(4)--MaritimeEconomics航运经济与政策.pdf
4.1 THE SHIPPING MARKET MODELThe search for signpostsNow it is time to examine the economic mechanisms which control the shipping cyclesdiscussed in the previous chapter.Shipowners have two jobs.One is to operate ships,aworthy task but not one that brings riches.The other is to be in the right place at the righttime,to rake in the money at the peak of a cycle.Each twist of the cycle confronts ship-ping investors with a new opportunity or threat.In the space of a few months a shipownerscashflow can swell from a trickle to a flood,and the market value of his fleet can changeby millions of dollars.This is how the market manages investment in a difficult and uncertain world,and it presents shipping company management with quite a challenge.The aim is to take advantage of the cycles to buy low and sell high.This is fair enough,as far as it goes,but this aspect of shipping is a game of skill and playing the cyclesSupply,Demandand Freight RatesThe price of freightToday is greatBecause the ships,youll understand,Are high priced too,Costing when newFar more than they used toIf youd know whyTheir price is high,Consider this,berth costs are greatBecause the trade,On which freights paidGrows faster than ships can be madeOnly one thing left to know,What it is that makes trade grow.The world needs its grain and ore;Sometimes less,but mostly more.When judging if the price is highWhat matters most is.when you buy(Martin Stopford 2007)4 depends on being able to recognize or,better still,predict the peaks and troughs on thefreight chart.Just being right is not enough.An investor may correctly predict a marketpeak,but if the charterers take the same view there will be no long-term contracts.Similarly,in market troughs owners may be ready to buy cheap ships,but who is willingto sell for a loss?As Michael Hampton pointed out,consensus is generally not a goodsignpost.1The best opportunities go to those who can judge when the other players in themarket are wrong,and that means digging below the surface to understand the conse-quences of current developments(see Chapter 17 for a full discussion of forecasting).From an economic viewpoint,each shipping cycle is unique.If we are to improve our understanding of what is going on in the market,we must now develop a theoreti-cal explanation of how the freight market cycles are generated.To do this we will use the supply and demand model,a technique often used by economists to analysecommodity markets.The term modelis used here in just the same way as when we talkabout a model ship it is a smaller version of the real thing,leaving out those detailsthat are not relevant to the present subject.The aim of the exercise,which is oftenreferred to as fundamentals analysis,is to explain the mechanisms which determinefreight rates in a consistent way.4.2 KEY INFLUENCES ON SUPPLY AND DEMANDThe maritime economy is enormously complex,so the first task is to simplify the modelby singling out those factors that are most important.This is not to suggest that detailshould be ignored,but rather to accept that too much detail can hinder a clear analysis.In the initial stages at least we must generalize.From the many influences on the ship-ping market we can select ten as being particularly important,five affecting the demandfor sea transport and five affecting the supply.These are summarized in Table 4.1.As far as the demand forsea transport is concerned(the demand function),the five variables are theworld economy,seabornecommodity trades,averagehaul,random shocks andtransport costs.To explainthe supply of shippingservices(the supply func-tion),we focus on the world fleet,fleet productivity,shipbuilding deliveries,scrappingand freight revenues.The way in which these variables fit together into a simple modelof the shipping market is shown in Figure 4.1.This model has three components,demand(module A),supply(module B),and the freight market(module C)which links thedemand and supply by regulating the cashflow flowing from one sector to another.How does the model work?The mechanics are very simple.In the demand module(A)the world economy,through business cycles and regional growth trends,determines136SUPPLY,DEMAND AND FREIGHT RATESCHAPTER4Table 4.1 Ten variables in the shipping market model Demand Supply1.The world economy1.World fleet 2.Seaborne commodity trades2.Fleet productivity 3.Average haul3.Shipbuilding production4.Random shocks4.Scrapping and losses 5.Transport costs5.Freight revenue 137KEY INFLUENCES ON SUPPLY AND DEMAND4.2CHAPTER4Figure 4.1The shipping market supply and demand modelSource:Martin Stopford,2008 the broad volume of goods traded by sea.Developments in particular commodity tradesmay modify the growth trends(e.g.development in the steel industry may influence theiron ore trade),as may changes in the average haul over which the cargo is transported.The final demand for shipping services measured in ton miles.(i.e.the tonnage of cargomultiplied by the average haul).The use of ton miles as a measure of demand is techni-cally more correct than simply using the deadweight of cargo ships required,since itavoids making a judgement about the efficiency with which ships are used.Thatbelongs more properly to the supply side of the model.Turning to the supply module(B),in the short term,the world merchant fleet provides afixed stock of transport capacity.When demand is low only part of this fleet may be trad-ing and some ships will be laid up,or used for storage.The fleet can be increased by new-building and reduced by scrapping.The amount of transport this fleet provides alsodepends on the logistical efficiency with which ships are operated in particular,speed andwaiting time(see below).For example,a fleet of tankers steaming at 11 knots and return-ing from each cargo voyage in ballast carries less cargo in a year than the same size fleetof bulk carriers steaming at 14 knots and carrying a backhaul for all or part of its journey.This efficiency variable is generally referred to as fleet productivity and is expressed incargo ton miles per dwt per annum.Finally,the policies of banks and regulators have animpact on how the supply side of the market develops.Dynamic links in the modelPeople play a central part in this shipping market model.At the heart of the demand module(A)are the cargo shippers.Their decisions over the sourcing of raw materials and the location of processing plant such as oil refineries determine how trade develops and,ofcourse,they negotiate freight rates,time charters and FFAs.Many shippers are large corporations trading raw materials and manufactures,but in recent years they have beenjoined by commodity traders and operators who have cargo contracts for which ships areneeded.The people who play a central part in supply module(B)are the shipping investors.The term shipping investor is used because although many decision-makers will beprivate shipowners or shipping companies there are other important players for example,German Kommanditgeseichllschaft(KG)companies which own containerships;oil traderswhich own tankers;and major oil companies with their own fleets.These shipping investorssit on the other side of the table from the cargo shippers in the freight negotiation and theyalso have the crucial task of ordering the new ships and scrapping old ones.Imbalances between the supply and demand modules feed through into the third partof the model,the freight market(C),where freight rates are constantly adjusting inresponse to changes in the balance of supply and demand.This freight module is a switchbox controlling the amount of money paid by shippers to shipowners for thetransport of cargo,and it is this flow of money which drives the shipping market.Forexample when ships are in short supply,freight rates are bid up and the cash whichflows into the bank accounts of shipowners affects the behaviour of both the cargo ship-pers and shipping investors(we discuss this behavioural part of the model in moredetail in Chapter 17).As the earnings of their ships rise,shipping investors rush to buy138SUPPLY,DEMAND AND FREIGHT RATESCHAPTER4 more second-hand ships,bidding up prices and then when second-hand ships becometoo expensive they turn to ordering new ships.As the new ships are delivered supplyexpands,but only after the time lag required to deliver the new ships usually 18 monthsto 3 years.Meanwhile cargo shippers are responding to the high freight rates by lookingfor ways to cut transport costs by delaying cargoes,switching to closer supply sourcesor using bigger ships.But by this stage in the market cycle there is not a great deal theycan do,and they have to grit their teeth and pay up.When there are too many ships the process is reversed.Rates are bid down and shipown-ers have to draw on reserves to pay fixed costs such as repairs and interest on loans.As theirreserves diminish,some owners are forced to sell ships to raise cash.If the downturn per-sists,eventually the price of older ships falls to a level where shipbreakers offer the bestprice and supply gradually reduces.Changes in freight rates may also trigger a change inthe performance of the fleet,through adjustments to speed,or ships may be put into lay-up.This model gives shipping market cycles their characteristic pattern of irregularpeaks and troughs.Demand is volatile,quick to change and unpredictable;supply isponderous and slow to change;and when the market is tightly balanced the freightmechanism amplifies even small imbalances at the margin.Thus the tortoiseof supplychases the hare of demand across the freight chart,but hardly ever catches him.In amarket with these dynamics we must expect balance,in the sense of steady earningsover several years,to be quite rare.One final throught.At the heart of the model are people shipping investors andcargo shippers.Their task is to negotiate the rate for each ship and inevitably the ratesthey agree vary depending on how the negotiating parties feel.A ship might be fixedfor$20,000 per day on Monday,but the sister ship might be fixed for$30,000 per dayon Tuesday because charterers got panicky overnight,perhaps due to some rumour theyheard.Mathematical models cannot hope to simulate this sort of freight auction,so inthe short term at least psychology is as important as fundamentals.This,in summary,is the market model which controls shipping investment.In theremainder of this chapter we will examine the three sections of the model.Our maininterest is not in the value of the variables themselves we discuss this in later parts ofthe book.Rather it is to examine why each variable changes and the relationshipsbetween them.The model is dynamic in the sense that supply and demand are deter-mined separately,with the two modules linked by the freight negotiation.But it isimportant to remember that the primary aim of the market mechanism is not to fix thefreight rate,it is to coordinate the growth of supply and demand for sea transport in thehopelessly complex world in which shipping operates.4.3 THE DEMAND FOR SEA TRANSPORTWe have suggested that ship demand,measured in ton miles of cargo,is mercurial andquick to change,sometimes by as much as 1020%in a year.Ship demand is also subject to longer-term changes of trend.Looking back over the last two or threedecades,there have been occasions when ship demand has grown rapidly over a 139THE DEMAND FOR SEA TRANSPORT4.3CHAPTER4 sustained period,as happened in the 1960s,and others when ship demand stagnated and declined notably,for example,the decade following the 1973 oil crisis.The world economyUndoubtedly,the most important single influence on ship demand is the world economy.It came up repeatedly in our discussion of shipping cycles in Chapter 3.Seventy yearsago,in his review of the tramp market,Isserlis commented on the similar timing of fluctuations in freight rates and cycles in the world economy.2That there should be aclose relationship is only to be expected,since the world economy generates most of thedemand for sea transport,through either the import of raw materials for manufacturingindustry or the trade in manufactured products.It follows that judging trends in theshipping market requires up-to-date knowledge of developments in the world economy.The relationship between sea trade and world industry is not,however,simple or direct.There are two different aspects of the world economy that may bring about change inthe demand for sea transport:the business cycle and the trade development cycle.The business cycle lays the foundation for freight cycles.Fluctuations in the rate ofeconomic growth work through into seaborne trade,creating a cyclical pattern ofdemand for ships.The recent history of these trade cycles is evident from Figure 4.2,which shows the close relationship between the growth rate of sea trade and GDP overthe period 19662006.Invariably the cycles in the world economy were mirrored by140SUPPLY,DEMAND AND FREIGHT RATESCHAPTER4Figure 4.2World GDP cycles and sea tradeSource:World Bank,Fearnleys Review cycles in sea trade.Note,in particular,that the deep sea trade recessions in 1975,1983and 1988 coincided with recessions in the world economy.Since world industrial production creates most of the demand for commodities traded by sea,this is hardly surprising.Clearly the business cycle is of major importance to anyone analysing thedemand side of the shipping market model.Nowadays most economists accept that these economic cycles arise from a combinationof external and internal factors.The external factors include events such as wars andsudden changes in commodity prices such as crude oil,which cause a sudden change indemand.Internal factors refer to the dynamic structure of the world economy itself,which,it is argued,leads naturally to a cyclical rather than a linear growth path.Amongthe more commonly quoted causes of business cycles are the following:The multiplier and accelerator.The main internal mechanism which creates cyclesis the interplay between consumption and investment.Income(gross national product or GNP)may be spent on investment goods or consumption goods.Anincrease in investment(e.g.road building)creates new consumer demand from theworkers hired.They spend their wages,creating even more demand(the investmentmultiplier).As the extra consumer expenditure trickles through the economy,growth picks up(the income accelerator),generating demand for even more invest-ment goods.Eventually labour and capital become fully utilized and the economyover-heats.Expansion is sharply halted,throwing the whole process into reverse.Investment orders fall off,jobs are lost and the multiplier and accelerator go intoreverse.This creates a basic instability in the economic machine.3Time-lags.The delays between economic decisions and their implementation canmake cyclical fluctuations more extreme.The shipping market provides an excellentexample.During a market boom,shipowners order ships that are not delivered untilthe market has gone into recession.T
