global shipping markets

8/7/2019 global shipping markets

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1

DistanceType

New YorkAir

Origin Destination

Singapore 19 Hours

2 SingaporeVessel Long Beach 40 Days

3 RibeiraoPreto

Truck Santos Port 5 Hours

4 TubaraoVessel Beilun 56 Days

5 NewcastleVessel Qingdao 25 Days

6 St PaulBarge NewOrleans

10 Days



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Physical Process of Moving Goods and Cargo

Air, Land and Sea



1 Beneficial Owners: ultimate recipient of profits, may own fleet.Sub Companies may own Vessels or use 3rd party managers.

2 Ship Owners: Rents the boat to Charterers

3 Ship owners: either transport the agreed upongoods, or provide the ship itself to Charterer.

4 Charterer: Agrees to pay a specified freightprice for the transport or use of the vessel.



1 A contract to deliver a product to an agreed upon destination.

2 Charterer agrees to pay Freight


4 Products: Grains; Crude Oil, LNG and Containers




Dirty Tankers ± Crude and Residual Fuel Oils - TMRD <GO>

Clean Tankers ± Gasoline, Heating Oil, Gasoil, Jet Kerosene: TMRD <GO>

Worldscale Rates & Conversion to $ per Ton, Barrels and Days

POTN <GO>

1

2

3

4

TTCE <GO>5



Unified system of establishing freight payment by routes and product

Annual AVG of the PORT to PORT flat route costs established by Worldscale

Worldscale rate is expressed as a % of the designated published rate

Reflects freight market demand: ships, size & cargo demand at time of Fixing

1

2

3

4



� Worldscale - % fluctuating on availability anddemand for ships and cargo by route

�

Established a net margin of U

SD

12,000 for charterers

� A route can be quoted in 3 ways:

± $ per Metric ton. ± $ per Day.

± $ per Gallon



� Use CHAD <GO> to gauge historical volumes of crude.

� TREK<GO> Crude Oil tanker voyages

� Use FLET<GO> to review global fleet data acrossproducts and vessel types.

� Track SSY broker estimated ship values.

� BMAP -Search vessels



� Global marketplace for owners, brokersand charterers.

� The exchange provides daily freightmarket prices and maritime shipping costindices, and a market for freight futures(known as Forward Freight Agreement).



� The exchange publishes six daily indices, all of which are complimentary on Bloomberg now.The additional route rates are a third party

service onB

loomberg.� Baltic Dry Index

� Baltic Panamax Index (BPI)

� Baltic Capesize Index (BCI)

� Baltic Handymax Index (BHMI)� Baltic Tanker Dirty Index

� Baltic Tanker Clean Index



� Agreements for Freight RATES

� Hedge tool ± they are NOT Contract

Fixtures.� Daily rate based upon Baltic Exchange

� Like a Contract for Differences (Swap)«at

settle, if contract is LESS than the AVERAGE rate for day count periodagreed, Seller pays Buyer the difference.



� Forward Freight Agreements and Optionsare the hedging tools used for trading of future levels of freight rates.

� Allow for Vessel Owners to hedge physicalfreight.

� OTC broker based market which settlesagainst the BFX indices & Platts

� IMRX exch electronic screen basedtrading..



� FFAs reduce price volatility risk.

� IMAREX is most detailed ± IMRX<GO>� Products that trade include:

± Dirty Tanker Futures ± Clean Tanker Futures

± Dry Bulk

± Bunker Forward Rates

± Freight Options ± BDI Futures (Baltic Dry Index)



�Takes into acct vessels anchored for more than 14 days,the draft (i.e. are not empty) stationary within sameregion



� FIXC - Containership fixtures

� FISL & GALB ± Regional route brokers

� Port Congestions studies (FLET) covers

major crude and products as well



� FUEL OIL used to power Vessels

� Regionally quoted

� Major Grades = 180 and 380 Centistroke� Centistroke is a measure of viscosity in oil.

Lower viscosity fuel oil tends to command

a higher price in the spot market.� Physical & Fwd markets exist (Imarex)



� No. 1, 2 and 3 are distillate fuels oils ± akaLight ± Kerosene (1), Diesel/Gasoil (2)

�No.4 is blend of distillate and residuals ± ablend of #2 and #6

� No. 5 and 6 are HEAVY Fuel Oils(residuals). 6 is Heaviest.

� BUNKER Fuel is most commonly No. 6



� Transport of regional Natural Gas Suppliesvia tanker and regasification plants

� Asia major importer.

� Price of LNG is indexed to CRUDE ratio of 6:1. Aka Japan Crude Cocktail Index

�

LNG competes with Nat Gas inU

SA andEU as well (also Crude in EU)

� Assets & Vessels ± BMAP <GO>



� Over 90% of the LNG market is under contract

� Shipments can move ± contracts can

change� Vessel location and cargoes are tracked ±

VSRC has sample searches

� Over last 2 years, USA has increasedimport capabilities by over 500% andbuilding (GCAS)



� B ARG <GO> - USA Agriculture River rates

� GALB<GO> DRY BULK global routes

� NWCO <GO> Australian COAL shipments

� BSHI<GO> SSY COAL & IRON rates

� BSHI<GO> Vale do Rio Iron Ore ± largestiron ore producer globally

� Iron Ore consumption grows 10% annual

global shipping markets

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