Space Station Keeps Watch on World's Sea Traffic

Ever wonder what the world's sea traffic would look like from space? If so, here's an interesting piece from NASA and the ESA, "Space Station Keeps Watch on World's Sea Traffic":

As the International Space Station circles Earth, it has been tracking individual ships crossing the seas beneath. An investigation hosted by the European Space Agency (ESA) in its Columbus module has been testing the viability of monitoring global maritime traffic from the station's orbit hundreds of miles (kilometers) above since June 2010.

The ship-detection system being tested is based on the Automatic Identification System, or AIS, the marine equivalent of the air traffic control system.

All international vessels, cargo ships above certain weights and passenger carriers of all sizes must carry "Class A" AIS transponders, broadcasting continually updated data, such as identity, position, course, speed, ship particulars, cargo and voyage information to and from other vessels and shore.
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The results of the analyses have been very good. On a good day, approximately 400,000 ship position reports are received from more than 22,000 different ship identification numbers (Maritime Mobile Service Identity, or MMSI). In a summary made in Oct. 2011, the total number of position reports received exceeded 110 million messages from more than 82,000 different MMSI numbers.
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The Vessel Identification System, or VIS, could potentially be beneficial to many European entities, particularly in assisting them in law enforcement, fishery control campaigns, maritime border control, maritime safety and security issues, including marine pollution surveys, search and rescue and anti-piracy. Various service entities have already been asking to get access to the VIS data, which is continuously acquired on Columbus.

Here's the image of one day's traffic:

Ship position reports received with the NORAIS Receiver during 24 hours, 29th June 2010. (FFI)

Sea commerce, sea lines of communication, choke points, oh my!

Shipping - Economic Indicator

In a post from December 2008, here, I noted an expert reporting the decline in shipping as an economic predictor that boded ill for 2009, which, as we all know now, was pretty accurate.

Now, trends in shipping may be signaling a shift toward an end to the current economic mess.

First, a headline from Lloydslist - China ore demand ties up one fifth of capesize fleet. China is spending money and boosting shipping. That's a good thing.

Then, some thoughts from Time:

. . . Never before have so many experts and ordinary folk been so busy trying to gauge the timing and strength of the eventual worldwide economic rebound. One of the best indicators is found in the shipping industry. It's global in scope and ever more indispensable in an economy so reliant on international commerce. Not surprisingly, perhaps, there is new evidence out on the open seas that both the bears and bulls can flag to help make their respective cases.
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The Baltic Dry Index is the worldwide benchmark for shipping rates of raw materials, and it has registered some eye-popping gains over the past month. The London-based index registered its 23rd straight daily gain on Wednesday, closing at 4,291, its highest mark since September and the longest streak of gains since July 2006. Daily rates for the largest Capesize ships, which typically carry iron ore, rose 6.8% on Wednesday to $93,197. Just five months ago, daily ship-rental rates were hovering just above $2,000 . . .

As to why the Baltic Dry Index (BDI) works as an indicator, see here:

The BDI is one of the purest leading indicators of economic activity. It measures the demand to move raw materials and precursors to production, as well as the supply of ships available to move this cargo. Consumer spending and other economic indicators are backward looking, meaning they examine what has already occurred. The BDI offers a real time glimpse at global raw material and infrastructure demand. Unlike stock and commodities markets, the Baltic Dry Index is totally devoid of speculative players. The trading is limited only to the member companies, and the only relevant parties securing contracts are those who have actual cargo to move and those who have the ships to move it.

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View the full BALDRY chart at Wikinvest

Light. Tunnel. Keep an eye out to see it they can get together.

Shipping Industry Hits Skids

An investment adviser points out that the world-wide shipping industry is taking an economic pounding here:

If the end of 2008 is a predictor of business in 2009, the shipping industry is in for one heck of a nightmare. On June 5, 2008, it cost $233,988 per day to charter a Capsize tanker, the largest ocean-going cargo vessel available for shipping dry bulk commodities. Six months later that same tanker charters for $2,773 per day, down 98.8% in less than half-a-year. To put that in perspective, imagine paying $15.00 for a cab ride home and six months later the same cab driver charges you $0.18. This is a problem shipping companies will continue to face in the coming months as demand for these tankers has fallen off a cliff.

The effect of lower shipping costs has been dramatic, as set out here:

Ocean shipping costs have plunged to 22-year lows, skewing global grain-trading patterns to the point where hog farmers in the United States are importing wheat from Britain and Japan has shunned American corn in favor of supplies from Ukraine.

In some countries, it is now less costly to ship grain thousands of kilometers across the ocean rather than move supplies hundreds of kilometers by barge or railroad cars. But the phenomenon should be short-lived and the United States should remain the world's top exporter of corn, wheat and soybeans, according to specialists in the sector.

"It has opened up opportunities that perhaps wouldn't have been conceivable before and one-off trades may well happen, but it is not really changing the grain flows," said David Doyle, head of wheat at Openfield, a farmers' cooperative in England.

Ocean freight rates reached a record high in May and have since fallen more than 90 percent in a few months to as little as $10 a ton to most destinations.

"Ocean shipping costs are so low that it would be cheaper for south Indian buyers to import Russian wheat than move wheat from north India by train," said one European trader who was not authorized to speak to the news media.
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"Ship owners are giving away bulk carriers at operating costs just to generate cash flow and to pay crews' wages," said another European trader who was also not authorized to speak to the news media. "This will expand the selling range of U.S., Argentine and Australian wheat in the Middle East market if they can compete against the Russians on prices."

The shipping container business is also way down, as reported here:

According to the Transpacific Stabilization Agreement, which represents 15 ocean carriers in the Pacific, Asia to U.S. container cargos dropped 6.9% in the first half of 2008 and could end the year down as much as 8% from last year.

And officials from TSA are not predicting a rebound in cargo demand until the second half of 2009. "Clearly we're in a slowdown right now, but just as clearly, the current freezing up of the global credit system is unsustainable," said TSA chairman Ronald Widdows in a statement. "We expect to see an orderly de-leveraging of the financial markets over the next year that will begin to restore confidence with year-on-year cargo demand growth resuming in late 2009."
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And with demand down, ocean container shipping rates have so dramatically in the past quarter, some shipping lines are reportedly refusing what cargo there is because the going rates are below operating costs—meaning the carrier would lose money by taking the business in certain lanes. Reuters reports that A.P. Moller-Maersk's Maersk Line is removing 7,600 twenty-foot equivalent units (TEU) per week from its Asia-North Europe lanes because, "The current Asia-Europe market is characterized by unsustainable rate levels," according to Maersk officials.

The Maersk move came only days after Neptune Orient Lines said its container shipping business APL will reduce capacity in transpacific trade by around 20% and reduce capacity in Asia-Europe trade by around 25% by suspending certain service offerings.

UPDATE: JOC reports up to 200 container ships could be laid up here:

Over 200 container ships likely will be laid up in the New Year as charter ship owners and ocean carriers adjust to weakening cargo demand, plunging freight and vessel hire rates, and an influx of new ships onto key liner trade routes.

Some 165 container vessels totalling 430,000 TEUs capacity were idle just before Dec. 25, up from 300,000 TEUs two weeks earlier, according to the latest estimates from AXS Alphaliner, the Paris-based consultant.

This represents 3.5 percent of the world fleet in TEUs, equivalent in relative terms, to the laid-up figure during the lowest point of the 2002 slump, AXS says. The list of unemployed tonnage includes six ships of between 7,500 and 10,000 TEUs, and 19 between 5,000 and 7,500 TEUs.
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Charter ship owners have taken the biggest hit from the market slump accounting for 105 of the 165 idled vessels, a figure that’s set to rise sharply in the coming weeks as scores of vessels are due to come off hire with little prospect of re-employment.

If it can find work, a 2,750-TEU sub-Panamax ship will earn around $10,500 a day compared with $19,500 in September and around $30,000 at the beginning of 2008.

Port of L.A. Cargo Slump

Reported as "Los Angeles terminal operators 'in trouble':

Port of Los Angeles executive director Dr Geraldine Knatz has told the Los Angeles Harbor Commission that the port’s terminal operators are now facing a 20-30% drop in volume in the first quarter of 2009 and some terminals may have trouble meeting their minimum rent obligations Some operators have told Dr Knatz that volumes had “cratered” with one terminal down 50% on last year. LA’s biggest customer is Maersk and it has recently moved to pulls ships off the transpacific trade and consolidate some volume in Seattle at LA’s and Tacoma’s expense. Dr Knatz has written to port staff advising them of the need to understand that customers are in “survival mode.” To play its part the port is recommending that the Commission shelve the per TEU infrastructure fee slated to be levied from next January and “modify the clean truck program to lessen the [financial] impact.” Dr Knatz added that this is not the time to borrow for capital investment and projects that generate revenue for tenants must now have top priority. She has issued a hiring and overtime freeze and the port’s audit committee has made an additional US$20M in budget cuts (9% of expenditure) on top of cuts previously made. Some projects under the ports clean air action plan are certain to be delayed or cancelled. Dr Knatz warned: “Times have changed. We embarked on the clean air action plan when times were good and now we are trying to implement it when times are bad.”

Short Sea Shipping: Using Ships to Ease Highway Strain

The Baltimore Sun suggests a way around highway shipping woes - by using ships in "Put ship in shipping":

When it comes to transportation planning, we need a detour from the usual remedy of building highways - a detour that removes traffic from the roads altogether and onto one of our most under-utilized transportation resources: the sea.

The incidents in Minneapolis and Philadelphia illustrate the fragility of our nation's interstate highway system and its vulnerability to disruption by terrorist attack, natural disaster or collapse from overuse and lack of maintenance. The American Society of Civil Engineers (ASCE) rates over 25 percent of our country's 599,893 bridges as either structurally deficient or functionally obsolete.

This situation threatens the daily commute of millions of Americans and the constant flow of goods upon which our just-in-time economy depends. And growing traffic volumes will add further strain on our interstate highway system. According to forecasts, U.S. freight tonnage will increase by 70 percent between 1998 and 2020, with trucks handling most of the increase.

Expanding the highway system to accommodate more traffic is expensive. The ASCE estimates that improving the nation's surface transportation infrastructure would require $155.5 billion annually. Contrast this with the Federal Highway Administration's budget of $40.1 billion for fiscal year 2009. We simply have not allocated sufficient resources to pave our way out of this challenge.

Fortunately, America has another, now virtually unused medium of transport. For interstate highways paralleling our shores, coastal shipping offers us a splendid alternative and a great entrepreneurial opportunity.

Marine highways do not need periodic resurfacing or massive land acquisition for expansion. They only require relatively small investments at each port terminal. Increased coastal shipping would also provide a new resilience to our transportation network, thereby contributing to national security.

Moreover, an alternative transport mode for heavy trucks would slow the aging process of the interstate highway system. According to a Federal Highway Administration study, trucks were responsible for 40 percent of the agency's program costs while accounting for less than 10 percent of total vehicle miles traveled. We must extend the useful life of our interstate highways as long as possible.

We might begin simply by putting trucks on ships. The shipping industry already builds vessels for that purpose, and the shore facilities for such ships are relatively simple and cheap. Trucking companies, struggling with the shortage of drivers, should welcome the opportunity to move long-haul trailers from one port to another. And they too would be pleased with less congestion on the coastal interstates.

The new marine medium would be a source of new jobs, both at sea and on shore. Furthermore, studies have shown that ships have the potential to carry three times more cargo per unit of energy consumed than trucks do. Thus they can cut transport costs and lower prices across the market, with benefit to both producer and consumer.

And, it gets better: New "green" propulsion systems, such as marine engines fueled by compressed natural gas, offer even lower emissions and better air quality. No more choking on diesel fumes; everyone benefits.

I don't see anything about the costs of developing our ports to handle more traffic, the need for more ships, crews and other maritime infrastructure and the need for drivers to get the trucks on and off the ships to their destinations. And I could quibble about how many of the 150,000 deteriorating bridges are on the heavily traveled East Coast corridor, but I won't.

It is an idea, however, when its true costs are developed and recognized, should be looked into.

In fact, it already has been. The topic of the Sun piece is known as "Short Sea Shipping" - which the United States Maritime Administration (MARAD) says is:

Short Sea Shipping is defined as commercial waterborne transportation that does not transit an ocean. It is an alternative form of commercial transportation that utilizes inland and coastal waterways to move commercial freight from major domestic ports to its destination.

For those interested in reducing the East Coast land transport woes along Interstate 95, which is the main north-south traffic artery, MARAD has a pdf available from the "I-95 Corridor Coalition" titled "Short-Sea and Coastal Shipping Options Study" here. Dated 2005, it contains some useful information that would support many of the goals set out in the Sun piece, but also a few concerns:

Existing infrastructure may not be capable of handling large volumes of short-sea
traffic. There are two infrastructure issues that interviewees mentioned. The first is the condition of the U.S. inland and coastal waterway systems, which have not been
maintained effectively over the last several years. In many cases, the waterway infrastructure (locks/dams, channels, bridge clearances) is not robust enough to handle commercial traffic. This results in somewhat of a “Catch-22” situation: it is unlikely that major investments to maintain or improve the coastal/inland waterway infrastructure will be made until there is sufficient commercial traffic; and commercial users are not likely to consider short-sea/coastal shipping as a viable option until the system is improved (and can provide some degree of transit time reliability). The other infrastructure issue is the condition of existing port and terminal infrastructure. Many of the under-utilized ports that would benefit from increased short-sea shipping operations do not have sufficient infrastructure (berths, cranes, access) to support efficient short-sea shipping; the ports that do have that kind of infrastructure are typically larger, load center ports that already are nearing capacity and that often give preference to larger, oceangoing, international container ships.
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There is a shortage of vessels suitable for use in short-sea trade. Due in part to the requirements of the Jones Act, many interviewees indicated that there is a lack of vessels that are appropriate for use in short-sea operations. Many interviewees stated that high-speed vessels (capable of attaining speeds of 25 to 30 knots) are necessary to support short-sea shipping operations. These vessels are expensive to construct and maintain, requiring a long-term commitment by shippers who would use a short-sea service. This results in another “Catch-22” situation: shippers often do not want to commit to the service until a vessel is constructed that can support it and operators often do not want to invest in new ships unless they have long-term commitments from shippers.

MARAD has more here, including a PowerPoint presentation. An organization (lobby group) named the "Short Sea Shipping Cooperative" has a website extolling the virtues of - no surprise- Short Sea Shipping and including links to studies (take a look at the funding) on Short Sea Shipping, including one from USMMA profs here, University of New Orleans (UNO) study here.

Many companies are already in the inland container barge business, as set out here in a press release from 205:

Osprey Line, LLC, ("Osprey Line") announced today that it recently completed the largest single unit tow container movement in the history of the U.S. Inland Waterway System. The 15 barge tow was loaded with 375 containers (750 t.e.u.¹s) of agricultural products from Memphis to New Orleans and Houston. Osprey Line worked closely with six major steamship lines to move the cargo to Gulf of Mexico ports for export on container vessels. The volume transported is the equivalent of some ocean going vessels in the container trade, and several times larger than the majority of vessels employed in the short sea shipping trade in Europe.

"This voyage is an illustration of what we are accomplishing here at Osprey Line. The service is a great alternative to truck and rail on routes along the inland waterway system and the Gulf of Mexico. The U.S. Inland waterway system is an amazing resource that can readily be used to alleviate congestion along existing rail and highway corridors. When you combine Osprey Line¹s inland service with our Gulf of Mexico service, we provide an all-water system extending from the heartland of the United States to ports such as New Orleans, Baton Rouge, Houston, and Tampa. With partners like Kirby Corporation and Cooper T. Smith, we have the resources to respond to projects such as this container move and provide consistent reliable service."

MARAD site devoted to encouraging use of inland waterways for "intermodal" transport here.

Moving containers by barge is seen as an alternative to the growing congestion being experienced by landside modes and a freight capacity shortage. It is also cited for it environmental advantages and the potential cost savings for shippers. C-O-B could fill a niche market in the transport of containers that are not time-sensitive, containers that exceed highway weight limits, and repositioning/prepositioning of empty containers.

There are a lot of potential upsides. However, as the UNO study stated in 2004:

Extensive recent studies conducted by the maritime industry and research institutions find that the Short Sea operations, based on deployment of Ferries to carry domestic trailers and international containers, should provide a significant impact on the formation of an effective intermodal system. Such a system would relieve congestion and decrease the number of heavy trucks on coastal highways. It also improves safety, air, noise, and other environmental consequences of land based transportation modes, creates a modern U.S. fleet reserve and cadres of seafarers for military and other emergencies.

Implementation in the United States of these promising maritime services, however, faces a number of financial, regulatory, and marketing problems. Unless these problems are resolved, a viable maritime system would have serious difficulties in being effective. Viability of the Short Sea services, to a large extent, is beyond only direct financial savings, but also includes a variety of external benefits in comparison with other modes of transportation. The issue here is that in the planning and actual implementation of the system the industry, as of today, does not receive any credit for generated external benefits.

Map image is from UNO report.