“Meonia”, Swedish-owned but Cyprus-flagged, discharging timer at Garrucha, Spain, from Lake Vänern, and taking salt back to Bergen.

Brighter prospects for shortsea

The shipping boom of 2004 has been reflected by a noticeable upturn of the European shortsea market. This has given shipowners a welcome boost in profit, brought back a sentiment of optimism and sent second-hand values up by at 25–40 per cent.

Having been reasonably close to balance for some time, the market picked up during the autumn of 2003 and kept fairly well up for 2004, with a genuine “hausse” towards the end of the year. Observers point to underlying factors such as the general upturn in trade out of the Baltic, the more moderate supply of new tonnage and a drain of older units, in addition to the economic upturn and higher production driven by increased demand in Europe.

Large and complex
Quantities of more than 1,000 million tons are moving in diverse directions across the Baltic and the North Sea, involving more than 2,000 ships and several hundred ports. Typical is the excessive number of short voyages with frequent port calls.
Statistics from the Eurostat reveals that 1,949 million tons of seaborne cargo wer e handled within the EU through ports in Northern Europe in 2001, in addition to 183 million tons by Norwegian ports. As each cargo is listed twice, once as loaded and once as discharged, the volume has to be halved, to 1,066 million tons. Out of this total, some 45 per cent would be liquid cargo shipped by tankers, some 20–25 per cent relate to unitized cargo in ro-ro or container mode, whereas the last 25–30 per cent are bulk or semi-bulk cargoes.

The significant change in the region’s trade pattern has been the integration of the trade of the former Soviet trading bloc since the early 1990s. For example, the trade volume through German ports has risen by 38 per cent since 1993. Seaborne trade from the Baltic countries increased 33 per cent from 1997 to 2001, and even by 28 per cent from Finland over the same period. Since 1999 the seaborne volume of the German-Polish trade has escalated by 75 per cent and with Russia by 200 per cent, according to German port statistics.

There are interesting differences between the various national fleets in our region, reflecting the respective customer bases. Sweden and Finland have fleets of ro-ro and lo-lo vessels for forest and steel industries, the Danish fleet consists mainly of multi-purpose and container vessels for general trading, the Baltic fleets are tailored for timber exports, the Norwegian largely for carrying raw materials, whereas the German and Dutch fleets consist of multi-purpose vessels for timber, steel etc, as well as a strong element of container ships for liner services.

Building logistic systems
The North European market is probably unique in having a high segmentation of transport modes, from regular ro-ro and container services to unitized concepts of semi-manufactured products and outright bulk consignments.

The ro-ro services like Finnlines, Transfennica (Spliethoff) and Wagenborg from Finland and Cobelfret and DFDS-Tor Line from Sweden and Norway to UK/Continent are largely based on the logistic flow for forest and other core industries. Similarly, contracts for steel, forest products and other cargoes provide the basis for operators like Paltrans, Nova Jönsson, Österströms, Siöwalls, Wilson and others. Typically, when B&N decided to recast its European dry cargo involvement, it sold off its bulk carriers and went for a take-over of Paltrans.

Wani Shipping of Oslo, which had extensive contracts, including timber from the Baltic, closed down in June last year, when its activities were taken over by Wilson of Bergen. Wilson also handles aluminium products for Hydro Aluminium by side-loader/container vessels from Western Norway to the Continent.

Tide turning
Some 75 shortsea vessels were transacted in the Scandinavian market during 2004, not counting the disposal of the Tordenskjold cement carrier fleet. This number includes 30 mostly smaller and older units sold to Third world buyers and a similar number of newer and larger vessels imported to our region, modern boxed-hold vessels of German or Dutch origin.

In addition, some owners have sold more modern units, like the Bore Group shedding two ro-ro-vessels to Attica Enterprises and two container vessels to Dutch buyers. Hansen & Lange of Faaborg sold out four smaller vessels in favour of three container vessels of 7,700–9,300 DWT. Clipper Elite Carriers of Copenhagen has been boosting its fleet with five container and multi-purpose vessels in the 44,00–5,200 DWT bracket, and Wilson of Bergen with nine bulk vessels of 2,500–4,500 DWT.

Thor Rederi of Svendborg has sold and bought vessels, going for somewhat larger units.

Apart from these larger owners, it is a healthy sign to see several smaller owners investing in newer tonnage. Several “low-air-draft” vessels have been acquired, and practically all acquisitions are of modern box-hold and “open hatch” configuration. New orders are limited to Thun’s two 9,000 DWT self-discharging bulk carriers and B&N’s three 15,000 DWT ro-ro vessels from Aker Finnyards for a Stora-Enso contract.

Summing up, 2004 brought back profit, optimism and commercial ambition. The sentiment is particularly apparent when compared to 2003; when only eight vessels were imported to the region.

How many new-comers are there to the shipping industry? Where do we find new entrepreneurs striving to build up business, acquire ships and build a portfolio of CoAs?

There are not many to be found. Is there a lack of entrepreneurial talent in shipping?

Not necessarily, but many aspiring young people with experience and ambition find their plans thwarted by lack of support and financing. True, the financial track record of shortsea shipping has not been the best, and the banks have suffered severe losses. Yet there is today probably not one single bank in Norway willing to finance a secondhand vessel for a new company, even with 50 per cent equity. Much the same goes for Denmark and Sweden. Without fresh entrepreneurs the industry is doomed to mature and lose its diversified structure.

Building trends
The brisk newbuilding of shortsea vessels for German and Dutch owners has tapered off since the building boom in 1999–2001. Newbuilding interest has moved to larger vessels of 8,000–12,000 DWT, container carriers and multi-purpose vessels. As an example, the order book for Dutch owners comprise 20 vessels of less than 5,000 DWT and 34 of 5,000–10,000 DWT. This means mounting competition from larger vessels in the European trade, but also fewer new contenders in the smaller size segment.

Often overlooked and overshadowed by deepsea shipping, the inter-European shipping market is important both for its large cargo flow, high diversity and sophistication, and also as an extensive network of maritime service providers; in fact the core of our industry.

//Dag Bakka Jr

Latest update 18-10-2006 8:49

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