Home World Intermodal Weekly Market Report for week 20 2020

Intermodal Weekly Market Report for week 20 2020

Please find below the Intermodal market report for week 20 2020.

Intermodal Report Week 20 2020

Market insight

By Christopher Whitty

Director, Towage & Marine Port Services

Seafarers keep maritime trade going so that the food, raw materials, energy and manufactured goods on which so many depend can continue moving around the world. At this critical point during these unprecedented times, people outside the maritime industry can now better understand and realize the role of seafarers in this industry, it’s wide spectrum and that ninety percent of global trade is transported by commercial seaborne transportation.

It has been three months since the crew-repatriation issue first arose and despite a major lobbying effort on the part of the shipping industry, there has been remarkably little progress in terms of actually getting crewmembers home. Apart from the main aspects of the problem, there is a lot of logistical planning and coordination into this, a key requirement of which is the resumption of international flights.

Most countries around the world are trying to get back to what is displayed in the media as a new normal, in an attempt to restart their economies, but ultimately if the crew changes problem is not resolved quickly and as a result ships aren’t able to operate safely and support vital trade routes and cargoes, the respective economies will not have the fundamentals to restart properly. Seafarer labor interests agreed to not stand in the way of one-month extensions to employment contracts on March 15, on April 15 and and again on mid-May. At the moment, however, the status quo has not changed and internationally recognized bodies such as the ITF (International Transport Federation ) are stressing again that if we do not see tangible and significant progress now or the latest by mid-June, then we will be facing an even bigger problem and multiple threats related to the health and wellbeing of seafarers at sea and the risks associated with this vague landscape.

The pandemic outbreak halted virtually all crew repatriations from ships, so crews have kept working way beyond their original contract terms, away from their families who are also going through restrictions. The oceangoing shipping industry has been working aggressively to solve the crew-repatriation issue, urging governments to designate seafarers as “key workers” and allow them to transit regardless of nationality. The ITF meets frequently with delegates of the International Chamber of Shipping (ICS), which represents the ship operators; the World Health Organization; the International Maritime Organization (IMO); and the International Labor Organization (ILO).

The International Chamber of Shipping, which represents 80 percent of the world’s merchant shipping tonnage, and the International Transport Federation which speaks for two million seafarers, have issued a bipartisan call for action to: Designate a specific and limited number of airports for the safe movement and repatriation of crews, redefine seafarers as key workers providing essential services during the COVID-19 pandemic, lift national restrictions designed for non essential passengers and deliver their commitment to keep supply chains open by taking urgent measures on the issue.

Seafarers need to be supported and enabled in the essential role they play in our societies so that the human factor does not fail and make the recovery stage from this pandemic more difficult.

Chartering (Wet: Soft-/ Dry: Soft-)

The dry bulk market witnessed another negative week on the back of negative performance for the bigger sizes, while the period market remained disappointing both in terms of activity and rate ideas. The BDI today (19/05/2020) closed at 453 points, up by 26 points compared to Monday’s (18/05/2020) levels and increased by 20 points when compared to previous Tuesday’s closing (12/05/2020). Following the recent negative performance of crude carriers rates, the tanker market appeared to be a bit more balanced last week. The BDTI today (19/05/2020) closed at 818, decreased by 52 points and the BCTI at 652, a decrease of 312 points compared to previous Tuesday’s (12/05/2020) levels.     

Sale & Purchase (Wet: Stable-/ Dry: Firm+)

It seems that the substantial discounts in asset prices have finally enticed more Buyers to leave the sidelines and start investing in the dry bulk sector that has been seeing increased activity as a result in the past few days, while on the tanker front the market remained relatively quiet for a second week in a row. In the tanker sector we had the sale of the “DAEWOO 5473” (300,000dwt-blt ‘20, S. Korea), which was sold to Greek owner, Thenamaris, for a price in the region of $94.0m. On the dry bulker side sector we had the sale of the “TRENTA” (56,838dwt-blt ‘10, China), which was sold to Indonesian buyers, for a price in the region of $6.75m.

Newbuilding (Wet: Stable+/ Dry: Soft-)

The number of the weekly surfacing newbuilding deals remained distinctively low, while the very little confirmed activity concerned exclusively tanker deals. With contracting volumes keep witnessing anaemic volumes, it is only natural that price ideas are still correcting downwards (sometimes even within a couple of weeks time), while comparing today’s price levels to those back in the beginning of the year, we see that the biggest discounts have been recorded in dry bulk prices. Indeed, all asset classes in the sector have seen a decrease ranging from 4% (Capes) up to 7% (Ultramaxes), while on the other hand, tanker newbuilding asset values have managed to resist much better so far, with declines in all sizes ranging from 0.9-1.5%. In terms of recently reported deals, Greek owner, Pleiades, placed an order for one firm Aframax crude carrier (114,000 dwt) at Daehan, in South Korea for an undisclosed price and delivery set in 2021.

Demolition (Wet: Soft-/ Dry: Soft-)

This has been another slow week on the demolition front, with easing restrictions across the typical demo destination countries in the Indian subcontinent market allowing for a few sales to take place, while given the fact that  some cash buyers have been already displaying increased interest, it seems that activity wise the market should return to normality soon after the full re-opening takes place. Demo bids remain under pressure at the same time and despite the fact that scrap steel prices have been witnessing improved levels lately, while given the excess supply of demo candidates we expect to see once operations resume in their entirety, it seems highly unlikely to witness substantially positive price improvements at least throughout the first half of the summer season. Average prices in the different markets last week ranged for tankers between $160-320/ldt and those for dry bulk units between $150-305/ldt.