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Profitable shortsea market not before 2020

Date: 11/09/2013

Bloem Doze Nienhuis, a provider of consultancy services to the maritime world, released its second short sea study.

The second shortsea study shows a cargo demand of around 1.8 billion tons between 2005 and 2012. In the same period the supply of the fleet increases by 20%, from 38 to 47 million tons dwt.

In 2005, the shortsea industry witnessed a reasonable level of profitability. With an annual growth of demand by 4% and a stable fleet size, the market will reach a new balance only in 2020.

The first study signalled strongly volatile freight rates, mainly caused by a fragmented supply of tonnage. Mergers, joint-ventures and pooling agreements were suggested to improve utilization rates of vessels, as were as a better use of economies of scale.
During 2012 and the first half of 2013 freight rates reached new all-time lows. At the same time, demand from two main industry sectors using shortsea transport (steel and forest industry) remains at the low level.

The authors propose the design and implementing of a reliable and representative shortsea freight index, which professionalizes the industry and provides more transparency.

An analysis of five large players shows that asset light owners/operators perform better than competitors with large owned fleets. Problems with financing and losses seem to concentrate in the end of the chain, with the ship owner.

Financing is a key problem in the industry right now. Repayments on loans are postponed to avoid executions. When the markets will improve, these postponements will swallow the available cash flow for a number of years.


Source: SeaNews


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