Those negative variations are impressive, as much in the price of products as for the freight rates, regardless of ship size.

We can summarise the main reasons as follows:

' The world economy has been running out of breath with all signals going from amber to red, principally in the U.S. which has been the driving force and where a slow-down in consumption was to be feared for quite a time after the easy days of the last few years. Unfortunately the turnaround had to come sooner or later and though everyone tried to cling on to a few sectors which were still on the boil, the decline had already set in as from the beginning 2001. OECD statistics for the 30 member states published successive GDP growth figures each lower than the preceding, to end up with a level near 1 % for the year, and forecasts wildly dispersed for 2002 given the actual recession in the U.S. and in Asia, where levels have now gone into the red. We are a long way from a level of over 3 % which was predicted at the end of 2000, and the tragic events of 11th September only accelerated the trend which was already well established, if often ignored.

' A general surplus capacity of production in all industrial sectors, whilst demand was weakening. Even though the old adage "more tons equals more freight" is often true, too big an imbalance between the development in production and the consumption level can undermine a solid basis of economic exchanges. One thereby exceeds the limits of practical hedging between different geographical zones such as have been frequently developed in the product market. Crude oil, naphtha, LPG, chemical gas and ammonia have all been hit by such restrictions.

' The limits and consequences of mergers among operators: although the majority of ships in the LPG fleet above 8,000 cbm is split and run by the three 'Major' owners, Bergesen, A.P. Moller and Exmar the effect of freight optimisation on certain movements hits a barrier when a substantial reduction in traffic comes up. The addition of idle times no longer allows a pool operator to obtain the appropriate average return on his fleet, whereas a smaller size operator does not suffer from this same handicap. The "Major" owner Bergesen decided to change his policy and approach towards the spot market partly for these reasons but this did not stop the very low demand conditions reflected in 10 units of his VLGC pool (75,000 / 85,000 cbm) currently looking for employment in the Middle East. Although difficult to quantify, the mergers and groupings realised over recent years in the product side have become operational and have now allowed a full optimisation of logistics in several markets which previously were more competitive but less efficient, with inevitable consequences in the volumes exchanged.

' Delivery of newbuildings ordered since 1998: within a market with limited growth, deliveries of new units create exponential availability of capacity. At the end of November, there have been 28 newbuildings delivered since January 1st 2001, with capacities ranging from 1,000 cbm to 84,000 cbm for a total of 578,000 cbm! It should be said however that six VLGCs (78,000 / 84,000 cbm) are included in these deliveries.