rate hikes

Members of the Informal Rate Agreement (IRA), which covers trade from the Far East to the Middle East, have announced they will implement four rate-rises next year.

From April 1, the rate increase per TEU will be $200, with $400 being levied per FEU. This will be repeated from July 1 and again from August 1 as a peak season surcharge.

The fourth increase will be $100 per TEU and $200 per FEU, but no date has been given.

Stelmar gets new vessel

Stelmar Shipping Ltd. has received the Cabo Hellas, a 2003-built double-hull Panamax tanker. The newbuilding is the first of the 11 new vessels that Stelmar expects to receive from late this year through to September next year.

The company predicts this programme will increase its operating capacity by 29 per cent next year and by 9 per cent in 2005.

In addition to the Cabo Hellas, Stelmar will receive delivery of four Panamax tankers by next June, which will make the company the largest owner of modern Panamax tankers. Three of these tankers have already been signed to profitable time charter contracts and two include profit-sharing agreements.

– Frank Kennedy is a Dubai-based marine consultant