A Look Back at the Past 25 Years of Shipping

Clarksons Research take a look back to 1992 and compare the shipping industry then to its profile today. If this reveals anything it’s that while many things change dramatically, in an industry like this some things don’t appear to change too much at all.

     By Aiswarya Lakshmi January 30, 2017

Seaborne trade provides the platform upon which the shipping industry operates. Back in 1992 world seaborne trade stood at an estimated 4.6 billion metric tons and in comparison current projections suggest that in 2017 it will reach 11.3 billion metric tons.

That’s 2.5 times bigger than 25 years ago. Iron ore trade is projected to be 4.3 times larger than back in 1992, LNG trade 4.5 times larger and container trade a mighty 6.3 times more voluminous

The 2017 seaborne trade estimate represents about 1.5 metric tons per person on the planet. That’s quite some performance all round and keeps the world of shipping turning.

Meanwhile, shipping capacity has also expanded equally rapidly. The fleet has grown by a multiple a little greater than that registered by trade over the 25 year period. At the start of 2017 the global fleet totaled 1.86 billion dwt compared to 621 million dwt at the start of 1992.

That’s a multiple of 3 times larger. Of course, over the period there have been changes to vessel productivity, not in the least the moderation of service speeds in many sectors in the post-Lehman downturn.

Alongside these significant changes, the value of shipping assets has seen more mixed trends. A 5 year old VLCC was 8 percent cheaper at the start of 2017 (in current terms) than at the start of 1992 but such is the state of play in the bulk carrier market that a 5 year old Capesize is 43 percent cheaper.

Adjust these for inflation and the values look even lower. On the other hand the scrap value of ships is higher than in 1992 on the back of an 81 percent higher $/ldt ship steel scrap price.

Despite the recent commodity price downturn, raw materials overall are substantially more expensive than back in 1992. Brent crude stood at $54.8/bbl at the start of 2017 compared to $18.2/bbl in early 1992 and iron ore at $76.3/metric ton compared to $33.1/ metric ton. Bunker prices (380cst Rotterdam) have increased from $69.0/metric ton to $312.5/ metric ton.

Elsewhere only $1.24 of shipping’s universal currency is now needed to buy one pound sterling, compared to $1.83 back in 1992, but USD borrowing (6-month LIBOR) is much less dear at 1.3 percent rather than 4.2 percent.

The world economy is still growing more quickly than back in 1992, projected at 3.4 percent in 2017 compared to 2.3 percent, and is over 3 times bigger at about $79 trillion. The size of the Chinese economy has rocketed from $0.5 trillion to $12.4 trillion, and the world’s population has expanded from 5.5 to 7.4 billion.

Last of all, some things never seem to change. At the start of 1992 the ClarkSea Index of vessel earnings stood at $11,700/day. At the start of 2017 it stood just 5.2 percent lower at a remarkably similar $11,092/day. In between the index once tipped over $50,000/day; that’s a cyclical business for you. Now let’s see what changes the next 25 years throw up.