John Faraclas
Improved Dry Markets, explosive Geopolitics whilst Coronavirus still spreads
The BDI (Baltic Dry Index) gained 37 points since yesterday and now stands at 1,577. Wets with mixed feelings and the Geopolitical issues will bother us for a long time. Coronavirus spreads with politicians to blame. John Faraclas’ brief daily recap:
The Capes’ BCI was up 52 points and now stands at 2,384…
Panamaxes’ BPI up 50 at 1,797…
Supras gained 18 points surpassing the 900 points threshold and standing at 911.
Handies’ BHSI up five at 485.
The Wets with mixed feelings; the last published BDTI (Dirties) and BCTI (Cleans) now stands at 499 – minus one, losing also the 500 points threshold and 399 – up 20 points respectively…
The WTI now at US$ 42.33 – minus 18 cents since yesterday’s US$ 42.51… We have advised for CAUTION as anything above the US$ 40 is a great loss and makes 7.7 billion people all over Planet Ocean suffer…
We have also closely followed the Cruise Industry part of Maritime Tourism, which currently suffers from Coronavirus as well as from the current Recession. VesselsValue come up with this:
The Cruise industry’s COVID-19 crisis: how bad is it really?
For a full analysis click here
Since the outbreak of COVID-19 was first reported on the Diamond Princess Cruise, operations throughout the world have come to a virtual standstill.
Using VesselsValue’s new Trade service for Cruise ships we can analyse journey counts, port calls, average speeds, passenger miles and supply & demand to shed light on the situation.
Port to port sailings
In 2019 there were 346 Cruise ships operating globally. During the first half of 2019 they made a total of c.30,000 journeys and travelled a total distance of 13.5 million nautical miles. For the same period in 2020 the number of Cruise ships increased by 10 but the total number of journeys fell by 53% to only 14,048. The reality may be even worse, as most of these journeys were to off board passengers and re position for layup.
Speeds
The average speed of the global Cruise fleet has remained stable in recent years, ranging between 13.5 knots and 15 knots. However, with COVID-19 restrictions in place Cruise ship voyages are now largely associated with non-profit movements. With fuel economy the only driver, the average speed has plummeted to 11 knots as entire fleets are repositioned for layup.
Activity
The constants leading up to the pandemic were very positive; consistent increase in fleet size, high utilisation shown by low number (10%) of ‘vessels not underway’. As can be seen by the graph below all this changed in March 2020 with ‘vessels not underway’ rising to over 50%.
This graph highlights the impact that the “no sail order” and layups have had on the industry. In 2019 the passenger miles remained at stable levels of circa 500 million Pax-Nm. March 2020 saw the figure plunge towards 100 million Pax-Nm, where it has settled through to July as vessels continue their non-profit repositioning.
Supply & demand balance
How has this affected values?
The value of the global Cruise fleet has fallen in value by 33.4 billion USD since January 2020. Older vessels are being offloaded for cheaper prices or being scrapped completely. This has crashed the values of vessels aged 20 years and older but has also pulled down the value of younger tonnage.
Summary
Demand for Cruises has declined to virtually nothing. Vessel activity since the COVID-19 related restrictions has been for off boarding of passengers and repositioning of vessels for layup.
This drop in demand has caused Cruise companies serious commercial issues. Some have even given up completely scrapping their entire fleet. Most are selling off older vessels at knock down prices causing values to crash. There is also a tendency to delay new builds. This is clearly an effort by the industry to streamline and modernise current fleets to minimise ongoing layup costs and to position for a recovery. In this way supply is being adjusted to try and match the anticipated future demand.
Next years passenger bookings are reported to be positive, however there is still huge uncertainty if and when demand will recover to match the current excess supply of vessels. Therefore, we will continue to monitor the real time trade data to identify the demand recovery if and when it happens.
For a full analysis click here
Geopolitics are getting off hand particularly in the faulty line from Gib to Afghanistan and from the Caucuses to the Horn of Africa given the despicable Turkish behavior. President Erdogan will make everything possible to rock Peace on Planet Ocean; just wait and see. As we have long ago advised you, he is going after every single nation that borders with today’s Turkey as well as with former parts of the old Ottoman Empire, the sick man of Europe… It is not just a matter only for the nations in East and Central Med, The Black Sea, or the Balkans, nor a European issue: it is a matter for all nations on Planet Ocean to seize the opportunity and impose no just sanctions but to completely block and isolate Erdogan’s Turkey by involving of a UN Force. This is the only way he understands. Add the fact that he uses religion, which is a very dangerous weapon these days… and this tells it all… We call upon everybody, every leader on Planet Ocean to stand up to the circumstances before it is too late. Every leader of any country is responsible and will one day be held responsible in yet another Nuremberg Trial! Military Blocks such as NATO must also intervene. Keeping a blind eye will one day become a boomerang!!! Erdogan and his authorities are totally responsible for the MIGRANTS movement – because it is a movement, a tool he is using in his arsenal, among other weapons to blackmail Europe and destroy its social cohesion. Turkey is now a pariah state. Cyprus and Greece continue like Syria, The Kurds and Libya to be bullied by Erdogan and his likes… New Oil and Gas reserves in Central and East Med as well as in the Aegean Sea has opened the appetite of Erdogan’s Turks to take them over… No respect for International Law… Watch it….
Fire opposite Chios, at Cesme (Turkey); picture gratis Galatia Paradisis
As you read these lines, there is a devastating fire raging at the Erythrea Peninsular in Turkey, opposite the Greek Island of Chios – places around Urla (Vourla), the Port of Cesme and other places close to Izmir (Smyrna) are on fire…
In Lebanon and in particular in Beirut the humanitarian crisis is beyond imagination following the explosion which caused devastation; the worse thing is that clinics are not functioning. Whoever is responsible for what has happened will face his time capital punishment.
Next door Israel signed a historic deal with the United Arab Emirates; some are happy but the Palestinian leadership brands it as treason…
BREXIT moves can be spotted; let’s see the finale with Europe… The EU still tries to strike a deal!!!!!! Let’s see what will happen. It’s not just the Trade Relationship, I could be more than that… A theme for a new book: “UK and EU: always at odds…”
At the other side of the Atlantic the USA’s presidential election fever is on… Kamala Harris makes waves, but is this enough to secure a comfortable win for Democrats’ Joe Biden?
More geopolitical news tomorrow.
Coronavirus spreads and I guess the second wave is on. Discipline, Discipline, Discipline particular for all those under 30 (thirty). Expect lockdowns. For a fistful of Dollars Politicians failed to perform and save millions of lives. S HA M E !!!!
the late Kostas Vasiliades 1950 – 2020
Lastly, earlier on this morning the Chian Society paid tribute to Kostas Vasiliades, former head of Greece’s Merchant Marine Inspectorate and former president of the Chios Marine Club, by participating in his funeral in Athens’ Paleon Faliron cemetery.
Who wasn’t there: officials from the Ministry of Mercantile Marine, Classification Societies managers, Associations, friends and neighbors. He will be greatly missed. Our Warmest Condolences… May his journey in the Sea of Eternity be plain sailing! Blessed!
Have a nice evening but continue to remain on guard from actions emanating from Pirates, Terrorists, Criminals and any Business Hooligans whatsoever wherever you are on Planet Ocean. Once again a big THANK YOU to all who really care for all humans – Doctors, Nurses, Seafarers, Dockers, Port Authorities et al during this Coronavirus disaster!! We repeat: Do please invest in Hospitals including Equipment, Doctors, Nurses and any useful means to avoid further disasters! Become more disciplined and care for the Environment too. Lastly: Education and Training for all to be able to tackle these disasters. Let’s work collectively together and NOT opt for a fistful of Dollars to restart the already collapsed global economy… which is in red US$ 260 (twohundredandsixty) trillion…
