As the market situation improves, more and more new ships are launching.
In 2017, happiness is a bit sudden for the shipping industry. The debate over “recovery” and “not yet recovering” has not stopped. The market trend has drawn a dazzling upward curve: the overall global shipping market is better than expected. The Baltic Index (BDI) has been up and running in shock since early 2017 Many times in the fourth quarter exceeded 1500 points; most of the container shipping companies to achieve profitability, and the general loss in 2016 in stark contrast.
Can the shipping market continue the recovery in 2018? Shanghai International Shipping Research Center of the country more than 100 shipping companies conducted a survey. According to the survey results, 54.87% of shipping enterprises believe that the shipping market will see a mild recovery in 2018; 14.28% of shipping enterprises believe the shipping market will see a sharp rise in 2018; meanwhile, 10.95% of shipping ships Entrepreneurs believe that by 2018 the global shipping market may once again bottom out. The dry bulk shipping companies and container liner companies on the shipping market in 2018 showed a different point of view, dry bulk shipping entrepreneurs more optimistic that the 2018 will continue the trend of full recovery; and the container shipping sellers relatively pessimistic , That 2018 basically the same as in 2017 or 2018 dip again reached the ratio of more than Qi Cheng.
Stood up and down, impermanence is a normal shipping market. We can not move up or down, but can focus on all parties market forecasts, to make the most suitable for their own development plan.
Global trade growth is expected to remain strong in 2018.
Oil transportation market
VLCC tariffs continue under pressure
For oil tanker owners, 2018 is likely to be a bad year.
The International Maritime Strategy Agency (MSI) recently said that in contrast to the traditional peak season, the VLCC spot market saw a sharp drop in revenue in December 2017 and the fourth quarter of 2017 was seen as a period of weakness in the tanker market. However, OPEC’s decision to continue limiting production in 2018 will reduce the demand for transportation in the oil shipping market by 2018. MSI predicts that the profitability of oil tankers will be roughly the same as that of 2017. The risk of falling shipping costs still exists. There will also be some positive signs in the tanker market in 2018. For example, the lower growth rate of fleet capacity, a large inventory reduction, the growth of US seaborne oil exports and the further release of the production capacity of the Chinese refining market may make the demand in 2018 more than expected it is good.
Bai Peijun, director of the COSCO SHIPPING Research Center, believes that the market demand for oil tankers will increase by 4.9% in 2018 and that the growth rate of transportation capacity will be 3.8%. The market is expected to improve. At the same time, attention should also be given to the delivery of 49 VLCCs in 2018, which will result in the delivery of high-value overlay and disassembly. The VLCC tariff will continue to be under pressure. It is estimated that the tanker market will continue to be adjusted for shocks in 2018 and the market rebalancing will be gradually realized in 2019.
MSI believes there is still considerable uncertainty about import demand in China, especially considering that the dominant oil stockpiles have risen further. Under such circumstances, the increase of strategic oil reserves and the large purchase of independent refineries will also lead to the increase of demand for crude oil imports. If this happens, about 15% of oil tanker freight rebound amplitude.
Some experts believe that the dismantling of aging oil tankers will play a key role in the market situation in 2018, and the massive dismantling of aging oil tankers is expected to have a positive impact on the market. Taking into account the age distribution of the fleet, the sentiment of the elderly oil tanker dismantling in 2017 increased. It is very likely that the oil tanker that reached the retirement age in the next few years will be dismantled ahead of schedule by 2018.
The MSI said that if the tanker dismantling volume increased by about 40% in 2018, it would affect all types of oil tankers. For example, Avrass type oil tankers, if disassembly than the basic situation increased by 30%, 2018 shipping costs will likely rise.
Coastal dry bulk market
Tariff growth is expected “fast cow” change “slow cow”
In the past 2017, it is worth celebrating for the vast coastal dry bulk owners. In the first half of the year, the freight rate surpassed the expected gain. In the second half of the year, especially in the fourth quarter, the freight rate surged ahead of schedule and showed a bull market with “no higher but higher”. It eventually hit a new high in nearly seven years. According to the Coastal Coal Freight Index released by the Shanghai Shipping Exchange, the annual average was 973 points, a substantial increase of 53% over 2016, with the highest in December 2017 exceeding 1,700 points, the highest in seven years.
Chen Yi, an advisor to Shanghai Times Shipping Co., said that preliminary estimates show that the average gross margin of coastal dry bulk enterprises will exceed 50% in 2017, far exceeding that of the coal and power industries in the upper and lower reaches and becoming the leader in the entire transportation and logistics industry . However, due to massive losses in previous years and large debts, many of the debt needs to be cleaned up. The good days for the shipping industry have just begun.
Wang Yu-fan, deputy general manager of Qinhuangdao Maritime Coal Trading Co., Ltd., believes that the domestic coastal dry bulk shipping market will be relatively optimistic in the near future. Because, on the one hand, the incremental demand for energy consumption is still on the rise. Although the growth of coal consumption slows down, the import coal will gradually decrease. On the other hand, although the supply of raw materials has increased, the arrangement of railway capacity will increase and some coal will use rail transportation .
Bai Peijun, director of the research center of COSCO SHIPPING, predicts that dry bulk demand growth in the period from 2018 to 2020 is expected to be 3.8%, 2.4% and 2.4% respectively. Capacity growth will be 1.2%, 1.1% and 3.3% respectively. As a result, the dry bulk market in 2018 to 2019 will continue its trend of “providing for less than demand” and the overall shock will pick up. By 2020, supply will again surpass demand and the market will decline.
For the freight rates that have appeared in early 2018 fall, Chen Yi believes that there is no need to worry too much. In his view, the future freight has greater support, this wave of bull market has not finished, will continue, but the heat may be somewhat cool, from “fast” market into a “slow cow” market. Because of the impact of the market, “weather and time” is about to find subtle changes.
Chen Yi first analyzed the “time” impact. He said that the strong coal market started in 2017 starts with seasonal factors, especially unexpected high temperatures and lack of water. It is uncertain whether it can be re-presented by 2018 or not. Secondly, China has entered a period of economic upgrading In the quality era, it is no longer realistic to place financial risks in a more prominent position and the macro economy is likely to slow down. It is not realistic for coal discharge to maintain double-digit growth in 2017.
In terms of geography, Chen Yi believes policy dividends will gradually weaken. The coal capacity-to-production plan, completed in 2017, will reach the “end” in 2018 and the power plant’s price expectation for coal will change. The phenomenon of “grab coal” at the port should be reduced. In the meantime, the old subsidy policy for old ships will be phased out and formally withdrawn from the historical arena in 2018. According to statistics from the Ministry of Transport, it took 550 years to phase out the 550 old ships with a deadweight of 21.27 million tons, accounting for 40% of the current total capacity. This has played a key role in the rapid recovery of the coastal dry bulk market. Without the financial subsidy policy of eliminating the old ships, the shipowners will have no impetus for dismantling. Moreover, the market is good and the owners have the desire to increase their capacity. Therefore, the increase in capacity this year can be expected. These factors determine the tariff in 2018 there is no room for price increases.
International container transport
The ups and downs of the future are unknown
The biggest highlight of the container shipping market in 2017 is undoubtedly “making money.” According to the third quarter results released by the top 20 liner companies, more than 80% of the companies achieved profitability, in sharp contrast with the general loss in 2016. The latest report from Durrës predicts that the freight forwarding industry will make a profit of 6 billion U.S. dollars in 2017 and that of the entire industry in 2016 will lose 5 billion U.S. dollars.
The main reason for the improvement in operating conditions of several liner companies is attributed to the improvement of the global economic and trade conditions. Therefore, the forecasts released by WTO and IMF by “the global trade growth will continue to be strong in 2018” undoubtedly give the CSSC a “boost”.
Many practitioners believe that in the context of economic warming, 2018 of the transport market worth the wait. The current market developments seem to confirm their point of view: 2018 contract prices and spot prices are better than in the past. Statistics show that the first batch of annual contracts currently serving the Asia-Europe routes are negotiated. The prices of large importers are between US $ 1,100 and US $ 1,200 per FEU while the prices of small importers are slightly higher, at US $ 1,300 and 1,400 per FEU. Compared to last year, the average price higher than 50-100 US dollars / FEU. There are also more willing to pay the owner to pay a certain freight to ensure that the ship on schedule.
Large companies market share will continue to rise
In 2017, major merger and reorganization of the shipping industry will be completed. First Haberut and Arab ships completed the merger, the new world’s fifth-largest liner company was born; Subsequently, Japan’s three major shipping companies to consolidate operations to set up a new company; followed by Maersk Line acquisition of Hamburg, South America. According to the latest data from the French shipping consulting agency, after the completion of the above-mentioned integration, the share of the top 5 shipping companies in the world exceeds 60%.
In 2017, the leading container shipping company recorded another record in the market, with the top ten container shipping companies controlling 77% of the market.
Experts believe that in 2018, the market share of large companies will further increase. French shipping consultants forecast that by 2018 this level will further rise to 82%. In November 2016, this figure was 56%.
Bai Peijun, director of Research Center of COSCO SHIPPING Group, believes that the concentration of the shipping market will increase, which is in favor of the freight rate rebound. He predicts that from 2018 to 2020, the annual increases in the demand for transport of goods will be 4.8%, 4.5% and 3.9% respectively, while the container supply will increase by 5.6%, 2.9% and 5.7% respectively. In 2018, there will be 33 large vessels over 18000TEU delivered, but the improvement of the industry concentration will make the market more stable. In terms of freight rates, the market recovery trend will continue into 2019 and reach the current round of highs.
Overcapacity situation is more severe
The judgment of the container freight rate rising in 2018 is not entirely agreeable to the Standard & Poor’s Global Ratings Agency. They said that the container shipping market will still face the problem of overcapacity in 2018. If the demand growth lags behind capacity growth, then the tariff will face a new round of pressure, especially in some major routes.
Statistics show that in 2017, there was a delivery of container capacity equivalent to 1.2 million TEUs, an increase of 26% over the previous year. More than half of the new ships are very large container ships of 14,000 TEUs and above. In 2018, the number of very large container vessels will continue to increase substantially. By then, 108 large vessels of more than 14,000 TEU will enter the market, equivalent to more than twice the current fleet, meaning that by the end of 2018, over 200 super-large vessels Container ships will be put into operation.
Standard & Poor’s Global Ratings Agency said that although the speedup of ship dismantling is to a certain extent favorable to the market fundamentals, most of the ships sent to dismantling are small ships serving the secondary routes and have a mitigating effect on the supply capacity of major routes Not big. Therefore, for cargo owners, the major routes such as Asia-Europe and trans-Pacific routes will still face the possibility of sharp fluctuations in freight rates. After all, liner companies have to fight price wars in order to ensure a cargo carrying rate of over 90%.
Decreasing freight pressure
Maersk recently issued a warning saying it is facing weak demand, resulting in downward pressure on freight rates.
Maersk South Asia’s general manager said it has begun to feel the downward pressure. Global trade orders only about 13.5% of the total capacity, not high. Because shipping costs are mainly affected by supply and demand balance, shipping tariffs in 2018 will be very unstable.
Maersk is not the only company that holds this view. From the early negotiations on the Asia-Europe contract, CMA CGM will see its cargo growth rate decrease in 2018. The DTU Shipping Consultants estimates that the growth rate of container shipping freight rates will decrease in 2018 from about 15% in 2017 to less than 10%.
Is expected to usher in “the year of the outbreak”
Natural Gas Marine Fuel Association believes that 2018 will be LNG as a “year of the explosion” of marine fuel.
In 2017, CFC decided to allocate LNG power for its fleet of 22,000 TEU container vessels built in China and signed an agreement with fuel supplier Total. At the same time, oil tanker companies AET and Sovcomflot also started to build LNG powered Aframax tankers. Statistics show that in 2017, there are 6 LNG bunker ships and 119 LNG powerboats operating. Natural Gas Marine Fuel Association believes that all this indicates that LNG will get more and more attention in the future.
Short-term cruise momentum
For the cruise ship market, the industry consensus.
The newly released “2018 Cruise Outlook” report released by the International Cruise Association (CLIA) shows that the cruise industry will remain on the path of positive growth in the coming year.
According to the “2018 cruise industry outlook” forecast, there will be 27.2 million passengers in 2018 travel. There are an estimated 25.8 million passengers for 2017 as compared to 24.7 million in 2016.
In order to meet the growing demand, more cruise ships will be put into operation in 2018.
The three major international cruise liners believe that the short cruise market in 2018 has enjoyed a strong momentum of development. In 2018, all three major cruise line operators in the world plan to expand various types of short cruise operations.
Seeking “structural scarcity” to promote “positioning up”
Bai Peijun, director of Research Center of COSCO SHIPPING Group
Over the past decade, we have always been subject to oversupply. We all know that excess supply, but the lack of detailed analysis. For example, to what extent? What is the difference between the excess market segments? In the face of the market, what are we going to do? Otherwise, will always be trapped in excess capacity.
A careful analysis reveals that resources in the shipping market are now excessively concentrated in traditional ship types, traditional routes, traditional markets and traditional business areas. In terms of ship types, from January to October 2017, the world’s newbuilding orders accounted for 94% of all traditional dry bulk carriers, tankers and container ships by deadweight tonnage, representing only 6% of all other ship types. On the shipping route, the demand for dry bulk seaborne shipments is still heavily reliant on China’s iron ore import routes. In 2017, China imported 1.07 billion tonnes of iron ore, only contributing one-third of the increase in the global dry bulk seaborne trade volume . Market, the volume is still concentrated in the mature port markets such as North America, Europe and Asia, the three major regions in the world container throughput accounted for nearly 80% of the proportion; as Emerging Markets in Latin America, Oceania and Africa, the total Only 11%.Business, the market is still a lot of resources precipitation in the traditional, low-end business areas, unable to meet the high-end service needs.
I think this is because the shipping industry is lagging behind other industries in applying new technologies and mainly relies on the traditional aspects of ship types, supply sources and costs. The combination of technology and management is far from enough. At the same time, the business model does not break through. Big. This has led to an overcapacity surplus due to the influx of excess funds. Due to the small difference in cost structure and the continuous rise of malicious competition, the homogenization has become more and more serious, resulting in a waste of resources.
To change this situation, we must first seek “structural scarcity” in the business space, explore and develop the shipping segment, and make efforts in such areas as livestock vessels, wind power installation vessels and marine equipment dismantling. Secondly, we should promote the upward positioning , The surplus mainly concentrates on the low-end market and the trend toward high-end becomes the trend of choice. We should pay attention to the integration of the industrial chain, push forward the close-type vertical integration and push forward the one-stop, cross-border and cluster businesses. In terms of operation means, Functional diversification “. In the field of shipping, extending services are generally moving upstream and downstream of the industrial chain. For example, Maersk has launched a” supply chain finance “service in India to provide a package of services for small and medium-sized shippers. In line development, emphasis should be placed on developing Polar routes, the Indian subcontinent, the Middle East and other non-backbone routes, South America, Eastern and Southern routes such as North and South Africa, Central and Eastern Europe 16 countries, Southeast Asia and other regional markets.