Supporting the long-term growth and stability of the dry bulk market through increasing efficiencies
Despite escalating trade tensions, tighter credit market conditions, shifting commodity flows and slow global growth, there is an air of cautious optimism in the dry bulk markets for 2019, writes Neil Godfrey, GAC Group Sales Director – West.
This contradicts the recent news that the sector is potentially set for a rough ride in 2019. The International Monetary Fund has warned the world economy is slowing and the agency’s updated World Economic Outlook lowered estimates for growth in 2019 by 0.2% to 3.5%, its second downward revision, resulting in negative implications on the shipping industry.
Cutting across this data is another forecast from Clarksons Research, who say that global tonne-mile demand growth is set to accelerate to 3.1% in 2019 from 2.7% in 2018, supported by China’s robust iron ore demand from Brazil and Australia, and grain trades.
According to a separate outlook report by Lloyd’s List, it was noted that the dry bulk sector is estimated to have grown by 4.1% to 5.18 billion tonnes of cargo transported in 2018.
As market dynamics surrounding the dry bulk industry remain uncertain, low-profit margins and financial pressures are forcing shipowners and operators to place greater emphasis on their own supply chains, as a first point of examination as they seek to rationalise their operations and push for greater cost efficiencies — and ultimately, shore up their bottom lines.
Emphasis on service quality
Many shipowners are looking to control and limit a range of OPEX costs including repairs and maintenance, crew costs, insurance and ship agency — all without having to compromise on quality.
Partnering with reliable and competent ship agents can enable owners and operators to navigate through these challenges, ensure the smooth operation of the supply chain, add value and streamline operations.
However, low profit margins and financial pressure in the dry bulk sector is pushing shipowners and operators to focus on cost reduction over quality — leaving them exposed to increased financial, legal and safety risks, and creating an unsustainable environment for quality ship agents to operate within.
It is crucial for owners and operators to understand that a ‘race to the bottom’ approach to selecting a ship agent may generate short-term savings, but lifecycle costs could be substantially higher if the appointed ship agent is not able to deliver services in a prudent manner. Adhering to the evolving spectrum of health and safety compliance policies and procedures is also critical to avoid considerable legal and financial implications.
As one of the world’s major global providers of ship services, GAC has been handling dry bulk commodities and vessels since the 1950s and takes care of a wide range of tasks, including husbandry, liaison with cargo suppliers, receivers and surveyors, ship spares delivery, bunker fuel supplies and more.
GAC’s network of more than 300 offices in over 50 countries, combined with the Group’s in-depth market knowledge and tailor-made approach ensures customers experience a reliable, compliant service — delivering both cost efficiencies and operational requirements. GAC serves as a ‘one-stop shop’ for customers where all their needs can be co-ordinated and delivered through a single vendor — minimizing lengthy administrative work.
Additionally, in the run-up to the IMO Global Sulphur Cap in 2020, GAC Bunker Fuels has launched a Fuel Changeover Service, to help ship owners and operators save time and money while staying compliant with the development of ship-specific fuel changeover plans. The full suite of services includes berthing arrangements, discharge and disposal of ROB HFO in tanks, tank cleaning and disposal of waste as well as refuelling with compliant fuel.
To further aid efficient planning of dry bulk operations, GAC monitors port conditions for potential problems. This includes disruption to loading or discharging, restrictions, new requirements, and port authority updates.
Trust is key
In dry bulk shipping, the success of a ship agent is determined by the agent’s ability to get a vessel into port, loaded, discharged, serviced and on its way in the quickest, safest and most economically efficient manner possible.
It is a major operation which relies on a trusted and experienced agent with local presence, trained staff, financial stability, international resources and a robust safety and compliance culture. Shipowners and operators want to know that they can depend on compliance and quality from their agent. If an agent fails to comply with health and safety regulations and should an incident occur, the financial and legal implications for the shipowner could be severe.
As dry bulk operators continue to navigate through a turbulent market, they need to adopt a long-term strategy that will allow them to maintain cost efficient operations.
As the sector steadily recovers, ship agents who proactively adapt to the changing landscape will be able to differentiate themselves in a competitive market and act as key partners for all those operating in the sector.