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05 June 2023 - Year XXVII
Independent journal on economy and transport policy
15:46 GMT+2
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FORUM of Shipping
and Logistics


The LPG shipping market
in 2000

 
Global rise in commodity prices and freight markets

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Whilst the predominant market features of the two previous years were mergers and fleet concentration, we could describe 2000 as the year of a quasi regular state of firmer prices for most petroleum products and, to a lesser extent, a gradual rise in freight levels on all LPG tonnage segments, although more limited as compared to the oil tanker markets.

We may illustrate this situation with the following reported price quotations for the main product segments in oil, LPG and the petrochemical gas commodity markets, '

average market prices

' and with the following average freight rates basis spot voyage or average short-term time- charter equivalents for main categories of LPG carriers (such figures exclude idle time between cargoes or time-charter trading periods).

average freight rates

Obviously sporadic moves, up and down, took place all along the year in the various size categories, as is usually the case when spot or short term markets are considered, but the average trend has been gradually improving until the last quarter of 2000.

Different factors led to this strengthening in freight rates, which we were intimating in our last year's annual report, among these, the following could be highlighted :

  • A healthier economy worldwide: the World Bank and the OCDE report a world GDP growth rise of 4 to 4.5 %, whilst world trade has gone up by 12.5 % over the year 2000.
  • A global increase of oil demand facing Opec regulating moves and quota restraints, resulting into firmer oil and products prices, thereby opening new arbitrage margins.
  • The combined effects of recent mergers among oil and petrochemical "Majors", and consolidation moves which took place over the past two years among shipowners operating LPG carriers of sizes above 8,000 cbm.
  • A continued development of long-haul voyages with increased volumes on new shipping routes where the price volatility of main gas commodities such as LPG, ammonia and chemical gases allows for temporary imbalances between supply and demand and arbitrage positions.
  • A stringent control and supervision of vessels' quality on traffic between industrialised producing and consuming areas, although such control has been in force for gas carriers for a long time.
  • An overall restraint on behalf of shipowners for fleet expansion which has been rather limited since the Asian crisis in mid 1997 until 2000, especially for fully and semi-refrigerated types of tonnage.

The combined timing of the above various factors has contributed to the strengthening of the market and the upturn of freight earnings.
 

Highlights over the year

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  • The 'Erika' effect, which we cannot ignore, although being more psychological than factual for gas ships. Indeed, gas ships, naturally double-hull, have been closely followed and checked through vetting organisations well before a similar vetting system was adopted for oil tankers. Furthermore, the nature of the gas commodity transported, with a lower degree of stress and corrosion, helps to explains why no major casualty has ever occurred on gas carriers, even on old ships. Let it be this way for many years ahead !
  • Shipowners' consolidation moves resulted in a double-edged freight situation: firmer spot freight levels as opposed to trading equivalent freights on the larger size ships, depending on whether the vessel is "pool controlled" or "not".
  • Idle time, which used to be accidental and a misfortune for owners, has turned out to be a tactical element of owners approach to the freight market.
  • LPG "Majors" or traders increased share of the commercial control on ships, whether it be through longer term time-charter commitments or purely ownership control. This kind of development is a an old story in shipping and more particularly in the LPG industry where trying to find the best balance between long-term financial commitment and short-term coverage with more exposure to market fluctuations can be a difficult task on a restricted market.
  • Increased volumes of gas chemical movements partly due, as usual, to unexpected outages or planned turnarounds, mainly on the ethylene front. A general shortage of molecules in Europe and a strong demand in the USA linked with competitive prices in South East Asia, contributed to a solid rebound of the ethylene, propylene and butadiene markets.
  • Newbuilding prices which heavily decreased during the last two years (up to 30 %) have recently fuelled new orders from shipowners and "Majors", more influenced by bottom line prices than by additional tonnage requirements.

One should also note the continued interest of Japanese owners placing orders in domestic yards for pressure-type LPG carriers of sizes between 4,000 and 7,500 cbm, for delivery end-2001 / end-2002, and fixed out for time-charter periods of up to five years plus options. Such moves are partly due to the prevailing financing conditions obtainable in Japan at very low interest rates.

ANNE LAURE
 78,000 cum fully-ref., blt 2000 by Daewoo - Commissioned by her owner Geogas Shipping - seen passing Sydney Bay.

 

Situation by Ship segments:

  • VLGC (very large gas carriers): 70,000 to 86,000 cbm

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This is "the" specific size of LPG carriers, which always had and still has its own identity and direction within the LPG industry. Whether it is because this size represents some 70 % of the total LPG carried in the world, with a major share being controlled by one single Norwegian owner, or because trading such LPG vessels is closely linked to product prices fluctuations, can be a long debate. Still the VLGC market has its own logic !

2000 was a year of mixed results for shipowners. Whilst the spot freight on the traditional benchmark route Middle East Gulf / Far East increased from $27 per mt in November 1999 to $42 per mt by November 2000 (which represents a time charter equivalent of some $1.1 million), an increased percentage of idle time of up to 20 % has dramatically affected this segment and particularly Bergesen who controls a large part of this market, mainly on a fully-owned basis with a few units pooled. Such idle time has lowered the net fleet earnings per ship down to circa $575,000 monthly.

However, the situation improved towards the end of the year when the alternative employment of CPP (naphtha and occasionally jet fuel) was frequently open to generate a time-charter equivalent in excess $1.5 million monthly. This latest development is however directly linked to the oil tanker supply and the versatile CPP market which has recently reached peak levels.

The time-charter market has been reasonably active at levels reaching an average of $850,000 for a 12 to 18-month period.

On the newbuilding side, eight more units of 78,000 / 82,000 cbm have been ordered since January 2000 for delivery between early 2002 and 2004, while five ships have been delivered during the same period. Together with the orders confirmed prior to January 2000, this makes a total of 14 ships on order out of which seven ships will be delivered in 2001.

Although this size segment still suffers from over-capacity, such orders can be partly explained by LPG producers' endeavours to control their own tonnage at newbuilding price conditions near bottom levels.

lpg 24/85000 cbm
 

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This ship class has achieved much better results than last year, generated by the expansion of NH3 long-haul voyages from the Black Sea to the USA and the Far East, plus alternative opportunities in the CPP and naphtha markets and the impact of firmer markets in the larger and lower tonnage size segments.

Depending on size, age and specifications, monthly average returns reached $750,000, a 15 % increase over last year's levels. Such an upturn was however limited here as well, by idle time. No newbuilding order was reported within this segment and only one 52,000 cbm built in 1971 was sold to demolition.
 

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Mainly supported by a substantial strengthening of the ammonia market, this highly consolidated sector has registered the sharpest increase in freight level, up to 50 % on spot rates in some specific areas. This situation and the concentration of tonnage has led a few charterers and traders to further cover their shipping requirements through medium or long-term periods, sometimes up to three or five years.

However, the overall earnings of shipowners did not increase in the same proportion due to a repetitive idle-time averaging 14 % over the year.

Stringent quality restrictions on the LPG trade pushed a few older units to switch from LPG to NH3 on a permanent basis, where old upgraded ships but in good conditions are still qualified by several terminal operators. New orders were limited to two 35,000 cbm vessels for the account of Bibby Line and Geogas, both for delivery end 2002 at Korean yards.
 




Shipping and Shipbuilding Markets in 2000

I N D E X

›››File
FROM THE HOME PAGE
Fraudulent mechanism for tax evasion and tax evasion implemented by a paved logistics company
Pavia
Employees 138 irregular workers and VAT evasion and direct taxes for more than 1.6 million
Japan's ONE took delivery of its first 24,000-teu container ship
Kure
Another five ships of the same capacity built by Imabari Shipbuilding and Japan Marine United Corporation will follow.
Switzerland will subsidize the travelling motorway between Fribourg and Novara until 2028
Bern
Measures will be introduced to make the Swiss merchant naval flag more attractive
FEPORT discussed the effects on ports and terminalists of EU climate rules
Saintes Maries de la Mer
Highlights the need for European governments to transpose the minimum corporate tax directive to avoid distortions caused by tonnage tax
In 2022, combined European transport marked a slight decline.
Brussels
Historical record of national volumes, while international traffic has decreased by -0.5%
An engine failure of an oil tanker in the Suez Canal has not stopped traffic in the waterway.
Ismailia
The "Seavigour" transports crude from Russia to China
Renewed the national contract of the mowers and barcaioli
Rome
Average economic increase of 175 euros
Renewal of the concession to PSA Venice
Venice
It will have a duration of 25 years. A planned investment of 78.6 million euros and a traffic growth of up to 500mila teu. Concession to Veneta Cementi
For its own decarbonisation, shipping does not have to rely too much on e-fuel
For its own decarbonisation, shipping does not have to rely too much on e-fuel
Copenhagen
The Mærsk Mc-Kinney Møller Center for Zero Carbon Shipping warns to take into account the future availability and prices of electro-fuels
EU Commission presents five legislative proposals on maritime safety and prevention of marine pollution caused by ships
Brussels
The aim is also to align European standards with international regulations
A quarter of Russian companies are in danger of disrupting production for the difficulty of receiving goods from abroad
Moscow
The first vice president of the Center for Strategic Research in Moscow
Truckers denounce the blocking of actions to improve the operation of trucks in the port of Spezia
The Spezia
Perhaps-they accuse the trade associations-it is the will to maintain the status quo
L'ultima lettura del Goods Trade Barometer della WTO segnala una ripresa che però potrebbe essere assai accidentata
The latest reading of the WTO's Goods Trade Barometer signals a recovery, but one that could be very bumpy
Geneva
Positive signals come from export sales orders
L'ultimo rapporto di AGCS evidenzia la notevole diminuzione della perdita totale di navi
The latest GATS report shows the significant decrease in the total loss of vessels
Johannesburg/London/Madrid/Munich/New York/Paris/Rotterdam/Singapore
In 2022 the number dropped by -36%. Sinking, fire/explosion and collision are the most frequent causes of accidents
Port of Livorno, interdicted four entrepreneurs and three companies
Livorno
Seized more than 8mila euros to a port authority official
Le Aziende informano
La Ant. Bellettieri & Co., presente da più di 140 anni nel Porto di Civitavecchia, opera nella logistica portuale e nell'intermodalità mare, ferro, gomma
L'elvetica Accelleron ha acquisito Officine Meccaniche Torino
Switzerland's Accelleron has acquired Officine Meccaniche Torino
Baden
The Rivoli-based company is a leading manufacturer of injection systems for marine engines
Grimaldi orders two more new Pure Car & Truck Carrier Ships from 9,000 ceu
Naples / Rome
Affirmed the reliance on Grimaldi Euromed of maritime territorial continuity on the Civitavecchia-Arbatax-Cagliari route
European Commission's OK to refinance the Italian Marebonus
Brussels
Aid programme worth EUR 125 million authorised, running until 2027
Assarmatori, good EU approval of Italian aid for road-sea intermodality
Rome
Messina; now the aim is to be able to use the resources as quickly as possible
I porti cinesi stabiliscono un nuovo record storico di traffico quadrimestrale delle merci
Chinese ports set new record for four-month cargo traffic
Beijing
New peak in containers alone
The handling of the freight traffic at Genoa airport was entrusted to the city's freight forwarders
Genoa
Giachero (Spediport) : It is essential to relaunch the cargo sector
At the end of the month APM Terminals will leave the management of the Itajaí terminal container
Itajaí
Superintendência do Porto will try to implement a new transitional solution pending the tender unopened by the federal government
GEODIS has bought Swiss Transport & Shipping helvetica
Levallois-Perret
In 2022, it recorded a turnover of 58 million Swiss francs
Conference in Genoa on the State of Implementation of the National Logistics Platform
Genoa
Organized by Federlogistics and Conftransporto-Confcommerce, it will be held next Monday
Livorno, air quality monitoring campaign in neighboring city areas to port
Livorno
The discovery campaign will last 240 days
Fincantieri agreement in Canada to propose "Vigilance" patrolman for the Royal Canadian Navy
Trieste
Two initiatives to commemorate Giuseppe Bono
On June 30 in Genoa, the second edition of the Youngster Shipping Summer Party will take place
Genoa
The event is promoted by Assagents
Fincantieri will build the third NFS submarine of the Italian Navy's Navy
Trieste
The first two batons will be delivered in 2027 and 2029
ABB plans a whale tail for the propulsion of small and medium-sized ships
ABB plans a whale tail for the propulsion of small and medium-sized ships
Zurich
The first prototype will be available in 2025
Final free route to the link between the port of Ancona and the State Road 16
Ancona
Aquaroli : It is a fundamental work for the development of the port, Ancona and the Marche
SAILING LIST
Visual Sailing List
Departure ports
Arrival ports by:
- alphabetical order
- country
- geographical areas
CMA CGM has completed the acquisition of La Méridionale
Marseille
Next order for two new LNG ships announced
Venice Boat Show inaugurated
Venice
Over 220 exhibitors. 300 boats presented, 240 of which in the water
MSC Crociere ha preso in consegna la nuova MSC Euribia
MSC Cruises took in delivery the new MSC Euribia
Saint-Nazaire
In the ship yard of Chantiers de l'Atlantique also took place the coin ceremony of "MSC World America"
Agreement between the AdSP of the Central Adriatic and the regional agency of the Marches for environmental protection
Yang Ming orders to HHI the construction of five portacontainer from 15.500 teu
Keelung
Commitment worth $927.9 million
Port of Genoa, procedural errors in paperwork reduced by 70%
Genoa
this is the result of what was experienced during a course organised by the Harbour Master's Office and Assagenti
Confitarma expresses satisfaction at EU approval for road-sea intermodality support, but denounces lack of resources
Rome
Mattioli: We hope that the new government will open a concrete discussion with the armament industry on this issue in view of the next Budget Law
KHI and DNV will define a method to calculate the CO2 emissions of the liquefied hydrogen supply chain
Tokyo
Specific memorandum of understanding signed
The Spanish FENADISMER will start a new class action against oil companies
Madrid
They are accused of taking advantage of the effects of the conflict in Udrain to apply a surcharge to fuels
Eni Agreement - RINA for the energy transition and decarbonization of naval transport
Rome/Genoa
Among the purposes, the development...
Chinese investment in the Suez Canal Economic Zone
Beijing
Production activities will be installed
In the first trimester of this year the traffic of the goods in the Croatian ports has grown of +14,9%
Zagreb
The increase is determined by the rise of the bulk volumes
Event in Genoa for the relaunch of the economy of the sea
Genoa
The sector - it has been emphasized - in recent decades has been dramatically underestimated in its potential
Assiterminal, Assologistica and Fise-Uniport Convention for Safety at Work
Genoa
It is by definition with the support of RINA
CMA CGM compra il quotidiano economico francese “La Tribune”
CMA CGM buys the French economic daily "La Tribune"
Marseille
The company is already active in publishing with the newspapers "La Provence" and "Corse Matin"
Next month Metrans will activate an intermodal link Rijeka-Budapest
Prague
The terminal of the Hungarian capital will be connected to the Serb terminal of Indija
Ok to a contribution of 2.2 million to the genoese harbour company CULMV
Genoa
Resolution approved by the Management Committee
ITA Airways, confirmed the agreement with Lufthansa
Rome
Uilt, important now to realize the objectives of development and growth of the industrial plan
German Schües is the new president of the BIMCO
Copenhagen
Subentra to Sabrina Chao who concluded his biennial term
PSA has acquired a minority share in the Vietnamese logistics company Sotrans
Singapore
It was ceded by Indo Trans Logistics Corporation
Inaugurated the second phase of the Vietnamese container terminal of Nam Dinh Vu (Haipong)
You have Phong
It has an annual capacity pairs to 1,2 million teu
In April the traffic of the goods in the port of Barcelona is dropped of -7.8%
Barcelona
The decrease has been determined by the decrease of the container, in particular by the ones in transit
TIL orders ZPMC nine cranes of quay for the TPO/TNMSC terminal of the port of Le Havre
Le Havre
They will be able to serve ships from 24,000 teu
GNV expands its support to the project for the protection of turtles and cetaceans in the Mediterranean
Genoa
The researchers, as well as on the Naples-Palermo route, are being housed on board the ships deployed on the Barcelona-Tangier and Valencia-Palma routes.
Positive the first quarter of MPC Container Ships
Oslo
The Norwegian company is concerned that supply growth in the segment of large container carriers could also have an impact on the fleets operated on intra-regional routes
PORTS
Italian Ports:
Ancona Genoa Ravenna
Augusta Gioia Tauro Salerno
Bari La Spezia Savona
Brindisi Leghorn Taranto
Cagliari Naples Trapani
Carrara Palermo Trieste
Civitavecchia Piombino Venice
Italian Interports: list World Ports: map
DATABASE
ShipownersShipbuilding and Shiprepairing Yards
ForwardersShip Suppliers
Shipping AgentsTruckers
MEETINGS
On May 25 in Genoa, a conference will be held on the programming, operation and management of transport networks
Genoa
It is organized by the International Institute of Communications and CIFI
On May 26 in Genoa, the first Mare Global Forum will take place
Genoa
It is organized by the Strategic Advisory Centre "Giuseppe Bono"
››› Meetings File
PRESS REVIEW
Budget proposes to cut tax on containers used in shipping
(The Daily Observer)
Exclusive: Malaysian tycoon weighs selling a stake in $2.7 bln port business -sources
(Reuters)
››› Press Review File
FORUM of Shipping
and Logistics
Relazione del presidente Daniele Rossi
Napoli, 30 settembre 2020
››› File
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