It’s unusual for small ships to be more valuable than large ones. But that has been happening in the tanker and dry bulk shipping area. The disruptions of 2022, following on Covid, have created markets better served by smaller ships.
One source of large dislocations in markets is a result of the Ukraine war. Because of sanctions, China has stopped shipping crude from Arabia. That was a channel that favored VLCC tankers. In addition, Russian exports of oil favor the use of smaller ships.
But other markets, too, have seen this effect as well. China, for instance, has reduced imports of iron ore and coal, partly due to Covid restrictions, and partly due to the deep slowdown in Chinese construction, requiring less steel production.
Clarksons, the shipping consulting firm, expects a reversal to more normal price differentials by 2024.
Here’s the future. China, which uses coal to generate 73% of its power, is experiencing a coal shortage. Blackouts, as we would call them, are in order, and many businesses are affected. Here’s how it is affecting global shipping.
This interesting article shows how CargoMetrics is using data on ship lading, IoT readings, and vessel tracking to determine the amount of trade to and from China right now. the Coronavirus problem in China has essentially caused ocean commerce to and from China to plummet since Chinese New Year (CNY).
Bulk shipments such as iron ore and coal have dropped over 40% according to the article. Container shipments out of China have also dropped, probably due to the disruption of work schedules at Chinese manufacturers. There are also issues involving quarantine of ships and cargos due to the virus. The article is especially good when it uses graphs to show the changes.
Of course, this is a great promotion for Cargometrics’ capabilities. I think one would have to look closer to discover how well Cargometrics’s data truly represents the entire range of activity, but the trends shown are certainly marked.
One very interesting fact the article gives is that petroleum imports have not dropped yet; they are up by a considerable amount. This may be due, so they say, to the longer transit times. The ships may have to lie to near Chinese ports when they cannot unload due to the quarantines or port handling issues. The other shoe may yet fall even in the tanker business.