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Volume 3, Issue 29, September 2008
To r Sea each far ou er r s
avelength The CENTROFIN Newsletter This, in turn, would affect transportation strategies, global production plant locations as well as the underlying logic of current global trade flows. A recently published analysis concluded that “higher energy prices are impacting transport costs at an unprecedented rate.
Rising Oil Prices Impact on Fuel Prices & Transport Costs Compliments United Nations Conference on Trade and Development (UNCTAD) Transport Newsletter No 39 - Second Quarter 2008 (Extracts) With rising oil prices and their impact on fuel prices and transport costs, analysts are concerned about the potential implications for global trade growth and changing trade patterns.
Rising costs of oil and fuel Transport costs are determined by a combination of factors, including geography, trade volumes, economies of scale, infrastructure and administrative processes. Fuel oil, a key cost factor, predominates the energy mix used in transportation. As a result, the relentless rise in oil prices since 2007 is fuelling concerns over the potential implications for transport costs and trade. At over US$140 a barrel in June 2008, some trade observers are suggesting that globalisation may be hindered and trade patterns changed.
In fact, in tariffequivalent terms, the explosion in global transport costs has effectively offset all the trade liberalisation efforts of the last three decades. Not only does this suggest a major slowdown in the growth of world trade, but also a fundamental realignment in trade patterns”. Another analysis reached a different conclusion, stating that “it might be considered that higher transport rates caused by higher fuel prices ought to reduce demand for logistics services. Yet the present picture on this is very mixed, with sea freight and, to a lesser extent, air freight, volumes still growing modestly. Leading global container shipping companies, have both recently reported robust demand in most areas of their business. What has not happened, apparently, is any change in behaviour in the transport market. There is anecdotal evidence that some major shippers are considering adapting their inventory policy to reflect higher transport costs, yet objective evidence of demand does not indicate this. It seems shippers are absorbing some logistics costs in markets which still have sufficient demand. Financial sector bulls such as Goldman Sachs are suggesting there has been a structural change in the energy market which will lead to much higher fuel prices for much of the next decade. That may be so. However, it has yet to feed through into lower demand for freight transport”. These seemingly conflicting views converge, however, on the importance of oil prices for transportation costs.
Industry News
Piracy:
Somalia and Gulf of Aden - *Update*
A Maritime Security Patrol Area (MSPA) is to be established in the Gulf of Aden. A force of Coalition Navy warships will patrol the area and aircraft will fly in the airspace above. The coordinates of the suggested corridor through the Gulf of Aden are: Waypoint: 12 15N 045E
In this issue pg 2
Groundings pg 4
Maslow's - hierarchy of needs pg 8-9
Safety First !! pg 10
Rising Oil Prices Impact on Fuel Prices & Transport Costs pg 15
Engine failures on new ships hits ‘shocking' high
cont'd on pg 10 Waypoint: 12 35N 045E Waypoint: 13 35N 049E Waypoint: 13 40N 049E Waypoint: 14 10N 050E Waypoint: 14 15N 050E Waypoint: 14 35N 053E Waypoint: 14 45N 053E. While Coalition ships have previously conducted routine operations as part of a continual presence in this region, the establishment of the MSPA will focus efforts to counter
TO THE MASTER: Please circulate copies of this Bulletin to the CREW.
destabilizing activities and improve security in support of the International Maritime Organization's (IMO) ongoing efforts for a long term solution. Commodore Bob Davidson (Canadian Navy), commander Combined Task Force 150, will command naval forces in the patrol area. > 22nd August 2008: Recent reports of attacks in the Gulf of
cont'd on pg 2