Home / Shipping News / International Shipping News / Trafigura: Shipping and Chartering Perfomance Review

Trafigura: Shipping and Chartering Perfomance Review

Wet freight
During a challenging year, the global wet freight market regained momentum, with shipping in higher demand as the war in Ukraine rapidly reshaped traditional global trade flows. The Trafigura Wet Freight team was able to adapt quickly to the new landscape to enable Trafigura and third-party clients to continue to provide reliable supply of commodities to customers and delivered a robust performance in the year to 30 September.

As trade flows evolved and altered as a result of the sanctions imposed on Russia, we were well positioned to adapt thanks to our decision to charter more vessels when the market was weak in 2021. We were able to leverage this capacity for both internal and external customers globally as they reacted to significant disruptions.

The new additions to our fleet, with up to 230 vessels under our management, were on average just over seven years old. This modern fleet provided significant efficiency gains in terms of fuel consumption and greenhouse gas emissions per tonne/mile. This planning, in combination with our work with owners to manage efficient tonnage and to retrofit energy-saving devices, complemented our decarbonisation drive ahead of up-coming regulatory developments including the addition of shipping into the EU Emissions Trading System (EU ETS), and the introduction of new carbon-intensity targets from the International Maritime Organisation (IMO).

In a year in which we notably increased our shipping activity, we also concluded more than 14 sale-and-purchase and long-term leasing transactions. Going forward, our focus will be on further improving efficiencies within our current fleet.

For LNG carriers, volatility was the main theme of 2022, following the invasion of Ukraine. We expect rates in this market segment to remain elevated in 2023 as a result of strong demand in Europe for natural gas because of lower flows from Russia.

The LPG tanker market was more subdued than other segments as a result of weakness in China’s petrochemical industry, but still offered plenty of opportunities. The next 12 months may see some challenges for owners of Very Large Gas Carriers as a heavy orderbook increases vessel supply, but healthy US export growth should remain a supportive factor for freight rates in 2023.

In the coming year, the oil tanker market will be supported by the longer distances that vessels will have to travel because of G7 sanctions on Russian oil, which take effect in December 2022 and February 2023. The possibility of a global recession and further geopolitical disruptions are the key downside risks we see. On a more positive note, there is real sense of discipline with regard to new-build orders, even though current markets are some of the strongest in recent memory.

Significant consolidation among owners and fragmentation among charterers are other key dynamics. All of this is translating into more volatility, which we are well positioned to capitalise on.

Trafigura’s work to decarbonise shipping
Despite volatile market conditions, Trafigura has continued to decarbonise its operations, with significant investments in staff, software, data management and energy savings technology. We are targeting a 25 percent reduction in carbon intensity by 2030 against a 2019 IMO baseline across our owned, long- and short-term leased shipping operations.

We continue to advocate for a global carbon levy on marine fuels and have implemented several measures on our owned fleet to capture immediate efficiency gains. These include wake-equalising ducts, carbon measuring devices and modern silicone hull paints. Together, these measures have already resulted in a meaningful reduction in our emissions. We will also continue to leverage our size, scale and resources to collaborate with leading technology and engineering companies to help pave the way forward for the rest of the industry.

Trafigura is a founding member of the Sea Cargo Charter, an industry coalition established to collect, assess and report shipping emissions. In 2022, the Sea Cargo Charter published climate alignment scores for 25 charterers and operators including Trafigura and an update on progress toward the IMO goal of reducing shipping emissions by at least 50 percent by 2050. We are proud to have contributed to this report and wider efforts to increase the transparency and measurement of carbon emissions in shipping.

Finally, we are trialling several new fuels on our owned and chartered vessels, including methanol, LPG and biofuels, to increase our understanding of the viability of various low-carbon fuels. Other initiatives include the cosponsoring of a two-stroke engine that can run on green ammonia, which is under development at MAN Energy Solutions, and investment in on-board carbon-capture technology developed by Swiss maritime technology start-up Daphne Technologies.

Dry Freight
As in wet freight, turbulence characterised the year for dry freight, although the impact was uneven across vessel size classes.

The market for Capesize vessels, the largest class of bulk carriers, was remarkably dynamic, with average daily timecharter rates over the year ranging from a high of almost USD87,000 a day to as little as USD2,500 a day, making profitable positioning around such extreme market volatility a challenge.

This was caused, in part, by the war in Ukraine, with the country’s iron ore producers forced to divert shipments to the national rail network following the closure of its Black Sea ports.

In contrast, exposed to less volatility, smaller-size vessel classes enjoyed a historically strong year, although we did see a marked swing in the relative strength of different markets and geographies.

One of the main features of the year was changing trade flows in coal, as utility companies in Europe were forced to look for alternative sources of supply before a ban on Russian imports came into force. One of the largest swings involved South African coal flow into Europe to replace Russian coal, at an annualised rate of 28 million tonnes compared to two million tonnes in 2021.

These changing dynamics helped the Dry Freight team deliver a strong performance. Voyages rose to 1,344 from 1,226 a year earlier, while volumes were little changed at 41.0 million tonnes versus 41.6 million tonnes in 2021. We were fortunate to avoid any major weather, strike, COVID-19 or force majeure-related events during the year.

Our Supramax book was a standout performer as the decision to expand the team paid off, giving the team a greater global presence. Mineral concentrates shipments from Mexico and Peru continued to form the backbone of our business.

Looking ahead, we expect a balanced market in 2023 and time-charter equivalents rates to be ahead of the 10-year average. The big wildcards for the market are the possibility of a global recession and the number of new-build container ships that hit the water, which could affect the flow of container traffic into bulk vessels.

The Dry Freight team will stay focused on delivering cost-effective and competitive freight for our customers, while anticipating the impact of and ensuring compliance with new environmental regulations, which will see shipping included in the European Union emission trading scheme.
Source: Trafigura

Recent Videos

Hellenic Shipping News Worldwide Online Daily Newspaper on Hellenic and International Shipping