How different the Maritime Scene looks today from when I wrote last year. I was then, with the Iraqi war looming, extremely cautious about making predictions of 2003 although I did feel that the Market would improve substantially during the year. I surely underestimated the incredible improvement that did take place. Now all areas of the Shipping Industries enjoying (insurance underwriters excepted?) record earnings and prosperity. Our old friend and economic guru De Martin Stopford of Clarksons has even identified 10 records, which were established in 2003 ranging from the Bulk Trades with earnings exceeding $20 billion, to significantly, Shipbuilding output which in the year exceeded 22.5 million cgt. China justifiably receives the accolade for imports, among which was iron ore rising to a monthly figure of I0 million tonnes. No wonder Bulker owners were smiling as rates swept to beyond $I00.000 a day!

China deserved further acclaim for its vast exports of consumer goods which more than any other revitalized the troubled containership industry. China also paid unprecedented rates per lwt for ships for scrap.

All this could lead to a dangerously high sense of optimism and contentment. But just how fragile is this delightful boom? In his recently published Report on 2003 my friend Michael Grey referred to me as the Cassandra of the Industry. In one sense he is so right in that I, in company with others, forecast that this boom will not last forever. The trouble is to identify how long it will last. I believe 2004 will be another excellent year but that over 2005 hovers a huge question mark. The boom is based on continued super consumerism particularly in the US (on borrowed money too!) while new tonnage to meet this conspicuous demand is being poured out from the yards. 

Forecasting is made ever more tricky by the unknowns, e.g. Terrorism. Will the imposition of ISPS from 1st July 2004 with 'zero tolerance' by particularly the US Coastguard produce a stutter in trade? What will be the extent of further Regulation by IMO and, much more unpredictable, the EU? Will such regulations bring forward obsolescence of many ships? Will such enforced early obsolescence make it easier to absorb the unprecedented introduction of newbuildings? Will there be more and more and bigger claims against shipowners for alleged 'wrong doing' such as pollution? Will the Scrapping/Recycling industries be able to meet new 'Green' requirements?

It is quite a conundrum but it surely indicates a certain caution. 

My forecast for 2004 for what it is worth is that World Economic Growth will continue to sustain the Shipping markets for the whole of 2004 and early 2005, after which there will be a manifestation once again of overtonnaging and a substantial drop in rates in all sectors with the exception of Gas Carriers. Thus caution is indicated for the present.

'The worst decisions are made at times of highest prosperity' I have frequently voiced. So our 2004 resolution should be a determination to avoid making them.

J G Davis CBE