Posidonia: Lloyd’s List Briefing – Current State of Shipping

Sunday 5 June 2016.

The Lloyd’s List Briefing is now a traditional sharpener for Posidonia week. The event was presented by Richard Meade, the Editor of Lloyd’s List, assisted by head of the Greek desk, Nigel Lowry.

Christopher Palsen, the head of Lloyd’s List Intelligence research kicked off the event by setting the scene and offering his explanation of where shipping was, and why.

He posited that the dry bulk fleet now consisted of 11,149 ships, with a capacity of 784m dwt. With a substantial portion of the bulker fleet idle (average age 18.5 years), why had there been any ordering at all in this sector since 2008? The answer, in his opinion, was Chinese interests. Specifically, the five-year plan for 50% of imports into China to be carried by Chinese-owned ships. The result was a massive shipbuilding programme. This has flooded the market, but it has kept Chinese shipyards busy, and the cost of transport low. He also made the point that Chinese coastal (non-deep sea) shipping carries an estimated 2.5bn tonnes (of which 1bn tonnes is coal) on coastal ships. He admitted LLI had very little information on this fleet, except that it was very old, and was being replaced by modern deep-sea ships.

According to LLI, the global tanker fleet consist of 2,003 ships (this is too small for the whole fleet and is probably only the largest sectors – CJ) with a capacity of 367m dwt, of which 29m dwt was being used for storage. The orderbook stands at 64m dwt. He asked if there would be enough demand for all this tonnage?

According to LLI, there are 5,292 container ships, with a capacity of 19.8m TEU, with another 3.9m TEU on order. The key with this fleet is efficiency. He felt that there was significant growth potential in converting Chinese general cargo and break bulk cargoes into containised shipping.

On the economic demand side, Mr Palsen felt that the slower growth in China ( about half the past averages), was still robust. In his opinion, the drivers in the future will be India and other Asian countries.

On the energy side, according to Mr Palsen, around 85% of energy demand is supplied from hydrocarbons, and even if renewables grow fast as 15% pa, after a decade of growth, this would mean hydrocarbons still accounted for 75% of energy supply. He noted that shale gas production has resulted in the decoupling of the gas price and oil prices in US. It would appear that Saudi Arabia (by flooding the crude oil market) was winning the battle to kill off some smaller US opertors. But if the oil price rose again, would these fields come back onto the market?