BMTI Outlook 2015

No
Friday, 02 January 2015
bmti daily and independent
BMTI OUTLOOK 2015

FOR BMTI-SUBSCRIBER .
TABLE OF CONTENTS .....................................................................................................................................................Page
Introduction: Embarking on the Next Chapter in Shipping ........................................................................................... 1
Global Dry Bulk Market in 2015............................................................................................................................................. 1
European Short Sea Market in 2015 ...................................................................................................................................... 6
Containership and Project Cargo Markets in 2015..........................................................................................................11
Market View from South America........................................................................................................................................12
Market View from New Zealand ...........................................................................................................................................14
Economic & Ship Investment Developments in 2015..................................................................................................15
Focus: The Future is Now The Promise of New Technologies..........................................................................................17
Introduction: Embarking on the Next Chapter in Shipping
One of the benefits of collecting views about the and that 2015 will defy expectations once again,
year ahead is being able to take stock of the year past. bringing a surprisingly strong market despite our
This time last year, in Outlook 2014, viewpoints earlier low expectations. We are most pleased with
were largely optimistic about prospects for 2014, the contributions that were kindly provided by our
thanks in part to the last quarter of 2013 being such friends and readers, professionals and leaders of their
a surprisingly positive one. That late-year boost of fields, giving their unguarded opinions and highlysentiment and market activity emboldened all but considered thoughts about a market that seems to be
the most pessimistic market players to cautiously getting more complex and unpredictable by the year.
proclaim 2014 as a year of recovery. In hindsight, we Nearly all contributions are published here anonysee that apart from a short jump in Q1, 2014 turned mously to encourage the highest degree of honest
out to be a disappointment to the most positive opinion, but we named any contributors who preforecasts. Now we find ourselves in the reverse ferred to be named. We value this exchange of ideas
positionthe end of 2014 was a sour note in a year and trust there are pearls of wisdom to be gained by
of unfulfilled revival. Perhaps a bit inevitably, the even the most experienced shipping participant. In
majority of prognoses here are of a more cautionary the interest of a successful and rewarding 365 days
and bearish outlook for the year aheadlet us hope, of experience, we wish readers of this year's Outlook
for the market's say, that we are all proven wrong 2015 report all the best in this new year of shipping!
Global Dry Bulk Market in 2015

Unpalatable Prospects for Chartering in 2015 Thoughts from a Continental Broker
The bears have taken a beating and now slightly waiting for the right moment to hold the whip hand.
wounded seem to be limping off the stage, where We aren't that far yet. But all indications give reason
the bulls have been lurking in the background to be more optimistic in 2014 than we were for
Europe's leading trend experts for the shipping industry
02 January 2015
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2013. The market was totally different. But now

after an almost three-month period of steadiness
accompanied by rising rates across the board, which
justifies the word "sustainable", there is reason to
hope for a new period of relative prosperity for the
months to come. Trade volume is expanding and the
shipping industry can hope for steady demand to
continue. Cape owners and brokers have also been
expressing very optimistic views for 2014. The
spectre of newbuilding deliveries is not off the table
to haunt particularly the Supramax section, but its
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effect will be limited in 2014. The pillars in the

Atlantic remain the USG and the new season in
ECSA. Should the present recovery in that area hold
until the new season arrives, we can expect a bullish
market in the Atlantic driving demand all over the
place. The East looks a bit shakier, but with the
Atlantic out-performing the East owners' desire for
Backhaul business will intensify whilst their desire
for fronthaul trips is going to decline sharply unless
charterers are paying a lot of money.
Shipping in 2014 and Looking Forward to 2015 Market Outlook from BIMCO
Global Economy: Fragile recovery highlights the
need for more political initiatives
2014 started with plenty of optimism for a considerably better global economy and an improved
shipping market. Things turned out somewhat
differently. Adverse weather conditions in the US
during winter were the dominant factor, creating a
difficult first half of the year for the global economy.
The developing and emerging markets continued on
a downward trend, while a sunnier outlook from the
US and Europe had the effect of moving the already
more advanced economies forward. The quantitative
easing programme of the US Federal Reserve has
now ended. This is a landmark in terms of recovery.
Following a quadrupling of the US monetary base,
unemployment has come down, the stock market
has gone up and economic growth has become more
robust. The UK followed the same path as the US,
with similar results. This is outstanding in the otherwise sluggish European economic development.
In Japan, "Abenomics" is facing headwinds caused by
a hike in sales taxes and a subsequent return to
recession. Japan's economy has been stagnating for
decades, and it is unlikely to move much further
forward from this in 2015. The slowing of the
Chinese economy is adding uncertainty to the level
of shipping demand generated in the Far East. Its soft
landing seems to incur turbulence, with some
indicators suggesting the official GDP data may not
give us the full story. Growth in emerging markets
and developing economies is set for a comeback in
2015, with GDP-growth improving from 4.4% in
2014 to 5.0% in 2015. The advanced economies are
likely to stay on the recovery track, and improve
their GDP-growth to 2.3% in 2015 (1.8% in 2014).
The common challenges remain poor inflation
expectations, a lack of structural reforms and lack of
job creation. There is clearly room for more political
initiatives in 2015 to support the global economy.
Supply: Stalling orderbook = reality has hit home

The total orderbook remained unchanged during
2014. This signals that the industry is now realising
that more new orders may not be the right thing to
do after all. The fundamental oversupply of capacity
in all of the major shipping segments has not
changed much over the past year. A higher level of
demand has only just matched the net supply of new
tonnage coming on stream.
Crude oil tankers are the only exception to the status
quo in the balance of freight markets. A multi-year
low inflow of new tankers has stimulated earnings
growth of some 20% compared to 2013. Meanwhile,
the growing supply pressure in product tankers
neutralised most of the growing demand side, with
earnings coming in just a little shy of 2013.
Containerships keep getting bigger, breaking previous size records for both individual ships and the
average size across the fleet. The CSCL Globe, with a
capacity of 19,000 TEU, was launched in November,
and the average TEU capacity of a 2014-newbuild
increased to 7,400 TEU, up from 6,600 TEU in
2013. Next year the scheduled average is 8,000 TEU.
Looking forward to 2015, BIMCO expects the dry
bulk fleet to have found a new "normal" level of
supply side growth, expanding by 5.1% (5.5% in
2014). Regrettably, the level is still too high to
reduce the glut of ships in the market. For tankers,
BIMCO expects the dirty segment to grow by 1.7%
(1.3% in 2014). Three years of low supply growth
has led to more positive short-term prospects for
crude oil tankers. In the clean segment, the estimated
supply growth for 2015 is 4.6% (4.3% in 2014).
Supply growth in the container ship segment is
expected to drop to 5.8% in 2015 (6.2% in 2014).
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Source: BIMCO, Baltic Exchange, Shanghai Shipping Exchange
Dry bulk: New challenges await as demand slows

BIMCO expects dry bulk demand to slow in 2015 to
a rate of 4-5%. Iron ore demand will again be the
centre of attention. In recent years, demand growth
has been biased heavily towards the Capesize segment. In 2014, 70% of the total volume growth
came from increased iron ore demand driven by
China. BIMCO expects this trend to continue, with
Capesizes outperforming the smaller sizes relatively.
Strong iron ore demand in 2014 was somewhat
neutralised by weaker coal demand to China. Meanwhile, Indonesia's ban on exports of unprocessed
bauxite and nickel ore resulted in a weak Supramax
market in the Far East. Towards year's end, the late
arrival of iron ore strong exports out of Brazil proved
to be insufficient to deliver on the promise of 2013,
when rates for all segments went up. While earnings
had hit the floor in 2012, BIMCO expected 2014 to
build on the optimism of 2013 and continue on the
road to recovery. That did not materialise.
market. The export of crude oil from West Africa has

shifted from West to East as the US has reduced its
imports to almost zero. This has given the demand
side momentum, as West Africa now export more to
the Far East, creating many more ton-miles.
For product tankers, the final quarter of 2014 contrasts greatly with the dull and flat market we have
seen for most of the year. Despite US oil product
export growth slowing, it remains a positive story
overall. Demand growth managed to match supply
growth as the positive events arrived late in the year
for shipping markets as well as in global economics.
Falling oil prices stirred some positive unrest in the
tanker market, with rising tonnage demand in their
wake. In spite of the price drop arising from weak oil
demand and oversupply, a currently low and volatile
commodity price is good for trading and shipping.
With a dramatic fall in bunker prices, it is vital for a
continued industry recovery that all shipping
segments resist higher speeds. Failure to do so may
compromise improvement of the fundamental
balance, which is essential to bring prosperity back.
Tanker: what is the "new normal" demand level?

The crude oil tanker market started 2014 on a very
positive note, with a five-year-high for earnings in
the first quarter. The market's strength showed
clearly in early autumn and in the current winter
Container: High demand & slow steaming stays?

Strong demand growth on the large-volume trades
from Far East to US and Europe has brought lower
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volatility in freight rates on key trades while reactivating most of the previously idle ships. However, in peak season, the steep drop in freights on the
Far East to Europe trade made it clear that the utmost
care is constantly required for the supply side, while
the introduction of ever-larger ships continues.
Improved industry earnings currently rest on one
central requirement: slow steaming and defence of
individual market share. This highly competitive
market only returns a positive margin if the cost base
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is extremely low. BIMCO expects containership supply to continue to grow at its "new normal" level of
around 6%, making the demand side a focal point.
European demand has been stronger than private
consumption figures indicated, and we may well see
further improvement for US demand. The USEC
could build further on a remarkable year as the ports
prepare for the imminent arrival of ultra-large container ships. Enlargement projects in the Panama and
Suez Canals will further influence ship deployment.
Expectations & Estimations from a Black Sea-Based Shipping Analyst

My expectations are from my estimates by analysing
indicators in the past 10-15 years. I read the data of
demolition markets, newbuilding markets, bulker
TCs, spot markets and BDI index changes only.
Looking to demolition market indicators, I saw that
between 1981-1991 (for 10 years) the demolition
level was in 10-30m dwt band. But from 1991 until
2008 the same band continued for 17 years. Then,
after 2008 until today, the demolition level has been
increased over 30m up to 40m dwt drastically. It
means that, the normal demolition balance should
be in a 10-year period for the same levels.
But, in the 1991-2001 period, the demolition balance was the same, however after 2001 till 2008, it
was not changed. It means that, the old ships were
remained in market till 2008. In that respect, after
USD/day
Cape
Pmax
Hmax
2013
20,000
13,000
10,000
T/C market data of bulkers

2014
Moved to
17,000
down
10,000
down
80,00
down
The movement direction of daily hiring rates from

2013 to 2014 has been going down for both TC and
spot markets. In 2015, it will continue trading in the
same band, as per my estimation. Maybe after 2016
(including the first half), it will be able to start to rise.
But, this would depend on the commodity markets.
Let's take a look at the BDI behaviour between 2009
and 2014. It was around 1,250 in February 2009,
after which it rose until February 2010 over 2,000 to
4,000 but then fell again under 2,000 drastically and
continued to fall into around the 1,600-1,200 band
from February 2011 upon July 2013 dates as per my
reading for comparison of monthly change tables. In
this way, I see that the BDI will continue to be on the
same level in 2015 within the 1,000-1,400 band.
This means that the freight market will be change by
2008 the demand on demolition has been drastically

increased up to 2012. The maximum level was 40m
dwt and, after that point, the demolition level
started its recession again and has continued in the
current year. This means that in 2015 the old ships
will stay in the market as well. It also means that the
freight competition will be effected by these actors
to stay at the same level that was in 2014.
On the other hand, in 2015 newbuild deliveries will
be about 95m dwt. And in 2016, it will be 118m
dwt as per present orders. This means if commodity
demands stay at the same level as 2014, that freights
will go down due to the increasing of dwt capacity
by new deliveries! Have a look at the table below.
The data on the table below are only approximate
information from the market from my research:
2013
24,000
11,000
9,000
SPOT market data of bulkers

2014
Moved to
20,500
down
8,500
down
7,000
down
very small recessions in 2015. When I check the

bunker price changes by years, I saw that there was
not drastically changes on bunker prices if
comparing the period of 1992-2004 (first period =
12 years) and the period of 2004-2014 (second
period = 10 years). In the first period MGO prices
approximately were at 200-400 (USD/tonne) band
but in the second period the band was changed
drastically to the 400-1,000 band. Besides, In the
first period, the 380 CST price was approximately on
100-200 (USD/tonne) band but in the 2nd period
the band was changed drastically to 200-600 band.
In my opinion, the bunker prices will not affect the
freight market with drastically alters in 2015, too.
Finally, in 2015 I don't expect to see more changes
from 2014! But for 2016, we may discuss again.
Bulk Market Expectations from a North African Charterer

The world economy was slow in 2014. However,
rates were 3.8% over 2013. It was a result of low
fleet growth from 5.5% to 3% In 2014, freights began strong (9.42% over Q4-2013) and changes were
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(-) 25.89, (-) 2.41, (+) 16.66 Q-to-Q consequently.

Wheat imports to Egypt were from the Black Sea and
France. Egyptian flag ships by NNC increased performance from 2009 (one) to 40 shipments in 2014.
For 2015 prospects:
The world economy will pick up in output and trade
comparing to 2014, there will be increased trade in
coal from South Africa as well as increase in demand
on iron ore as benefit of its low price effecting
increase Capesizes' revenue 40-60% than 2014.
In MENA, the market showed the biggest decrease in
oil prices. In light of keeping production levels from
Gulf countries for the next six months the market
will be in consumers' hands and no improvements
will happen until the fourth quarter.
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Wheat imports, the strategic commodity for North

Africa, will show a considerable decrease in prices in
converse to what was last done in 2014.
UNCTAD 2014 highlighted an increasingly important role for the services sector in its post-2015
trade report. Applying to this recommendation
Egypt
The
hee eis
con
on
ngoing
om
my co
oto
nf eeffect
r en
ncee w
the
ill l b
following
e he l d i ndevelopments:
Ma rch
ch
h
T
The
h
hee enew
cew
o
wno
Su
m
uy
ezzco
Can
a fnealrl en
proje
croje
eoje
jew
e ictltlw
b
i el lheld in March
The new Suez Canal project will finish in
Th
hAugust
e
The Damietta grain logistics project done in 2016
Fleet growth is expected to be 2-3% while tonnage
demand will grow 5-6% instead of 7-8% in 2014.
Therefore, we expect freight rates to be 6% lower.
Looking Ahead at 2015 from a Major European Shipbroker

As everybody seems to be bearish for 2015, and 2014). This increased spot fixing activity may result
everybody willing to be short on tonnage, I would in higher (normal) spikes during the relevant grain
not be surprised if this results in more spot fixing seasons, but generally there is not much else to look
activity, particularly from the grain houses (who forward to for owners.
were burning their fingers with their period ships in
Speculation about the Coming Year from a Continental Owner-Operator
I find it almost impossible to predict the market for
the coming year. Geopolitical unrest in many parts
of the world, a strong US dollar, the Russian economy and the erosion of the oil price all pose individually or in combination a great risk for the world
economy and the shipping market in particular. The
world seems to have forfeited their achievement of
an open minded and peaceful world, with only a
very few exceptions, allowing and supporting the
free transfer of technology, goods and money. The
Cold War seems to be on the rise again with all the
negative effects and new restrictions on world trade.
I expect this to have a positive effect on the feeder

markets with the ever growing SECA areas demanding new distribution concepts and creating a new
individual market. Slow steaming has been introduced on all major routes, offering the best TEU/
mile ratio, thus absorbing additional tonnage. Will
the lines react now that the price for fuel oil has
dropped so drastically and unexpectedly? Are today's price levels sustainable? Will the lines decide
to speed up again? It would only be logical to do so
sooner or later if they continue to always offer the
most economical way to move the boxes.
For the container market, however, my gut feeling is

carefully optimistic, although the trade is also still
full of uncertainties. The consolidation continues,
big is beautiful. Strangely enough all new joint ventures have received approval from the anti-trust
agencies, except for the bravest plan to combine the
three biggest lines. Trade growth is robust and will
likely outstrip supply, although only marginally. Of
the new tonnage entering the market, the majority
will be very large size of ships that will, at least for
the time being, increase the cascading momentum.
How far down in size will this go and will this make
a certain size of tonnage obsolete? It is well possible.
The newbuilding spree seems to be running out of

steam, except for the biggest size ships to be ordered
by the lines that entered a consortium recently in
order to homogenize their fleets. Traditional ship
banks are still exiting the market and are not willing
wait any longer or avail fresh money, thus scrapping
will continue at high levels, although this year fewer
ships than expected were sent to the torch. In view
of the poor TC market scrapping may be the only
alternative for owners with ever younger ships.
To reach balanced market conditions may still take

some more time but looking at the recent
developments it does not seem unrealistic any more.
02 January 2015
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European Short Sea Market in 2015

Short Sea Economic Expectations from a Black Sea Broker & Market Analyst
As last year, more or less during the same period, I
tended to be a bit optimistic due to soaring rates
while I managed to contain my enthusiasm and
miraculously managed to conclude as follows: "If
someone decides to drop another bomb at the heart
of the Middle East, or after Spain, Italy and France
cause additional worries in Europe prompting the
ECB to throw more money on the fire, that is
another (and rather well-known) story." That is a
perfect demonstration of how a tiny bit of prudence
can save an economist from being regarded as
completely inaccurate.
However, I shall continue being upbeat, (after all
even a broken clock shows the correct time twice a
day). But I have other (viable) reasons. Let's start
with Black Sea. It is true that the region is engulfed in
a conflict and that the Russia-Ukraine tension is
being fanned by at least visible external factors that
could depress trade. It is also true that the recent oil
price plunge could seriously deteriorate Russia's
commercial and financial stability. But a depreciating
ruble could and would lead to "other" commodities
being much more competitive in the Mediterranean,
which was a lost cause until recently as China started
exporting its surplus steel to the region. This could
be partially reversed if the ruble stays depreciated.
The same goes for oil-related products like fertilizers. Cheap oil and a weak ruble might contribute to
Russian exports. Grains are priced on USD or EUR
terms in the region whereas Russian farmers incur
manpower, fertilizers, and even the fuel they burn
on their reapers in ruble.
Anyone with an in-depth micro and macro-economic commodity view can make even more so-
phisticated comments on these, which could largely

contribute to the above. My point is: while economies "might" suffer, exports will flourish due to
price competition reflecting somewhat positively on
the Black Sea coaster rates.
Considering the Med, the ECB has embarked on a
Fed-like monetary easing programme, one largely
aimed at Southern European economies like Italy,
Spain and France, which were seemingly recovering
last year but suddenly started to slide again. This
might be the last chance of a much sought-after
recovery (despite the near "rebukes" drawn from
Germany) and if it is really going to work, it must
stimulate growth, spending, employment, etc. If this
is successful, demand will start to finally pick up in
the region. But this is, I'm afraid, among the best case
scenarios for the Mediterraneanhas anyone been
following the recent news from Greece?
In North Africa, Libya is now producing oil at an
increasing rate, but there is a de facto split situation
in the country. Egypt is in better shape compared to
last year, but the Arab Spring will always be just
around the corner as Syria is still in shambles. Algeria
is doing well, but we have yet to see how oil and gas
prices will affect this energy-exporting country.
Overall, I'm generally optimistic about the Black Sea,
unless conflict deepens. I'm a bit concerned about
South Europe, but sincerely wish good luck to Mr.
Mario Draghi and finally, I'm reluctant about North
Africa. Everybody is tired of reports pointing to the
"significance of this quarter, importance of that
agenda" so I won't insist, but I should still say, "The
second quarter of 2015 might see new dynamics
introduced to the global commercial paradigm."
Key Factors for the European Coastal Market in 2015 from a Continental Broker
Weak fundamentals from economical growth and
industrial production within the EU and adjacent
regions for the shipping market in Europe will also
remain in 2015. Economical growth forecasts for the
European Economies (especially the major economies) have been downgraded very recently. This will
continue to play its role on shipments of unfinished
goods and industry raw material. Seasonal factors
(grains, agriprods, ferts etc) will certainly play a role
in the first quarter of 2015 if grain prices increase
again which is likely to happen if Russia reduces its
exports by introducing tariffs. This may temporarily
lift freight rates in the northern European trades.
Trade in 2014 was also influenced by political

tensions, especially the one between Ukraine and
Russia. This will continue to harm shipping in 2015
as a simple and quick solution seems unlikely and
the psychological factor for business (taking into
consideration the ongoing sanctions) should not be
underestimated. The introduction of SECA in 2015
covering the Baltic, North Sea and English Channel
will have no big impact on freights within or from
those trades as long as the freight market does not
pick up and as long as the bunker prices remain low
(which is more than likely in the short term).
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Scrapping will continue to play a role on the tonnage

side. Scrapping potential is still huge with a nearly
non-existent newbuilding orderbook. Owners will
be further forced to consolidate as cash flow problems will stay on their agenda, lacking availability of
bank finance. The positive thing related to this is as
long as there will be no fresh bank finance there will
be no new orders for newbuildings. With stronger
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regulations for banks in force, increased ship finance

is not expected. Therefore, the risk of an oversupply
in the short term in this segment remains very low.
In sum, we do believe that the activity of the freight
market in 2015 will not be able to catch up with the
one in 2014 but owners may be able to compensate
this with further decreasing or steady bunkerprices.
Short
1 5 willSea
l yiPredictions
e l d 15
5
from a Scandinavian Shipbroker0
2015 will yield 15-20% better earnings than 2014 On the negative side, we'll see a worsening refor the coaster market, mainly from lower fuel costs. lationship between Russia and the EU that will negMy guess is that 3,500 dwt coasters will see average atively impact European trade volumes. Likewise, a
weaker rouble will cut Russian imports from the EU.
earnings of EUR 2,550 daily TC by the end of 2015.
Falling oil prices will stimulate European industry
and thus result
On t he in
ne gimproved
att i vee sii ddemand
e,
for coasters.
Crystal Ball Insights from a European Short Sea Owner
After a long period of down turn we have seen now
for the first year 2014 a small upswing in rates and
even kept it strong to the year end, Christmas time.
What we see for the 2015 will be again a crystal ball
story. Being in shipping already a few year it never
been so hard to get charterer to give some prospect
for the period coming. Do they rely don't know?
Are they hiding them self and be affright for another
wrong market indication?
NO they are right, this world has been changing as
from financial crisis we just came out of, wars
coming from all directions and then the change of
important rules like the IMO's in January 2015. We
scarcely survived the crisis and shipowners have to
invest in new demand for the SECA waters. People
will say, but that was known already long time, yes,
right you are, but we had other problems to take care
of. Bankers created the financial crisis and are overreacting, trying to correct their own balance sheets.
Calling in their loans and starting to own the (bank)
vessels. This would not affect the market when they
would be willing to help the shipping by lay-up the
vessels. But no, they put them back in trade and
create competition for the remaining owners. Let's
see when this will come to an end, fighting your
own bankersit's the world upside down.
In this new financial playing field, we see it's hard to
find financing grounds for new projects like innovation for new SECA areas. The trend goes to LNG.
Owners have to invest in this concept, but can hardly find financiers to assist in these high capital investments. Even though LNG projects emerge all
over the SECA trading area, it seems bankers believe
they are not being built for LNG-powered vessels.
The scrubber concept for the short sea vessels up to,
say, 8,000 dwt is far too expensive and the ships lack
sufficient space for a build-in of this system on

existing vessels. This means owners have only one
option, leaving the SECA area (reverting on this).
Innovation for new fuels is ongoing and of course a
set-back for investing was coursed by the sliding
Barrel price. Market is telling that pricing will be US$
70 for 2015 and US$ 75 for 2016. That will mean
that innovation projects like Scandinavia's first lithium-ion-powered electric car ferry will need more
time to become economical. But sure it will come
owners will keep on innovating. We need to keep up
with the new standards of life.
Not only owners are changing fuels. Power stations
have also started to no longer use regular fuels and
are moving to bio fuels like wood, RDF and other
new sources. This off-course will generate new
trades and new vessels to be built. Looking to the
problems that owners will face in SECA, we will see
that owners with older vessels will leave the SECA
area due to technical reasons, being unable to refit to
MGO burning tier II engines, unable to finance the
available scrubber systems and refit for LNG.
I would believe they will look for new market
playing grounds in the Mediterranean. Vessels with a
higher age also could move further to India as the
Indian government has granted the shipping industry a high subvention to increase their domestic
sea transport. The background is that their roads are
fully congested and this needs to be reduced.
For the Baltic, we will then see a quite positive upswing as vessels leave the SECA area. Now new
vessels are being built for the new standards and new
products (bio) moving. Perhaps this coming winter
nature could help owners to get paid better when
Old Man Winter shows his real face.
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That will affect the rates upwards and one could

believe that it will remain strong for a longer period
as supply of new ships will be slow due to difficult
financing and long building times. In short, the
Baltic will get stronger and could be even return to
normal rates as seen in 2005-2006.
For the Med we are more hesitant, why?
The Mediterranean is not yet a SECA area, therefore
all the vessels that have problems to meet up with
the regulations will look for shelter in the Med. The
sanctions for Russia will of course also effect trading
to and from Russia as well as the Black Sea market.
This could result in a downturn in this market.
But on the other hand, the IMO regulations also
could help the Med, as the big liners are not able to
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comply with the new regulations, and it could very

well be they will seek non-SECA ports in the Med.
In result this will increase the cargo flow extensively.
This would mean that far more short sea vessels will
be needed, but as the ports are not yet ready in the
Med to take this hub already possible on short
notice. It will take years to get the ports ready and, in
due time, the Med will be also be a SECA area.
Having digested the above, I feel charterers need to
refresh their fleets to be ready for the market
changes. The Baltic goes stronger and the Med will
be difficult. Owners will find new ways of financing
in due course and, if the economy does catch up, we
are all in a better position. Sailing full speed ahead.
Forecast from a Russia-Based Owner & Broker

As an owner in the sector of modern 10-20,000mt Provided the major transit, there will be a decline of
dwt as well as charterers of the same size, we do see market-driving cargoes like coal, steels and grain.
that next year (2015) will not bring any good news Further, sanctions imposed on my country, Russia,
at all. The situation will get even worse. There is and the sliding rouble will cause export activity to
definitely an oversupply of ships as many owners of reach very limited numbers. Thus, we here share the
overaged tonnage of this size in the Med and Baltic common opinion that freight rates, at least in H12015, will be 30% less than now. The second half of
are greedy enough to send their ships for scrapping.
2015 is really a gray zone without perspective.
Personal Feelings on the 2015 Market from an Italian Short Sea Broker
Commercial trade it looks generally quite "blocked"
due to a very limited trading margin return for all
traders/producers for almost all materials in the
European-Mediterranean-Black Sea areas.
In addition, due local economic crises in the EU area,
political and economic crises in the Black Sea and
some of the African Med countries, the consumption
of many commodities (which are driving this market) like fertilizers, steels, alu products and minerals
(we are not much involved in cereals transport) are
deeply frustrating the general expectations for the
next year and are not even limited to them.
Thus, we expect the volume of dry transport in such
areas for 2015 to almost reflect 2014 or maybe even
worsen within the possible short "waves" of improvement that might depend on stabilizing in some
countries and may determine a certain normalization
of production, export or import, locally.
The purchase price of most of commodities (fertilizers, steels, minerals, alu prods and so on) may
still limit sales due to the short margin in the same
for traders of producers. It will be still be a problem
for many of the cargoes' trade that raw materials
prices could still be too high compared to the final
product's manufacture (aluminium world or steels)
or the final consumer (fertilizer costs for farmers
respective to crop returns).
Most of the trades we are following since 33 years

limit the shipping size or reduce them constantly
due to lower demand. Nowadays, it might become
difficult in the aforementioned areas to find small
3,000-4,000 dwt ships with proper standards because of the increase of demand for such small ships
in the bulk trade market in view of the limitation of
the levels of consumption and trade mentioned here.
In terms of volume, we expect almost the same as
2014 but feel we could eventually bet on worsening
rather than ameliorating the same due to historical
changes of trade, production or shareholder changes
of many commodities producers in such areas.
Liquid - stainless steels ships

Even in such a market (we are only specialized in
phosphoric acid), the situation will not be brilliant.
Due to the crisis, the volume of cargoes will be kept
almost reduced as in 2014 or may even worsen (less
sulphuric acid available due shutdowns of various
refinery plants in the UE area) and, on the other side,
ever fewer shipowners have the financial capability
to keep investing and renewing such small ship's
size fleet in comparison with the freight margin
return of the last few years. It appears that the poor
luck of stainless steel ships in the Med-Black Sea area
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(3,000-10,000dwt) might be more sensitive and

this might determine a possible, small improvement
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of freights for such ships, even if cargo volumes will

always be almost the same or even reduced.
Brief Prognosis from a European Small Size Bulker Charterer

Sorry, but we see no improvement for 2015 but
would estimate a slight market decrease as from the
second quarter 2015 for the tonnage between 30-
55,000 mt. Finally, the short sea market will remain

unchanged. This is what our crystal ball shows us.
A Continental Short Sea Broker Asks: Is Short Sea Bulk Traffic Back to Normal?
After 2014 has shown clear signs of a return to a but this may not be the case for some other traders. If
balanced supply and demand situation over most of only a few larger vessels decide to drop and/or pick
the year, several reasons point to a return to a normal up their cargoes outside the SECA area and have the
market in 2015. Despite the fact that there still is an rest of the job done by smaller feeders and/or
oversupply of vessels in most other markets, the distributers, this may very well have an influence on
only down risk for the small European bulkers is the some ports as well as on short sea demand.
new conflict in the Ukraine and the dare-scenario's
between Russia and the EU. Nevertheless this Reduced fuel prices initiate two other factors but
scenario has apparently not shown any effect in the they are work in opposition. Whilst slow steaming
becomes unattractive, possibly making more transpast months, so the influence appears to be limited.
port capacity, taking longer ballast into account for
On the upside, we see the strengthening economies the better paying cargo is an option again, obviously
in Europe, the expected push for investments from absorbing transport capacity for ballast voyages.
the European Union and, last but not least, the influence of traffic changes due to the new SECA Zone. Despite this slow but steady return to normality,
Although this factor is probably the most obvious average market returns for small bulkers are still
and hardest, its effect still remains the most difficult below levels needed for full service of loan capital
to predict. European coastal traders who inevitably and a long way from attracting fresh investment to
will continually move inside and outside the SECA new ships. Thus, for those who've managed to stay
Zones obviously are well-prepared for the change, in the market there is still room for improvement.
Prospects for the coming year A European Coaster Charterer's Perspective
We suppose year 2015 will be more or less quiet and But on the average we suppose coaster owners will
smooth. Many things happened in political and benefit from more or less stable markets and reduced
economical aspects in 2014 and the task for 2015 is bunker expenses. Implementation of new SECA
to adapt to those changes. Speaking of European and areas is also one more happening to which everyone
Med economies, we'd expect somewhat recession or needs to adapt in coming year. Probably also many
"zero or slightly minus" growth. We think owners shippers (charterers) will have a "slow" year in sales.
will benefit from lowered oil and fuel prices. On the So we hope for more or less stable and smooth year,
other hand, freight markets will probably remain which could be a good thing to wish for.
relatively weak during most time of the next year.
Looking at 2015, Thoughts from a German MPP Operator
2015 will be more challenging than 2014. We will
see less volatile market and the liquidity is likely to
remain tight. Charterers (including Cargill, Glencore,
ADM, etc) consolidate their position as massive defacto operators, competing with the more traditional
owners and operators. Using their huge fleets to
cover their own execution and absorbing what else is
out there in the market, that poses a serious new
type of competition backed up by derivatives and
massive own cargo books. We will continue to see
rates being undercut by operators to keep cash flow
running and might see one or two traditional
operators in trouble. I don't expect more consolidations as counter party risk will remain high. I do
see a new generation of economical and environmentally friendly vessels being delivered as from
2015. Such vessels will have an impact as they will

remain competitive in a depressed marketit has
nothing to do with eco speeds, but rather directly in
connection with the fact these new vessels will burn
much less fuel. These ships are also much better
prepared for the new regulations to come in force in
the future, while a lot of the existing fleet is still
behind and will have to retrofit the system in many
cases. Owners with ships built before 2010 will have
to already start thinking about extra costs, adding
even more pressure. Therefore, for 2015 a conscious
review of how one operates and maintain their fleets
will be as important as being on top of the market
conditions. There is one hope I have for 2015: Less
Rockefeller-minded investors will enter our market
and hostile takeovers will be rarely heard. We need
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shipping people in our sector and not cowboys,

because the challenges ahead are for those with a
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thick skin and not those looking for quick bucks.
View on the Year Ahead from a Black Sea & Azov-Based Short Sea Owner
It is always difficult and risky to predict anything in
this life (save, probably, for my wife's negative and
brutal attitude to my smoking) but it is doubly risky
to make predictions for the shipping sector, especially for the Black Sea market in 2015. There are too
many "ifs" and subjects that the market heavily
depends on. In addition to usual factors that we took
into consideration in the past, it looks like geopolitics may well prevail against all others in the
coming year. Just a year ago we saw 2015-2017 as
bright ones and a turning point, potentially bringing
good earnings. Now with rising tension between
Russia from one side and Ukraine supported by
some countries from the other and non-stop warlike
activities in the Mid East, we are not so optimistic.
Furthermore, there are heavier sanctions against
Russia that quite possibly bring devastating consequences to Black Sea coaster markets. All owners
operating coasters in the Black Sea are very much
dependent on Russian exports, and if it stops then
we all will see numerous defaults. We do hope the

wisdom, as from one so from the other, will prevail.
As always one of the most influenced and driving
forces of Black/Azov Sea coaster markets is the
Russian grain crop, the forecast for which 2015 is
not all that encouraging over a rather torrid autumn
in southern Russia. In recent days, disturbing news
and rumours as to possible interruptions in Russian
grain exports do not bring joy to owners and traders
at Christmas Eve and New Year holidays.
Nevertheless, generally we expect Black/Azov Sea
coaster market to be on sideway trend in 2015,
lowering in the first and second quarters and rising
in the second half of the year. We are of opinion that
so called sea/river going vessels of about 3,0004,000mt dwt will be able to earn in average about
US$ 2,700-3,000 daily and 5,000-6,000 toners about US$ 4,800-5,000 daily. Earnings of other,
deeper draft and incapable to call river ports, coasters
are expected by us to be about 30 % lower then that.
Market Outlook from a Sea of Azov-Based Short Sea Broker

First of all, let me repeat our annual mantra: "every
year sea river tonnage is getting older and older."
Mostly it's already older than 30 years, so it doesn't
completely suit charterers' requests. We're always
talking abt this, but nothing positive happens. Only
big companies at sea-river market can afford
themselves to buy a new tonnage, however they
don't hurry to replace their old one. We can discuss
many reasons for such reluctance, but it's not the aim
of this report. I've heard abt few newly-built seariver vessels, but it doesn't bear mass effect and
companies have ordered them only for specific
cargoes/voyages. The most seen current approach is
to maximize profits for a short term, to wringer all
from the old tonnage, spend as less as possible for
repairs and then sell the vessel or demolish her. As a
result significant part of tonnage is in poor
condition. And i think charges will come only with
support from government, which is not highly
expected keeping in mind current economic crisis in
Russia. From the other hand, if the things go this
way without charges many European and Turkish
companies will consider to enter freed market,
freight rates for sea-river tonnage especially in inner
waters historically higher than at deep sea. But they
will face a lot of bureaucratic hindrances to enter the
market. Well, let's see how the things will develop.
The second issue that worries me is the grain market

ex-Russia-Kazakhstan. As you might know, Russia
has applied export taxes for export cereals. It's not a
secret that it has been made wary of high volatile
currency followed by a terrific increase in sales in late
December at ludicrous markets for foreign traders. I
hope the currency rate will become stable and as
soon as it maintains stability export tax will be taken
off. Maybe it's too positive from me, but it's exactly
the right time to make wishes.
The Caspian Sea market will be overflowing until
opening of river navigation in the second half of
April, especially at Aktau-Makhachkala to Iran
routes. Many vessels failed to leave the region due to
unexpected severe cold weather at Volga rived and as
a resulted thickness of ice reached in patches 15 cm.
So, some of them are still staying at Astrakhan, the
others working at Caspian Sea with the considerably
reduced rates. USD 4 less for couple of weeks as i see
is not the bottom line. I've heard the grain crops
from Kazakhstan are lower than has been expected,
so it might be not a bad idea to lay up the vessel until
spring. But generally I do believe that we'll have a
great prosperous New 2015 Year. We wish the best
of luck to BMTI and all its subscribers.
Meditation on 2015 from an Azov-Based Shipbroker

It's quite hard to see now how the Azov Sea market
will develop in 2015. Especially in the current cirEurope's leading trend experts for the shipping industry
cumstances when we have political pressure, grain

export restrictions, etc. Of course the freight market
02 January 2015
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will stay highly dependent for the grain market in

Russia. I guess the first half of the year the freight
will be less favourable for owners, market will loose
large volume of grain cargoes; owners will have to
struggle. However, owners have earned a lot during
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the second half of 2014, thus they can relax during

the next few months. After that nobody knows what
we will face as from the new grain season. Forecasts
already say that the 2015 crop may not be that large.
Containership and Project Cargo Markets in 2015

Expectations from BMTI's Container Market Correspondent
Now there are about 6,000 container vessels plying growth on a par with world GDP at about 3.5-4% as
the waters of the world and a total of some 19m TEU some analysts are forecasting. But there are also anis moving around with an additional 1.75m TEU alysts like Clarkson Research who expect an increase
expected to enter the market in 2015. With the of 7% for the major Asia-Europe trade volume in
average age of container vessels hovering around 11 2015 and some 6% for the main trans-Pacific routes
years scrapping candidates for 2015 are rare so the but these figures seems more than optimistic in view
estimates are about 350,000 TEU for the whole of the just moderate economic gains expected for
most of the countries in 2015 and growing unyearall in all, a rather bleak perspective.
certainties due to elevated geopolitical risks, underFreight rates in the container shipping industry are cutting confidence, spending and investment.
expected to head lower over the next two years
meanwhile the trend of upsizing to megaships will "Made in China" is declining further with an ongoing
not come to an end. Some companies will be pushed shift towards Vietnam, Cambodia, Laos and Banglaout of the game when not being able to keep up with desh. Production in China is now moving inland.
this development and survive some times without
meaningful profitability. The fight for market share Companies offering more customized services and
and ordering new modern and fuel-efficient vessels special offers for long-term customers with innowill determine the market dynamics for the next vative technologies for route design, fuel usage supyear. A brake on this will only be seen if raising ervision, better stowage plans or even accepting
interest rates were to show up. New alliances may ideas from employees (!), may result in having some
come to light and mergers are expected to take place. future advantages, thinking in new ways, having an
Port congestion is another topic that will remain hot 'open horizon' and better using new information.
in 2015 as infrastructure expansion is still lagging Sustainability of growth is an increasing discussion
behind vessel size development.
among governments. In 2015, the United Nations is
Volatility in freight rates will be seen throughout the
year and general rate increases (GRI) are hardly
expected to succeed. The imbalance between supply
capacity and demand will continue for quite some
time and even increase in 2015 as a substantial
global growth in GDP is not to be expected.
expected to adopt sustainable development goals to

build upon the Millenium Development Goals. The
shipping industry will be affected in many ways.
Ballast water, emissions, safety, oil and for instance
fertilizer spills, harmful materials in the construction
of ships and ports are some of the topics involved.
Despite an only fragile recovery of worldwide economy forecasted in 2015, some analysts expect an
increase of 5-7% in container trade with Intra-Asia
boosting the figures although more realistic seems a
There are still some headwinds to face until the

present transition in the shipping industry regarding
technological advances related to fuel efficiency and
environmental requirements has settled and the
world economy gets more stablemaybe.
Predictions for 2014 from a Prominent UK Shipbroker

The container market will remain very challenging turbing, their capacity is truly alarming. Some
for owners into 2015 and beyond as the industry operators report that they are profitable, but I suscontinues to be "the author of its own misfortunes". pect that creative accounting is as much the source of
The insane race for having the largest possible con- this alleged profitability as any genuine financial
tainer ships confined to a few routes in an effort to well-being. It is the vanity of the largest operators
keep slot costs low and compete with rival operators and the partnerships that keep the container "arms
is leading to a continuing ordering spree. Whilst the race" alive. Cargo volumes are healthy and have
number of ships entering service may not be dis- easily surpassed pre-financial crisis volumes. Were it
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not for the unnecessary fleet growth, the industry

would be highly profitable. For so many ships, their
owners are just able to cover operating expenses and
perhaps pay the interest outstanding on the mortgages. How the capital is being repaid is a mystery
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something will snap one day! And as for those

investors in the USA who seem so free and easy with
their millions, they seem to have more money than
sense. But one day surely someone will ask where
are the returns they were encouraged to expect.
Outlook 2015 for Break Bulk and Heavy Lift Shipping from a European Project Specialist
The recent substantial decline of bunker oil prices
may have allowed taking a breath for a short while.
The advantage, however, is a leveller for all market
participants and as such can not be taken as a kind of
turn point or trend set for better commercial results
in 2015. 2013 and a good part of 2014 was the
worse year for the multi-purpose ship owners and
industry itself since the recession started in 20092010. For year 2015 we foresee more bulk and steel
cargoes to be carried by MPPs whilst project cargoes
seem to become less by volume. The trend toward
heavier and more voluminous transport units will
certainly continue to the advantage of the upper class
heavy lift ships with lifting capacities of 1000 metric
tons and above. Competition from container lines
on their traditional trade routes will definitely
continue to increase substantially and will create
deficits to the traditional break bulk owners. Smaller
ships able to call draft and size limited sea and river
ports will always remain engaged by the industry at a

reasonable level of income. One may hesitate to consider a positive outlook when reports say that global
steel production is expected to grow by about 4-6%
over the next two years. The outlook for project
cargo is definitely less encouraging after we saw the
project cargo volume fall by some 12-18% over the
year, however as usual one can interpret some given
signs that the volumes may pick up towards the end
2015 and even start growing in 2016-2017.
Fortunately, the orderbook for traditional MPP newbuildings is very moderate, which certainly will ease
the income situation. Our very unfortunate prediction however remains that we don't see the industry substantially returning to a good earning situation, including interest repayments, loan replacements and rising operational reserves until 2017-18
("unforeseen circumstances always excepted").
Market View from South America

A Look Ahead at the Year Ahead from a Brazil-Based Shipbroker
2015 projection seems to be an impossible task with the Cuba-US renewed relationship? All this is to be
so many uncertainties that we face today. Economic, considered, to say nothing of Ukraine, ISIS and other
political, environmental, health (read: Ebola) among conflicts that are, or may be, taking place next year.
other issues that affect our industry, even though
one or the other may not even play a direct effect in Environmental: How will low sulphur policies
affect Latin America's trade to the US and Europe.
the trades of our concern, e.g., Latin America.
Regular carriers have already announced the neEconomic: Will Barak Obama be a lame duck and cessity to apply a surcharge for cargoes bound to the
thus bring the US growth to a slowdown? What will USA. Will they succeed in implementing the same,
the OPEC do to safeguard the interest of smaller thus increasing the cost of exports to our North
members, highly prejudiced by the current price American brothers? Will Brazil be able to implement
versus volume policy and putting oil and gas in- all scheduled infrastructural growth, or will the
vestments in Brazil, Columbia and Peru in jeopardy? environmental agency IBAMA slow the same down
Will Japan re-elect Abe and allow him to continue or even block one or the other projects? How will
Abenomics? Will China's growth continue slowing Brazil's largest industrial and economical state, So
and maintain or even reduce their current demand of Paulo, handle and survive the current drought and
commodities? What will happen to the EU and likely long term lack of water? What impact will
Great Britain's membership? How will Russia han- global warming and clearly visible climate changes
dle the economic downturn it faces with sanctions have on international trade, commodities, etc.?
and low oil prices and how will same affect Mr. Putin
Health: We have started to see some Ebola quaranand his buddies? And this is just to name a few.
tine policies implemented in various Brazilian ports,
Political: Will Dilma Rouseff's PT government sur- which imply in days or weeks of delay to vessels
vive the billion dollar corruption scandals or is im- being able to clear. Some charterers are refusing to
peachment likely? Where will Argentina go in their consider ships that have recently called West African
2015 presidential elections? Will the Maduro gov- countries, even beyond those considered of risk.
ernment in Venezuela survive current oil pricing or
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2015 Vision: How can I reasonably forecast our

fortunes for 2015 with so many unpredictable
factors? A crystal ball won't be enough. A trip to
Uruguay may help to see what one can not visualize
consciously. Low commodity prices will help all
majors, be it in the energy, mining or agricultural
industry, strengthen their market. While they will
suffer because of reduced income, they will manage
to keep undesired "newcomers" off their toes, with
many likely abandoning their projects. In order to
off-set such reduced income, investment portfolios
will be cut or may be even stopped completely. This
will, subsequently, impact the project shipping industry, with reduced inbound business, particularly
from Asia, but of course also from the EU and US.
Such reduction in investment will impact the
country's labour market with lay-offs and higher
unemployment, which in turn will go on to reduce
the purchase power and affect internal sales.
This, although, might eventually impact positively
on the outbound business, which for the past 2-3
years has been relatively miserable for the owners.
On one side there will be less available ships coming
open with import cargoes; on the other side we may
see increased export of cargoes that had been sold in
the internal market. The steel industry has already
shown clear signs of such development over the past
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months, and I believe there is more to come. This

should also provide added outbound opportunities
to the Handy up to Ultramax owners and operators.
As you all may have seen, certain stems have gone
from 40,000 to 50-55,000 and occasionally even
60,000 tonnes. While Brazilian steel mills may be
selling at a loss, they try to compensate this with
lower freight rates thanks to higher volumes.
The inbound business for this size of ships will stay
relatively stable. Brazil will keep importing wheat
(15-25,000mt stems), ferts (25-40,000mt stems)
and coal or coke, in Handymax up to Panamax stems.
The occasional Cape may find inbound employment.
As for the agricultural industry, I'm at odds with myself. I don't expect record crops this season. An overall lack of rain has been detrimental to output of all
customary products, and volumes are likely below
previous years' figures. Sugar, though, may rise. Reduced oil prices should decrease ethanol usage even
further, and thus more sugar cane will most likely go
to the refineries rather than the distilleries.
Last but not least, iron, manganese and/or bauxite
ore, as previously mentioned, will be at China's and a
handful of players' mercy. Potential newcomers will
simply abandon their projects if prices remain at
current levels. Good luck to all in 2015!
View from a South American Shipbroker Prospects for Brazil and for Shipping
Prospects for Brazil, the most important economy in soya and iron ore, not to mention meat, poultry,
South America and one of the famous BRICS are orange juice and others. This means that the existing
more than dire. The recently re-elected leftist gov- trade volumes and patterns will continue, changing
ernment under President Dilma has been unable to to focus more and more on Brazil-to-Europe, Brazilcontinue on the financially secure and stable (social to-USA and Brazil-to-Asia, namely China. But
liberal democratic) course drawn by Fernando Hen- nothing leads us to believe that this means that, due
rique and later on continued up to a certain extent by to the above patterns, Brazil will be able to influence
President Lula, dropping the country into a turmoil shipping positivelyto the contrary. From here,
of corruption, social unbalance and, even worse, unfortunately, not much positive can be expected
juridical instability. Nothing is there that could make and additionally the normal logistic bottlenecks and
one believe that things should change. It looks more bureaucratic burden will continue and likely even get
like a continuation of the mess and following the worse. For us working here in Brazil, it only can
mean: fasten your seat belts.
course of Venezuelan or Argentine politics.
National growth for 2014 has been near to zero, the
trade balance is negative, the economic household
showed a huge debt and things will get worse. This
means no big positive signs can be expected from
this part of the world and surely it won't be Brazil
that can effectively assist in world trade growth and
the fight against recession. To the contrary, it will be
Brazil that will be one of the hurdles the world
economy has to cope with. So it doesn't look nice.
Of course, we shall not forget that Brazil has a population in excess of 200m and is now already one of
the world main suppliers as of commodities like
Regretfully, the market is as negative as described. It

doesn't make any sense to sugar-coat the situation
it's my job to analyze the market circumstances as
truly they are. Especially at this point in time, in
shipping to much white-washing is happening,
misleading about the true state of the market. The
situation is much more dramatically negative than
officially communicated. Nobody is going to be the
"whistle blower" of the true reality. Plummeting
bunker prices have at the last possible moment saved
owners from unavoidable bankruptcybut this is
only a very short reprieve.
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Thoughts on 2015 by a Charterer in Brazil View from a South American Perspective

For the last three years we've made predictions that
have, sadly, been proven to be woefully optimistic,
especially on the BDI. But then if we aren't optimistic, we've no right to be in the shipping busiEvent
Exchange rate
Inflation
GDP growth
BDI
Handy future
Dec 2013 actual

2.35
5.8%
2.3%
2134
9850
nessthere's always steady work at the undertakers.

That said, the outlook for 2015 is undoubtedly
gloomy and as our chart shows, we expect pretty
much zero growth in Brazil in the next 12 months.
Dec 2014 prediction

2.50
8%
1.8%
2500
11000
We have been saddled with another four years of

wishy-washy government under a president who
has lost all authority due to the massive corruption
scandals at Petrobras (and that's only the tip of the
iceberg). The economic 'policy' has been completely
adrift and where there has not been corruption with
the usual privileges for the comrades, there has been
downright incompetence. The only ray of sunshine
is the appointment of a market-oriented finance
minister who should be able to get things back on
track but it will be a long and slow process that will
show results only in 2016and only if he is allowed
to prescribe the necessary medicine which is a big
question mark given the President's propensity for
Dec 2014 actual

2.65
6.5%
0.3%
838
7300
Dec 2015 prediction

3.00
6.5%
0%
1500
8000
micro-managing every single area of government.

Whilst the lower oil price should eliminate Brazil's
deficit on imported gasoline it will be a disaster for
development of the ultra deep-water exploration
(pre-salt) if the price drops below US$50. Similarly
the falling price of iron ore is going to contribute to a
worsening of the balance of payments so we really
need China to increase their demand and help keep
Brazil afloat. On the Valemax front, the 400,000 dwt
vessels are still not berthing in China with full cargoes, but the recent sale of four vessels to Cosco
linked with a 25-year COA must surely mean that
ports will finally open to these monsters in 2015.
Market View from New Zealand

New Zealand's Shipping Outlook for 2015 from a Log Shipping Logistics Manager
New Zealand's shipping outlook for 2015 appears to With farmers less inclined (or able) to invest in
be in the lap of the gods (or perhaps the hands of increasing production inbound cargoes of fertilizer
some pretty crazy people). First off, on the supply will decrease. In this environment the haven of the
side of the equation, logger tonnage is increasing as ballast bonus will most likely be eroded which is bad
newbuilding continues unabated. These vessels are news for ship owners with long term COAs.
generally 32,000 dwt sized (14% larger than the 28s
described by the BHSI) and 38,000 dwt (even bigger Demand for another 14m cubic metres of New Zeaat 36%). The quite adequate "original" fleet of the land logs (400 voyages) in 2015 is in question. The
28,000 dwt vessels continues to ply the trade (BHSI building boom in China appears to be over with
5 & 6). The balance sheet values of these ships are more economic pundits and commentators predict(mostly) inflated above market and, with scrapping a ing catastrophe than otherwise. The "elephant in the
poor option, will continue for the "foreseeable fu- kitchen" has been the "carry trade" that has driven
ture" (if there is indeed such a thing). This surplus of demand for logs in 2013 and 2014. This essentially
involves raising finance on cargoes, selling short and
tonnage will continue to drive freight costs down.
using the funds in (shadow banking) arbitrage opOn the demand side, news for owners is equally dis- portunities. This practise appears wide spread across
tressing. Inbound bulk cargoes are largely driven by the broad spectrum of commodities and can explain
the agri sector (fertilizer essentially). Unfortunately why with wharf stocks at record highs, and building
for farmers (and New Zealand Inc.) the whole milk demand diminishing, cargoes continue to be orpowder price has fallen 50% in the past 12 months. dered. When Chinese authorities eventually get to
Incidentally, this situation is resultant from com- addressing this issue (in the log market) we can
modity oversupply (sound familiar?) which does not anticipate a structural change. The current oligopoly
appear to be reversible in the short term. The current is expected to be replaced by a fragmented market of
inbound/outbound ratio of bulkers is probably 1:2. second tier traders and end users. Consequently,
02 January 2015
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Daily & Independent
smaller consignments will become the norm, thus

putting further pressure on the larger ships and
increasing the need for consolidated exports.
But wait there's more: Russian currency devaluation
(50%) will increase their competitiveness and their
market share of the Chinese log & lumber market.
This cargo is delivered to China by rail, not sea. The
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US, Canada and New Zealand will find it increasingly difficult to compete and cargoes on the BHSI 5
& 6 will fall. Economics, that dismal science, dictates
that freight revenues will fall further in lockstep
with diminishing demand. Predicting rain they say is
easybuilding an ark is the hard part. In this current
environment, though, I think there is sufficient
tonnage and a spot charter may be the answer.
Economic & Ship Investment Developments in 2015

Outlook 2015 from a Continental Ship Investor
The shipping markets in 2015 will be continuously buildings into the Shipping market, thus further
governed by weakness due to the following reasons: delaying a market recovery. Due to the expected
Bunker rates will continue to remain at cheap levels, deliveries of very large tonnage, the container
tempting owners with the calculation to further market will continue to remain in a depressed state,
employ elder ladies instead of scrapping them. Re- fuelling a knock-on effect with the negative impact
flecting this background, the cost advantage for new on tramp operators for quite some time. Even so, the
buildings compared to elderly vessels will diminish, bulk market will be ruled as well by the continuing
further depressing the charter rates for quite a while. tonnage surplus that is fuelled by an increasing
number of expected new buildings in 2015. We
Based on the continuing weakness of the worldwide expect the tanker market to have the best pereconomy, interest rates will remain at low levels, formance compared to the container and the bulker
bringing even more speculative investments for new markets, benefitting from the new trade routes.
Outlook 2015 from a Specialized EU Short Sea Financing Expert
Demand will remain flat as no serious GDP growth invested capital is on a level of 2.5%. No improveis foreseen for 2015 and 2016. The good news is ments for 2015 are expected, new SECA measures
that the short sea fleet shrinks for the second will increase costs of shipping (direct bunkering cost
consecutive year in 2014 with 1.4% (2013: 3.4%) or capital and operational expenses for scrubber
and will shrink further by scrapping and transfer to installations), but far lower bunker prices will
other areas. Profitability of the short sea industry is compensate, depending on who pays the fuel bill. It
still far below standards allowing attracting new will take another 3-5 years before normal proequity, but there are good exceptions. Return on fitability in the short sea will be restored.
Shipping Finance Prospects in 2015 from Karatzas Marine Advisors & Co.
It's a well-established fact that shipping is a capital
intense industry; successful owners have to be both
good vessel operators and managers, and also have to
have a solid financial strategy in good times but
mostly in challenging times as well. The need for a
financial strategy is heavily pronounced at present
when access to capital is a formidable task. It's a
formidable task because shipping is still working
through the excesses of the boom years (excess of
tonnage, lots of ships of poor quality and design,
etc.) while the traditional funders of the industry
(shipping banks) have significantly curtailed their
activities in the industry. One can almost say that
while ships were the underlying asset and shipping
finance was the first derivative of the business, now
shipping financing is the primary 'asset' and the
ships and 'steel' have become the derivative concept;
accessing and deploying financing has become a
higher priority than the 'real' industry. As the saying
goes, making predictions, especially about the
future, is a hard task, but, in our opinion, 2015 will

likely bring an extenuation of trends in shipping
finance that are already in development.
For debt financing from banks, the market will
continue its bifurcation and the distinction between
the 'haves' and the 'have-nots'. Lending into
shipping from traditional lenders will be remain
limited, or at the very best, well below the amounts
the industry requires to function on this 'normal'
business model. Banks will show a bias to stay away
from shipping as an industry, and to the extent that
they will be extending credit to shipping, their
preference will be for corporate finance, to owners
with consolidated financials and balance sheet,
'projects' with cash flows attached, projects with
energy or offshore exposure. Borrowers complying
with such characteristics will be crowding out the
traditional, independent shipowners looking for
plain vanilla ship mortgages. And, as banks will be
02 January 2015
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competing for the same (and small pool of such)

owners, spreadsthe differential over Liborwill
be thin. For the shipowners looking for mortgages,
the preference by the banks will be for modern
vesselsnothing older than ten years old, and fairly
low advance rates (approx. 50% of the vessel's value).
We think that traditional independent owners,
looking to acquire older but quality tonnage will
likely be having an impossible time obtaining bank
financing, which may have a disproportional effect
in certain markets such as in the Greek market.
With funding from banks and traditional lenders
offered on limited basis, shipowners will continue
exploring alternative sources of financing, including
discussions with leasing companies and institutional
investors (whether equity and/or debt). Despite the
heightened expectations, the reality is likely to
disappoint as many of these new transactions have
often not been placed on an 'even keel': a shortcircuited 'investment box' with a five-year investment horizon and heavily based on unrealistically
discounted asset prices will drive away many of the
legitimate projects. Many have the opinion that
private equity funds will be sellers of distressed
assets on their own right, many of their investments
so far not performing to their expectations, but, in
our opinion, there is still a long time left, if and
when, for an eventuality like this to present itself.
While many institutional investors will continue
their policy of equity investments on highly
opportunistic basis, there will be more sources of
funding for debt, both for senior, junior and gradations in between. For now, there are funds lending
in shipping, but their 10% minimum interest rate
requirement has phased them out of the market, for
all practical purposes. Likely in the coming year(s),
there will be newcomers to offer debt financing in
shipping at lower rates and likely capable of
accommodating some of the owners and projects
that the shipping banks remaining in the industry
will not be able to lend to. Again, such newcomers
will not have the funding capacity or flexibility to fill
the whole funding gap left by the banks, but
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marginally and selectively will be able to provide

debt for shipping projects; the funding gap itself and
the business opportunity will be too great to resist
and sufficiently big enough to dig up business
opportunities.
And again, following the present trend of owners
trying to broaden their investment horizons, there
will be more owners looking to access the public
capital markets, for equity (for IPOs, etc) and also for
debt (for bonds, etc). We believe that this is a very
legitimate trend that will keep going strongly and for
some time. Not that every shipowner will file for an
IPO (quite frankly, a great deal of them do not meet
minimum requirements for an IPO); however, there
are many substantial owners who do qualify and
who, while taking a second look at the public markets, will come to appreciate the benefits of such,
benefits that in the past were easy to dismiss. And
while there will be many owners seeking to access
the capital markets, public investors will have better
choices for top tier owners, legitimate owners with
established businesses and long track records. Hopefully the era of shipping IPOs in the last boom,
shipping IPOs that at present are trading over-thecounter as 'penny stocks', would have provided
'food for thought' about what exactly makes successful shipping investments, as ships, as projects, as
owners, as publicly traded shipping companies.
There are still many dislocations in the market since
the boom years were phenomenal in every respect
and the excesses still have a way to go. There are still
plenty of business opportunities on individual basis,
but the overall market trend has been toward a more
'institutionalized' approach to shipping. A freight
market recovery has still a ways to go, and market
participants from charterers to financiers want to see
an 'institutional' approach with critical mass and
economies of scale, efficient and lean operations,
focus on market segments and ability to persevere
and succeed over a prolonged market recovery. For
now the 'institutional' aspect is taking precedent
over the 'entrepreneurial' element of shipping. Still,
many may opt to disagree with the last statement.
Considerations about 2015 from a Northern Europe Investment Analyst

Year by year in the last five years, the forecast for the
upcoming year was more or less driven by expectations that the markets will encounter a turnaround
some time within the next twelve months. We all
had been wrong with our optimistic approaches,
crises levels continued and the light at the end of the
tunnel was just an illusion. This year, the majority of
market participants seem to be far less optimistic
compared to past years. The problem with any
analysis of the shipping market is that everything
seems to be changing. With an oil price going crazy

and hence unpredictable bunker price levels, what
will be the engine of choice? What will be the
perfect vessel size for what trade? Nothing seems to
be clear anymoreeven for those who expect to see
a stable or even enhancing world economy for 2015.
As we could see a lot of sale and purchase, or even
new building activities, supported by some huge
financial investors like Oaktree with their own operational setups, we are not too optimistic for a long
02 January 2015
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Daily & Independent
lasting or significant upswing in all of the major

shipping markets. There will be enough tonnage
available to trade cargoes in place, so that expectations on increasing charter rates should be limited in
general. On the other hand, there are environmental
issues coming up that might not have been taken
seriously enough by market participants thus far.
There has been a huge new-building program with
respect to the required phase-out of single-hull
tankers but we do not see enough new-building
activities for securing the fleet within the SECAs.
The financial investors with their turnaround expectations had been concentrating on certain preferred sizes and they did not have a focus on special
situations within the major markets. There will be a
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significant shortage of tonnage able to operate in the

Baltic Sea where ice class is needed as well as other
SECA areas. Small bulkers for certain cargoes seem to
be less attractive for most of the remaining shipping
investors. "Volume matters", a common strategy of
some PE firms, may turn out to be a false approach!
The market eruptions, the Jones Act brought up,
probably are a blueprint for what may happen within the short sea trade markets in the upcoming years.
For those who are interested in investing in the
maritime sector, we strongly advise to focus on special situations subsequent to an in-depth analysis of
certain markets, instead of investing in such a way
that only a general upswing of the world economy
might generate some returns on their investments.
Focus: The Future is Now The Promise of New Technologies

The Fix is In Thoughts from BMTI's Technology Correspondent
Hallelujah! The oil price has dropped through the
floor. This is the exact stimulus the global economy
needed, equivalent to a growth in GDP of 2%. I'm on
a roll. Pass me the champagne. I think I'll have a cigar.
S**t! The oil price has dropped right through the
floorall my investments and bets on high oil prices
are crashing like a house of cards. Pass me the gin. So,
which is it to be? Happy New Year, or Horrific New
Year. Terrific or terrible?
In our interconnected global economy, if you are still
a fossil fuel addict, you'll be either on a soaring high
or a crashing low. That's the nature of addiction. But
if you are doing cold turkey on kicking the old
economy habit then this may be just the lift you
need to realise the wisdom of that hard decision.
Those transitioning to renewables are enjoying the
show. The wind keeps blowing, the sun keeps
shining, the tides come in and out, the waste keeps
coming, and the trees keep growing. The power
keeps being generated. And plummeting oil price is
curtailing the costlier exploration projects, leading to
reduced fossil supply.
Sure, this oil thing, it's a blip. And nope, we didn't
see it coming. But is it sustainable? Financially, or
environmentally? Not financially: once the OPEC
dealers have reasserted market control and kicked
the smaller, troublesome peddlers off the street,
they'll be back in control of the fix and push it again
at any price they want. The addicts will pay; it's what
addicts do. And what will the bruised would-be
producers do next? We might anticipate aggression.
Environmentally time is running out for our species.
2014 looks to be the hottest year on record. That's
hot. This kind of temperature change will alter ecoEurope's leading trend experts for the shipping industry
systems, create food shortages and lead to mass

migration. We're likely to see some more aggression.
The 'do-gooders' are getting increasingly vocal and
militant. No longer prepared to stand back and allow
a bunch of unruly addicts to trash the only neighbourhood we have. In Lima, at the back end of 2014,
the Peruvians held it together long enough to thrash
out a sort-of, quite good, UN deal on climate change.
One of the proposals discussed at Lima, and still an
option for the Paris climate change talks, is phasing
out of fossil fuels completely. Holy Moly! That's on
the table! It sets the stage for the next conference in
Paris 2015. It's still a bit uncertain but the zealous
converts to a new economy are a gathering force. Last
year saw organised climate protests in over 100
countries led by the head of the UN and supported
by A-list actors and multitudes of ordinary people
driven by desperation and prepared, finally, to act.
Expect more of that, louder drums and shriller calls
for action. A correspondingly increasing likelihood
of legally binding and stringent carbon reduction
targets driven by this rise in a noisy and organised
public will drive vote-starved politicians to respond.
Sooner or laterand the later it is the harder it'll
beclimate legislation will make you think that the
ECAs we're facing today were a fun, intellectual
challenge. Like any addiction, the longer you put it
off the harder and more painful it is to quit. Being
clean brings a whole new perspective. No longer
dependent on the dealer and able to produce your
own energy gives a sense of security and wellbeing.
It may not be as thrilling as the roller coaster ride of
the uppers and downers but steady, predictability
stimulates creativity in whole new unexpected areas.
2015 is going to be one big adventure. Bring it on!
02 January 2015
Page 17 of 19
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Daily & Independent
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Market Estimate from a Scandinavian Biomass Trader

Last year we wished that owners would build some
high cubic capacity small wood chip carriers for the
inter-European market. In 2014, we certainly needed them. The market for biomass is shifting gears.
The mild winters have no doubt had a knock-on
effect on the pellets trade, and we see more available
pellets. US and Canadian supplies to Europe have
peaked and stocks are up, pricing down. It is a tough
time for pellet producers. The woodchip market is
shifting due to the US dollar's strength, and supplies
from Baltic States to the Med are in fact now booked.
It is exciting to see a new trade starting. The wood
quality required does create a challenge for suppliers
where the old debarking systems are now coming
back into use. The ongoing trend from fossil fuels to
biomass remains strong. The latest fall in coal and oil
prices though makes it easier for power producers to
chose their source of energy. We believe that unless
the CO2 rights system improves very soon, it will
backfire into the biomass for energy world.
Last year we predicted the steel to start to move up,
but must say we were wrong. Our steel mill client
did though last year give concern as to a last dip, we
didn't consider it, but it came, we have seen iron ore
and steel scrap go down following the iron ore
prices, also the coal market has changed and prices
has fallen. The word is now from our steel mill client
is we have seen the bottom now, and they are
currently expecting things again to start moving
with upward going prices. In last quarter of this year
we have seen Asian-produced steel dumped in
Europe and at prices being low. This trend the steel
mill expects to stop. Scrap steel from ships was as
well adjusted severely down during 2014, but not to
the extent as expected. Yet it is more difficult to find
ships for demolition at the prices the yards are

willing to pay, this may cause some reduction in
volumes of available demolition ships, hence
supporting the price of scrap steel. The European
scrap steel market is still to a large extend priced by
the Turkish, however the flow of material has
reduced and regular players are not building stocks
unless they get the scrap steel at a bargain.
On the European short sea market we have noticed a
long period with steady freights, to see some increase in the end of 2014. The low sulphur rules
from 1 January 2015 will have impact, as larger ships
will have to burn MDO or the expensive HFO
cleaned from sulphur soon to hit the market. The
indication is a difference in pricing from low sulphur
MDO to low sulphur HFO type fuel is a small gap of
15-25 USD/mt. In our opinion, the small coaster
ships on MDO, also the older ones, will enjoy better
times ahead with big HFO-burning ships having
extra costs in the coastal north Europe market. The
gap in rates will be less because HFO burners will
need to use MDO or expensive low sulphur HFO.
Again this year we wish some owners start to build
short sea chip carriers, just size 150,00cbm taking
5,000mt woodchips would be fine. In steel markets,
we hope our steel mill client is correct in assuming at
least we are all ears. A strong winter chill in the next
months will only assist biomass and pellets markets
this season but we doubt it will happen because with
the latest average temperature weather recorded in
most European countries, 2014 was the warmest
year ever and we still have warm seas to cool down.
Today (late December), outside is 8 degrees Celsius,
I would have expected less than 2 degrees Celsius.
Wind Tide and Renewables with Cockenzie and the Changing World A UK Perspective
The shipping market is, as always, erratic and un- emerging trades require. The land where the power
certain. This is particularly true around the UK east station and coal storage used to be can take some of
coast as the offshore wind turbine market emerges the manufacturing space to build the blades, tower,
bringing the necessity to find suitable port facilities nacelles, castings and gearboxes that are land hungry.
to handle the capacity of large vessels and land that
this industry requires. Cockenzie is being looked at Many thousands of turbines will be built and many
as a new facility as an alternative to established ports hundreds of offshore platforms will be decommisthat do not have large enough capacity to cope with sioned in the next 15-20 years and the size of the
the new vessels that are involved in the manufacture component parts simply mean that 'nothing' can
move by road. Some of these parts can be manuand shipping for the offshore wind farms.
factured and handled in existing ports but the
New facilities are being sorted and the Humber is an assembly of the structures need very large facilities
example of where new ports can, and are, being to cope. One can look across the Forth from Edindeveloped. Cockenzie has the promise of a nascent burgh to Methil and see the size of the Samsumg
port for the new industry as well as present oil and turbine. This is in shallow water and they will get
gas business and the future of offshore rig and plat- larger as the industry develops. We are going deeper
form decommissioning. It can be developed to 'go and biggerit is the new oil and gas industry startout' into deeper water, regaining the capacity such ing all over again. The picture is quite similar, off-
02 January 2015
Page 18 of 19
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Daily & Independent
shore structures producing oil and gas with a pipeline running to shore as opposed to wind turbines
producing electricity with a cable running to shore.
These are fascinating and exciting times. The evolution of alternative energy is upon us and will
change what we know, just as the shale gas industry
is turning the US energy market upside down with
compounding affects of that knowledge across the
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globe. The cost of all this power generation is always

part of the discussion, but all energy is fiscally adjusted. Put into the context of shale, nuclear and
wind (and other energy sources), it gets spreadsheets
combusting. As one US economist said when asked
how big shale gas is, he replied, "About as big as the
world wide web." If only I were 30 years younger
what fabulous opportunities and what fun!
forthcoming holidays
Date
Country
2 Jan 2015 Albania; Cuba; Eritrea; Haiti; Kazakhstan; Mauritania; Montenegro; Morocco; New Zealand;
Philippines; Romania; Russia; Samoa; Seychelles; Scotland (United Kingdom)
3 Jan 2015 Birth of the Prophet (Muslim) in 31 localities, Russia
4 Jan 2015 Angola; Bangladesh; Brunei; Dem. Rep. of Congo; India; Myanmar; Russia; Sao Tome; Sri Lanka
5 Jan 2015 Fiji; Russia
6 Jan 2015 Croatia; Cyprus; Greenland; Dominican Republic; Finland; Greece; Guadeloupe; Iraq; Italy; Lebanon;
Mexico; Montenegro; Poland; Puerto Rico; Russia; Spain; Sweden; U.S. Virgin Islands; Uruguay
2015 by BMTI gmbh for .
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Friday, 02 January 2015

bmti daily and independent

BMTI OUTLOOK 2015

Global Dry Bulk Market in 2015

Daily & Independent

2013. The market was totally different. But now

effect will be limited in 2014. The pillars in the

Europe's leading trend experts for the shipping industry

Supply: Stalling orderbook = reality has hit home

Daily & Independent

Source: BIMCO, Baltic Exchange, Shanghai Shipping Exchange

Dry bulk: New challenges await as demand slows

market. The export of crude oil from West Africa has

Tanker: what is the "new normal" demand level?

Container: High demand & slow steaming stays?

Daily & Independent

Expectations & Estimations from a Black Sea-Based Shipping Analyst

T/C market data of bulkers

The movement direction of daily hiring rates from

2008 the demand on demolition has been drastically

SPOT market data of bulkers

very small recessions in 2015. When I check the

Bulk Market Expectations from a North African Charterer

Daily & Independent

(-) 25.89, (-) 2.41, (+) 16.66 Q-to-Q consequently.

Wheat imports, the strategic commodity for North

Looking Ahead at 2015 from a Major European Shipbroker

I expect this to have a positive effect on the feeder

For the container market, however, my gut feeling is

The newbuilding spree seems to be running out of

Europe's leading trend experts for the shipping industry

To reach balanced market conditions may still take

Daily & Independent

European Short Sea Market in 2015

phisticated comments on these, which could largely

Europe's leading trend experts for the shipping industry

Trade in 2014 was also influenced by political

Daily & Independent

Scrapping will continue to play a role on the tonnage

regulations for banks in force, increased ship finance

Europe's leading trend experts for the shipping industry

sufficient space for a build-in of this system on

Daily & Independent

That will affect the rates upwards and one could

comply with the new regulations, and it could very

Forecast from a Russia-Based Owner & Broker

Most of the trades we are following since 33 years

Liquid - stainless steels ships

Daily & Independent

(3,000-10,000dwt) might be more sensitive and

of freights for such ships, even if cargo volumes will

Brief Prognosis from a European Small Size Bulker Charterer

55,000 mt. Finally, the short sea market will remain

Europe's leading trend experts for the shipping industry

2015. Such vessels will have an impact as they will

Daily & Independent

shipping people in our sector and not cowboys,

thick skin and not those looking for quick bucks.

we all will see numerous defaults. We do hope the

Market Outlook from a Sea of Azov-Based Short Sea Broker

The second issue that worries me is the grain market

Meditation on 2015 from an Azov-Based Shipbroker

cumstances when we have political pressure, grain