Its the shipping update – and things are pretty complex out there in waterworld.

Norden A/S, which owns 44 tankers,  is to hike rates 80% this year as it says jet fuel in particular is in high demand by Asian markets which have grown their aviation sector.  China to be specific.  But what of the commodity carrying dry-bulk carriers?

Well things are not so sharp.  Norden says 81% of these will be assigned to what is known as long-duration contracts,  which are not as lucrative as the short duration version.  Dry-cargo is in a slump because of two reasons.

Supply and demand.

There is a glut of vessels and a drop in demand.

Global Shipping routes mapped by GPS

The spot shipping market is where these players are playing.  That is ad hoc and requires almost supernatural qualities and luck, along with guesswork and proper research.  For example,  spot vessel hire is very expensive but preferred as the world moves away from Iranian oil.   A maritime company will be well set if it has many tankers in the right place at the right time.

Demand for oil and other product tankers is to grow around 4,3% this year according to Clarkson Research Services Ltd,  the world’s biggest shipbroker.    The number of dry-bulk vessels is three times more than the trade in 2012 can support.

Norden has also reported a first Q loss of $256m – and a drop in sales of 2,8% for 2012 and better guess right over the next few months or things could get sticky in oil-tanker land.

Hedge Funds have moved in to take advantage of the probable improvement in Chinese purchases of oil,   with Very Large Crude Carriers or VLCC’s earnings up around 30% for 2012 already.

But rates are swinging wildly,  giving hedges a chance to either guess right – or get it badly wrong.   VLCC per day rates swing from $50,000 to $8,000 at times and last year averaged $22000 per day.

Again we should sound a warning here.  The ten year average rate per day is $56000 so as we can see – the average is less than half what it was when the world’s economic growth was on the high road.

And Dry-bullk?  Well that’s really shattering.  Returns dropped 25% last year, and in the first quarter of 2012 rates dropped another 35%.  That is a compound dip of 60%.  No wonder dry-bulk vessels are in the financial doldrums.  Or is that the financial hurricane?

Geography and economics.  We should all be forced to study both at school.  The medium size tankers that carried crude from Africa, Venezuela and the North Sea to the US have seen rates dip steeply over the past year and are down another 17% in the first quarter 2012.

The clowns of the new epoch are dancing gaily on their soap boxes,  all swept up in the fervour of ferocious neo-imperialism.  Their machines have hummed into life once more to dream up the tail-dogging treatise that whatever is presumed reality dreamed up by the Chinese Central News agency,  or the Columbian Vark, (sorry, farc) guerilla movement,  or the Venezuelan prostate-professor,  or His Royal Hitler,  Robert “Malaysian-trip” Mugabe,  or even that most prestigious of Ills,  King Jong “Young”-’un.   In SA everyone has a hit out at FW “bantustan” de Klerk.   He trends on twitter.  Probably for the first and last time ever.

I watch these social media despots of all colours and sizes and its a bit like observing the mentally deranged.   Nonsense in a 140 character cup of hash tag and a double shot of cacophony.

We are in a dangerous phase here,  folks, so lets concentrate on what remains reality as we sneak sentiment and hannah-hannah to each other.

We have the US president happily announcing his $40 000 per person banquet to doll in the cash for his “sort-of-I-kind-of-only-just-evolved-to-support-gay-rights-election-year” position while JP Morgan reveals a $2bn hedge that fell apart.  Mr Dimon,  the president,  will smile and happily remain in his position while Mr Obama’s lobby group ensures JP gets their next lolly-bail out come what may.  Wonder if Mr Dimon bought a table for his execs at the Hollywood $40 000 special?

Beijing is living on a quixotic mix of government bombast and Chinese accounting, where what appears to be a spreadsheet is actually merely a numerical propaganda document.

The Greeks don’t know who’s going to lead them through their crisis.  Probably the man who bakes dolmades next door.  Maybe the German milk-maid?   Then again, not likely.

Perhaps the left?  Perhaps the right?  Perhaps the military left/right/left/right?  Today sees Greek politicians entertaining what is called a “last-ditch” attempt at forming a government.  It’s the ditch part of that phrase that is disconcerting.  So very negative.  Why not “eleventh-hour”  or some other sort of journalese than “last-ditch”?

Fact sheet time.

So very painful this growth business.   China’s growth rate has almost halved in five years.

Not very productive.  And the forecast has crumpled still further.  At the weekend and in what appears to be a panic move,  Beijing announced earlier toughened rules about Bank capital were to be eased.  That has hardly dented the negative sentiment in the market,  mainly because traders are beginning to identify with reality.  The dollar is up and the yuan is down.

As Business Day reports today :

“Start with Industrial & Commercial Bank of China (ICBC), the world’s most valuable bank, at least on paper, with a $238bn market capitalisation. Much of its capital consists of the remnants of bad loans dating to the 1990s, which ICBC now calls receivables. One such receivable represented about a third of the bank’s shareholder equity, as of December 31. It was scheduled to start coming due in 2010 but was not repaid, and still sits on ICBC’s books at its original value.”

http://www.businessday.co.za/articles/Content.aspx?id=171657

Not healthy.   But China looks good.  Billions of people.  China City in Johannesburg continues to parade its plastic flamboyance to the lower middle class,  all lining up for cheap sunglasses.  Beijing hosts various world leaders and shows off bullet trains and thick smog intimating just how industrially powerful it has become.

But as soon as the gaze switches from Greece, which will leave the EU eventually,  to the lack of real growth in China,  the commodity honeymoon will come to a shuddering halt and the World Economic Forum will have to reassess what it means to be a brick.   Where exactly is the money coming from to repay the bank loans which are oiling the construction boom in China?

It may end up with a mortar instead as the Chinese crack down on their own by the third quarter and into 2013.  However,  this is merely an analytical summation.  Go and check out Chinese banking data sheets for exposed loans if you want a real eye-opener.   As soon as corporate rents dry up,  so will the demand for rebar and concrete.  And coal.

Bets are on.  My self-made bookie Albert “vingers” van schalkwyk has the Chinese Spring starting by 4th Q 2012 at 3:1.

A trend to watch.

Richards’ Bay coal prices have dropped 5% in May compared to April 2012.  This has led to the Chinese purchasing MORE as the price drops.  Indonesian, Australian and South African coal prices are at their lowest level since 2010 based on poor demand.

The last two paragraphs are a contradiction.  But they’re 100% correct.

So how does this tap into supply and demand theory in macro-economics?  To be blunt,  it doesn’t.

China imports coal to fire power stations and demand continues to grow in the Asian country.  For instance,  China produced 411billion kilowat-hours of power in March this year,  compared with 383 billion last year March.

But this demand has done little for Indonesia, Australia and SA.  Indonesian coal prices are down 3% in May, and Australian coal has shed 7% month on month.

What is difficult to understand is that why, when the regions biggest buyer reaches a new record in coal purchases,  does the price of coal continue to fall?

Because Europe is not buying.

In a nutshell.

So macro-economic theory projections are actually accurate.  China is not driving the price of commodities exclusively and the next phase of Europe’s recession will have a market effect on commodity prices.

Beijing also announced today it is to cut fuel and diesel prices as crude oil prices drop.

So what would you do if you wanted to pass on sensitive information about a company or government agency to the media?

Would you use a machine or a human?

This is pretty important.  For example,  Mr Assange and his server.

Would you really want to be identified as the source of hundreds of thousands of documents which can be traced in various ways to your sweaty palm,  when all you really have to do is send a stamped envelope containing aforementioned items?  You may be traced and arrested.

Ok – so its not called a paper trail for nothing.  Whichever way you look at it, control over the manner in which documents flow is both nationally important,  and internationally porous.

Yes, people check the paper trail,  but its far more difficult these days than you would think.    As agencies switch to monitoring data,  one important component is forgotten.

Paper.

I only say this because someone recently sent me a missive with a piece of very important information.  By hand.

And there is no record other than this vague digital note appearing on a WordPress server that there was ever any sort of document passing through any sort of mechanism.   Hand-to-hand.

As information value increases,  there is a growing tension between the importance of the detail and the speed at which that detail is accessed.

We are profoundly confused between those two facts.   A few years ago a former professor of mine sent me a hand delivered message to my front door.

While that doesn’t sound like much of a thing,  I should say that he lives in Cambridge Massachusetts,  and I live in Johannesburg.   The information contained within the note was important and because of  the manner in which it was delivered,  I can still recall with exactness what was said and how.

So my advice as the ANC government plans its assault on the flow of information is this:

- Pass on information to protect yourself via non-digital means.

- re-publish that information for all to use via social media spheres so that it becomes public information

- keep the analogue information separate from the digital re-publishing process unless sources are utterly protected.

- Use hand delivery methods or snail mail

- Purchase your stamps using cash in PostNet facilities that are not local.

- Re-publish all information openly to protect yourself from selective arrest.

And thus,  fear not, we shall be informed.

A while back I purchased a chronograph from an aviators shop and was stunned by the cost.  R1500.00 for what amounts to a stop watch?  Ouch.  Then again,  we pay for quality and expect it.  This chronograph is a wind up version and does not have plastic moving parts,  unlike most watches and time-machines that employ an analogue face.

The stainless steel and platinum watches and chronographs out there are a whole bunch more expensive.

Because they last.

I also have an Aviator Watch (the brand) purchased in a moment of weakness by my nearest and dearest as she flew around the globe.  Duty Free.  At 30 000 feet.  After two years it ceased operations.  According to the watch maker I consulted,  that was because, while the watch appeared to be manufactured out of stainless steel,  the mechanism was a well-known Chinese product made of hardened plastic.

In a word,  the watch design externally was most fetching and tough looking,  but inside it was a pile of junk.

Manufacturers purchase these generic plastic thingies and they lock them inside a beautifully chromed casing and voila!

Incredibly valued Seiko watch with .. plastic parts

Chronograph.

I don’t use this watch while flying,  where time is everything. Precise turns need to be made using seconds of accuracy and if you’re using a stodgy piece of Asian plastic to link up on a runway in thick cloud – you’re going to be missing by hundreds of feet.   Which is not nice.

But this requires careful consideration.   Why would we purchase an analogue timepiece when our machines are all digital?  No pilot I know uses a digital watch.  Not one.  Its something about using the second hand swinging around the face of the device in conjunction with an eye on instruments and timing it just right that your two minute rate 1 turn ends up in a 360 degree pattern.   If you try this on a digital watch,  its not very accurate.

Many now prefer to use GPS devices and glass cockpit mechanisms to conduct rate 1 turns.   However, when they climb out of their R3 million private plane,  they invariably look at their analogue time piece and mutter “jeez,  was I up there so long?”.

I’m re-reading Edward Gibbon’s History and Decline of the Roman Empire for the third time – this time the unexpurgated 6 volume version.  He penned volume I in 1776 and volume VI in 1789.  Quite a lot was going on around that time.

But why read this oke at the start of the 21st century?  Because his turn of phrase is like a thwack across the side of the slowing noggin with a silicon covered glove.

Because of all the historians and historiographers,  including those old yokels like Herodotus and Thucydides,  ol’ Karl Marx and Hegel and Toynbee and Williams, Davidson and Wright and Taylor and Churchill and Sol Plaatjie,  Gibbon is still the boytjie.

Who else could write this kind of thing:

• “If we contrast the rapid progress of this mischievous discovery [of gunpowder] with the slow and laborious advances of reason, science, and the arts of peace, a philosopher, according to his temper, will laugh or weep at the folly of mankind.”

The mischievous growth of explosions compared with the less than explosive evolution of the human condition.  Science and reason develops over epochs.  Gunpowder is an epoch all by itself.  And epic.

He could fold a sentence in half like Hemingway then wring out hundreds of thoughts from an intensely short phrase.

• “The various modes of worship which prevailed in the Roman world were all considered by the people as equally true; by the philosophers as equally false; and by the magistrate as equally useful”.

But for some reason,  Gibbon sounds like he was South African.

For example:

• “The value of money has been settled by general consent to express our wants and our property, as letters were invented to express our ideas; and both these institutions, by giving a more active energy to the powers and passions of human nature, have contributed to multiply the objects they were designed to represent.”

Our value chains right now appear to be somewhat murky.  Value of the multiplicity of consumables leads to sexual prowess and lethargic rule-mongering.

Or how about this from Chapter 12

• “On the slightest touch the unsupported fabric of their pride and power fell to the ground. The expiring senate displayed a sudden lustre, blazed for a moment, and was extinguished for ever.”

All very South African.

And this – with its ominous warning:

• “The incapacity of a weak and distracted government may often assume the appearance and produce the effects of a treasonable correspondence with the public enemy.”

And as we go about collecting our consumer items for another year in the intangible egoli,  perhaps this thought could pass by:

• “Their poverty secured their freedom, since our desires and our possessions are the strongest fetters of despotism.”

Nothing like arriving at work on Monday with sunburn.  The effect of Autumn belying Summer’s existence.  At 07h30 on Sunday it was 9 degrees with a nasty little wind whipping in from the South East.  By 14h30 it was 28 degrees and I had been hoodwinked by meteorology once more as I staggered around a cricket field growing increasingly lobster-ish.

Seeing we discuss people and machines (mostly) here,  I was thinking about thermometers.   I grew up with these and something called a barometer hanging in the passage where upcoming storms could be managed by the farm.  If the barometer moved downwards quickly,  a little needle would point towards the word:

STORM.

Just in case we hadn’t noticed the fact that the pressure had dropped from 1032 hPa to 956hPa.   

Now we just log on to WeatherSA or similar and the machine tells us exactly what’s going to happen in a week.

Or does it?

I feel we are far too reliant on these devices – many automated out of Sweden or the US – merely because they have an interface that is pretty or sexy or colourful.

“Oooh”  said someone to me a while back “This website is really good!  It gives you the latest weather right here!”

Well blow me down.  Why not look out of a window instead?    But there was no gratuitous sniggering from this peanut gallery .  Folks really need to know what’s happening with the weather.  Its the most ancient of tools after reading spoor and throat singing around a fire.

However, there is something to be said for a long-term forecast.  Being an aviator, albeit poverty-stricken,  I constantly log in to my smartphone application to check what’s going to happen next week.    From my prescient understanding of these things here are two observations which you may or may not believe,  but are nevertheless true.

1) Some people can forecast the weather without machines.

Ok, this is tough to believe.  In the Pacific, islanders who regularly travel by boat can foretell an upcoming storm by merely observing wind, waves, current and animals.    And up to a week ahead.  No radar, no smartphone.

2) Some people can forecast up to six months ahead.

This is harder to believe than the first.  But true.    There is no doubt that the Innuit and San and farmers in parts of the world can accurately foretell of a drop in rainfall ahead.  And thus,  make decisions.

But these two prevalent skills are unfortunately dying.  Which is a shame because we could really be a lot more independent of things that are produced for us a long way away, and thus,  empowered,  if we took more notice of what sort of cirrus cloud was gliding past us at 22 000 feet.   It is really amazing what kind of soothsaying can then take place – and mostly accurate.  If you live in Gauteng here are a few pointers.

• If the cloud bank builds up low in the sky to the east and remains there for 48 hours, the wind will begin to blow from the East and it will rain for more than two days – usually in winter.
• If the cloud bank builds up from the North West and a strong wind blows from the north during summer,  the concomitant storm could include quite large hailstones.  The effect can last 24 hours.
• If the cloud bank builds up from the South West,  there is usually a very powerful electrical storm and strong wind which usually lasts an hour or two.
• In January/February and sometimes March,  if the cloud builds up from the North East,  and the barometer drops slowly to a very low level,  expect up to a week of low cloud and persistent rain.  Sometimes floods.
• If the cloud bank builds up from the South East in winter there is usually a steady wind blowing and the rain can continue softly for up to a week.

I spent Saturday night with oncologists and gynaecologists and surgeons and specialists.  Some got drunk.  Others went home early.  None had bleepers.   Some brought their … um … assistants.

Others their wives.

While confidentialities preclude me from revealing too much,  lets just say I was not there as a hack.   But it gave me time to observe how folks who say stuff to you like “I just don’t know what’s causing your deafness” deal with loud sounds and gushing beer noises.   Then whip out their invoice for R1200.00 for doing exactly nothing.

Those troll-dops,  the god-awful green cane rubbish drink of the new breed of poor white-cocktail trash which features Cream Soda and ethanol emerged from the shadows like lurking taste bandits.

This drink is just vile.  Unfortunately,  its become fashionable to throw up in shades of chartreuse and chlorochrous coloured bile, while turning cinerious and eyeballs mutating from white to  citrine.

Some doctors drink this stuff too.

Some could be seen hunkering down near the blazing fire in the lapa smoking cheap tobacco.  Not great fat Romeo et Juliet.  No,  just the bog standard rubbish with which you can kill yourself, purchased VAT inclusive from any corner cafe.

Others could be seen clutching “dictator” fruit – those flighty little bottles of ethanol .. sorry ..  vodka, with food colourant and erythraean tones belying their liver-shuddering cheek-puce-ing characteristics which would leave your head isabelline and your eyes magenta.  I was shocked.

Shocked.

No sign of bottles of Johnny Walker Black Label?   No grappa to accompany the espresso?

Has the medical profession stooped so low that the specialists and surgeons are now forced to imbibe these poor-people drinks and smokes?  Is this what has happened to the poor blokes who spent seven years of their youth immersed in text books about someone else’s bladder and sphincter and large intestine?

Not a Porsche in sight outside.   A rabble of Range Rovers though.   A couple of Mercs and BMW’s.  A smattering of Subaru’s, and one VW Polo.  That belonged to the chef.

After finding an additional tax surcharge,  the SA government has decided that the Gauteng tolling system is to go ahead.  I sat down with a calculator to do some basic math and found that we shall be taxed at a horrendous rate for owning a single vehicle in Gauteng this year.

Here are the numbers:

1. Tax on fuel = 20% @ 70L x R11.23 or R 786 / 20% =  R157.22c  of tax per month 
2. Additional fuel tax surcharge = 2oc  =  R 140.00   of tax per month 
3. VAT  =  14%       =  R 110.00  of tax per month 
4. Emissions Tax on new vehicles =  5%         = A once off – lets leave this out for now
5. Driver’s licence renewals = R400.00    =  R .50c per month (factored at a new licence every 5 years)
6. Annual Car registration = R 400.00   =  R 33.33 per month 
7. Tollgate costs – bi-weekly journey to Pretoria x month x year = R 3000.00 / 12 = R 250.00 per month