Page 13: of Maritime Reporter Magazine (March 1998)

MARINE FINANCE

Forest Products Nicho Looks Ripo For Expansion 12% growth predicted over six years; Ports must step up improvement efforts

In its latest report — Forest

Products Shipping: Looking to the

Upturn? — London's Drewry

Shipping Consultants forecast that the forest products trade will rise, in terms of tonnage, nearly 12 per- cent by the year 2004 from current levels of around 170 to 175 million tons/year.

As significant to the shipping communities as are the hard num- bers, so too are the changes in the type of products to be shipped and service expected.

Trade growth, according to

Drewry, will not be distributed evenly: The focus will be on "down- stream" products such as sawn- woods and boards/panels rather than logs and pulp and paper prod- ucts rather than pulp wood. This will be crucial for both ship opera- tors and ports as they will see more business falling into the dual are- nas of minimum/nil damage "cargo care" and just-in-time (JIT) deliv- ery.

Holding A Steady Course

While not a major focus of the shipping market in general, the carriage of forest products has enjoyed steady growth over the last decade.

Tonnage transported in the mid- 1980s equaled 125 to 130 million tons/year; this compares with 150 to 155 million tons/year at the start of the 1990s. In its latest report, Drewry estimated that by 2004 total seaborne trade could be touching approximately 190 mil- lion tons.

Even if trade volumes stall in the short term, key underlying funda- mentals that underpin forest prod- ucts demand — population growth, improving living standards (increasing demands generated by existing populations) and increas- ing levels of literacy — are wholly growth oriented.

The forest products trades make use of virtually every type of dry cargoship, with success deter- mined by the blend of logistics, competitive advantage, quality of service and freight rates. This cre- ates various shipping "battle- grounds" where competition comes to a head. Such an arena is the

North American export sector.

Late 1997/early 1998 have seen a good deal of tension arise as vari- ous contract renewal sessions have come around. Drewry noted that this tension is not wholly about freight rates (though this is impor- tant) as the business has other logistical elements. Generally speaking, the breakbulk sector regards the container market as a threat. With crisis in Asia impact- ing on the demand, not just for for-

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