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Divided opinion on greater specialisation in bulk trades

Divided opinion on greater specialisation in bulk trades
The trend for the future is towards greater specialisation in the dry bulk market, according to Drewry Singapore president and ceo Arjun Batra, who even went so far as to suggest that "VLOCs (such as the Valemaxes) will eventually push out capes".

While opinions varied at the 2nd Iron Ore and Coal Shipping Summit in Hong Kong, it was clear that the matrix for seaborne is set to undergo a big change. This will be drven by factors as diverse as commodity price volatility and the import substitution policies of lack thereof of India and China.

Questions were asked by the likes of dry bulk luminaries such as TCC Steamship chairman Kenneth Koo as to what would be the apprpriate size to be the capesize of the 21st century for the Pacific trades. Whether this should be the so-called Aussiemax for the Port Hedland iron ore trades or the Newcastlemax for the coal trades remains to be seen. He postulated whether this would then sound the death knell for the traditional capesize and being relegated to mere transshipment vessels for Vale's terminals in Asia. In response Batra fimrly declared that "the iron ore capesize backhaul trade is dead".

Loo also highlighted the increasing trend towards C&F contracts now in China as opposed to FOB terms previously and the increasingly close relationship between China and major miners such as Vale for example. To this, Batra, went on to emphasise that owners need to start thinking about building specific vessesl for specific trades as well as getting closer to the big players such as Vale and Rio Tinto.

A lot of how the future pans out will depend on whether the Chinese buyers go back to FOB terms or whether they continue with the current trend of negotiating prices directly with sellers inclusive of freight, noted Noble Group co-head of chartering Jagmeet Makkar. He nevertheless remained optimistic that there would be a place for everyone."There will be some kind of balance between tradeable ships and specific built ships," Makkar said. This is because the nature of the shipping business is changing all the time.

For example the profile of ports keeps changing and larger ships such as the capes may in future be able to call at ports they could not previously due to enhancements that are made.

Clarkson Asia managing director Martin Rowe meanwhile ended with the encouraging reminder to independent shipowners that they possess more pricing power than they realise and ultimately do have the option not to fix a ship if the price is not right.