The different military organisations have become much better structured and did not panic when it came to transporting troops and material this time. The American Military Sealift Command drew from its experiences in the past and only resorted to the spot market occasionally to cover its needs, without causing any particular waves or price hikes. The U.S. and the U.K. are definitely the two countries with the best-integrated fleets and best-fitted to meet their transport needs. There are in practice the only two countries with an operating service mechanism capable of making arbitrages between ships on long-term charter, owned vessels and spot charters.

Of course other European countries have shown themselves to be interventionists as well, but have not yet taken the necessary steps to be able to enforce this policy in the long-term. This waiting attitude adopted by military organisations has some perverse effects on the market. First of all, a number of very old ships, which have been financially written-off for a long time, win a lot of these tenders without their owners being able to find steady employment for them over the year as a whole. It gives the military the benefit of covering their transport needs at competitive costs, but with little anticipation for the medium or long-term. This attitude may become difficult to manage sooner or later.

In practice there are still a lot of ships in service built in the middle and at the end of the 70's. Although it is possible to charter and buy these second-hand ships cheap today, the effect of a fairly massive scrapping would soon be felt in terms of transport supply and also immediately in prices. Owners of more modern ships, built in the 80's and early 90's could then hope for a second breath, as they are amongst those suffering most from the current very low freight rates and lack of employment. The running costs of meeting such low utilisation and the poor returns of period business have pushed some owners into laying-up, often unable to compete with older ships in the spot "military" market.

As frequently the case, it is impossible to generalise about this market and the specific character of each ship makes them almost individual special cases - with one or two additional knots, a car deck, a straight or quarter ramp, etc. - matters which differentiate one from the other and can make or break a deal. All these are items which potential buyers of second-hand vessels will have to take into consideration in their choice.
 

Armada has reduced their assets over the last years to simply ensure a continuous employment of their ships, and it does not seem that they are in an expansionist mood.

Stena, who several years ago threw themselves into a phase of renewing their fleet in an inspired manner, have the big advantage of working with a "safety-net", capable of operating an arbitrage on their own lines if ordered vessels should find themselves without tramping employment. Nonetheless Stena still have to absorb three more ships of 3,000 lane metres in the year 2002.

The owner Visentini remains today an isolated case of really gambling on the future, building his ships in his own yard and with his own designs but with undeniable success. This unique example is worth citing for its visionary aspect, and in parallel with a policy of renewing the smallest and oldest ships, finding success with sales to Stena as well as the Turkish Ege Roro, for example.

Other owners like Ernst Russ are paying the cost of the very reduced activity on the spot market. Already owners of four ships of 1,650 lane metres backed with period charters, they have received at the beginning of the year a unit of 2,500 lane metres 22.5 knots, which saw its initial employment in the Atlantic prematurely terminated in the autumn, leaving this splendid ship on the shelf in a capricious market.

It will be interesting to see how the sector of the market of fast 2,500-3,000 lane metre ships will evolve in the course of 2002. There is a fragile balance and the market got tossed about during the second half of the year due to the introduction of three ships from Ege Roro (2,500 lane metres). One of them finally found a home with Cotunav. Certain niche services, which operate with ships of 1,800-2,000 lane metres, could benefit in 2002 from a possible swap of the bigger sizes of 2,400-3,000 lane metres to allow them to increase their transport capacity at reasonable costs. Maybe we will see a new class of routes coming into service and finally shedding in compensation to congested roads. Will the recent accidents that have hit the trans-Alpine road tunnels lead to new policies favouring short-sea shipping? We very much doubt it, as history tends to have a shorter and shorter memory, and we would rather bet on the well-conceived private initiatives, which should finish being crowned with success sooner or later.

Having found shelter in different business management structures or having been sold, a good number of ships built for Russian operators continue to liven up the market with varying fortune, but with a preponderance for the largest ships to find period employment on long-haul routes. Egon Oldendorff operating through a Norwegian commercial management structure (Atlantica Shipping) already got his way into the closed circle of tramp owners and seems set to enlarge his presence in this market, on condition to define and target precisely the type of ship to focus on, which while remaining risky could prove profitable.
 

On long-haul routes, the charter market has been particularly quiet. The decline in the chartering activity is in this instance also linked to the number of new ships, which have gradually replaced tramp ships, despite the level of new deliveries in 2001 being below that of the preceding two years. Grimaldi has remained the most active player in the pure ro-ro sector (as opposed to the ships of PCC and PCTC). Elsewhere, Delmas, who is in partnership with Grimaldi on the Mediterranean / West African Coast trade, has undertaken an external growth transaction at the end of the year, taking control of their common partner Setramar. Earlier in the year we had the case of Grimaldi taking control of Atlantic Container Line, a good example if needed of the interaction between ro-ros and containers. We can also mention that at the end of the year DFDS, emblematic actor in the ro-ro market took majority control of Lys line, a Norwegian operator of containerships.

Facing a difficult horizon for numerous owners in the container transport market (at least until end 2002), it is not impossible that we will see several "forced mergers" between niche market operators in this sector with the biggest ro-ro operators.

Finally and unless there is an important volume of new orders in the next two years, the ratio of deliveries to demolitions should naturally get inverted, which could signal the beginning of a new tendency in the market.

To be continued'