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Saturday 10 January 2015

Plunging oil prices cause a surge in the shipping oil tanker market

There are winners and losers with the 48%+ drop in oil prices in recent times. The Shipping Industry is one winner as it is not only benefiting from lower operational costs but the oil tanker market is enjoying boom times but not from a growing transportation task.

Oil is in contango so traders and energy companies are buying and storing now in expectation of profiting from higher prices later this year. Land based storage is reaching capacity so the industry is switching to floating storage hence the surge in demand for oil tankers. In the next few months as much as 60 million barrels could soon be held in storage at sea.

Current charter rates for crude tankers is now US$35000/day and rising rapidly. This is the highest the tanker market has been since 2010. The shipping term for this practice is vessels going "Dark". This means that they effectively leave the transportation trade and instead enter the contango trade whereby they sit at anchorage brimming with oil waiting for the price to rise and then discharge their cargo.

The worlds largest oil tanker, "TI Europe", which has a capacity of 3.2 million barrels and is 380m long has gone "dark" and is off the coast of Singapore now. It was chartered by a Chinese oil trader who is waiting for the perfect time to sell her cargo.


Some forecasters believe the contango oil trade could ultimately see as much as 100 million barrels being stored at sea.

In the long term as alternative energies are favored and countries like the USA are self-sufficient for their energy needs, I wonder what the tanker market will look like then? 

We will we still see goliath vessels like the TI Europe operating or will they go the way of the dinosaurs?

All for now,

+Brad Skelton 

Friday 10 October 2014

Tech like smartwatches will drive increased need for speed in supply chains

Instant gratification is not just a wish it's a hardwired expectation of the Millennials that are gradually moving into influential positions in commerce. So what will be their future demands on shipping and logistics providers regardless of the mode of transport? Road, rail, air or sea?

Smartphones, and more recently smartwatches, are already changing the way business is done radically as they enable users to immediately order the goods and services they need. Lets take this one step further though and consider intuitive, automated ordering particularly via smartwatches? As it is wearable devices can track your heart rate, steps taken in a day and your sleeping patterns so it stands to reason they will eventually be able to do far more than this and anticipate what goods the wearer needs and then locate them for an immediate rapid response delivery by the local logistics provider.


So while this technology will have less of an impact on large shipments of whole containers and the like, if Depth Logistics had a courier division delivering small parcels and satchels our team would be working on a rapid response delivery system to cater for this inevitable supply chain need.
As consumers can already easily check prices, from the very same devices, sellers are being forced to organically aligning pricing to stay competitive. Therefore in my opinion the competitive battleground will inevitably switch to the speed of service or delivery as the deal clincher.
Exciting times ahead!
All for now,

Wednesday 1 October 2014

Incredible footage of two container ships colliding in the Suez Canal 2 days ago!

If you ever think marine insurance these days is unnecessary then watch this

Two days ago the "Colombo Express" and "Maersk Tanjong" collided in the Suez Canal causing the loss of eight containers and serious delays in the southbound convoy through the canal.


As yet no cause has been reported and it is believed nobody was hurt. Only one container has been recovered so far.
Accidents do happen so contact my team at +Depth Logistics now to make sure your shipments are comprehensively covered.
All for now,

The Death of Television

When my children have the choice to either watch TV or +YouTube for entertainment guess which one they choose? It's YouTube.

My daughter, nearly 12, doesn't use Google to search online for most things...she first tries YouTube for what she is looking for.

My friends report the same thing about their kids who apparently disappear into their room for hours watching YouTube on their tablets and smartphones.

The rise and rise of YouTube cannot be underestimated. Did you know it is now the 2nd biggest search engine in the world? Sure, it is still owned by Google but this says a lot about the way future consumers want to find entertainment and information and how this will impact business and media consumption in the future.

In homes now with internet enabled TV's, like mine, YouTube is what my kids want to watch ahead of free to air programming.

Why? The bottom line is, they are in control. They get to CHOOSE what they want to watch and even get the opportunity to skip advertising after a few seconds. They also have the freedom to CHOOSE which device they watch it on and when. How does television compete with that? It can't!

Have you set up your YouTube channel for your business yet?

All for now,

+Brad Skelton  

Monday 22 September 2014

Office Evolution

Here's why virtual offices and offshore teams are now possible.

What about collaboration? Google Hangouts make that possible with team members in multiple locations around the world. 
All for now,

Sunday 3 August 2014

New economy rule: You are only as good as your last job

In a commoditised, internet enabled, global economy where competition abounds, loyalty is evaporating fast and brands matter less.

The consumers mindset has changed as they know the power in any transaction rests primarily with them, the buyer, and no longer the seller. Via a smartphone it is easier than ever before for them to go somewhere else, price check and short list another supplier to ultimately satisfy their needs.

This reality is causing business loyalty to fast become "old school" and buyers are typically unforgiving because now they can afford to be. Therefore the value a modern buyer attaches to a long business relationship with years of good service they may have received is diminishing.

The test now is their last experience with buying from your company so you better make it good for them. If you don't your buyer will not only be gone but worse still their experience in dealing with you can end up in online reviews and damage your business reputation further.

That it is why these days, you are only as good as your last job.

All for now,

+Brad Skelton

Friday 1 August 2014

Mining in Australia and Canada...It's normalising, not crashing!

From my perspective as a mere shipping bloke, my view of what's happening with mining in Australia and Canada isn't a crash as some of my younger clients think, it's actually a "normalisation". At the risk of showing my age I have been through a downturn or cycle like this before and it's deja vu for me.

The mother of all mining booms has played out over the last ten years or so driven by big demand from China, which is still large, however the accompanying investment boom in mining has slowed radically to what I consider to be more normal non-boom dynamics.


Commodity prices are down and while most contracts are written in US dollars, miners in Canada and Australia are suffering from historically high exchange rates when they repatriate their profits. On top of that, the OH&S environment is out of control and salaries have been too. I am not saying safety isn't important but insane and completely noncommercial things have been going on that only serve to increase production costs and feed the voracious "Safety" industry.

In Australia sadly we are seeing lots of people losing their jobs and salaries "normalising" too. Paying plant operators circa $140k+ is simply not sustainable and anybody on these sorts of salaries surely must have considered this wouldn't last for them?

From a shipping perspective the amount of mining equipment moving is well down. No wonder really with the amount of gear parked up or mothballed currently. A client in Perth told me there are over 500 mining trucks idle right now in Western Australia. We are seeing increased exports of equipment which could gain pace if the AUD would normalise too BUT...which market in the world could possibly consume this much gear? 

The Depth Logistics Shipping Index for May and June is very telling. May recorded a 68% drop from the previous twelve month high and the index just released for June recorded the lowest import value of equipment into Australia in the history of the index. Only $147m! To put this into perspective some of my clients bigger trucks can cost $4m each.

I was talking to a mate in Canada this morning. He is very nervous about the Canadian stock market as basically the Canadian index overall is doing well but the miners, who traditionally have contributed greatly to the strength of the index are not. He and his buddies are waiting for the correction and with a "seemingly" recovering US economy they think the next move up with US interest rates will be the trigger. Perhaps Australia will be the same?

Meantime, space on ships for my clients is pretty easy to come by and freight rates are still at historically low, 1980's type levels.

All for now,

+Brad Skelton