SHIPPING

We do not hold a gloomy view of the world, but there are concern points that pose a risk to the status quo and could be the catalysts for high impact events on the world stage, affecting the shipping industry. By Basil M. Karatzas*.

Looking into 2023, one has to be very cognizant of geo-political and macro- events. While supply and demand will be crucial as always, “external” events are likely to drive the market the most in the coming year. By Basil M Karatzas*.

The big difference from previous (normalized) markets is that the strong shipping freight rates in the last year or so have not been due to structural demand, but rather on shifting trading patterns that have caused global supply chain disruptions, which artificially pushed freight rates higher. By Basil M. Karatzas*

The PM said he had addressed a letter to the European Commission president to request that shipping becomes a European priority. He also added that the current developments calls on shipping to contribute to stability in the world, with the transport of natural gas.

Greece is the world's largest shipowning nation, with a fleet of 5,514 vessels, representing 59% of the EU-controlled fleet. Since 2019, the Greek-owned fleet grew by 7.4% and since 2014 by 45,8%.

Based on market participants, after the August data, the volume of new ship orders during 2020, has fallen to the lowest level in the last 20 years. Few shipowners are willing to bet on rising market demand, whether e.g. it is for oil or for raw materials, in the next few years, in order to make such a significant investment.

The greatest impact is on cargo ships and container vessels. Outstanding cargo shipbuilding orders currently concern ships with a capacity of 63.4 million tonnes dwt, a size that is 34.7 percent lower than 12 months ago and lower than in 2004. On container vessels, the order book has decreased by 10.3 percent per year and is at its lowest point since September 2003.

According to shipping analysts, the first ships began receiving the above container shipments in early March and now (three weeks after) are heading to ports for delivery. These are orders that were submitted before factories in China and other Asian countries were closed and are being carried out as production resumes. However, meanwhile, and specifically in the last 10 - 15 days, economic conditions have changed dramatically in Europe and the US, with consumer demand dropping dramatically and the majority of stores shutting down. This led to buyers of Asian factory products, retailers, canceling many orders.

According to brokers, chartering a tanker from the Middle East to China costs $243,347 per day, an increase of 700 percent from just over a week ago. By taking a look at moves that Greek shipowners have made lately, one gets the general feeling is that fares will remain high in coming weeks.

Analysts, business and bank officials described the coronavirus as posing a serious risk to the macroeconomic environment, meaning that Greece is less likely to achieve its target for economic growth of 2.8 percent for this year. Experts point to a 0.1 percent cut to forecast global growth for this year by the IMF, which also reduced its estimate for China's economic expansion by 0.4 percent.