Top 100s, Top 20s, Reviews of the Year
Top 100s, Top 20s, Reviews of the Year – all the rage at this time of year. A bit of fun by themselves and not much harm, they provide a good opportunity to rank and review who has done what in the past year and even what we might expect.
It might be the nature of the new mass media world that we live in, but not only does time appear to run faster, we also forget more quickly. Looking back I found plenty of reminders of what I had already forgotten, much of it informative for 2012.
The year began with a terrible dry bulk market and bad news coming in the form of tonnage oversupply, doom-laden freight rate forecasts and the short term impact of floods in Australia. This saw the publication of the first ever negative Baltic freight rate assessment and analysts queuing up to pronounce the end of the world – your correspondent not least.
Plunging rates coincided with a spike in commodity price and demand, though these positions have traded places over the course of the year. However we end 2011 with the Capesize market supported by port congestion and iron ore and coal demand although this health is not the case across the sector.
At the beginning of the year there was little sense either that by December the IMO would be publishing an encouraging analysis of the fight against piracy as it did just a couple of weeks ago.
Indeed, so bad was the situation in February that UN secretary-general Ban-Ki Moon came to IMO to jointly launch the organisation’s response initiative, drawing the great the good and the world’s media. Given the terrible toll of attacks the previous year, there was serious concern that the escalation of violence – as naval forces and pirates became increasingly drawn into conflict – would put seafarers directly in the firing line.
Mr. Ban’s visit was in some ways a tipping point. Not because his call for a more co-ordinated response from the international community drew fresh resources from the already strapped nations contributing to the naval task forces off Somalia, however.
Rather, the industry moved from a position of appearing to flout basic anti-piracy precautions developed by their own industry to one embracing the use of armed guards as more and more flag states signalled they would change their rules to allow them. The concomitant change in the insurance market saw an explosion in kidnap and ransom insurance as owners sought ever more specialist solutions.
This year has seen other transformations too – or at least the groundwork for them well and truly laid. When AP Moller-Maersk announced that its liner shipping subsidiary Maersk Line wanted to change the industry, the industry probably had little idea just how serious it was.
Maersk boss Eivind Kolding told TOC Europe that new thinking was desperately needed in the container shipping industry if it was to continue its history of innovation. In fact the Maersk boss had some pretty simple ideas in mind – make it easier to book shipping space, improve communications and information technology, turn up on time with the right cargo and charge customers the market price in a transparent way.
Since then of course the industry has taken on some much more simple ideas – in some cases consolidating to stay alive – but Mr. Kolding’s ideas will continue to resonate even as the industry recovers from its current lows.
By mid-year, the smell of gasoline was in the air as oil producers released 60 m barrels of oil from strategic reserves in an attempt to breathe life into the global economy. With oil in the high USD 90s, the aim was to get the price down further and encourage Americans to get in their cars, go on holiday and put more money back in the local economy when they reached their destination.
In particular the intent was to help the US counteract high unemployment, flimsy economic growth and a housing market dead in the water as a substitute for further Quantitative Easing. President Obama threw 30 m barrels into the pot to ensure it. And it worked, despite the political backlash. The additional supply – sourced from storage facilities in the US, Europe, Japan and South Korea – did its job in temporarily encouraging more economic activity. This was before Libya of course, and the Euro crisis, but just a quarter or so, it felt like we might be out of the woods.
It was a year of progress too on environmental protection in shipping, though as ever there were probably more questions than answers. The awarding of “Outstanding Contribution to Sustainable Shipping” to Andreas Chrysostomou at the Sustainable Shipping Awards was a signal that we were living in a new world.
The timing was fortunate as the recent MEPC 62 meeting, the shipping industry had put itself out in front of the CO2 regulation process. The adoption of amendments to MARPOL Annex VI making mandatory the Energy Efficiency Design Index (EEDI) and the Ship Energy Efficiency Management Plan (SEEMP) stands as IMO’s defining moment of 2011.
The adoption was in no small thanks due to Chrysostomou – delegates and observers to the committee were well aware that in addition to the plenary and the working groups, he continued to hold informal meetings bringing together members from key delegations to seek consensus on the amendments.
That consensus was little found and the adoption process fractious but even so, the EEDI and SEEMP have already made an impact on the industry and their use in practice over the next decade or so will change it forever.
Meanwhile, and quite unexpectedly, the bulk market kicked into life – just as the tanker market’s slide from crisis into chaos began. The improvement in the bulk market was against the trend and took owners almost completely by surprise.
The naysayers argued that this was not the start of something concerted, but merely a technical correction, caused by a short-term reduction in availability of vessels in specific loading zones. As it turned out they were half right. The cape run continued – and continues even now – but the Panamax and Supramax markets are far weaker.
Ever since the upturn began, it has been possible to set the tidal wave of newbuildings against the expected faltering of demand and deduce that it simply can’t last. That hasn’t happened yet and as a tumultuous year comes to an end, there are too few good news stories around at the moment to let this one go, just yet.
Source: BIMCO,Neville Smith
