Send Me reports Posted Monday, June 12, 2006 by Send Me Reports
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Thank you
Mark Harrison

Short Market Report w/e 27.01.06 Posted Monday, June 12, 2006 by MarkH
Short Sea Market Report week ending 27.01.06

The downward slide continues and if anything this week was significant because it marked the point where it became clear that this is indeed the trend. Obviously a certain amount of time has to pass before you can stand back and get a clearer perspective and as we are now one month into 2006 it can be seen that the pattern since the beginning of the year has been one of a progressively declining market. For the first two or three weeks of the year there was a great deal of uncertainty over which way it would move and despite the fact that rates were softening there remained a strong feeling that this was largely due to the Christmas holidays and that demand would pick up again at anytime. This hasn’t happened and there is now a more broad acceptance that, in the short term, it isn’t going to.

Charterers are beginning to enjoy holding the initiative and have started to flex their muscles. Up until now rates have been softening fairly gradually but we are now starting to see more significant drops as Owners struggle to cover the increasing number of open positions. There is too much pressure to secure cargoes ahead of the competition and consequently at the moment Owners are simply unable to afford the luxury of holding out for their rates because the chances are others will snatch what’s on offer. For the time being Charterers are happy to sit tight and hold out for lower levels because this is proving a successful tactic and it won’t change until demand increases.

3500 mts – Fr. Bay / Portugal – €15.00-16.00 pmt
3500 mts – ECUK / N. Spain – €18.00-19.00 pmt
3000 mts – ECUK / Portugal – €22.50-23.50 pmt
3000 mts – Fr. Bay / ARAG – €10.00-11.00 pmt

Extreme weather conditions in the Baltic and to a certain extent Black Sea have seen the imposition of ice restrictions in numerous ports and this is compounding the current situation by forcing non ice classed tonnage to look elsewhere and thus add the volume of tonnage available. As said the downward cycle has now gathered momentum and it won’t change in the short term. As yet no-one is necessarily assuming it’s going to be downhill all the way to the summer so to a certain extent the outlook isn’t that far forward but the softening trend is now sufficiently established to ensure next week will be the same as this and Charterers will continue to see how far down they can push it.

Kind Regards
Mark Harrison f.i.c.s.

HC Shipping & Chartering Ltd
Suite 14
Friary Chambers
Hull HU1 2HA
Telephone : +44 1482 586760
Fax : +44 1482 590759
E-mail : chartering@hcshipping.com
web : www.hcshipping.com

Short Sea Market Report w/e 20.10.06 Posted Monday, June 12, 2006 by MarkH
Short Sea Market Report week ending 20.01.06

This has been a fairly active week throughout and somewhat more consistent than last. The market trend remains very much the same in so far as the supply of spot/prompt tonnage continues to exceed supply and the pressure on freight levels remains downward. There were some limited signs that the volume of firm business has increased but not sufficiently to have any real impact on rates – freight levels this week perhaps moved less than last but overall are still softening.

The market continues to work very spot. Owners are naturally trying to halt the downward trend and remain firmly of the opinion that demand is still in the process of returning to higher levels after the Christmas and New Year holidays. This is the main reason for the current focus being predominantly on spot business. There is a complete refusal to accept that rates will continue to soften so for anything much over a week ahead Owners are quoting higher levels but Charterers are happy to wait and see because for the time being this approach is working in their favour.

3500 mts – N. France / S. Spain – Euros 23.00-24.00 pmt
4000 mts – Lower Baltic / S. Spain – Euros 25.00-26.00 pmt
3000 mts – ECUK / N. Spain – Euros 19.00-20.00 pmt
2000 mts – ECUK / ARAG – Euros 9.00-10.00 pmt

The short sea market is notorious for working short term and at the moment there is far too much uncertainty for any confident predictions to be made about the next couple of months. It would take a very bold decision for an Owner to start booking ahead at lower levels just as it would for a Charterer to book ahead at higher levels but ultimately one of these will prove to be the smart move. Until enough time has passed for stronger opinions to form or unless there is a dramatic change of direction, the market will continue to work on a very spot/short term basis

Kind Regards
Mark Harrison f.i.c.s.

HC Shipping & Chartering Ltd
Suite 14
Friary Chambers
Hull HU1 2HA
Telephone : +44 1482 586760
Fax : +44 1482 590759
E-mail : chartering@hcshipping.com
web : www.hcshipping.com

Short Sea Market Report w/e 13.01.06 Posted Monday, June 12, 2006 by MarkH
Short Sea Market Report week ending 13.01.06

This has been an up and down sort of a week, certainly in terms of activity. There is no doubt the spot market is fairly depressed (current rates are approximately 15-20% lower than the same period in 2005) and Owners are understandably keen to change this so it isn’t surprising there’s a fair amount of posturing taking place at the moment. The week consisted of sporadic bouts of activity punctuated by periods of quiet and on reflection this pattern correlated pretty closely with the times when new cargoes entered the market. Firm spot business is flying off the shelves and anything fresh was seized upon immediately.

We are in a period of uncertainty and the mentality at the moment is very much short term. Owners certainly attempted to be bullish by trying to hold out for either moderate rate increases or even just to keep the status quo but ultimately the lack of options forced their hand. Charterers are presently not buying the argument and were happy to hold their ground which proved to be the right approach because it was soon apparent there was simply too much spot tonnage available and Owners were forced to either make concessions and fix or continue to sit spot. As you would expect in this type of environment freight rates softened further.

4500 mts – Black Sea / Span Med – Euros 31.00-32.00 pmt
3000 mts – ECUK / N. Spain – Euros 19.00-20.00 pmt
5000 mts – N. Spain / ARAG – Euros 8.00-9.00 pmt
2000 mts – Fr. Bay / SCUK – Euros 10.50-11.50 pmt

Despite all of this Owners outlook for the second half of January remains very optimistic. It is far too early in the year for any conclusions to be drawn over whether this is going to be as good as it gets and there is undoubtedly the potential for demand to increase. A number of industries are yet to get back in the swing and Owners are certainly trying to sell the idea that an upturn is around the corner. As always no-one knows, it really is a question of wait and see and in the short term assess each week on its on merits. Texas hold ‘em anyone?

Kind Regards
Mark Harrison f.i.c.s.

HC Shipping & Chartering Ltd
Suite 14
Friary Chambers
Hull HU1 2HA
Telephone : +44 1482 586760
Fax : +44 1482 590759
E-mail : chartering@hcshipping.com
web : www.hcshipping.com

Short Sea Market Report w/e 06.01.06 Posted Monday, June 12, 2006 by MarkH
Short Sea Market Report week ending 06.01.06

As expected this has been a slow week and very much an extension of the last in so far as there remains an abundance of spot/prompt tonnage and a limited number of firm cargoes to supply it with. This was compounded by holidays in various countries on Monday and Friday which limited the bulk of chartering activity to three days. Generally Charterers with spot business were knocked over in the rush and it wasn’t unusual to see three or four vessels offering in for a cargo. Unsurprisingly this meant Charterers very much held the initiative and were able depress freight levels further.

3500 mts – Black Sea / Span Med – Euros 35.00-36.00 pmt
3000 mts – ARAG / Adriatic - Euros 37.00-38.00 pmt
4000 mts – ECUK / ARAG – Euros 10.50-11.00 pmt
3000 mts – Bristol Channel / ARAG – Euros 7.50-8.50 pmt

It is still too early to draw any firm conclusions based on this week alone. Despite the current dip Owners remain confident it is due entirely to the New Year and that within the next two or three weeks, as business returns to normal, the market will once again pick up. This viewpoint is hardly surprising but seems to be based more on optimism than hard facts. Overall it’s probably fair to say the outlook is uncertain. Charterers don’t seem to be speculating too much, just enjoying the fact that the market is certainly a lot easier at the moment. It’s another statement of the obvious but if things are going to pick up again then it will take a significant increase in the current level of demand and that isn’t going to happen overnight. It is therefore likely the market will move week to week until a clearer trend emerges and in the very short term i.e. next week the surplus of tonnage over cargo looks set to remain.

Kind Regards
Mark Harrison f.i.c.s.

HC Shipping & Chartering Ltd
Suite 14
Friary Chambers
Hull HU1 2HA
Telephone : +44 1482 586760
Fax : +44 1482 590759
E-mail : chartering@hcshipping.com
web : www.hcshipping.com

Short Sea Market Report w/e 30.12.05 Posted Monday, June 12, 2006 by MarkH
Short Sea Market Report week ending 30.12.05

Due to the Christmas holidays, chartering activity this week was so limited as to scarcely warrant any comment. In a nutshell there were far more spot vessels than there were cargoes so any firm spot business was snapped up immediately. In many instances there were at least two or three vessels vying for any cargo and consequently Charterers were (within reason) able to dictate the rates. In a number of cases where vessels had lost position over the holidays Charterers found no shortage of candidates willing to re-fix at lower levels than originally booked. This is all relative and cannot necessarily be viewed as an indicator to how the market will continue in 2006. Prior to Christmas there was no real desire on any side to play the spot market over the holidays and with most industries either on shut down or working at half capacity, any benefits Charterers achieved by virtue of having a spot cargo were attributable far more to luck than judgment. Certainly tonnage was not being run spot through choice, just lack of alternatives and the bulk of activity this week arose from either, last minute orders or previous bookings running late, rather than from any astute master plan to play the market.

2005 was always going to be a difficult year to second guess following the unprecedented market activity experienced in 2004 and it’s probably fair to say (at least from an Owners perspective) that it has failed to live up to expectations. The year started, as so many do, with a hangover. The last quarter of 2004 saw freights reach levels that had previously been unthinkable and even though the peak came around November 2004, expectations remained high for the first quarter of 2005. It soon became clear that the level of demand was not going to be sufficient to fulfil these expectations and rates began a gradual decline over the first quarter of 2005. Gradual is the operative word, rates always rise faster than they fall, but by the end of March freight levels were around 25-30% down on the end of the previous year.

Moving into the second quarter of the year there was a gradual acceptance that the market was going to revert to the normal seasonal trend i.e. a steady decline towards the summer trough of July and August and to a large extent this was true. By the time we reached this point rates levels had fallen to roughly around 40% lower than the beginning of the year. If anything the legacy of the 2004 boom has been to ensure that the underlying low is now much higher. It had been felt for some time that a certain amount of equalisation was necessary and 2004 provided the springboard for this. With fuel prices virtually double what they were two years ago and with ever increasing running costs and port expenses there is obviously a finite point at which it ceases to be financially viable to perform a voyage. As an example, for the route East Coast UK to North Spain, the low point in 2005 was circa €18.00/19.00 per mton compared to around €12.50/13.50 per mton in 2003. You can never say never but it would take an extraordinary set of circumstances before rate levels could conceivably fall this far again. When doing nothing is a better option than doing something what are you going to do?

By the end of August, as the summer lull ended, Owners expectations were again sky high and they were keen to encourage the market to undertake the sort of stratospheric ascent we saw at the same time in 2004. At the first sign of freight rates firming Owners initial reaction was to try and immediately drive them skywards with the minimum of delay. The reality however was somewhat different. Perhaps a good example of once bitten twice shy but the previous year’s boom had taken everyone by surprise and, as you might expect, Charterers were not prepared to leave themselves exposed again. There were now contingencies in place – in some cases deals were only done once fixed freight was booked, in others far longer shipment dates had been allowed. The main point was that the key driver i.e. demand itself, was not as high and you can’t argue with that. Each time Owners tried to force the market up, Charterers retreated and, as is always the way, the basic rules of economics determined the outcome. Owners were eventually forced to concede that the best they could hope for was to keep rates at worst static and at best rising very gradually. All of this made for a very stop/start trend and that’s pretty much the best way of describing the market from September to December. There were a number of false dawns and, as always, a few exceptions but overall, despite Owners best efforts the market never really took off and generally demand pretty much cancelled out supply.

By the beginning of December there seemed to be an acceptance that the market was not going to suddenly explode into life and both Owners and Charterers began to make their plans around the Christmas holidays earlier than normal. This meant that rates started to soften although Charterers were generally as keen to conclude business as Owners. They seemed happy with relatively modest gains and perhaps did not force levels down as much as they might have actually been able. The year ended with the pressure most definitely on tonnage and there is absolutely no reason to suspect this is going to change in the first couple of weeks of the New Year. Demand in the last quarter of 2005 has not been sufficient to move the market very far so why, with most industries just returning from the Christmas shut down, should this suddenly change? In the first half of January it is likely we may see a somewhat subdued market - after that it is impossible to be sure but there is presently nothing to suggest any great change to trend we have seen over the last quarter of 2005.

What should we hope for in 2006? Health, wealth and happiness wouldn’t be a bad threesome. All the very best.

Kind Regards
Mark Harrison f.i.c.s.

HC Shipping & Chartering Ltd
Suite 14
Friary Chambers
Hull HU1 2HA
Telephone : +44 1482 586760
Fax : +44 1482 590759
e-mail : chartering@hcshipping.com
web : www.hcshipping.com