European shipping market – regions and organizations

European Shipping: Commodities – Markets – Trade Flows

Taking into account the European geography with the very long coastline, the European Union is highly dependent on the Shipping Industry, which is essential for the European economy’s global competitiveness. It is estimated that approximately 75% of its external trade (Union’s imports and exports) and more than 30% of its internal trade goes by sea, making shipping an important contributor to the European economy and to the quality of life of EU citizens. Furthermore, Short Sea Shipping has attracted a lot of attention in the EU in the last 25 years since it is considered as a mode of transportation favored to reduce the social costs involved with the road transportation, which otherwise cannot be removed unless huge investments in infrastructure are made. Due to its geographical position and the fact that the major part of its trade is external (import/export from/to non EU countries), the Short Sea Shipping includes maritime transportation among the European Union member countries along with the countries with coasts to the Black Sea, the Mediterranean Sea and the Baltic Sea as well as the European Economic Area members Norway and Iceland.

European Shipping Fleet

Europe plays a major role in today’s shipping world, with European companies controlling almost 40% of the world deadweight tonnage (DWT). In such context, Greece has the largest controlled fleet within Europe (approximately 40% of total European DWT) whilst Germany stands in the second position with approximately 20% of DWT tonnage capacity. The EU fleet is mainly dominated by three types of vessel: bulkers (about 28% of GT), oil tankers (about 25%) and container ships (about 25%), which represent approximately 60% of the world’s container ships in GT terms.

Market categorization: Commodities & geographic regions

The short sea shipping markets are mainly categorized according to the type of cargoes transported/ type of vessels utilized as well as the geographic region of trade. Especially the geographic segmentation is a main characteristic which highly differentiates the short sea markets between each other.

There are mainly four types of cargoes namely: (a) Dry Bulk cargoes which are transported in Bulk Carriers or General Cargo Ships, (b) Liquid Bulk Cargoes which are transported in Tankers, (c) Containerized/ packed products which are transported in Container ships and (d) Wheeled Cargoes, such as cars and trucks, which are transported in Ro-Ro ships. Containership and Ro-Ro markets offer specialized fixed price-fixed quality services to its clients, while on the other hand, liquid bulk and dry bulk markets trade the most shipped cargoes in the European Union and they are highly competitive. Liquid bulk cargoes account for almost 40.0 % of the total tonnage of cargo handled in the main EU ports, followed by dry bulk goods, containerized goods and Ro-Ro mobile units. Dry bulk and oil tanker markets are both influenced by the worldwide economic environment however each of them is lead by their own market dynamics of supply and demand and therefore the market might be quite different. During the last three years the oversupply of the dry bulk tonnage capacity has pressed the dry bulk market in historical low levels, while on the other hand the tanker market stands at healthy levels. For example, a 30k dwt handysize tanker for a Black Sea – Med trade has earned from about $11,000 up to about $20,000 per day which is two or three times higher than their operating expenses. On the other hand, earnings of a bulker handy have been around $3,000 up to about $9,000 per day since 2014 with most of the time remaining at low levels.

As far as the regional categorization is concerned, the markets can be separated in the following: The Baltic Sea, the North Sea, the North-East Atlantic, the Black Sea and the Mediterranean Sea. According to Eurostat, Mediterranean Sea and North Sea are the two regions with the highest trade activity, followed closely by Baltic Sea. On the other hand, the North-East Atlantic along with the European ports of Black Sea have much lower activity and sum up to no more than 20% of the total European short sea trade flow. However, Black Sea is a special market since most of the trade is taking place by Europe’s neighboring countries of Russia, Ukraine and Turkey which along with the North African countries (in Mediterranean Sea) are the non-EU countries handling most of the trade in the overall area.

North Sea & Baltic Sea

The largest ports of the North Sea are met in Netherlands, United Kingdom and Germany with Rotterdam, Antwerp and Hamburg being the three largest ports of the European Union. On the other hand, the largest European ports of the Baltic Sea are met in Latvia (e.g. Riga), Lithuania (e.g. Klaipeda) and Poland (e.g. Gdansk) while the largest ports of this region seem to be non-European belonging to Russia (e.g. Primorsk & Saint Petersburg). Fertilizers, scrap, steel products and grains are some of the dry bulk cargoes which are mainly traded in the area, while Rotterdam (in the North Sea) and St. Petersburg (in the Baltic Sea) are two of the largest exporting ports of oil products like gasoline, diesel fuel and jet fuels which do not only cover short sea requirements but they are also exported all over the world. It is worth to note that the ports of these regions usually require high standard, young ships therefore the competition is less and freight rates may be slightly higher as compared with freight rates in other geographic areas. Furthermore, Baltic Sea is quite sensitive to the weather conditions since during the winter season the area may be covered by ice in which case specialized ice class vessels are required making the specific markets even more closed. Ice class vessels are usually paid with some premium which results in seasonal increase of the freight rates in this specific area during winter.

Mediterranean Sea & Black Sea

On the other hand, the largest European ports in the Mediterranean region are met in Italy, Spain & France while the non-European ports in Turkey, Algeria & Tunis are playing an important role in the trade of this region. The main cargoes handled in the European ports of Mediterranean Sea are oil products since major oil producers like Total, Repsol and ENI are based in France, Spain and Italy accordingly while Motor Oil and HELPE are also exporting considerable quantities of petroleum products from Greece. On the other hand, Turkey is known for its physical resources in the dry bulk commodities exporting mainly iron ore, chrome ore, steel products and importing large quantities of scrap mainly from North Sea or Baltic. Grain products and steels are also traded mainly from Black sea (Ukraine & Russia) to Adriatic, Turkey and North African countries while Algeria is usually importing wheat from North Sea (France, Rouen port). Oil products are also traded out of the Russian and Ukrainian ports of Black Sea not only to Mediterranean countries but to the rest of the world as well. Mediterranean & Black Sea markets are less dependent in weather conditions as compared with the North/Baltic Sea and the major seasonality is related with the cargoes and especially with grains, which is the main exporting product out of Black Sea, and the Oil products. Seasonality in grains is related with the supply availability which in Black Sea increases during the August – November period each year while seasonality of oil products is related with the demand which in oil products mainly increases during the spring & summer seasons due to the advent of the summer-drive season.

Major Shipping Organizations

The European Community Shipowners Association comprises the national shipowner associations of the European countries and Norway. The ECSA is an important intertrade organization since it represents the interests of its members towards EU institutions as well as towards the international organizations or institutions. ECSA seems to be one of the most important intertrade organizations within the European Union. Other major International Organizations are BIMCO, The Baltic and International Maritime Council, which is the largest of the international shipping associations representing shipowners, Intertanco which represents the Tanker Owners and Intercargo which represents the Dry Bulker Owners. On the other hand, Charterer’s interests seem to be mainly protected via UNCTAD, The United Nations Conference on Trade and Development. In any case, all these regional and International Organizations are cooperating with each other in order to promote the common interests of the shipping community.

OpenSea has close presence in all these markets around Europe offering its services and giving useful market insights from Baltic Sea and North Sea up to Mediterranean and Black Sea. The high specialization in those markets as well as its electronic services which give a clear picture of the open positions and the available cargoes gives professionals the opportunity to enter these niche markets easier and be established.

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