ITF squeeze 8% rise in crew wages outta fat shipowners

Shipping as whole is going through a golden period. Burgeoning international trade has lifted logistic demand to great heights giving rise to acute shortage of skilled men o'er and under the bridge.

And finally, the ship-owners are on the backfoot and ducking to the rising demand salvo, as they have agreed to a higher-than-expected 8% rise in crewing costs on flag-of-convenience ships. However, it is yet to be decided on how they want the bread to be divided among the officers and the ratings. Obviously, the men with stripes will walk away with the lion's share.

But looking at dollar's plight, this hike is just a lollypop, as dollar is already down 11.6% against rupee this year and if Bernanke were to have his ways, wages of solitude won't be enough to drive men up the gangway.

Northwest Pass - Polarization of shipping

Heat at work, the Northwest Passage is finally ice free for the first time as the satellite records showed recently.

The Northwest Passage is a direct shipping route from Europe to Asia across the Arctic Ocean along the northern coast of North America. Woven through the waterways amidst the Canadian Arctic Archipelago, it connects the Atlantic and Pacific Oceans.

Though it was first navigated by Roald Amundsen in 1903-06 but it remained unnavigable due to the Arctic pack ice.

It would save many a miles for ships that now travel through the Suez Canal or the Panama Canal thus opening a new frontier for North Atlantic - Pacific trade.

As snow lifts over the hidden treasure, Canada, Russia, USA, Norway and Denmark have started pissmarking their territories. Fear is, there will be a race among these wary nations for oil, fish, diamonds and shipping routes.

Shines when it's dry

It applies not only to shoe polish but shipping too. Sentiments were never so strong for the solid stuff as far as shipping is concerned. Dry ship-owners are busy counting their chickens, while tanker owners are nervously watching the dry index shooting up to all time high with no ceiling in sight yet. Sky is the limit as they say.

Reasons for High:
1. Booming international trade.
2. Unabated demand for raw materials.
3. Most ports not geared to take the extra traffic and handle growing mass.
4. Bad weather delays.
5. scarcity of tonnage.
6. still some time for new keels to take off.

We acknowledge the fact that there is acute shortage of dry tonnage in the market right now. And the chunk of the fresh orderbook supply is to arrive in the market only by 2009, which means summer is there to stay for some time. But one must acknowledge the fact that traffic jams at ports, which are not equipped to handle growing traffic, have largely added to the shortfall of tonnage in the dry market. And owners must discount this factor when working the demand and supply equation.

While owners/investors, led by BDI, are fast placing orders for fresh tonnage, some tanker owners are pushing their old cows over the fence for greener pasture. On the other hand, chartrs bitten by high freight rates will have to pull up their sleeves and push/pay port authorities for faster turn around of vessels. Ports will soon have to get their act right and scale up their efforts to handle the economy of scale.

Leave apart uncertainties in world economy, this three prong correction is already at work and though we might not see it coming soon, but its gonna be a scary ride down.

And don't forget, shipbuilding is a heavy industry and many of the elder sisters are presently beasts of burden for their siblings in womb. So a double edge sword there too...