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Editorial:
The future direction for Short Sea Shipping?
The sector of the shipping industry which is tending to the transport
demand in Northern Europe is riddled with imbalances and differences,
even inconsistencies - in short something of an intellectual puzzle.
 Why
are the Scandinavian and British fleets struggling with decline, while
the German and Dutch fleets are growing healthily? How come that new ships
are being built while there apparently is enough of them in the market?
Judging from voyage fixtures and contracts, the margins are slim, even
considering a good portfolio of connecting contracts.
Part
of the explanation is to be found in the great diversity of the market,
both on the demand and supply sides. Differences are found in the commercial
organization of short sea companies, in market strategies and cargo targets.
Every cargo is being paid according to its requirements; paper is a better-paying
cargo than gravel. There is a world of difference between a large broker/operation
house in Hamburg going for containers and project cargo and the small
Norwegian broker with a handful of bulk vessels hauling gravel and stone.
Having
said this, the ownership structure may not be so different. Very many
of the 2,500 shortsea vessels in Western Europe are owned by individual
partnerships, often headed by a master-owner, and operated and marketed
by an exclusive broker who may also have a financial interest. This allows
the master-owner to pay his attention to running the vessel, while the
chartering organization has a professional grip on the market function.
But at the end of the day, it is the owner company which books the profit
or loss. The crucial question is: What are the rates of return of capital
invested in a modern Dutch multipurpose vessel, a German container ship
and an aging Norwegian bulk vessel?
Except
for certain niches, there are too many ships competing for cargoes and
owners undercutting each other in a gloomy market. In theory, the supply
of vessels should be reduced, preferably from the older end, to make a
reasonable living for the rest. But the actors are not always behaving
in a rational manner; many owners are clinging on to their ships and hoping
for better times ahead. In the meanwhile some are falling by the wayside
for losses or bankruptcies, older vessels being sold to Africa or the
Eastern Mediterranean; a painful adaption of supply to demand.
The
question for the operators is how to adapt to a changing market, to find
a niche or define a strategy.
The
European transport market continues to move towards integration and logistic
systems. For the larger shipping companies the general recipe has been
to take on total logistic commitments, even tender for complete outsourcing
of transportation services, perhaps in partnership with a total transport
provider.
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Dag Bakka Jr, Manager, Norway |
Smaller companies will profit from a sharper commercial priorities, seek
to identify trades and volumes suitable for their fleet and try to develop
such niches. More travelling will be required, more focus on efficient
services, more listening to the customers and a stronger emphasis on personal
relations and services.
After
all, shipping is nothing but a service provider based on human relations.
Back to SSG 1, 25 January
Latest update 18-10-2006 8:49
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