2-1 Chapter 2 International Sea-Borne Trade 2.1 Outline The
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Chapter 2 International Sea-borne Trade 2.1 Outline The international movement of goods through the Suez Canal is dependent upon the general world economy, global trade and competitive pressures from airfreight, overland routes and the Panama Canal. In this chapter the following factors that influence to the sea-borne trade through the Suez Potential are discussed. 1) Containerization 2) Vessel Development 3) Sea-borne Route: Panama Canal route Arctic Ocean route 4) Land Transportation: Pipelines for Crude Oil Land bridges for Containerized Cargo 2-1 2.2 Containerization 2.2.1 Trends in the world There are several general cargo commodities experiencing a continued loss of market share to containers. Break bulk refrigerated commodities are still in decline, despite the overall growth in refrigerated trades. The increased capacity of new containerships for refrigerated containers combined with the increased trade route services of strings of larger containerships has further reduced the future potential growth for refrigerated general cargo moving in conventional refrigerated vessels. General cargo of the roll on-roll off (Ro-Ro) type continues to grow in the domestic or a short-distance trip. But Ro-Ro is not popular in long-haul trip. The Ro-Ro trade is handled by a consolidated group of companies whose vessels carry containers to balance their capacity utilization. Growth in Ro-Ro and also heavy lift cargo will follow closely the industrial growth of the world, with energy industry growth contributing significantly to this growth. Strength of demand for imported higher value goods moving in containers is forecast to continue as recovery from the Asian economic crisis of two years ago proceeds. With the prospect of additional increases in container trade, the industry has responded with new orders for significant numbers of new container vessels. The pattern of an annual Fall seasonal peak in container cargo trade will continue in the future, but the peak period will likely lengthen as shippers and carriers adjust rates and planning to reduce the impact of the capacity problems faced almost every year. The lengthening out of the peak shipping period is also a reflection of the increasing maturation of some trade lanes, with container penetration complete for high value commodities and additional container traffic coming from special applications such as tank containers and the use of flat racks to carry outsized goods on container vessels. The container shipping company alliances and mergers continue to affect the market through newly optimized service patterns and joint service arrangements. The recent increases in average rates have been easier for shippers to accept with improved service offerings and better transit times on many routes. Exports from China to Europe have grown significantly recently, leading to very high vessel capacity utilization westbound to Europe. 2-2 2.2.2 Trends in the Suez Canal The cargo volume loaded in general cargo carriers has been decreasing and general cargo is shifting to containerships. As vessel size of containers is increased to almost double from 1980, containerships and containerized cargo has become major transit of the Suez Canal. 200,000 180,000 160,000 140,000 120,000 100,000 ('000 SCNT) 80,000 60,000 40,000 20,000 0 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Year General Carrier Containership Source) SCA Yearly Reports Figure 2.2.1 SCNT of Containerships and General Cargo Carriers 14,000 12,000 10,000 Containership 8,000 6,000 Number of Ships General Carrier 4,000 2,000 0 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Year General Carrier Containership Source) SCA Yearly Reports Figure 2.2.2 Number of Containerships and General Cargo Carriers 2-3 2.3 Vessel Development 2.3.1 Vessel Size The development of the world fleet is an important factor for the future of the Suez Canal. Information from Clarksons Research was used to examine the size of vessels. As for all ship types, 92 percent of the active world vessel fleet and order book is below 80,000 tons deadweight. Of this, 81 percent is below 40,000 DWT. DWT >= DWT 80,000 40,000- 8% 79,999 11% DWT < 40,000 81% Source) Clarksons Register Figure 2.3.1 World Fleet - All Ship Types by DWT (1) Bulk Carrier The size distribution of the world dry bulk vessel fleet mirrors the distribution of the overall world fleet, with 92 percent below 80,000 DWT, although a higher proportion of the vessels are in the 40-79,999 DWT size range. The two major commodities that move in these large ships are coal and iron ore, primarily sourced in Australia, South Africa and Brazil. All three countries benefit from deep water access channels and ports. Most of the other countries that serve as marginal suppliers of these products do not have deep-water access and are themselves restricted to loading smaller “Panamax” vessels. DWT >= 80,000 8% DWT 40,000- 79,999 DWT < 21% 40,000 71% Source) Clarksons Register Figure 2.3.2 World Fleet - Bulk Vessel 2-4 (2) Tanker The world tanker vessel fleet size distribution has 80 percent of vessels below 80,000 DWT and a smaller proportion of the fleet below 40,000 tons. This is commensurate with the global distribution of supply and demand for crude oil which is on routes that are potentially through the Suez Canal but not the Panama Canal. The Suez Canal restrictions allow for larger ships to pass through and the existence of the SUMED Pipeline provides route alternatives for supplying oil to Europe from the Arabian Gulf. DWT >= 80,000 20% DWT 40,000- 79,999 11% DWT < 40,000 69% Source) Clarksons Register Figure 2.3.3 World Fleet – Tankers (3) Containership The world container vessel fleet is predominantly below 50,000 DWT. It has been only in recent years that the vessel sizes have moved beyond the 50,000 DWT size marker. The trend toward larger containerships has been discussed previously. It must be noted that the trend toward increasing vessel sizes continues apace in this sector as international trade volumes grow in an environment of globalization and liberalization while ship operators want to achieve better economies of scale and improved financial results. The distribution of the container vessel fleet in tonnage terms is not particularly illustrative. The consultants have therefore used the databases available from Clarksons Research in order to provide a more meaningful breakdown of the fleet. DWT >= 50,000 9% DWT < 50,000 91% Source) Clarksons Register Figure 2.3.4 World Fleet - Container Vessels 2-5 Today, only slightly more than five percent of the container fleet have above 4,000 TEU capacities. The very large vessel sizes are active only on those routes (Europe-Asia and Asia-North America) that provide sufficiently large volumes of cargo over a fairly narrow range of ports. Part of the size configuration is also driven by the nature of the goods moving, with predominantly light, volumetric (high TEU requirement) cargo originating in Asia. 4,000- >=6,000 5,999 TEU TEU 2,500- 5% 0.2% 3,999 TEU 16% <1,000 TEU 1,000- 41% 2,499 TEU 38% Source) Clarksons Register Figure 2.3.5 Number of Container Vessels Based on Clarksons Data The design draft of the container vessels has kept pace with the increase in TEU capacity. There is a strong relationship between DWT and draft, but this is mitigated by both length and beam. For example, a relatively large TEU size vessel, such as those operated by Hapag Lloyd, may still be Panamax, but their beam will be comparatively narrow, creating a deeper draft requirement compared to a larger ship with a broader beam. The introduction of the vessel, Regina Maersk, began the second phase of post-Panamax containerships operating in world trade. The most important functional characteristics of these Post II vessels, is their ability to accommodate 14 rows of containers under deck with 17 rows across on-deck. In comparison, Post I vessels, with capacities of 4,500 - 5,500 TEUs accommodate 15 rows, and a Panamax containership accommodates only 13 rows. Along with the larger vessels’ greatly expanded carrying capacity, their draft requirements are greater than current operating depths of the smaller vessels. There are no existing container vessels or ordered containerships of draft greater than the Suez already, however. 2-6 50 45 40 35 30 25 20 Draft (Feet) 15 10 5 0 <1,000 TEU 1,000-2,499 TEU 2,500-3,999 TEU 4,000-5,999 TEU >=6,000 TEU Source) Clarksons Register Figure 2.3.6 Average Containerships Design Draft The age profile of the ships is also illustrative; it indicates that the majority of the vessels currently in service will continue to be active for a considerable period of time. Some of the first generation containerships built in 1969 are still active today, many having been re-engineered from steam to diesel, prolonging their life span. 90,000 14 80,000 12 70,000 10 60,000 DWT 50,000 8 Age 40,000 6 30,000 4 Avg Age in Years DWT (Metric Tons) 20,000 10,000 2 0 0 <1,000 TEU 1,000-2,499 2,500-3,999 4,000-5,999 >=6,000 TEU TEU TEU TEU Source) Clarksons Register Figure 2.3.7 Average Ages and DWT of Containerships This profile of containerships is not dissimilar from the profile of the world fleet where the majority of ships have a design draft below 12 meters.