Coal is the second largest, in terms of trade volume, dry bulk commodity, behind iron ore, transported by sea accounting for about the 25% of the world dry bulk trade. Due to its high importance for the dry bulk shipping as well as its black color many shipping professionals call this commodity as “black gold”. There are two main types of coal; namely the steam (or thermal) coal and the coking coal. Coking coal is the coal used for metallurgical purposes to make coke -not to get confused with cocaine, though sometimes shipowners make such parallel- and this is about 25% of the total annual volume of coal. On the other hand, the coal burnt for producing heat in thermal power plants is referred to as thermal coal which is used for Power generation and accounts for more than the 75% of the total coal transported by sea. The below table describes the volume of coal trade (in mln tons) between 2010 and 2015 and its percentage as compared with the total dry bulk commodities.
Main Exporters & Importers of Coal
The largest exporter of coal is Indonesia which produces and exports thermal coal. Indonesia is exporting almost the 1/5 of the world coal exports followed closely by Australia which is exporting another 1/5 of the total world coal. Though, Australia is exporting both coking coal and thermal coal while it is the largest exporter of coking coal worldwide, with a share of almost the 60% of the global coking coal exports. Russia is the third largest exporter of coal behind Indonesia and Australia, with a share of about 9% of the total exports, being active both in thermal coal and coking coal markets but especially in thermal coal market. Colombia and South Africa, which are active mainly in thermal coal market, follow in the 4th and 5th position. In smaller quantities, coal is also exported out of USA and Canada. USA and Canada had been much more active in the coal market in the past and USA was a leading exporter of coal however its production and exports have been reduced recently, mainly due to environmental policies as well as its price which remains less competitive for the buyers in Far East than the coal exported from Indonesia or Australia. Nowadays, USA and Canada are mainly exporting high-spec coal (high Kcal) which is not very common in other exporting countries, like Indonesia.
The main exporting ports are the following:
Indonesia: Coal is usually exported from South, East or North Kalimantan and the main loading ports are: Samarinda, Banjarmasin, Muara Satui, Muara Berau and Balikpapan .
Australia: Coal is mainly exported from East Australia and the main ports are: Newcastle, Hay Point, Dalrymple Bay, Gladstone, Brisbane and Abbot Point.
Russia: Russia is exporting coal both via its western ports and its eastern ports as well. Main exporting ports are: Vostochniy, Ust-Luga, Murmansk, Vanino and Tuapse.
Colombia: The main ports of exporting coal are: Santa Marta, Rio Cordoba coal port, Puerto Drummond and Barranquilla.
South Africa: Most of the coal is exported out of the port of Richards Bay (RBCT) while smaller quantities are also exported via the port of Durban.
USA: Coal is exported both from East Coast and West Coast. Main ports of East coast are New Orleans (usually for handies, supramax up to panamax) and Hampton Roads (Norfolk, Newport News) for panamax or capesize bulkers. From West coast USA coal is usually exported from port of Long Beach.
Canada: Also in this case, coal is exported both via west coast and east coast Canada. Vancouver is the main port of West Canada, while the International Coal pier of Canada at Nova Scotia is a deep-terminal for loading coal. Due to its deep draft, big capesize bulkers sometimes load up to max. draft in Hampton Roads and then top up balance coal of same grade at the International Coal pier of Canada.
The three largest importers of coal are China, India and Japan, being active in both the thermal and coking coal markets, with a total share of about 50% of the total imports of coal. South Korea and Germany are the two importing countries that follow. The main ports for discharging coal are the following:
China: There are various ports for discharging coal in China and the largest of them are the following: Qingdao, Tianjin, Lianyungang, Xiamen and Fangcheng.
India: Coal is discharged in both East Coast India as well as West Coast India however most of the volume is discharged in East India and probably this happens due to the shorter distance from the two major exporting countries of Indonesia and Australia (and thus the lower freight rate). The most famous discharge ports in East India are Paradip, Haldia, Gangavaram and Chennai while in West India are Mundra, GOA, Cochin and Dahej.
South Korea: The largest discharge ports of coal in South Korea are Yeosu, Gwangyang.
Germany: Port of Hamburg is the largest port in Germany.
Major trading routes for shipping coal
When you open the OpenSea platform and see the map, you will be able to filter all the coal cargoes around the world and if you click on any of the cargoes you will be able to read detailed information about every particular shipment, including: the destination, loading/discharge rates, dates of shipment and even offered freight ideas. Therefore besides of finding a matching ship or cargo, the user can also take a clear picture of the main trade flows of coal and all the other commodities of course.
In general, most of the coal exported out of Australia is mainly shipped to China, South Korea and Japan. Panamax and capesize vessels are mainly utilized in this trade and the loading rate is very high with a panamax vessel loaded within about one day only, however in some cases the waiting time is long due to the congestion. Smaller vessels like handies and supramaxes are used for shipping coal mainly to the ports of the South-East Asia or India.
Coal from Indonesia is mainly exported to India and China. The coal in Indonesia is loaded either at berth or most of the times at the anchorage. In case of loading at the anchorage, either the vessel’s gears are utilized (if the vessel is geared) or floating cranes are utilized. In this case the loading rate can be as low as 6,000 MT per day which means that it can take up to more than 10 days for a panamax bulker to load in full. Indonesia/ India is a major trading route for coal which mainly takes place with geared handies or supramax bulk carriers. This happens mainly due to the fact that the Indian ports are not equipped with high-spec facilities and the vessels’ gears are utilized in order for the coal to be discharged. In many cases panamax bulkers are also used while It is very rare to see capsize in this trade. However in case of panamax or capesize it is not unusual for some of the cargo to be discharged at the anchorage in barges before vessel enters the port. On the other hand, coal from Indonesia to China is shipped in all types of bulk carriers.
Russian coal is loaded from Black sea or Baltic Sea mainly to Turkey or European countries, however a big amount of Russian coal is exported from the Far Eastern ports mainly to China, South Korea and Japan. These ports are ice-free all year round however freight rates tend to be higher almost all the year and some shipowners prefer to avoid calling the Far Eastern ports of Russia. This is due the weather conditions during the winter months or the Gypsy Moth high risk period which takes place during the summer period and until the end of September.
Coal from South Africa is shipped to India, mainly with panamax vessels, as well as to China both via panamax and capesize bulk carriers and in less extend to North Europe and Turkey, again mainly with panamax and capesize bulkers. To the long distant between South African ports and the importing countries, it is very rare to see shipments with smaller vessels to take place. The Richards Bay Coal Terminal is one of the most famous coal terminals worldwide and can load panamax or capsize vessels quickly even within about 2 days.
Except of the above routes, other usual trades of coal are those coming out of Colombia to Europe mainly in smaller sizes up to Panamax and coal coming out of west coast Canada to South Korea, China and Japan. This latter route out of west Canada is well known as “NOPAC” and it is very famous especially in the panamax sector. Last, the US coal is exported both via East Coast and West Coast ports. From East Coast, the coal is mainly shipped out from USG (NOLA) usually in smaller quantities (handysize or supramax) and from US East Coast (Norfolk and Newport News) usually in larger quantities (panamax or capesize) mainly to Europe and Turkey. Coal exported from West Coast US ports is usually shipped to Japan, South Korea, China or India. Rarely, we see coal shipments to Pacific or Far Easter countries which are exported from the East Coast USA ports rather than the West Coast ports and this happens since the rail costs for transporting the cargo to west coast ports may be higher than the additional sea freight.
Loading & Discharge Specifics
Coal is usually brought to the loading port in rail wagons and then loaded mainly via a loading conveyor or chute. Discharge is usually taking place by shore cranes equipped with grabs or in some cases by ship’s cranes. Due to the very large quantities of coal shipments a major problem is that of storage space. Therefore since the coal cargo is not a very sensitive cargo, it is very usual the cargo, before loading and after discharge, to land at the berth side waiting for loading onboard the vessel or the rail/trucks which will transport the cargo to the inland destination. However, even the land at the berth or other industrial areas tends to be very expensive and therefore it is of utmost importance the process to be efficient in order to minimize the waiting time of the cargo at the berth. Due to this problem, it is supposed that the well-known expression of “subject stem”, which we meet in each and every fixture, originates from the coal trade, when it was very important to secure a ship first before finalizing the whole operation with the logistics of the coal cargo.
Major Coal Charterparties
Despite the generic charterparties which may be used in a coal trade, there are also specific charter parties which are related with the coal trade and they are related with the geographic area of the trade. Such charterparties are the following:
— American Welsh Coal (AMWELSH) which was first published in 1953 by ASBA and revised in 1993. It is usually used for coal trades coming out of USA, Canada and Australia. The AMWELSH is the most common voyage charterparty for loading coal.
— South African Anthracite (SAFANCHART) which is published in 1974 and its name shows it is used for coal trades coming out from South Africa.
— Australian Coal Charter (AUSCOAL) which is used for coal trades originated from Australia. Taking into consideration the leading position of Australia in the coal exports, the AUSCOAL -along with the AMWELSH- is a major voyage charterparty.
— Standard Coal and Ore Charterparty (COAL-OREVOY) which is published by BIMCO and it is a general voyage charter party for loading bulk coal and iron ore. Due to its more generic format and the fact that this is produced by BIMCO, It is usually preferred by Shipowners.
Despite the various different c/p forms, it seems that there are not very special terms which are used and despite any local characteristics which may be described in the conditions for tendering NOR or commencement of laytime, all other terms seem to be rather common as in most of the voyage charter parties, like GENCON.
The seasonal effects on freight rates of coal
Coal does not have a high seasonal effect by itself but its demand mainly depends on the activity of the industrial countries and the economic development. Other than that, since the grains –which is the third largest dry bulk cargo in terms of trading volume- experiences a high seasonal effect, it also affect the freights in the coal market. This is because during the peak period there are more inquiries for grain cargoes which occupy more capacity and decreases the available supply of vessels, which by its turn increases the freights in the overall dry bulk market, but especially in handies, supramax and panamax bulkers. In our article for the grain cargoes we had discussed in detail the seasonal effect of grains, but in general this effect mainly happens during August-October as well as December-March.
The future of coal
Coal is a high emission-heavy fuel and it is the target of several environmental regulations which are nowadays going into effect. Furthermore, nowadays, there is a worldwide turn into renewable energy and fossil fuels, therefore is a high skepticism about the future prospects of the coal industry. A decrease in the consumption of coal will definitely be a big hit on the dry bulk shipping as well. Despite these environmental changes, there are a lot saying that it will not have any real effect on the coal industry since the coal burning technology will just be adjusted and become more environmentally friendly while the coal will remain a cheap fuel. Whatever the case will be, coal still remains one of the two major dry bulk commodities and there are not any noticeable negative signs in its current trade volumes or its short term prospects.
The future of ship chartering
OpenSea follows all the developments in the freight market and offers professionals innovative services by which both Owners and Charterers can have a clear picture of the available cargoes and the freight ideas by just filtering our map. This way, Charterers can have a clear view of what their competitors are paying and take the chance to better compete during the peak periods of the market, while on the other hand Owners can take advantage of the flow of information and find the highest paying cargo.