Wednesday, March 9, 2016

To add insult to injury: the industrial carriage of iron ore

There are frequent news these days of Chinese iron ore importers and trading houses ordering their own bulk carriers for the transportation of Brazilian ore. 

We have seen this movie before, in the post-war economy, when oil majors were owning their own tankers.

And there is nothing wrong with this: Both Chinese and Brazilians integrate vertically downstream and in doing so they add value to their imports (China) and exports (Brazil), in addition to giving work to their own shipyards. If this type of industrial carriage will cost them more in the end, remains to be seen. Who is to say, really, when Chinese shipyards are subsidized State activities? When the building cost (in China) of a Valemax bulk carrier costs half today of what it costed 8 years back? After all, if they themselves don't care much about transport costs, why should I? 

One thing is for sure though: Industrial carriage consists of tonnage outside the free dry bulk market and in the abysmal state of affairs the latter is found these days, the news are worrisome, to say the least, for independent dry bulk operators. HH

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