We should savour our pleasure! The year 2003 was an
exceptional vintage for most shipping and shipbuilding
markets, what wine experts would classify as
outstanding, with an abundant harvest from the three
main crops - tankers, dry bulk and containers.
One has to go back as far as the Six Daysí War in 1973
and to the Suez crisis in 1956 to find such an
equivalent jump in freight rates, but this time without
any menacing world war or oil embargo, and really just
one principal cause: the economic awakening of China,
with its dramatic repercussions for bulk and containers
and to a lesser extent oil markets.
The increase of raw materials imports and finished
products exports in and out of China, the lengthening
of voyage times, port congestion, and the political
crisis in Venezuela and Nigeria, helped to contribute
to an increase demand in transport of over 7 % for
tankers and bulk carriers, resulting in an average
daily rate in 2003 of $ 52,000 for a VLCC, $ 42,000 for
a Suezmax and $ 34,000 for an Aframax, whilst the same
average rate for bulk carriers was $ 40,000 for a
Capesize, $ 20,000 for a Panamax, and $ 15,000 for a
Handymax. Average freight rate hikes ranging from
between double up to four-times as much within a year!
This resurgence has made owners more confident and
enticed them back to the shipyards, where the level of
orders at the end of the year has reached a record
level of over 3,500 ships and more than 110 million gt.
European shipbuilders, specialising in ships with high
added value, have unfortunately only been able to reap
some marginal benefits from this situation.
With such spectacular increases, one is bound to fear
whether this is not similar to the frenzy seen in the
technological bubble. Are we going to wake up and find
ourselves back down in the doldrums that the shipping
markets have so often suffered, or have we just entered
a more lasting period of virtuous recovery?
It is obvious that some of the excesses experienced
this year will get corrected naturally, and that these
corrections will engender some hesitation and
nervousness. It is unreasonable that the newbuilding
cost of ship can be covered in less than 24 months or
that a ship on order get resold four times before being
delivered and with a final premium of 40 % on
completion. Such speculative enthusiasm can sometimes
be a handicap to a sane and steady development.
However, without being over-optimistic, we believe that
the market is well orientated for this new year, due to
the enormous needs to equip China and its huge
population, the development of the Asian zone,
especially India, and above all the economic recovery
in the US and Europe, without forgetting the developing
trade in energy with the old Soviet republics.
The return to growth within the large economic zones
will automatically contribute to an expansion of
seaborne trade and to a healthy use of shipping
capacities. In addition, the pace of new orders must
inevitably slow down as shipyards are now fully booked
up until 2007.
There is however concern with regards to the fleet of
containerships, whose capacity will increase over the
next three years by more than 10 % p.a., and thus will
only find a full employment provided there is a
sustained and continuous increase in world trade,
although in the light of the current economical context
this is not totally unrealistic.
It is in such a period of feast that France will
enforce legitimate legal means to compete in the
expansion of her fleet, by creating a new French
International Registry and introducing a tonnage tax
We would then hope that, like our European neighbours
who already benefit from these facilities, we would see
the French fleet grow and reach a more respectable
dimension, in line with the economic rank of our