A mixed year with some lessons relearned

It's fair to say the shipping industry bids farewell to 2013 in better shape than it welcomed it

FOR many in the shipping industry, 2012 was a terrible year. So this year did not need to be excellent to seem much better than the last. In any case, 2013 didn't turn out to be outstanding. But was it better?

The sinking of the Costa Concordia in January gave 2012 a melancholy start. With 32 deaths, the incident put the cruise industry on the defensive and under intense political scrutiny. Then in July last year, the MSC Flaminia episode claimed three lives and showed several northern European coastal countries in their worst light as they refused to provide a place of refuge until the ship was eventually towed to a German port.

Unfortunately, 2013 has also not been a good year where accidents are concerned. The Philippine domestic ferry St Thomas Aquinas sank after colliding with a cargo ship, the Sulpicio Express 7, in July. At least 116 people died.

In June, there was a stark reminder that large containerships can still have structural problems. The 8,110 TEU (twenty-foot equivalent units) post-panamax containership MOL Comfort suffered a crack amidships in bad weather about 200 nautical miles off the coast of Yemen and finally broke into two. The crew of 26 abandoned ship safely but the two sections of the ship eventually sank.

There have been, as in every year, numerous other accidents. As the year closes, we have had a nasty accident involving a barge, the Bolivian-flag barge Heng Hong 168, which capsized in Singapore waters about three nautical miles west of Horsburgh Lighthouse. At the time of writing, four of the 11 crew are still missing. The others have been rescued, with one making a near-miraculous escape from the upturned hull of the barge after being trapped inside for four days.

This incident underlined the fact that seafarers still face dangers on an everyday basis. This is something the rest of us should bear in mind, especially at festive times like Christmas.

This has been an especially difficult year for the Filipinos, who account for about a quarter of all seafarers on the international trading fleet. The devastation caused by November's Typhoon Haiyan was a big blow for some and gave cause for worry for many more. On the positive side, it does appear that the shipping industry responded well and provided effective support.

The shipping business also seems to be in a slightly better state than a year ago. Overall confidence levels in the industry rose to their highest in more than three years in the three months ended November, according to the latest Shipping Confidence Survey from international accountant and shipping adviser Moore Stephens.

The firm also noted encouraging news on freight rates, and evidence of an increased willingness to invest. But the good news was tempered by concerns over overtonnaging, operating costs and the cost of regulation.

One respondent to Moore Stephens' survey said: "We clearly see an upswing in the markets when talking to various people at various locations in the last couple of months. There is, for the first time in a long while, a general feeling of optimism. Furthermore, the economic indicators, both small and large, all over the world, are pointing in the direction of recovery. We cannot expect it to reach the same levels as in 2007/2008, but a sustainable level of confidence is much better than skyrocketing markets - because the higher you climb, the lower you might fall."

Said Moore Stephens' shipping partner Richard Greiner: "The findings of this latest survey provide more good news for the shipping industry. It is now 15 months since we recorded a decline in shipping confidence. There is an old adage which says that confidence is contagious. If that is true, shipping certainly seems to have caught the bug."

Mr Greiner added that there were still too many ships for the cargoes available on many trades. There was not the ready access to bank finance "that many would like". Operating costs were expected to rise over the next two years, following their decline last year. Crew wages were "only moving in one direction". The cost of keeping up with regulatory compliance had become a big-ticket item while liability insurance premiums were on the increase.

He concluded: "These problems will not go away. But the prospect of being able to fund them properly is brighter now than for some time. Expectations of improved rates in the dry bulk sector are now higher than at any time in the last five years, while in the tanker market, the mood is at its most bullish for two-and-a- half years. In the container trades, things are meanwhile holding up well. In short, there should be more money about next year, although no shortage of things to spend it on."

So perhaps it is fair to say that the industry bids farewell to 2013 in better shape than it welcomed it. But it is an industry that is relearning the cyclical nature of its trade.

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