The decade-old imbalance between cargo demand and multipurpose/heavy-lift capacity continues with no forecast for any significant change. The prospect of stagnant cargo flows has now been accepted by many industry insiders as the new norm. Even with negligible new ship orders, the forecast for improved earnings is impossible to predict, particularly in a market where so many vessels continue to be supported by banks unwilling to call non-performing into default.
During the cycle of poor earnings, the demands on carriers have continued to mount. The escalating regulations have made recording/reporting requirements so labor intensive and time consuming so as to add to carrier costs, and in many instances, to result in a more negative service capability, the direct opposite of the intended goal.
Vessel crews are taxed to perform non-cargo-handling reporting functions, making them unavailable to assist in load and discharge operations as was traditionally the case. Compliance demands affect all aspects of our business in terms of what needs to be provided and/or reviewed; government restrictions, port requirements, vessel classification, multiple third-party ship vetting methods, extensive preload technical services, insurance, and the various surveyors that can be engaged in a project all require significant investment from premium breakbulk carriers.
In addition, and adding to the resources required, many of these services are applied with a broad range of subjective criteria. The safety and legality of vessel and cargo operations has given rise to industries that purport to ensure carriers do a better and safer job. Those industries have flourished while ours bears the increased costs without realizing any proportionate benefits from the implementation and adoption of all that has been put on us.
Objectively, our sector is in poor health, and increasing regulatory and customer demands should call for an improvement in freight rates, although currently they just add to costs.