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Investors Are Cautious about Ordering Newbuildings

by Richard Scott FICS, member of London & South East Branch Committee, 22 March 2019
 
Activity in the newbuilding market remains quite subdued, compared with many previous years. Signs pointing to an upsurge in the immediate future are absent. Looking at the broad pattern of new vessel ordering, a revival has unfolded since annual orders collapsed to a very low volume three years ago, but the recovery has been restrained.
 
Statistics for global newbuilding orders placed annually, including all commercial ship types, show a total of 87 million deadweight tonnes in 2018, a figure which probably will be revised. This provisional total, calculated by Clarksons Research, is about 2 percent below the preceding year’s 89m dwt volume, but still well above the decade’s low point in 2016 when only 28m dwt was recorded. Previously, in both 2010 and 2013, annual orders exceeded 150m dwt.
 
The entire orderbook at the end of last year, a ‘snapshot’ view including contracts agreed during last year as highlighted above, totalled 220m dwt, equivalent to about 11 percent of the existing world fleet. A noteworthy aspect is that orderbooks for the main individual sectors - tankers, bulk carriers and container ships - were all within a narrow range of 10-12 percent of respective existing fleets. By contrast the orderbook for liquefied natural gas (LNG) carriers was much larger, at 25 percent of existing tonnage.
 
For shipping markets, the newbuilding deliveries pace which is likely to result from the orderbook is particularly significant. About half of the end-2018 orderbook total is scheduled for delivery this year, followed by under two-fifths next year. But actual deliveries in 2019 almost certainly will be lower than the scheduled figure, a typical outcome. Perhaps this year’s total will be broadly in line with last year’s 80m dwt recorded newbuilding deliveries.
 
What explains the mostly restrained investors’ attitude to ordering new ships? Although circumstances in individual sectors vary, common factors are visible. Many shipowners are more uncertain about future good investment returns, after long periods of difficult freight markets in the past decade. Further lengthy market adjustments may be needed to restore market balances, aided by relatively low new capacity volumes added. Less abundant finance availability may have contributed. Greater ordering ‘self-discipline’ has resulted. 
 
A longer article about this topic can be found at:

UK maritime looks ahead to 2050

by Richard Scott FICS, member of London & South East Branch Committee, 7 February 2019

In late January 2019 the UK Department for Transport published a comprehensive 336-page report entitled Maritime 2050 – Navigating the Future. This report is based on a study initiated by the government twelve months earlier. It looks at how the UK’s multi-faceted maritime activities - including shipping, ports, services, engineering and leisure marine industries - have been developing, and what action is needed to make progress over the next three decades.

The research and action plan included in the report was prepared with assistance from consultants PA Consulting. An expert panel of senior business, professional and academic people contributed. Secretary of State for Transport Chris Grayling commented that the new study is “bold and aspirational, cementing our ambition to be a world leading maritime nation long into the future”.

Emphasising the large scale of this review, the executive summary runs to 23 pages of text containing 73 paragraphs identifying action required. Within these paragraphs are extensive and detailed government commitments to provide assistance and help to shape and promote all the UK maritime activities, over the period up to 2050. It is a breathtaking agenda, and arguably a huge challenge, necessitating sustained motivation.

A striking feature of the report is the frequency with which the word ‘government’ (of the UK) occurs - mentioned sixty-one times in the summary alone - and how much the government’s contribution is highlighted. The context in which the word is used is typically a statement of government intention to take some action or provide support to maritime activities. In numerous instances a firm pledge is given about what the government can do or attempt over a period of years. If these promises are fulfilled, it will be regarded as a remarkable achievement.

Of particular interest from the viewpoint of the Institute of Chartered Shipbrokers is the coverage of maritime education and training. As the report acknowledges “UK maritime business services lead the world”. Specifically mentioned are categories of shipbroking, education, insurance, accounting and law, while other aspects not mentioned include consultancy, information provision and publishing.

The report states that “the UK is justifiably proud of its maritime education system”. An example given is the new London School of Shipping evening classes run by our own Institute. Also revealed is the government’s aim to set up a Maritime Skills Commission to report on existing and future skills needs. One of the medium-term recommendations is that the proposed body will “consider how to ensure professional development plans are built into training programmes across all roles”.         

This recommendation, accompanied by numerous others, and the detailed assessment make the report a worthy successor to previous government-sponsored maritime sector reviews. It follows in the footsteps of the famous 1970 ‘Rochdale Report’ (Committee of Inquiry into Shipping, Report) and the 1990 British Shipping: Challenges and Opportunities. Subsequently in 1998 deputy prime minister John Prescott (who had worked in shipping before becoming a politician) was instrumental in producing British Shipping - Charting a new course.

Maritime 2050 – Navigating the Future available for free, please click.

Callum Beaumont Recruitment Manager at Clarksons Platou outlines the opportunities in Shipbroking

Callum Beaumont Recruitment Manager at Clarksons Platou outlines the opportunities in Shipbroking

Opportunities in commercial shipbroking exist to utilise all skill sets. Interested in a career in the industry? See which path suits you best.

Shipbroking is a highly sought-after employment sector, with applicants coming from a wide variety of professional and educational backgrounds. 

Though many people equate professional shipbroking primarily with originating and closing deals, complex international shipping organisations offer opportunity in many different forms. 

Shipbroking firms are divided into expert teams, each comprised of specialists working in functions which bring out the best in their natural strengths and talents. 

Within Clarkson’s core shipbroking unit, there are three primary career paths: Operations, Broking and Market Analysis. Each one calls for a unique set of skills and abilities.

Which one best matches your profile?

Ship Operators

What do they do?

Operators in shipbroking are responsible for coordinating and overseeing the successful delivery of cargoes negotiated and agreed by the broking team. Working closely with owners and charterers, they provide regular updates to customers at all stages of the voyage, facilitate documentation and ensure that all partners and suppliers adhere to schedules and regulatory requirements to deliver cargoes securely and on time.  

What skills do they need?

Successful operators are great communicators, in constant contact via phone and email with multiple contacts around the world – owners, charterers, brokers and masters. Project managing between business partners can be stressful work, so operators are skilled in mediating and customer service. 

They are highly responsive, working in time-sensitive conditions and keeping on top of large volumes of correspondence. Since operations is a 24/7 function, members of the team adjust to client needs and often remaining contactable during evenings and weekends.

Organization is key, and operators are experts at establishing workflows and working patterns that allow them to keep in control of a constantly-moving workload. 

It could be right for you if:

You are detail-oriented, have great communication and inter-personal abilities, enjoy fast-paced work, have a good memory and prize your organization skills. 

Brokers

What do they do?

Shipbrokers are the link between companies looking to charter or purchase ships with the owners of suitable vessels. 

They build and manage complex contact networks across the international shipping community, working to help those who need to transport cargoes and materials locate the right ships at the right price. 

What skills do they need?

As well as being deeply knowledgeable about ships, shipping routes, rates, pricing and other market knowledge, brokers need to be experts in relationship-building and negotiating. 

Top brokers have highly polished sales skills, have a knack for being in touch with the right potential customer at the right time, and are savvy business professionals able to see how political, legal and trade events translate into needs and opportunities across the shipping community. 

It could be right for you if:

You’re a natural networker, have an outgoing personality, establish rapport quickly with new acquaintances, are fascinated by business and market dynamics and have outstanding sales and negotiating skills. 

Analysts

What do they do?

Analysts collect, analyse and present essential data used by shipbroking companies’ internal teams and external customers. Monitoring shipping and commodities markets, analyst teams manage complex databases of market information, partnering with brokers, commercial teams and clients to provide market analysis and presentations to facilitate decision-making and negotiations. 

What skills do they need?

With data at the heart of their work, top analysts have strong numerical and logic skills, are advanced Microsoft Excel users and are comfortable working with and analysing complex data sets. 

An ability to share and display data compellingly is also vital, with analysts being highly adept with PowerPoint and other tools, often supporting key commercial engagements with data and analysis presentations. 

(It’s not all about IT, either – many analysts at Clarksons do regular filmed interviews in our in-house studio to share their expertise with our team and customers). 

It could be right for you if:

You have strong educational qualifications (typically degree of MSc in Shipping, Economics, History or similar), are highly numerate, have strong logic skills, have exceptional attention to detail and a natural flair for data analysis and visualization. 

(Printed by kind permission of Callum Beaumont Recruitment Manager Clarkson Platou in February 2019)