Baltic Asia Mid-Week Freight Report - 23 November 2022

Dry bulk freight rates year to date

This week’s Baltic Report will consider several shipping markets and events that are driving them.

Firstly, the dry bulk segment. With the China Party Congress now complete and some news snippets arising regarding an increase in stimulus for the economy and the housing sector, it has been said that this might begin to start lifting the dry bulk freight sector. Nothing could be further from the truth, as all the dry bulk sectors have been continuing to weaken through a lack of demand.

Combatting a slowdown in China, coupled with economic recessions in most other countries around the world, dry bulk shipping has little hope at this time of an improvement in the short term.

In contrast, the demand for dirty tankers, which carry crude oil, remains strong. This market continues to build as the energy crisis stemming from the Russia-Ukraine conflict intensifies. It’s worth being aware that in the beginning of December, new European sanctions will take affect banning the insurance and financing of any seaborne Russian cargo.

This is expected to make it increasingly difficult for Russia to have oil cargo carried on much of the world’s tanker fleet. In addition to that, Europe is also further limiting the purchase of oil into the European region. These sanctions are expected to have a dampening effect on tanker prices, yet it is a little too early to be sure and will only be known post implementation.


Dirty tanker freight rates year to date

Looking at the spectacular fall of the Freightos Container Index we can see the index value continues its relentless decline. The trend is clear and decisive with little time left before values return to pre-covid levels. This is not such an enticing thought for owners yet for the everyday person, falling container freight rates will come as quite some relief.


Freightos Container Index declines


Hull maintenance is key to vessel performance

In the drive to improve the performance of vessels, which now more than ever in the limelight with regards to environmental concerns, owners are constantly looking for a technical edge that will help the vessel consume less fuel at desired speeds.

This is not unique to shipping, as many of us can all relate to when comes time to refuel a car. How many miles did you get on that last full fuel tank? What could you do to improve the performance of your own car?

Owners have large technical teams that are dedicated to maintaining their vessels. Maintaining performance is key, and if they are able to improve the performance of the vessel, even better.

The ocean environment can be a very unforgiving place for vessels and machinery. The sometimes-rough conditions a vessel may encounter at seas, such as storms, twist and contort vessels. This is expected by designers and vessels are designed to have some flex lest they snap or break from being too rigid.

We have all seen the pictures of vessels riding high across large ocean swells before crashing down to the next wave. The solid metal structures are seen to impossibly bend and bow on each set.

While the vessels may be built for such conditions, the care and maintenance required is ongoing. Cracks can manifest, and if left untreated, an expensive toll can be taken on the vessel.

Left unchecked, the salt of the ocean will enter exposed metal cracks, weakening the structural integrity of the vessel. 

Exposure to salt is one of the biggest factors in the deterioration of ocean vessels. Ships must be painted regularly to minimize exposure, both on the cargo holds tops and the underside of the hulls. In fact, any exposed metal area will succumb to the ravages of rust.

Looking at the underside of vessels, the effects of salt water, while important, are not the leading concern. The ocean is alive with life and much of that life seemingly loves to attach itself to the underside of a vessel. A vessel left at anchor will quickly grow a garden of sea life on its underside. This growth will drastically affect the performance of the vessel, inhibiting the smooth flow of water across the hull.

The rate of this growth varies from region to region. In tropical water, the rate is faster, while in colder water regions, the rate slows. To prevent buildup of growth, traders will stipulate in contracts that if the vessel is left idle for a set period of time, for example, 20 days in the tropics, then the master is required to take the vessel on a short trip at full speed to use the water current to blast off some of the growth.

While this will help remove the growth, it is more advisable not to let it grow on the hull to begin with. For this reason, vessels are often painted with protective anti-fouling paint, which helps to stop growth forming on the hull.

This type of specialist paint comes in many versions and at different price points, which are all considerations for the vessel’s technical departments. The paint must also contend with salt water, so the process of reapplying, as you can imagine, is ongoing.

A vessel’s technical department has many other areas of concern they must address to ensure a vessel is well maintained and seaworthy. The ocean will age a vessel quickly if maintenance is ignored. This is a particularly heightened risk for owners during times of low markets and poor returns where vessels are often neglected.

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