Hellenic shipping fleet is bound to continue growing in size and numbers, breaking new records in the years to come, according to Mr. John Pachoulis, President of the Hellenic Shipbrokers Association. He also stresses out that this growth is
channeled towards bigger and younger vessels, which means that the fleet renewal process is well underway.Β Regarding the current level of the dry bulk freight market, he said that "the good market should smoothly continue with a small interval, just before and during the Olympic Games, when China is expected to reduce the imported commodities".
Recently, we were informed by the Committee that the Hellenic-owned fleet now stands at 4,173 vessels, against 3,699 in 2007, with even larger increases in terms of deadweight tonnage. Today, the country's shipping industry controls 16.4% of the global tonnage. Could you comment on these developments?
Well, after the great increase of the freight market during the last five years, it was obvious that the Greek shipowning community would take advantage of this and grow to today's levels. It goes without saying that this increase in deadweight will continue in the years to come, as Greek shipowners have a great number of vessels under construction or ordered, with deliveries up to 2012.
The market is still very much assisting towards this development and I strongly believe that we are going to reach new records in future.
It is also important that the shipowning community developed the mentioned expansion plans on the basis of younger vessels and newbuildings, allowing the renewal of their fleet, thus we don't only have an increase in deadweight but also the average age of the tonnage was considerably lowered.
What triggered the record rise of the freight market during 2007?
It is well known that the freight market depended mainly during 2007 on the growth of the Chinese, Indian, South American and Russian economies.
According to analysts the continuing Chinese imports of raw materials such as iron ore, metallurgical coke and recently coal (although China is a coal producing country), would have a tremendous effect on global freight markets. Since the raw materials are shipped in large quantities mainly served by ships like Capers (Capesizes) and Panamaxes, there was an obvious shortage in tonnage of the mentioned types. The market was exceptionally good, following the supply and demand rule, so the increased imports of iron ore in China which were planed to reach the quantity of approximately 400 million tons, increased in total in 2007 by about 75 million tons compared to 2006, finally reaching 480 million tons. The majority of these imports were from Brazil, Australia and India. So after the monsoon period, which restricted the exports from the Indian ports, we experienced the largest demand on vessels of any type, size and age in order to serve the already signed and existed contracts.
On the other hand, although China was a coal producing and exporting country, we noticed that exports have decreased, since 2006, while at the same time imports have been increasing, thus requiring a good number of ship tonnage. In addition, India had a great demand in coal, therefore imports were also increased and expected to increase by 15 per cent per annum until 2013.
How sustainable are the high rates observed in the dry bulk market?
It seems that the market, with several fluctuations. will continue to be good enough. Although, iron ore producing countries announced a tremendous increase of 65 per cent on F.O.B. prices which will have an effect on the seaborne trade, I believe that the needs of raw materials will continue as the developing countries will be purchasing. The further softening of the U.S. Dollar is allowing also the trade to be strong, so the feeling is that the good market should smoothly continue with a small interval, just before and during the Olympic Games, when China is expected to reduce the imported commodities.
Why has the wet side of the market (tankers) taken such a hit during these last months? Is there an "exodus" visible ahead?
Considering the new double/double tanker deliveries which started already a couple of years ago bringing a surplus in tonnage, together with the volatility of the crude oil prices and the uncertain situation of the world stock markets, the low tanker market proved to be an expected situation.
The "exodus' might come at the end of 2009/beginning of 2010 when the single hull vessels will be forced as per the IMO regulations to enter into scrapyards.
There is a growing sentiment that 2008 will maybe be the last "good" year for the dry bulk market, mainly because of the large orderbook. Do you agree with this scenario?
With the recent developments in the world trade one could accept this idea. But it is not the case. The developing countries will continue to import, even in higher prices the raw materials, also the todays' importing countries might have a new export policy of their heavy industry products, which will allow the world trade to continue at acceptable rates. The new deliveries of dry cargo vessels will have definitely an impact in the freight market during 2009 and 2010 when the majority of deliveries will take place.
However, the new ship deliveries might force the shipowners to scrap their older tonnage as they will not be able to face the competition from the younger vessels, especially when belonging to the same fleet of one company, therefore creating an internal competition.
How will the huge increases in iron ore prices (65%) affect the market, in terms of cargoes and shipbuilding prices?
The increased requested prices will have at least for a period of time a great affect in trade, which will most probably drop today's volume of iron ore transportation. Nevertheless we hope that same will be just periodical and eventually, the buyers will have to absorb the new prices and rates. We have experienced a similar situation when the freight rates for Capers increased by even 400-500 per cent. At the end of the day the increases were accepted. The only problem arising is that the price of steel will be considerably higher with the consequences this might bring in the shipbuilding industry but also in any construction where steel is required.
The needs in steel even with higher prices will remain as China is reconstructing the railroad network, being also in the middle of reconstructing the whole countryside. Therefore , although the prices will be increased the trade will continue.
As President of the Hellenic Shipbrokers Association (HSA), you represent one of the most important shipping services sector of the market. How has the role of shipbrokers changed in the course of years, in order to keep up with the shipping industry's fast pace of growth?
Shipbroking has always been the service which was assisting in the smooth and overall economical management of the vessels. Hellas being basically a shipowning country gave the chance to Hellenic brokers to follow the growth of shipping and since the mid 70's to have a tremendous growth, parallel to the one of shipowning. The recent developments in telecommunications assisted in the world's recognition and appreciation of the Greek shipbroker. Shipping in general is the first globalized industry and broking being part of it has been following the same route. The Hellenic shipbrokers are considered amongst the most educated, experienced and hard working brokers in the world having the chance to serve not only the Greek shipowning clientele, but also the worlds' greatest companies, charterers and owners which entrust the talent and abilities of the Hellenic shipbrokers.
HSA has began a very important initiative in providing a chance of further education on shipbroking procedures and practices, through a series of seminars. What's the response to these seminars?
The series of the seminars for practical education in shipbroking commenced in 1999 by 3-4 experienced shipbrokers in an effort to assist the graduates and students of the shipping schools and universities to understand the practical procedure of fixing a vessel. Gradually the seminars gained credit amongst the participants and proved to be a tool which would add value to the theoretical and academic knowledge.
The educational committee and the teaching panel is voluntarily working, therefore the participants can get the practical part of the business at nearly no cost. The recognition of Piraeus University and other Greek and foreign shipping universities and institutions leaded H.S.A to target on high quality practical education, which we believe was achieved. After attending the series of twenty 9-hours seminars the students are giving verbal and written examination, which are leading to the S.G.C. (Shipbrokers Gnosis Certificate), a certificate counter signed by Piraeus University certifying that the holder has the basic shipbroking practical knowledge. We are happy also to see that the seminars were attended by delegates of Ministries, port Captains, young brokers, shipping companies officials which were interested in getting the basics of chartering.
We do believe that this effort has to continue as the older and experienced brokers can pass their knowledge to their successors.
Despite the fact that shipping is one of the best places for a youngster to be, the shortage of seafarers and marine officers is growing. The problem is expected to intensify as more and more vessels keep coming into the market. How can this issue be addressed?
The question on the Greek officers and crew is actually a problem. Hellenic shipowners have always wanted their vessels to be served at least by Greek officers. In this respect, Ministry of Mercantile Marine has started a campaign in persuadingΒ young students to join the Mercantile Marine Academies with the result that lately we have experienced an interest from highschool Graduates. The great advantage of the seafarers career is that students are having the privilege of a salary and also a very well paid career, which can be continued in a shipowning office ashore.
We cannot forget that today's Hellenic shipowning miracle started mainly from ex captains and engineers which became shipowners and continued their shipping career on another field. It is still a challenge.
Nikos Roussanoglou, Hellenic Shipping News Worldwide