Still young and foolish, my wife Rose and I followed our dream and founded Baird Publications early in 1978. It was to be the start of a long, fascinating and often exciting voyage. Before that year was out our first magazine, Professional Fisherman, was being published monthly to great acclaim from Australia's commercial fishing industry.
The fishing industry had been neglected for too long and had to contend with one, rather biased, government-published trade magazine – an unusual, curiously Australian arrangement. The industry was in desperate need of a publication to fight on its side against malignant bureaucrats and politicians.
While still very much a “mom and pop" operation, working with practically no capital, masses of effort, some judicious risk taking and benevolent suppliers, the business and magazine continued to grow. So inspired by the success of Professional Fisherman were we that we boldly went global with the launch of Work Boat World in March 1982. By then we had also “launched" two of our three sons, so we were very busy!
Fortuitously, although we didn't think so at the time, the editor of the Australian government fishing magazine published some untrue, deceptive and misleading comments about Professional Fisherman which he obviously regarded as a most unwelcome intruder on “his" patch. He refused to retract and apologise so we sued the government. It was an unbelievably successful action and the first by which the Australian Government had been sued under its own Trade Practices Act. In short, our win gave us some very valuable publicity and, eventually, led to the demise of a malicious, government supported competitor.
Probably somewhat over-confident following our big win, in 1983 we moved into the leisure boating or consumer market by launching Nautical News which later became Australian Yachting. It operated in a very competitive market in which a different form of commercial morality prevailed. In the commercial marine market we had become used to 95 per cent of customers being gentlemen. In the leisure market it was more like the reverse.
In 1993, to our great relief, we sold it. Meanwhile, foolishly, we had by purchasing Fishing News, entered the angling business. If anything, it was even worse than the leisure boating sector. We soon sold that publication having learnt our lesson about consumer magazines.
Endlessly searching for new adventures, in 1985 we launched the first of a long series of Seadays exhibitions and conferences. These were “on-water" events aimed at both commercial and leisure boat owners. They were a lot of work but proved to be useful cross-promotional exercises. Running out of steam in 1991, following the stock and property market crashes, we gave ourselves a three-year sabbatical from the events business and moved right out of the consumer market. A very wise decision as things turned out.
Quickly realising that Australasia represented about five per cent of the maritime world and learning fast from our Work Boat World venture, we determined that we needed to go truly global and to cover the full spectrum of the world maritime market. We had to cover commercial fishing globally, as well, obviously, as cargo shipping. Thus, in early 1989, we opened an office in England and in April launched Fishing Boat World. After seventeen fascinating years it was folded into Work Boat World as the commercial fishing industry contracted and the worlds of work and fishing boats became ever more similar.
Always looking for something new to do, in November 1988 we launched Australasian Ships and Ports which, via Asia Pacific Shipping, eventually morphed into Ships and Shipping, a truly global publication which was laid to rest late in 2007 as the Global Financial Crisis started to murder the international shipping industry.
While enjoying plenty of small adventures and excitements, we needed something to really get our teeth into so, in 1994, we revived our events division with the launch of Ausmarine '94 in Fremantle. Before we sold that division in 2013, we had held numerous exhibitions and conferences in Fremantle, Sydney, Brisbane, Cairns, Singapore, Kuala Lumpur, Bangkok, Hong Kong, Dalian, Sharjah, Bahrain and Venice. They were great fun and quite profitable and, most importantly, let us get to know our customers very well. However, they were a lot of work and, as Rose and I neared retiring age, we felt it better to let our successor focus on the heart of the business, magazines and new projects.
Realising that Britannia no longer ruled the waves and that, indeed, Britain hardly had a maritime industry at all, we closed our London office in 2003. We decided it was easier and more economical to operate from Melbourne using phone, email and jumbojet to reach our far-flung customers.
The next few years saw us reduce our magazine fleet to a more manageable two titles. Our old favourite Work Boat World was and is still going strong no matter what the vicissitudes of the world economy and Ausmarine has revived the fortunes of Professional Fisherman which it replaced following the sad and rapid decline of the Australian fishing industry.
Under our successor, our second son Alex, the business is in another growth phase. Alex, who is of the “digital generation" has launched our classified vessel advertising websites: initially workboatworld.com and soon to be followed by fishingboatworld.com. Their objective is to provide ship brokers, builders and owners with an economical, easy-to-use and truly global digital market place to facilitate the fast and economical sale and charter of vessels and their equipment.
Having grown up in the business since stuffing invoices in envelopes from the age of three, Alex has been imbued (some might say “indoctrinated") with its values. Our objectives are to provide solid and economical sales and marketing support for our advertiser customers and to fight tenaciously and strongly for our vessel owner readers whenever they are threatened by malignant governments and similar outside forces. We started with those objectives firmly in mind. They will remain there.
Neil Baird - Co-founder
33 new LNG ships have been ordered so far this year, compared to 19 in the whole of 2017 and just six in 2016. Owners have been tempted by higher spot/short-term charter rates, still-low newbuilding prices and rapidly growing LNG trade.
New LNG supply is being absorbed far more easily than many expected by booming demand in Asia. A new wave of FIDs on new supply projects is expected to create even more demand for shipping. But owners need to be careful they don't over order.
There is still a huge number of ships ordered in the 2011-2014 LNG newbuilding boom to be delivered to the fleet and there is a long history of new ships arriving before new supply.
New LNG supply is creating new trade routes
LNG shipping is benefiting from an unprecedented wave of new LNG supply projects coming on stream in a relatively short period. Between 2015 and 2020 LNG production is forecast to increase by over 150 mmtpa; in comparison, supply rose by just 20 mmtpa in the five year prior to 2016.
For LNG shipping this supply boom is particularly beneficial, as much of it is coming from the US Gulf which is a long way from the largest LNG markets in Northeast Asia. To move one mmtpa of LNG from the US Gulf to Japan requires 1.9 ships, compared to 0.7 to move the same amount of LNG from an Australian project.
Record demand from China
The huge increase in LNG supply has so far been comfortably absorbed by rapid growth in demand. China has been at the forefront of demand growth with imports in the first half of 2018 up 50 per cent, following 46 per cent growth in 2017.
Chinese LNG demand is also taking a more pronounced seasonal shape as new terminals have opened up in the north of the country requiring more LNG in the winter months.
FIDs imminent on next wave of LNG supply
The apparent ease by which the current wave of new LNG supply is being absorbed by markets has turned attention to who will develop the next wave of LNG supply. Wood Mackenzie currently forecast that 114 mmtpa of new LNG capacity will take FID between 2018 and 2021.
These pre-FID projects will not provide any new LNG to the market until at least 2023 and most of it is unlikely to be available to ship before 2025. Between the current wave of new LNG supply and the anticipated pre-FID wave there will be a period of low LNG supply growth. Ships being ordered now will deliver just in time for the start of the period of low supply growth.
Still low yard prices
In real terms newbuilding prices for LNG ships have never been lower. Elsewhere in the shipping industry newbuilding prices have begun to creep up and prices for LNG ships will eventually follow the trend. The newbuilding prices look even more attractive when you consider how much more you get for your money with the latest ship designs. The temptation for owners is to order sooner rather than later whilst the newbuilding price remains low.
New ships versus old
Vessel design and technology advances have seen the typical new order LNG ship become larger and more efficient, making ships ordered even three or four years ago outdated. Ship orders now are typically sized at 170-180,000m³, compared to 155,000m³, dues to design advances and to maximise carrying capacity through the newly expanded Panama Canal.
In addition, the introduction of gas-injection slow-speed engines has offered fuel savings of over 20 tonnes per day even against modern DFDE/TFDE engines and 75 tonnes per day against older steam ships.
Huge orderbook to be delivered
So far this year 36 new vessels have been added to the fleet and three have been scrapped. A further 22 are scheduled for delivery before the end of the year – if these vessels are delivered on time and no further vessels are removed from the fleet, capacity will grow by 13.0 per cent in 2018 (up from 6.8 per cent in 2017). The 37 vessels currently scheduled for delivery in 2019 will grow the fleet another 7.6 per cent.
LNG trade is growing strongly but our forecast of an 8.2 per cent expansion in 2018 lags behind fleet capacity growth. More long-haul imports from the USA to Asia should see tonne-mile demand grow at a faster rate, leaving a delicate balance between supply and demand for LNG ships. But forecast trade growth of 13.7 per cent in 2019 should tip the balance in favour of ship owners.
US LNG exports are creating more seasonality in shipping
Swings in where US exports go are creating more volatility in spot/short-term LNG charter rates. Peak demand periods in Asia see more US exports attracted to long-haul destinations, taking ships out of the Atlantic basin. This drives up charter rates globally, but drives up rates even higher in the Atlantic basin.
In June charter rates in the Atlantic basin peaked at around US$90,000/day, whilst rates in the Pacific Basin at the same time were closer to US$70,000/day.
Industry outlook – too little too late or too much too soon?
LNG is one of the fastest growing sectors in shipping and design advances have made new ships more attractive compared to much of the existing LNG fleet. The market clearly wants more of these new ships and it could be said orders have been too little too late.
But looking at the wider picture there is a lot of new capacity still to be delivered from the current orderbook. There is under-used and laid-up older shipping capacity that could be more fully employed. The next pre-FID wave of LNG supply won't come on stream until mid next decade. If ordering activity continues at recent levels there is a high danger that it will be too much too soon!
By Andrew Buckland, Wood Mackenzie