ECSA - The Tramp Shipping Market Mar 2015

ECSA
The Tramp Shipping Market
4.3 Long term trends in the cost of bulk transport
Long term trends in the cost of bulk transport provide an indication of the economic performance
of the business. In 1950 it cost about $8 to transport coal from East Coast North America to
Japan. In 2014 the trend, which is linear, had increased to $16/ton. Along the way there were
seven market cycles, peaking in 1952, 1956, 1970, 1974, 1980, 1989, 1995, and 2004-7 but the
average transport cost was $10.9 per ton. The cheapest year for shipping coal was 1972 when it
cost $4.5/ton, while the most expensive was 2004 when it cost $44.8/ton. (The oil trade shows the
same long-term trend, with transport costs fluctuating between fifty cents and one dollar per
barrel. The highest cost was in 2004 when the price went to $3.37 per barrel and the second
highest was almost 50 years earlier during the 1956 Suez crisis when the cost went up to $2.1 per
barrel. In five years, 1949, 1961, 1977, 1994 and 2011 it fell to $0.5 per barrel).
Compared with other sectors of the economy, the transport industry's achievement in
reducing costs is exceptional. In market prices between 1960 and 2014 the trend price of freight
only increased from $9/ton to $16/ton as shown in Figure 4.( Inflation adjusted prices shown in
Figure 5, which is based on 1950 $ prices indicates a reduction from $8.1 in 1950 to $1 in 2014).
Over the same period average dollar prices increased sixfold. For example a basic Ford motor car
had increased in price from $1,385 to $16,000; the UK rail fare from London to Glasgow from
$23.4 to $190; and the price of a barrel of crude oil increased from $1.5 to $60. Another feature
over this period has been the increase in the average cargo size- for example the average coal
cargo in 1960 was 12,000t, now it is closer to 70,000t.
5 The Supply of Sea Transport
5.1 The world merchant fleet
In February 2015, Clarkson Research had records of 89,636 deep sea merchant ships (bulk,
specialised, liner and non-cargo) of a combined 1,181 million GT, covering all self-propelled
ships of 100 gross tonnes and above. The cargo carrying fleet of 100 GT and above numbered
53,101 vessels of a combined 1,083 million GT, with the remainder made up of 10,689 vessels
supporting the offshore oil industry, 1,911 dredgers, 16,794 tugs and 6,512 passenger vessels.
The balance is made up of small ships trading generally on short sea, non-international routes.
5.2 National registration of the world merchant fleet
One of the major commercial issues in the shipping business is the ownership of vessels. In order
to trade any merchant ship must be registered under a maritime flag, and in making this
registration the shipowner chooses the legal jurisdiction under which the ship will operate.
Because trading on the high seas is less subject to national affiliations than most other businesses,
there is a long tradition of registering ships in countries that are not necessarily the owners
commercial base, so the fleets registered in a particular country will not necessarily give a true
indication of the fleet controlled by nationals of that country.
In February 2015 the 30 most important maritime countries controlled 93% of the world fleet 8 in
terms of gross tonnage. Out of a global merchant fleet of 1,181 million GT, 311 million GT was
registered under the national flag of the owner, and 870 million DGT was registered under a
foreign flag. The world's biggest shipowning nation is Greece, which controls 182 million GT of
ships, with 44 million GT registered under the national flag. For Japan the ratio is even greater,
with 162 m GT controlled, but only 17 million GT registered under the Japanese flag.
8 The tramp shipping market is a global business with the international fleet registered in over 19 countries.
Table on page 24 shows the top 30 ship owning countries.
Clarkson Research Services Limited 20 March 2015