URSABLOG: Bunker Mentality

On wet Saturday afternoons when I was a child I used to enjoy watching old war films on television. The men, soldiers, sailors or airmen, were full of plucky posh grit or cocky cockney humour - depending on whether they were an officer or in the ranks. These images still define what the British think of themselves, the blitz spirit, keep calm and carry on, the class system, that kind of thing. It reminds us when we had proudly stood alone against the Nazi terror, when the rest of Europe had either collaborated or been occupied, or had neutralized themselves. It is the same image that many people had in mind that fateful June day in 2016 when the British voted to leave the EU.

It is very easy to mock this spirit, but the reality of air raids was psychologically and physically very damaging. Both my parents lived in London during the Second World War, and the stories my grandmothers told were of a nightly grind of going down to the air raid shelters, and waiting for the ‘all clear’ to sound. They could point out where the anti-aircraft guns were situated in the parks around and described the thumping sounds of the bombs as they hit the ground. My mother was born in June 1940, and although I have never ascertained whether she was actually born during an air raid, certainly many nights of her early childhood were spent in the air raid shelters.

And it wasn’t just London. I was born and raised in Coventry, a manufacturing city of strategic importance a hundred miles north. The city centre was flattened on 14th November that year, and even though I was born almost thirty years later, it was hard to escape the evidence of that violent night. The medieval cathedral was destroyed and left a shell as a memorial, as well as a monument to peace, with a spectacular new cathedral built in its shadow. The city is twinned with Dresden; war is never one sided, and real war is deadly.

The word ‘bunker’, it should be remembered in these low sulphur times, has many different meanings. As a noun it is:

-         A protective dugout or fortified chamber, usually underground

-         A bin or container for storing fuel

-         A sand trap on a golf course

The origin of the word predates shipping, and was simply a place for storing coal. Many houses from the 18th century were built with bunkers in the basement so that coal deliveries could be poured directly from the pavement. Bunkers on ships came in with steamships, and were placed around the boiler for ease of access. In time the fuel itself became known as bunkers. As oil-fired engines began to propel ships, the fuel oil was called bunkers too.

To bunker a ship means to load it with bunkers. It is odd that a name for a container to store solid fuel has mutated into a verb, and then a noun to mean the fuel itself, even if it is in the plural. It is also odd that the name for a protective chamber to hide from shells and bombs falling from the air, should cause such despair amongst the shipping community.

This year has begun with a lot of hassle, but I find myself slightly cynical.

Trade Wars

Maybe I’m showing my age, but I grew up in an era of severe trade war, but never really noticed it. The Cold War meant that very little movement in people, goods or technology moved from inside to outside of the iron curtain. At all. Today’s trade wars, if we can call them that, are about containing, or persuading, or punishing, or promoting an adversary, an ally, or an electorate. The world is too connected to build walls around continents, or even cities, as recent events have shown. So instead of using the term ‘trade war’, how about ‘friction pain’? It hurts, and is irritating, but it is hardly life threatening. And for my parents’ generation, war meant something far more serious than the cost of spare parts going up.

IMO 2020

Just in case you hadn’t noticed, here are the latest scores from Singapore:

-         VLSFO: US$ 546/t down from a high of US$ 741/t a month ago

-         MGO: US$ 605.5/t, down from US$ 746/t over the same period

IFO 380 (the dirty one) reached US$ 400/t just after New Year, and is now around US$ 345/t. And you don’t hear so much about the bunker prices because….

Coronavirus…

…has taken over in the news. The more that is known about the virus, and the measures taken to stop the spread, the less breathless the coverage becomes. Forecasts of doom and catastrophe seem to be premature, and although the illness and deaths seem alarming, some of the controlling measures seem a little draconian. But we should remember that draconian social measures already exist in China, so they have had good practice.

And as if to underline my undimmed optimism, the Baltic Dry Index has turned a corner, and is now, admittedly very tentatively, heading upwards again, led by the panamaxes. And elsewhere stock prices soar to ever increasing heights.

The IMO 2020 scare led to a two-month boom in bunker prices, which are now lower than where they started before the transition. The trade war has led to a lot of air miles, and tonne miles, that need not have been spent, but now they have, trade is finding different ways to flow around the world. And the coronavirus is a flu, not Ebola, or the plague, and will pass the way of other viruses that have come out of the bat cave before. Some people have lost, some people have won, but nothing fundamentally has changed.

The rest of the world has probably not noticed, but 17 people died from the flu in Greece in the last seven days (January 30th – February 6th), with 48 people admitted into Intensive Care Units. Since October 2019 a total of 38 people have died. The National Public Health Organization (EODDY) has said that Greece is currently experiencing a large number of flu virus infections, especially sub-types A (H1N1) and A (H3N2). “Immunity is reached in 15 days,” they say, stressing that the flu period normally lasts until mid-March. This influenza, like the coronavirus, is transmitted from person to person when a patient coughs, sneezes or speaks, spreading the viruses through the air.

Proportionally, considering the population of Greece (10.75 million), this is a far more dangerous epidemic than the coronavirus in China (1.4 billion): the latest figures from there are 31,203 confirmed infections, 637 deaths, and 1,540 recoveries. But here in Greece, we have yet to see empty streets, or towns and villages being quarantined. There are a few more surgical masks being worn on public transport, but I suspect that this is because of media reports of the coronavirus, rather than the good old-fashioned flu.

The disruption caused at present is human driven – the measures put in place by the authorities - rather than actually caused by illness and death. These restrictions on movement are temporary, and cannot be maintained forever. There will not be an ‘all clear’ signal for the end of the coronavirus, but we shall learn to live with it before it ceases to be significant. The trade wars are not wars at all, but the frictions caused as the world moves on. There will always be problems with bunkers and I expect we will still be talking about the latest Brexit news in ten years’ time. But that does not mean we should hide away underground and wait for it all to blow over. Instead, let’s borrow a little of that British Blitz Spirit, and keep calm, and carry on.

Simon Ward

www.ursashipbrokers.com