Steady/flat.   Steady would probably have covered it but the word on its own also perhaps implies a degree of stability or a reasonable overall level and so the ‘flat’ is intended as a reminder that the market hasn’t gone anywhere since last week.   It’s increasingly difficult to keep saying the same thing in a different way because for weeks and even months now it’s really just been about minor variations on the same theme and there’s virtually nothing measurable to analyse or discuss.   The level of activity this week was greater than last and in that respect rates remained static but it still has to be qualified by emphasising static equals a very low level.

You could argue that any increase in activity has to be a positive and that’s probably true but it hasn’t actually changed anything as far as the market is concerned.   All in all there was easily enough tonnage to accommodate demand and whilst some rates were still fractionally down on last done the majority just about managed to stay the same.   Where Charterers might have preferred a green vessel for Tuesday morning they had to make do with a blue one for Wednesday but we’re really just splitting hairs.   Similar flurries have occurred before but they’ve so far always proved short-lived and it would be way too premature to form any concrete assumptions or authorise another new building just yet.   Bunker prices have dropped back quite sharply from where they were a couple of weeks ago although this has had no discernable impact other than providing a minor positive from Owners perspective.

So there you go.   The week might have been a bit more active but it ended quietly and with few clues as to what next week might have in store.   The short term outlook remains exactly the same and the market looks set to continue working day to day, week to week.   Rates are already dragging along the bottom so there’s little room for them to fall much further but by the same token, until demand picks up enough to take up the slack, nothing’s likely to change.

This week’s market report is dedicated to the memory of Mrs Brenda Collins.

Have a nice weekend.

3000 mts – ECUK/N. Spain – Euros 15.00-16.00 pmt

7500 mts – Fr. Bay/S. Spain – Euros 14.50-15.50 pmt

3500 mts – N. Spain/ARAG – Euros 10.50-11.50 pmt

Kind regards,

Mark Harrison

THIS REPORT IS PROVIDED FOR GUIDANCE ONLY AND WITHOUT GUARANTEE AS TO COMPLETENESS OR ACCURACY. NO RESPONSIBILITY OR LIABILITY IS ACCEPTED FOR ERRORS OR OMISSIONS.   ANY DISSEMINATION, COPYING OR USE OF THIS MESSAGE IS STRICTLY FORBIDDEN, AS IS THE DISCLOSURE OF THE INFORMATION THEREIN.

Another year is all but over and consigned to the archives.   As usual at this time of year, activity between the Christmas and New Year holidays is so limited that it is really impossible to report on in the usual way and there are too few examples from which to form any constructive conclusions.   There was little change from last week and we’ve kept the index at the same level for that reason.   All in all it would appear that the majority of business had been concluded before the Christmas break and what was noticeable this week was a high volume of open tonnage which suggests that there will be continued downward pressure on rates in the short term and until everyone is fully back at work next week.

So how will 2010 be remembered?   Overall it’s probably fair to say it won’t be looked back on as a particularly exceptional year, nor one that necessarily stands out for any extremes.   It has perhaps been more of a year of consolidation and if nothing else has seen the return of a degree of stability following the unprecedented conditions and subsequent uncertainty that began with the market collapse at the end of 2008 and continued throughout a large part of 2009.

The year began briskly enough with a fair degree of activity right from the outset and although the balance of supply/demand was relatively even to begin with, demand carried on increasing.   By February an upward trend had begun to establish itself and the market continued in this direction throughout the remainder of Q1 and the majority of Q2.   Rates did not rise dramatically, it was much more a case of steady improvement, but after the difficulties of the previous year an air of caution and uncertainty still prevailed and Owners seemed reluctant to press too hard for fear of over doing it.

By July and the beginning of Q3 demand began to die down ahead of the summer holiday period and unsurprisingly the market in turn started to lose some of its momentum with rates softening.   The Short Sea market has always tended to conform to a seasonal cycle of (broadly speaking) high in winter, low in summer so there is nothing unusual or unexpected about weakening freight levels in the middle of summer.   The low point fell somewhere around the first half of August which is again typical and coincides with precisely with the quietest period of the year in terms of holidays.   At its lowest point the index fell to fractionally under 14 and, compared with a low of just under 11 in 2009, highlights the extent to which overall market conditions had strengthened over that period.

The second half of August saw the level of demand starting to increase once again and, as you would expect, freight levels followed suit.   This coincided with the return to work and the new grain harvest and is again quite typical of the normal seasonal pattern.   Rates rose initially quite sharply through the beginning of Q4 but by mid October the upsurge had started to falter and although the direction remained upward to a high point around the end of November the graph had all but levelled out.   That is also a good pointer to the overall strength of the market and, where October and November are usually the strongest months of the year and the period where rate levels would normally show their greatest progression, this was true only to a lesser extent in 2010.   Still, an index high point of around 18 points in 2010 compared with just about 15 in 2009 once again underlines the progress that has been made.

For the remainder of the year through December the market has struggled to maintain the status quo with rates beginning to soften as the holidays approached.   Again that is a familiar pattern at this time of year although the apparent surplus of spot tonnage coming into the New Year does leave a little bit of a question mark on the overall health of the market and the prospects for improvement in January.   As things stand it looks like there could be more downward pressure over the next week or so and beyond that is (as always) impossible to tell.   It’s likely to be at least a couple of weeks before everything settles back to normal by which time it should (hopefully) be possible to form some more concrete opinions.

So that was 2010.   Not the best year on record but by no means the worst either and following on from testing times in 2009 the return of some normality surely can’t be a bad thing.   As for what 2011 has in store, watch this space!

Our best wishes for a happy, healthy and prosperous New Year.

(The Short Sea Index is based on the average freight rates for five routes, ECUK/N. Spain, ECUK/ARAG, Lower Baltic/ARAG, French Bay/ECUK and WCUK/East Med in 3000/4000 mts size and bunker prices in USD basis MGO delivery ARAG range)

Kind regards,

Mark Harrison

THIS REPORT IS PROVIDED FOR GUIDANCE ONLY AND WITHOUT GUARANTEE AS TO COMPLETENESS OR ACCURACY. NO RESPONSIBILITY OR LIABILITY IS ACCEPTED FOR ERRORS OR OMISSIONS.   ANY DISSEMINATION, COPYING OR USE OF THIS MESSAGE IS STRICTLY FORBIDDEN, AS IS THE DISCLOSURE OF THE INFORMATION THEREIN.

So that was 2008. It’s been a year that could arguably be described as memorable but perhaps not necessarily for the right reasons. As is always the case at this time of year, overall market activity is disrupted by the holidays and unrepresentative of normal trading conditions to such an extent that there is no real value in writing a weekly report. A brief summary of the Christmas period 2008 would be; virtually non existent demand coupled with an abundant supply of spot tonnage = a very weak market.

2008, to coin a footballing cliché, has been a game of two halves or more precisely a game of three quarters and a quarter. It all started strongly. At the beginning of January 2008 our Coastal Index stood at around 17.73, over 35% higher than it had been at the start of 2007 (13.06) and after a steady start the market continued to pick up gradually to end the first quarter showing a modest gain at 18.53.

This trend continued into the second quarter and the pattern overall was fairly unremarkable in terms of volatility. If anything the main difference was simply the increase in freight levels in comparison to the previous year and they remained somewhere in the region of 30-35% higher even approaching the traditional Summer lull. This also coincided with significantly higher fuel prices which had been steadily rising for about 12 months and finally peaked in early July 2008 at approximately USD 1300 basis gasoil for ARAG delivery. To put it into some kind of perspective this was just over 100% higher than a year earlier and the impact of those extreme bunker costs cannot be underestimated in terms of their underpinning the comparatively high market level at that time.

And so into third quarter and the Summer holidays. Given the seasonal nature of the Short Sea Market a dip in demand around July/August would be entirely expected and 2008 was no exception in this respect. As a consequence rate levels also started to soften and again there was really nothing remarkable to report except for the fact that this process was unusually restrained. Rate levels remained comparatively high for the time of year and on the back of that it is fair to say that initial expectations were for a very strong final quarter. It was only by around mid September in the absence of any noticeable upturn and coupled with the first real signs of the impending financial crisis that the prospects for the “normal” Autumn/Winter improvement started to look decidedly wobbly.

The rest, as they say, is history. Cue Q4, cue global financial meltdown and an unprecedented Winter slump. The annual seasonal trend in the Short Sea Market is traditionally so reliable you could almost set your watch by it, so to say it was extraordinary to see rates falling through October/November/December is somewhat understating the case and it was the speed and extent to which everything started to unravel that really shocked. At first everyone though perhaps it was a just a temporary blip but in a relatively short space of time it became apparent that these were exceptional circumstances and the final quarter of 2008 has seen nothing but an unparalleled descent.

So that was 2008. The index closed the year about 33% lower than where it began. Bunker prices have fallen back about 65% from their mid-summer peak. Sterling is so weak it is now every close to parity with the Euro which ordinarily might be described as astonishing but against a back drop of one astonishing event after another somehow doesn’t seem that surprising at all. A glance at the graph below should underline 2008’s exceptional status. Uncertainty has been the operative word over the last few months and it remains so now. There is a hope that the New Year will bring an improvement but for the time being hope is all it is. There is absolutely no evidence to suggest that demand is about to suddenly pick up so whatever happens further down the line the first few weeks of 2009 are likely to be as subdued and uncertain as the ones that preceded them.

Happy New Year.

Steady. In a “borderline firmer” kind of way. The emerging pattern of the last few weeks has been one of increasing levels of activity and demand which have perversely had little or no impact on freight levels, and that’s exactly how it continues. Surely the main conclusion to be logically drawn from that is it highlights the extent to which the market has obviously slumped in the first place. Despite a fairly noticeable rise in demand, rates have as yet failed to show any noticeable sign of improvement.

Every fresh batch of cargo requirements is eventually swallowed by a seemingly limitless supply of spot tonnage. The very first sign of a rising market has to be when cargoes start sticking around and for the time being they still are not.
It’s easy to forget how comparatively high the market had been for the 3/4 years up to the end of 2008 and, after even a relatively short period of austerity, how soon the restless hankering for the good times returns. Anyone who’s only been in this business from around 2004 onwards will just be appreciating what a weak market actually is. ,

Trying to analyse a little bit beyond the one size fits all weekly summary you’d have to say the pressure appears less in the 1000-3000 mts size range than it does in the 4000-7000 mts size range but then again that’s probably largely attributable to the chronic lack of newbuildings in smaller size vessels over the last 10-15 years. If spot cargoes are showing any signs of sticking around anywhere at the moment then it’s more so in the Baltic than anywhere else.
Clearly if levels of demand continue to increase as they have been doing then eventually freight levels will also follow suit but the generally optimistic expectation is still tempered with a fair degree of caution.

3500 mts – Fr. Bay / N. Spain – Euros 8.50-9.50 pmt
4000 mts – W. Med / Marmara – Euros 11.50-12.50 pmt
2000 mts – ARAG / ECUK – Euros 6.50-7.50 pmt
3000 mts – ECUK / Portugal – Euros14.00-15.00 pmt

(The coastal index is based on the average freight rates for five routes, ECUK/N. Spain, ECUK/ARAG, Lower Baltic/ARAG, French Bay/ECUK and WCUK/East Med in 3000/4000 mts size and bunker prices basis MGO delivery ARAG range)

The short term outlook remains changeable.
Have a nice weekend.

Kind regards,
Mark Harrison

H.C. Shipping & Chartering Ltd, Hull
Tel : +44 (0)1482 586760
Fax : +44 (0)1482 590759
E-MAIL: chartering@hcshipping.com
WEB: www.hcshipping.com

THIS REPORT IS PROVIDED FOR GUIDANCE ONLY AND WITHOUT GUARANTEE AS TO COMPLETENESS OR ACCURACY. NO RESPONSIBILITY OR LIABILITY IS ACCEPTED FOR ERRORS OR OMISSIONS. ANY DISSEMINATION, COPYING OR USE OF THIS MESSAGE IS STRICTLY FORBIDDEN, AS IS THE DISCLOSURE OF THE INFORMATION THEREIN.