Featured Article: A North American Forecast

With almost 20% of the world's merchant fleet based in North America, dry bulk carriers serve as the workhorses of the ocean. They are sometimes thought of as less complex technologically, but to reduce the consumption of fossil fuels and GHG emissions, they must adhere to the same increasingly strict efficiency as well as environmental criteria as all other ship types.

According to Future Market Insights, an ESOMAR-certified market intelligence firm, the North American dry bulk market is expected to garner a CAGR above 5% during the forecast period of 2023 to 2033. The need for dry bulk shipping in North America is anticipated to develop along with seaborne trade and the transfer of iron ore and coal. Foreign trade, bulk shipping of raw materials, and import/export of food and manufactured goods are all essential in any economy, thus it is expected that they will fuel the expansion of the dry market business in America.

In terms of the market, dry bulk is now experiencing a great run overall after struggling in previous years, and hence the improved performance is likely to continue over the next couple of years. The fundamentals of demand and supply are favourable, and the sentiment is positive. While iron ore is anticipated to remain more or less steady, the majority of the key trades, including coal, grain, and minor bulks, are likely to expand. Additionally, even though 2021 was the best year in 10 years for the sale and acquisition of used bulk carriers, the worldwide order book for new ships is still small. The majority of the big yards are filled, mostly with container ships, which contributes to the high pricing.

This article will discuss how supply chain hurdles are being overcome with Canadian government support, what the major roadblocks to this market are, and its future outlook.

Canadian government to help in enhancing the supply chain issues

For Canada, having a robust, efficient supply chain is of utmost importance. To promote middle-class job development and support Canada's economic expansion, the Canadian government is dedicated to making sure its supply chains are dependable and efficient. At the same time, they must also be resilient and capable of coping with the effects of climate change.

The National Trade Corridors Fund would invest up to CAN$12.5 million in a construction project at the Port of Belledune, according to a February 2023 announcement by the Transport Minister. A dry bulk conveyor belt between the two terminals will be built as part of the CAN$25 million project, which will make reloading as well as transshipments at the Port easier. With the help of this investment, the Port plans to construct a new warehouse along with a transfer tower, refurbish current storage, and add permanent conveyors connecting the deep-water ports to the staging area. The project will facilitate the movement of items including minerals, petroleum, and forest products between ships and other forms of transportation while also increasing the volume of bulk cargo serviced at the Port of Belledune.

By easing supply chain congestion and improving the transit of products at this port, this financial commitment will have significant economic and employment advantages for the area while also generating high-quality jobs for local Canadians.

The Canadian government is making investments to support the country's economic potential and chances for Canadian dry bulk companies to grow into international markets. To alleviate transportation vulnerabilities, bottlenecks, and congestion in Canada's trade pathways, this is a long-term commitment to collaborate with partners on key infrastructure projects.

Chinese exports have posed a great threat to the American market

Dry bulk equities with US exchange listings did remarkably well in 2021, posting triple-digit returns. They kept growing in the first five months of 2022 despite reports of the Chinese economy being negatively impacted by COVID-19 lockdowns and that nation's real estate crisis.

However, in keeping with trends in rates as well as freight futures, dry bulk stockpiles have started to decline from the beginning of June 2022. Star Bulk, whose ships have exhaust gas scrubbers that increase earnings, is down 22%; Safe Bulkers, is down 23%; Grindrod, is down 26%; Golden Ocean, downward 30%; Eagle Bulk, is down 32%; and Genco Shipping & Trading, down 38%; all of which have significant Capesize exposure in 2021.

Especially for bigger bulkers known as Capesizes that primarily rely upon Chinese imports such as iron ore and coal, China looks to be to blamed for much of the dry bulk's turnaround. Rates for sub-Capesize bulkers called Supramaxes (45 000 Ð 60 000 DWT) along with Panamaxes (65 000 Ð 90 000 DWT), which transport a range of cargo, are less reliant on China and have tariffs more in line with movements in the global GDP, are also declining.

In the 2H23, it is hoped that China would announce a significant stimulus programme to counteract the negative economic effects of lockdowns as well as the real estate crisis.

Data is the future in the bulk shipping industry

Shipping firms may gain insights that could provide them with a competitive advantage with the use of digital and sophisticated analytics. Data may be obtained and used in a variety of creative ways to improve business decision-making.

Examining the position of rival ships

All vessel operations are now clear thanks to the automated identification system (AIS), and shipping firms can see the present and past positions of the vessels that are competing with them. Additionally, algorithms enable transportation businesses to comprehend the loads and clients of rivals and even foresee their deployments, which enables them to make speedier and wiser business judgments. For instance, using competitor vessel data to generate assumptions about vessel utilisation and, consequently, cost position, which might then be used to guide commercial talks.

Finding cargo in spot marketplaces by use of algorithmic prediction

Shipping businesses may now forecast which commodities demonstrate predicted freight volume and rate rises and, as a result, locate viable short-term cargo by keeping watch of several variables, including significant economic, industrial, trade-related, and retail parameters. Intelligent algorithms can even utilise past data to pinpoint the best routes and areas, enabling ships to select ports that are likely to have the best possibilities at the right times with the highest returns.

Using images from satellites or drones to keep an eye on value chain transactions

Monitoring the status of maintenance in the oil fields or refineries may be done with the use of satellites and image analysis tools. Counting the number of maintenance machines that have access to or operate within a site is one method they may go about doing this. With the use of information like this, businesses can keep an eye on their upstream markets and, as a result, make quick tactical choices regarding things like expected shipping capacity requirements.

Enhancing vessel use through competitive research

Location, draught, speed, route, asset utilisation overall, loading as well as sailing times, waiting periods before discharge and sailing times for ballast and dry-docking are all real-time information that may be obtained via competitive research. Businesses should utilise this information to compare against rivals at the vessel level and to identify the causes that contribute to low utilisation. To inform important indicators of success and other performance metrics, this data may also be utilised to identify top performers.

Conclusion

Energy efficiency will likely become more crucial than ever in the future, and technology and solutions aimed at making bulk carriers more effective and hence environmentally benign will be in demand. While LNG dual-fuelled motors are already a possibility, ammonia as well as methanol's potential is now being further investigated, either in terms of technological development or acceptance.

The interest in wind-assisting devices, both for retrofit and new ships, is particularly noteworthy. These solutions may be able to deliver real fuel savings and commensurate pollution reductions more straightforwardly. In the upcoming years, it is anticipated that these variables would increase the potential for the dry bulk industry in America.

It's important to emphasise that several American businesses are putting their attention on emerging technologies from the perspectives of safety, efficacy, cost-effectiveness, and generally superior vessels, as well as how new technology may be easily applied. New technology can be created or moved from one industry to another, but it takes much more for this technology to be used in everyday life. For this reason, over the past three years, these businesses have entered into more than 70 cooperative development initiatives for bulk carriers with Asian nations like China and shipyards; more than half of these projects have already been included in new construction projects.

This indicates the significance of ongoing training and assistance for all of the dry bulk seafarers on the necessary competencies and safety management given the impending usage of new technologies and the handling of numerous fuels aboard, perhaps with considerable quality variations. In this regard, understanding digital technology is also helpful.

Read the article online at: https://www.drybulkmagazine.com/special-reports/15062023/a-north-american-forecast/