Static. A different word to steady (for a change) but to all intents and purposes it means exactly the same thing. The reality, yet again, in terms of business concluded, is that there hasn’t been enough fundamental movement in any particular direction to justify a headline that suggests anything has actually changed. In any given week in any market state there will always be fluctuations and exceptions to the rule but it depends on your capacity for micro analysis as to what, if anything, can truly be learned from splitting hairs. If the rate on like for like business increases or decreases by 25 cents from one week to the next then you could technically, and quite justifiably, say it’s ‘firmer’ or ‘weaker’ but is that really an accurate assessment of the overall picture or just a disingenuous way of finding something different to say? You can watch currency rates shift by thousandth’s of a decimal point every few seconds and at the end of a week still find they’re exactly where they were when you started. Average Cape earnings might be up from around USD 3,000 a day to USD 5,000 which accurately constitutes ‘firmer’ but that’s really just varying degrees of ‘very bad’.

The Short Sea market doesn’t tend to be driven by speculators and there is no derivative trade or futures market to influence sentiment going forward. It’s largely elementary and what you see is usually what you get. Fuel prices remain high which in a better market wouldn’t be so relevant but at the moment seem to be underpinning a progressively uneasy status quo. Market direction is mostly unchanged, sentiment is certainly not optimistic and the pressure is definitely downward although tempered by an increasingly entrenched and collective refusal on Owners part to accept further reductions. The first clear sign of the beginning of an upturn would be cargoes starting to stick around and at the moment all firm orders are being covered with the minimum of difficulty. Glean from that what you will.

Short term outlook? Have a stab in the dark. Uncertain and therefore potentially changeable. There’s strong resistance and consequently less scope for further decline but by the same token no evidence at all of an impending surge in demand which is what would be required to kick-start an upturn so more of the same would again seem the most likely/logical. As Niels Bohr once astutely observed, “prediction is very difficult, especially about the future”, so maybe it’s still prudent to wait and see.

And so to the important bit! Hull City had a key mid week game at home to arch local rivals Leeds United. It ended in a valiant 0-0 draw which at this stage of the season frankly isn’t good enough – a bit like the Short Sea market.

Have a nice weekend.

4000 mts – W. Med/Lower Baltic – Euros 21.00-22.00 pmt
5000 mts – N. France/S. Spain – Euros 19.00-20.00 pmt
2500 mts – ECUK/ARAG – Euros 9.75-10.75 pmt

(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 deadweight and bunker prices in USD basis MGO delivery ARAG range)
Kind regards,
Mark Harrison

H.C. Shipping & Chartering Ltd, Hull
Tel : +44 (0)1482 586760
Fax : +44 (0)1482 590759
Email : 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. NOTHING IN THIS REPORT IS, OR SHOULD BE RELIED UPON AS, A PROMISE OR PRESENTATION AS TO THE FUTURE (SURPRISNGLY ENOUGH).

Steady/borderline weaker. It’s still marginal to say the least but for the sake of trying to find some variance in an otherwise static scenario then the market seemed to lean more towards down than it did towards up this week. Admittedly that’s not a lot to work with but the Short Sea rarely moves dramatically from week to week and much of the time it’s about trying to identify a subtle change or maybe just a slight shift in sentiment in order to unearth a potential underlying trend. Or maybe it’s just the irrepressible need to find something different to say.

Cards are normally played close to the chest but at the moment they seem closer than usual. It’s almost as if the market’s already at the bottom even though historic and predictable seasonal trends would suggest there should certainly be some downward margin left. Perhaps the bottom’s just getting higher and there’s definitely a refusal or at least a very strong resistance from Owners to go below certain levels. Brokers would often joke that Owners always play the bunker card when fuel prices are going up but conspicuously fail to acknowledge it when they’ re going down but nowadays fuel prices rarely do anything other than go up (this week back to USD 1000 per tonne in Rotterdam for gasoil) and the bunker card is pretty much out there all the time. Similarly port costs and operating expenses generally increase year on year, consequently so does the viability threshold.

The continuing winter conditions have further strengthened ice restrictions in both the Baltic and Black Sea which should mean richer pickings for ice classed tonnage but may also have the adverse effect of pushing more conventional tonnage out into the wider market. Interestingly, cargoes into the ice are currently being fixed at levels roughly around 25% lower than like for like business at the same time in 2011. The approach is still one of holding out as much as possible and there’s certainly a sense there may be more spot tonnage out there than is perhaps being advertised.

The short term outlook remains uncertain and potentially changeable. It’s very difficult to second guess but longer the market remains static the stronger the feeling that a change in direction is imminent. Time will tell.

On the Hull City front, last week’s game at Portsmouth was cancelled due to snow. It’s Bristol City at home tomorrow, weather permitting!

Have a nice weekend.

3000 mts – W. Med/Black Sea – Euros 24.50-25.50 pmt
4000 mts – Fr. Bay/Portugal – Euros 14.00-15.00 pmt
2500 mts – ECUK/ARAG – Euros 9.50-10.50 pmt

(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 deadweight and bunker prices in USD basis MGO delivery ARAG range)

Kind regards,
Mark Harrison

H.C. Shipping & Chartering Ltd, Hull
Tel : +44 (0)1482 586760
Fax : +44 (0)1482 590759
Email : 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. NOTHING IN THIS REPORT IS, OR SHOULD BE RELIED UPON AS, A PROMISE OR PRESENTATION AS TO THE FUTURE (SURPRISNGLY ENOUGH).

Steady. At this time of year the level of activity between the Christmas and New Year holidays is usually so subdued as to be unrepresentative of ‘normal’ trading conditions and in that respect there isn’t much point in trying to draw any serious conclusions from the limited amount of business done. All in all steady should just about cover it. There were certainly signs of a greater volume of open tonnage either spot or directly after the New Year and those Charterers with firm requirements were able to cover them without difficulty. Rates are hovering at just about the status quo but with some downward pressure.

A summary of 2011 couldn’t really be anything better than not very good which is possibly bordering on the understatement and it’s been a year that is unlikely to remembered fondly, if it’s even remembered much at all! The market began 2011 in decline and, aside from the odd minor fluctuation here and there, followed that direction pretty much consistently throughout Q1, 2 and 3 which is unusual. Even by June rates were pretty much bottomed out and the market then continued to flat line through the traditional summer doldrums. By then freight levels had fallen to the point where there was virtually no scope left for further decline before they ceased to viable and in the absence of any improvement or increase in demand the market simply dragged along the bottom through July and August and even into the first of half of September.

The longer this flat line continued the more inevitable some form of recovery became and it did eventually materialise in the second half of September. Traditionally the market tends to pick up somewhere around this time coinciding with the end of the summer holiday period and the start of the new harvest so there was no great surprise in this, only perhaps that it was a bit later than might ordinarily be expected. After such a long period of comparative depression Owners were understandably keen to force as great an improvement as possible and as quickly as possible and initially the increase in demand was able to sustain the upturn until around the middle of November. In firmer conditions you could easily expect the market to be at its strongest through the whole of November and up to the Christmas holidays so the fact that the momentum was already starting to wane well before then perhaps just highlights the general economic fragility of current times.

Looking at 2011 versus 2010 you can see a fairly similar pattern, certainly through Q3 and 4, but the main difference this year was in the first six months. Where 2010 started lower but improved noticeably until around May, 2011 was declining from the outset and it’s striking how much of this year has been at a lower level than last. 2011 is ending on a fairly level trajectory so in that respect it certainly has the scope to go up or down. Although it appears to have disappeared from the headlines (at least in the UK) the Eurozone debt crisis is still very much unresolved, not to mention consistently gloomy economic forecasts which continue to cultivate an overriding air of uncertainty and it has to be said pessimism about the immediate future. What is noticeable is the general lack of firm opinion and expectation for the coming year and so it really does seem to be very much a case of taking it as it comes. Let’s face it, it will be here soon enough.

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

H.C. Shipping & Chartering Ltd, Hull
Tel : +44 (0)1482 586760
Fax : +44 (0)1482 590759
Email : 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.

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.