The first quarter of 2022 has again seen a low level of dry bulk ordering. With supply set to remain tight, we look at why contracting still hasn’t grown despite positive rates over the past 12 months.

Current trends

As Q1 has come to an end, ordering in the newbuilding market has remained at historically low levels. Despite a strong rate environment in 2021, many owners have been reluctant to order new vessels amid high prices, low yard availability and regulation uncertainty. Bulk carrier contracting slowed for the third quarter in a row to 8m dwt, equating to 112 vessels, in the first quarter of this year. Breaking this down across the four sectors, the Capesizes have been the least popular, at just 8 vessels amounting to 1.5m dwt. The other sectors have been more robust with Supramax ordering in Q1 growing by 1.2m dwt YoY and Panamax and Handy contracting marginally lower.

Yard availability continues to be an issue in the newbuilding market for bulkers, with buyers looking for prompt slots required to pay high premiums. Yard capacity continues to fill up with containerships and gas carriers occupying most slots in 2023 and 2024. Their price compared to bulkers makes these vessels more attractive to yards which face growing costs due to rising energy and steel prices. Containership ordering in Q1 totaled 164 vessels, increasing by 84.3% Q/Q, indicating any slowdown in contracting for these vessels has yet to occur. Meanwhile, orders for gas carriers are at all-time highs, totaling 40 vessels in Q1. Understandably the ongoing natural gas crisis, particularly in Europe, which is moving away from pipeline gas from Russia, requires increased seaborne volumes to haul supplies. This is also coinciding with many gas projects coming online in the next couple of years which need vessels to transport product. The absolute minimum lead time for an LNG carrier is approximately 20-22 months, compared to 13-14 months for a dry bulk vessel. As gas prices remain elevated and demand for newbuilds continues to increase, these vessels will carry on keeping bulkers out of yards in the coming years, particularly the larger sizes.

Rising prices

The continual price increases for bulk carriers have also deterred many buyers in the newbuilding market from making any purchases, speculating on the prospect of lower quotes later in the year. Prices across the vessel categories are at their highest levels since 2009, with Ultramaxes the highest on record. As prices remain firm, payback periods are extended and any uncertainty on the direction of the market drives risk to buyers higher. Capesize prices have especially risen due to the competition from the larger containerships and gas carriers which continue to see high demand.

Higher prices have kept the orderbook at historically low levels in 2022. For the entire fleet, this currently lies at 7.6% in dwt terms, falling from 7.9% in January but still 140bps above the most recent low in March last year. Dissecting this by sector, the Handy orderbook remains the most subdued at just 3.8% of its current fleet. While Handy rates have continued to perform strongly in 2022, the price differential for the smaller ship versus the Ultramax has led to more interest in its larger compatriot. Meanwhile, the orderbook lies at 7.1%, 9.8% and 8.5% of the trading fleets for the Capes, Panamaxes and Supramaxes, respectively.

Ultramax interest outperforms

As previously mentioned, buying interest in the Ultra/Supramax vessels has continued to largely outpace its counterparts. In Q1, 3.4m dwt was ordered in this sector, higher than any other in dwt terms and the highest level since Q1 2014. When comparing ordering activity across the four major ship types, the Supramaxes have gained their largest share over the past 5 years, accounting for 41.9% of total dry bulk orders in Q1. This could be a result of these vessels outperforming their peers so far in 2022, averaging $25,156/day.

In the secondhand market, interest in the older Supramaxes has also remained robust, as Chinese buyers use the older vessels for short-haul coal trades and ultimately coastal stems. Also, pricing on the secondhand market for Tier III compliant ships has increased to approximately $37m. For this reason, most buyers have opted to go down the newbuilding route instead. This trend has not carried over into the other sectors, leaving buyers for these vessels mostly in the secondhand market for the time being. With just over 9% of the Supramax fleet aged 20 or higher and demand for older ships strong at current prices, this could incentivize continued renewals in this sector in 2022.

Alternative fuel uncertainty

Another trend emerging in bulker contracting is uncertainty over which vessel to order and whether it will comply with future EEXI and CII regulation, set to commence on 1 January 2023. As these measures will get stricter each year, it will be important to order a ship that can maintain compliance over its lifecycle. So far, the extent of the penalties for non-compliance are unclear. Only when this is revealed, will there be more clarity over the necessity of ordering a dual-fuel vessel over a conventionally powered ship for example.

Dual-fuel vessel ordering in 2021 totaled 8.5m dwt, with the majority being Capes and a handful of Panamaxes. In Q1, however, only 802k dwt of all orders have been dual fuel. At present, the only dual-fuel dry bulk vessels being ordered are LNG, with 5 currently trading and 60 on order. LNG is largely seen as a transition fuel in anticipation of cleaner fuels such as ammonia, methanol and ultimately hydrogen entering the market. At current newbuilding prices, ordering an LNG dual-fuel vessel, which commands a significant premium to a standard ship, is a large commitment when taking natural gas forward prices into account. Although these vessels can still burn fuel oil, the aim of ordering one is to use LNG and reduce emissions, implying high bunker costs. Further, fees are higher for LNG bunkering compared to traditional fuels, and these could increase if costs continue to rise.

Some owners have also stated they will be surpassing the LNG (or biofuel) route as a transition fuel and looking towards future fuels such as methanol and ammonia. However, operating these vessels will not be possible until 2025/6 at the earliest, so buyers are taking a wait-and-see approach to ensure they select the optimum fuel for a vessel. Supply chains are currently in development for these fuels, but it will take years for supplies to meet the demands of a bulk carrier, particularly as they will face competition from vessels in other shipping markets. Further, there will be a time lag as yards develop the expertise to build these new types of bulker, which require different components to accommodate new types of engines and fuel tanks.

Outlook muted

The historically low orderbook in the dry bulk market remains a theme in 2022 and will continue to support the outlook for freight rates going forward. High pricing for a newbuild has kept many owners unwilling to order this year. Hesitancy in the dry bulk market over which vessel to order will increasingly see slots allocated to the gas and container markets, particularly the larger sizes, as ordering for these vessels shows no signs of slowing down. As the timeframe of yard availability and the feasibility of more eco-friendly fuels align relatively well, this may keep newbuilding buyers on the sidelines a little longer as these technologies continue to develop. Growing uncertainty will also play a role in keeping ordering down this year because of the Russia-Ukraine war, leaving high vessel prices potentially unjustifiable for some buyers. Finally, the prospect of higher interest rates means capital is set to become more expensive and thus will require strong returns to breakeven at these vessel prices.

China’s leading terminal operators expect no quick fix for the global port congestion and supply chain disruptions. The logistics bottleneck and a shortage of containers is unlikely to be improved in short term with the resurgence of coronavirus in both China and the West, according to senior managers at Cosco Shipping Ports and China Merchants Port Holdings. “The situation will persist for the time being,” Cosco Shipping Ports managing director Zhang Dayu, told a press conference. He said the clogged landside transport continues to pose a challenge to container port operations, squeezing yard capacity, reducing box turnover, and affecting terminal productivity.

The company has seized the opportunity to increase its income by charging demurrages, receiving ships on extra sailings, and raising terminal handling fees. “We have put the mark-up request to all our clients and have achieved good results,” said Mr Zhang.

Wang Xiufeng, chief executive of China Merchants Port, said stricter control measures triggered by the new wave of coronavirus infection in China has impacted some of its operated ports, leading to longer berthing time and reduced terminal handling capacity. Chiwan, one of its container terminals in Shenzhen, was said by Maersk to have been affected by the lockdown measures in the city.

Mr Wang said port operation in Shanghai, another virus-stricken Chinese shipping hub, was normal. Trucking capacity, however, were restricted by the government lockdown policies, while his company is using more barge services to haul cargo from the hinterland to minimize the disruption, he added. “Overall, the supply chain is still under strain and will see no palpable improvement this year.”

Deputy general manager Lu Yongxin said China Merchants Port is establishing a communication system to include governments and shippers among other stakeholders along the logistics chain to share information that can alleviate the container shortage and port congestion. The Hong Kong-listed company reported a 58.1% surge in full-year net profit to HK$8.1bn ($1bn). Revenue rose 32.5% to HK$11.9bn. Total throughput of containers increased by 12% to 135m teu. The growth was mainly driven by the increase in container volume in the Pearl River Delta and the Yangtze River Delta regions in mainland China, according to a stock exchange filing.

Cosco Shipping Ports said its full-year profit increased 2.1% in 2021 to $354.7m while full-year revenue increased by 20.7% to $1.2bn for 2021. Excluding one-off items, the surplus rose 23.6% to $332.5m. Total throughput increased by 4.4% to 129.3m teu.

John Michael Radziwill-led GoodBulk is expecting strong bulker rates this year as fleet growth remains low and port congestion continues. The Monaco-based capesize specialist said net profit in the fourth quarter of 2021 was $36.5m, against $7.6m the year before. Revenue was up from $41.7m to $93.4m. Annual profit hit $92m, against a loss of $4.5m in the previous 12 months.

“Currently, the outlook for 2022 is for a strong rate environment and much like in 2021 this is owing to low fleet growth, possible strong congestion that will be maintained by the record high container rates, at least for part of the year, and good demand volumes,” the Norway-listed shipowner said.

The company views the main risks to rates as being potential aggressive moves by China to cap commodity imports to prioritize domestic output instead, as well as industrial production being affected by a resurgence in Covid-19 cases. The drought in South America will reduce grain exports from the region and the Russian invasion of Ukraine could have a negative impact on grain exports and on other commodities, GoodBulk believes.

“These tensions, on the other hand, could also be a positive for dry bulk tonne-miles in the longer term if they reshuffle trade flows,” the company said.

GoodBulk managed an average time charter equivalent (TCE) rate of $31,666 per day on the capesize vessels, and $27,223 per day for the single panamax bulker. For the first quarter of 2022, the company has fixed about 98% of its capesize days at about $18,000 per vessel per day, a 23% premium to the market. In the fourth quarter, the bulker sector saw a reversal in the upward trend that had lasted most of the year, GoodBulk said. This decline in rates continued into January 2022, but eventually bottomed out at the end of the month.

Heavier than normal rainfall in southern Brazil hampered mining and logistical operations, which led to the weakest January in seven years in terms of iron ore exports.

The owner’s cash balance was $39.7m at the end of the year.

Investors are sniffing around shipping stocks in numbers not seen in years, according to participants in this week’s Capital Link International Shipping Forum webinar. But while those ranks increase, the portion of investors asking loud questions about environmental, social and governance (ESG) matters is dwindling in the aftermath of Russia’s 24 February invasion of Ukraine, experts said. To be more precise, they’re backing off on the “E” more so than the “S” or “G” as concerns over near-term “energy security” begin to overshadow demands to transition to alternative fuels and renewables that may still be a thing of the distant future.

As the US, Western Europe and others begin to seek alternatives to Russian energy sources, harsh realities are focusing minds on the continued relevance of fossil fuels even as pundits say the eventual necessity to transition away from them is also getting a boost. “I think there’s been a big change in the last month,” said veteran analyst Magnus Fyhr of investment bank HC Wainwright in a panel appearance. “People are realizing we may have gone a little too fast into this ESG and we all need energy resources going forward. I think the shipping industry has done an excellent job with the ESG initiative — maybe even pushing a little too hard. I think investors realize maybe some of these older industries need to be revived again.” Fyhr was not alone in detecting a trend.

“ESG is not as prevalent a topic as it was six months or a year ago. There’s certainly been a pullback,” said Jefferies’s lead shipping analyst Randy Giveans. But Greg Lewis of BTIG called for caution in evaluating the shifting winds. “Had the pendulum swung too far in one direction? Yes,” Lewis said. “Has it now swung too far in the other direction, saying that ESG doesn’t matter? Yes. ESG investing is here to stay. I don’t think anyone is saying ‘I’m an ESG investor and I’m going to go out and buy an oil company’.” But it wasn’t just analysts noting a re-evaluation of priorities. The topic broke out earlier in the day on a panel dedicated to the global economy’s impact on shipping.

Those weighing in included Marco Fiori, chief executive of Italian product tanker owner Premuda, who spoke on the speed of energy transition. “People think this can happen in a few years. No, it will take time. I’m not saying not to adapt, but let’s have some realistic expectations. People have been living in a little bit of a dreamland. Sometimes people need a reality-check.” If that’s what has been provided by the aggression of Russian President Vladimir Putin, perhaps there is a knock-on effect for public shipowners and their shares. It may be a secondary factor, as experts say there’s been a rotation of investors out of growth stock like technology listings and into energy and equities backed by physical assets — such as shipping — since November, well before Putin invaded.

The bigger driver has been the specter of inflation and the reality that rising interest rates will be the tonic applied by regulators such as the US Federal Reserve bank. The 29 US-listed shipowners covered by investment bank Jefferies are now up 29.7% year to date and 51.6% year over year. “Our analyst Ben Nolan has never seen more calls coming in from investors who want to talk about shipping,” Stifel investment banker Chris Weyers told a capital markets panel. He noted that LNG — a mooted beneficiary of Russian dislocation — is the hot query. “The [overall] level of interest is two to three times what it was last year,” Weyers said.

Clarksons Platou Securities analyst Omar Nokta has been around shipping since 2003, when the industry was gearing up for its last supercycle. “For the last decade or so, we’ve had a real lack of interest,” he said. “Stocks sold off and investors focused on other things. Now the investor pool is getting bigger. It seems like the pool of capital will be much deeper than anything we’ve been used to in the past five or 10 years.”

Steel trades are continuing strong and should see an increase in tonne-miles. With Europe effectively banning steel imports from Russia and Belarus in response to the war in Ukraine, the bloc will need to look elsewhere for volumes, especially as domestic production slows due to higher input costs. According to ship brokerage Braemar ACM, the increased volumes could come from China, which more than doubled its shipments to Europe last year to 1.5 MMT. That will benefit the supramax segment. “As easing domestic demand in China persists, there will be more opportunity to export out of the country,” said dry bulk analyst Mark Nugent. In addition, since the European Union has a quota system in place, Turkey and India are set to be allocated additional volumes as the Russian quota gets redistributed.

Europe imported an average of 467K tons per month from Russia in the 12 months before the invasion, accounting for 25% of European steel imports, according to Braemar. That equated to 5.6 MMT in 2021. The rest of Russia’s 30 MMT steel exports — half of it finished and the other half semi-finished — moves to neighboring Belarus and Kazakhstan, and to Turkey, Egypt, and Mexico, according to Banchero Costa. Exports to these countries should probably “continue more or less as normal, despite short term disruptions from payments and insurance issues”, head of research Ralph Leszczynski said.

The volumes which head to western Europe will probably be directed to the Middle East and North Africa, with not much difference in terms of tonne-miles, he said, adding that he did not expect much volume to shift to Asia as the market there was saturated with competitively priced Chinese and Japanese cargoes. In the longer-term, high-energy costs could affect European steelmaking, as energy accounts for 15% of production costs, he said. In the first two months of this year, steel output in the 27-nation European Union fell 2.2% to 23.8 MMT, according to the latest statistics from the World Steel Association. Furthermore, output from other countries in Europe dropped 4.8% to 7.8m tonnes.

Of the top 10 steel-producing countries, only India, Germany, Iran, and the US showed growth in February versus the same time last year. China’s output fell 10% to an estimated 75 MMT. Global steel output meanwhile fell 5.7% to 142.7 MMT last month, mostly led by the decline in China. Although seaborne steel trade will not repeat the growth seen last year, as global economies recovered from the worst of the pandemic, the volumes should “remain robust on arbitrage plays”, according to Arrow Shipbroking, Since the start of the Ukraine conflict, the spread between US and Chinese steel prices has widened to $700 per short tonne from $250, which is an indicator of increased backhaul volumes. “Supply-chain backlogs and high durable goods consumption is keeping demand for industrial commodities like steel very strong and this should keep seaborne steel demand above trend,” said the brokerage’s research analyst Harry Grimes, while a more “relaxed production environment” in China should maintain seaborne trade over the coming year.

Steel product volumes rose 20% last year, leading tonne-miles to rise 37%, mostly to the benefit of supramaxes. While such a big jump in tonne-mile demand is unlikely, the current level of demand could be sustained during 2022, Mr Grimes said, as European buyers switch from the conflict region to Asia. “The loss of many Russian and Ukrainian cargoes this year may not be fully offset by other origins as rocketing steel prices suggest, however, the longer distance of additional Asian cargoes will likely maintain tonne-mile demand,”  he added.

According to Braemar, seaborne steel trades increased 5.2% to 12.1m tonnes in February versus the same time last year, buoyed by exports out of Brazil, to the US, and increasing exports from Japan to Thailand, Mexico, and the US.

If the financial performance of major listed shipbuilders provides a reasonable bellwether of the current state of the global shipbuilding industry, then things do not look too rosy. Last year, South Korea’s majors Daewoo Shipbuilding & Marine Engineering, Korea Shipbuilding & Offshore Engineering (which includes the Hyundai group of shipyards) and Samsung Heavy Industries lost a combined $3.3bn, citing increases in steel plate prices as the main cause. Nevertheless, surging demand since the beginning of 2021 for liquefied natural gas tankers and containerships on the back of exceptional freight earnings has helped drive an increase in newbuilding contract prices, which have surged by an average of 30% in the past 18 months. This demand has, in turn, helped to push out lead times so that currently a large containership ordered today has an average lead time of 30-36 months, in comparison to half this length of time two years ago.

Demand for new containerships — which most South Korean and a handful of Chinese and Japanese shipyards excel at building — began to lift off from the start of last year. This demand has been so great that during the first quarter of 2022, some 70% of all new orders, in gross tonnage terms, were of this vessel type. This ordering frenzy has brought the newbuilding backlog for boxships up to around 25% of the existing fleet in service. Interestingly, most recent containership orders have been placed by non-operating owners for the charter market. However, at the time of writing, additional orders were in the pipeline for liner operators including Ocean Network Express (up to 10 13,000 teu ships) and CMA CGM (nine 24,000 teu units). Meanwhile, orders for tankers and bulk carriers appear to have almost stalled as overcapacity and geopolitics have driven freight rates down. Given that both sectors already have significant vessel orderbooks, contracted in 2020 and 2021, this should be no bad thing. In the gas sector, South Korean shipyards have benefitted from rising demand for LNG tankers, with Greek shipowners Maran Gas and Dynagas, Mitsui OSK of Japan, Nigeria LNG and Qatar Gas all placing orders in South Korea during the first quarter of 2022. New orders expected to be placed soon in the LNG sector include up to 14 vessels for Malaysia’s Petronas and a series of ships for Abu Dhabi’s ADNOC. In the latter case, the contract is expected to be won by China’s Jiangnan Shipyard.

This increase in demand could drive an expansion in shipbuilding capacity going forward. Indeed, Hyundai Heavy Industries has already stated that it will soon reopen its Gunsan shipbuilding facility, which was mothballed after the downturn in orders following the global financial crisis. Shipbuilding capacity reduced significantly after 2012, following a period of rapid expansion in China. Japanese and Chinese shipbuilders in particular ran down production or closed shipyards altogether after 2012 as the downturn in orders hit the sector.

Clearly the drive to decarbonize shipping has been an important factor in the recent newbuilding ordering bonanza. Significantly, most recent orders for containerships, ro-ro cargo ships and pure car and truck carriers have been for alternative-fuel vessels. Indeed LNG, methanol and ammonia-ready or capable vessels made up 60% of orders for containerships in the first quarter and 100% of orders for pure car and truck carriers. With all these ship types operating on fixed liner schedules, the ability to bunker alternative fuels — now undergoing rapid development — will be far simpler than for most other ship types. Yet one cloud on the horizon for the global shipbuilding industry is a shortage of labour. While this is not new, labour shortages will provide a constraint to increasing capacity to meet short- and medium-term demand. The answer to this appears to be increased automation. Samsung Heavy Industries recently introduced robots to its ship production process to cut steel plate and weld it into ship blocks. The use of robots in this process is understood to have increased productivity by around 40%. Other South Korean shipyards are expected to introduce similar automation processes soon.

Compagnie Maritime Belge (CMB) has added two Newcastlemax bulk carrier newbuildings to its orderbook at Chinese yard Qingdao Beihai Shipbuilding Heavy Industry. Brokers said the Belgian shipowner is paying about $66m each for the 210,000-dwt vessels, to be delivered in the second half of 2024. They are thought to be optional berths that the company was holding with the shipbuilder. But this has not been confirmed. Benoit Timmermans, chief commercial officer of CMB’s dry bulk division Bocimar, confirmed to TradeWinds that the company has ordered the two ships at Qingdao Beihai.

Timmermans said the vessels, along with the others the company has ordered at the yard, are dual-fuel ammonia-ready. “This is part of our fleet renewal with future-proof vessels which are — on the basis of conventional fuel — already 20% more fuel-efficient than newbuildings delivering today,” he added. In 2021, CMB ordered eight Newcastlemax bulkers at Qingdao Beihai, starting with a quartet and adding a further two ships in October and then again in December. This initial octet is due for delivery in 2023. At the time, Timmermans said the order was placed on the back of strong fundamentals in the dry bulk sector and fleet renewal plans.

Brokers said the latest two vessels have been contracted at a strong price — setting a new benchmark for this type of vessel — but it is unclear what additional premium has been paid for the ammonia-ready notation. In contrast, Tor Olav Troim’s eco bulker start-up Himalaya Shipping is paying about $68.8m each for a series of 12 LNG dual-fuel Newcastlemax bulkers contracted at New Times Shipbuilding in China. These vessels are scheduled for delivery from the second quarter of 2023 to the end of 2024. But they include a dual-fuel system worth about $15m.

Shipowners are battling to decide whether to move forward with increasingly expensive newbuildings at yards, where berth space is rapidly filling up, or turn to the secondhand market until the regulatory picture on emissions becomes clearer. Building vessels that are classed as ammonia-ready is one option for owners that do not want to take the LNG-fueling route for their newbuildings but do need to demonstrate to investors and shareholders that they are addressing emissions reductions for their fleet.

Clarksons said that in 2021 some 35 newbuildings were contracted as ammonia-ready. Shipowners that have ordered ammonia-ready tonnage have said their vessels will have deck areas marked out for strengthening to take future bunker tanks to hold higher-density ammonia. Fuel and pathways for a gas supply system, which would require double walling for ammonia, are also being mapped out on ships.

Mediterranean Shipping Co (MSC) has upsized a planned order for 18 LNG dual-fueled panamax-sized container ships to a whopping 28 vessels split across three shipbuilders and priced at more than $3.4bn in total. Brokers said MSC has signed letters of intent with Chinese shipbuilders New Times Shipbuilding and Qingdao Beihai Heavy Industry for a series of 8,000-teu container ships. New Times is set to net the lion’s share of the contracts with up to 14 vessels with state-owned Qingdao Beihai expected to secure eight vessels. On top of this, newbuilding sources revealed that South Korea’s Hyundai Heavy Industries has secured six 7,700-teu LNG dual-fueled newbuildings from MSC.

Shipbuilding sources said MSC, which is partnered with Shell on its move to LNG-fueling, will be paying the three shipyards more than $120m each for the container ship newbuildings. Officials at the shipyards declined to comment on their companies’ newbuilding activities, citing contract confidentiality. In response to a request for confirmation and further details about the orders, MSC told TradeWinds: “In keeping with our general policy, MSC declines to comment on speculation around our newbuilding pipeline.”

News of MSC’s latest newbuilding haul on container ships — this time for 8,000-teu vessels — was first reported in TradeWinds in early March. Then, the company was said to be looking to order 18 firm LNG dual-fueled vessels and options that could take the total to 24. All shipyards in South Korea and China able to build 8,000-teu boxships are said to have been approached by MSC. Initial market speculation indicated that the order would be split between two Chinese yards with the inclusion of orders at HHI surprising some. Brokers said MSC’s order has basically filled 2024 and 2025 delivery slots for 8,000-teu newbuildings at New Times and Qingdao Beihai. MSC’s newbuilding contract will be the second boxship order for Qingdao Beihai. The China State Shipbuilding Corp controlled shipyard, which is better known for bulker construction, made its boxship debut in 2021 when it scooped 10 conventional-fueled 5,500-teu ships from CMA CGM. In February, John Fredriksen’s shipowning vehicle SFL Corp was reported to have signed a letter of intent with Qingdao Beihai for four conventional-fueled 7,000-teu newbuildings at between $81m and $82m per ship. But this publication has since learnt that the deal is no longer going ahead.

Interest in the 7,000-teu to 8,000-teu boxship size range has been intense this year. Owners that have contracted ultra-large and neo-panamax-sized vessels have been working their way down the size ranges, ploughing the vast profits they have been making back into fleet renewals and expansions with the new 7,000-teu to 8,000-teu sized vessels. Brokers and consultants have named companies including Zim, CMA CGM, Hapag-Lloyd, and Pacific International Lines as among those eyeing vessels in this size range.

In March, CMA CGM turned to Samsung Heavy Industries to contract four LNG dual-fuel 7,400-teu boxships for delivery dates starting in 2024. The newbuildings were priced at around $123m each and the deal includes an option for three additional vessels. But to date, it is MSC that appears to have the most voracious appetite among all its liner peers.

Shipping loves a war. It’s a trite saying, dished out by shipping veterans as TV news correspondents don flak jackets and social media becomes awash with armchair generals.

Rates near war zones tend to spike at any sign of a skirmish, and the need to source cargoes from alternative, peaceful climes has a habit of extending the overall tonne-mile picture, soaking up tonnage and making owners richer.

That’s the argument regularly trotted out. However, with this Russian invasion there is one significant change to previous wars. This time, thanks to myriad brilliant new digital shipping platforms, we can see all too clearly which owners have decided to profit by sending their crews on dangerous sorties to pick up Russian cargoes, tempted by sky-high rates, where aframaxes, for instance, shot up above $200,000 a day.

I’ve been fortunate enough to be granted recently full access to Sea/, a platform developed by Clarksons. Opening it up, I get to see where every ship is in the world, and where they’re headed. The platform hosts a vast amount of other data too. There are many other similar platforms, giving journalists and regulators alike a level of transparency in these dark times of war like never before.

We’ve been all too happy to name and shame owners who have continued to do business with Russia in recent weeks, much to the horror of many CEOs, who previously had gone about their questionable businesses without any intrusion. Greek owners have been the most egregious over the past five weeks, but there has been a bunch of big names we’ve called out with my email inbox getting several spluttering, harrumphing missives from boardrooms across Europe.

Technology has made my job easier. I can, for instance, see the names of the 400-odd ships due to call in Russia in the next two weeks. With any luck tech transparency will also push the dodgiest ship operators to the sidelines. We will be watching.

March has been highly profitable, and with the need to search for alternative cargoes, the outlook is strong for dry bulk. China remains paramount in the bulk carrier pantheon. This is becoming increasingly worrisome for the bulk carrier market, as the urgent issues in President Xi’s in-tray stack up in a year he would have wished would go smoothly as he seeks a constitution-busting third term in office. As the cult of personality builds around him, he must take on personal responsibility for a slowly imploding property market, managing the pandemic, rising energy and commodity prices driving factory gate and foodstuff inflation, China’s response to the war in Ukraine, ongoing strategic competition with the US and a stalled Belt and Road Initiative.

The resurgence of the Covid-19 pandemic has caused lockdowns across swathes of the country’s most important industrial areas, such that 30% of Chinese GDP is now said to be shuttered. If this lasts for a month, it could wipe 1% off Chinese GDP growth this year. It is affecting steel production in key areas such as Tangshan, a city which produces around 13% of all Chinese steel, but where output has been suspended at many mills due to public health measures. This is driving up steel futures prices and the prospects of reactive monetary loosening by the People’s Bank of China. The bank now has a fine balancing act to perform between supporting industrial activity and exports but not overheating the already oversupplied housing market. Steel analysts in China describe the market as rangebound and cautious. Landed iron ore prices in China were $150.75 a tonne on March 25 having begun the year at $114.60. Coking coal prices, rallied from mid-2020, from $300 to $670 a tonne by September 2021, have recently fallen to below $450 a tonne amid bearish sentiment with the Tangshan lockdown quoted by market reporters.

The consequences in the bulk shipping markets have been muted. Capesize freight rates from Australia to China stood at $8.86 on February 21 (a TCE of $15,331) then enjoyed three firm weeks to peak at $12.38 on March 15 before giving up some gains to end up at $11.64 on March 25, a TCE of $15,648. On Brazil to China, the TCE was $11,986 on February 21, peaked at $19,232 on March 15 and subsided to $12,795 on March 25. Shipping Strategy analysts estimate that Australia will export 210m tonnes of iron ore in Q1 this year and Brazil 70m tonnes compared to 219m tonnes and 78m tonnes respectively in Q1 2021. All in all, Q1 this year is a damp squib for Chinese iron ore demand. Still, month on month the Baltic Capesize Index was up 12% to 1,887 points on March 25. Life is even better for panamax operators, who have enjoyed a rising market for a month now. The Baltic Panamax Index stood at 3,413 points on March 25, up 28% in a month, as panamax cargoes increased 18% to 110 MMT in the first three weeks of March compared to all of February.

Ukraine, the fourth biggest exporter of wheat and coarse grains, shipped almost 50 MMT of wheat, barley, sunflower seeds, etc. to global destinations last year, with 11 MMT going to China, 4.6 MMT to Egypt and 3.6 MMT each to the Netherlands and Turkey. The Ukraine government says a disrupted planting season this year will result in at least a 50% fall in the harvest. As Ukraine’s Black Sea port approaches remain mined, any exports will have to find alternative routes out. Russia shipped around 20.5 MMT of grains by sea last year, of which 3.7 MMT went to Turkey and about the same amount to Egypt, with most grains loading at Novorossiysk. If Egypt and Turkey are not to suffer significant food inflation and possibly social unrest, they will need the support of other suppliers.

China, the biggest wheat importer globally, has this month warned that its winter wheat crop condition is “the worst in history”. Agriculture minister Tang Renjian reports that heavy rainfall last year delayed the planting of about one-third of the normal wheat acreage and that the harvest may be down 20% this year. Wheat prices are at 15-year highs and will rise further this year, pressuring many of the poorest countries in the world. The US, Brazil and Argentina all shipped over 100 MMT each of wheat and coarse grains in 2021. The grain seasons from those countries this year should prove very busy, to the delight of panamax bulker owners.

Russia shipped almost 17 MMT of steel in 2021 as well as 1.5 MMT of iron ore. Ukraine exported around 5.5 MMT by sea plus 9 MMT of iron ore. Those figures may be significantly lower this year, certainly the Ukrainian figures, as tens of thousands of steel workers are currently occupied in the National Defence Force. The relevant freight market, Baltic route S1B, from the Black Sea eastwards, stood at $30,654 on February 21, sliding gently to a low of $18,992 on March 10 before perking up a bit to $22,763 on March 25.

Lockdowns in China may prevent it from repeating its 53 MMT of steel exports of 2021, when it led the world, again. Globally tight steel markets could see construction corporates scouring the globe for alternative sources of supply, to the delight of geared bulk carrier operators, for whom steel is a key cargo. Already in the first three weeks of March, nearly 15 MMT of steel products were loaded onto geared bulk carriers worldwide, compared to less than 12 MMT in each of January and February. The biggest increase came from Europe, where an extra 1.5 MMT were loaded in the first three weeks of March compared to all of February. The result in the freight markets has been a 25% month on month increase in the Baltic Supramax Index to 3,020 points on March 25 and a 27% increase in the Baltic Handysize Index to 1,782 points on March 25. The supramax 10TC average is up 25% to $33,217 a day and the handysize 7TC average is up 27% to $32,082. Truly, the capesize market has become decoupled from the freight markets for smaller ships. Nonetheless, the BDI is running ahead of Q1 last year and market bulls look to have the wind in their sails for the time being.