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The objective of the newsletter is to provide you with up-to-date information on the most recent advancements in space and furnish you with market insights derived from data analysis.

TL;DR

• Are Sanctions Really Working to Curtail Exports to Russia ? An Insider's Look Using Dun & Bradstreet Shipping Insights 🇷🇺

• The Dark Fleet, with Michelle Wiese Bockmann of Lloyd's List

• Maritime Data launches Beta Access Program 💥

• 3 ways the shipping industry is adopting predictive analytics

• Oil's Resilience: Oil Demand slows but maintains dominance amidst rising electric vehicles and renewables 🛢️

Are Sanctions Really Working to Curtail Exports to Russia? An Insider's Look Using D&B Shipping Insights

A post by Dun and Bradstreet

The D&B team read an article recently published in the Wall Street Journal titled: “How Sanctioned Western Goods Are Still Flowing Into Russia.” The Dun & Bradstreet Analytics team dove into the D&B Shipping Insights database which spans over one billion shipments since 2014. Here is what we found:

As the world engages Russia in response to the ongoing tensions with Ukraine, its former territory, the implementation of economic sanctions has been a widely debated topic. Many want to believe sanctions work through invoking the force of law. The result of these political actions would lead to countries reducing their engagement with the Russian economy. If the sanctions had the desired impact, shipments to Russia would decrease.

The good news is that exploring the D&B Shipping Insights archives showed a truly clear picture. Sanctions resulted in shipments declining from over 360,000 unique shipments from one hundred distinct exporting countries in 2021 to less than a projected 35,000 shipments from ten countries in 2023.

This analysis indicates that sanctions do work to isolate a country as a punitive response to undesirable actions.

To further validate the conclusion that sanctions are extremely efficient in reducing the imports to an economy by up to 90%, the team looked at the shipment trends globally starting with 2014 shipments.

The retrospective of global ocean exports revealed that container-based shipments enjoyed a steady year over year increase from 2014 to 2021. During 2021, shipments spiked in line with increased consumer spending on physical products as service and travel options were curtailed as uses of discretionary spending as the world responded to the global COVID-19 pandemic.

Starting in 2021 and projected through the remainder of 2023, it is predicted that global shipments will decline by over 30% from the 2021 peak. The fact that exports to Russia declined by more than 90% in the same period, reenforced the hypothesis that sanctions are an effective deterrent.

As data scientists, the team attempted to falsify their conclusion.

The D&B Analytics group brought in a peer committee and returned one more time to the assumptions in the conclusion, Russia’s receipt of shipments is down so the sanctions work. Could there be another scenario where Russia sees a decline in shipments, but sanctions are still ineffective?

The final review explored by the team explored the patterns of imports and exports building from a regional lens. Delving deeper into the numbers reveals a secret world of economic maneuverings and uncertainties.

The challenge for the D&B analytics team is that with the continued success of global corporations as measured through increasing profits, the demand for the products previously sent to Russia needed to flow somewhere. Where could they have gone instead?

The starting point for this analysis began with understanding which countries were most impacted by the sanctions. This is a selective list of the most significantly impacted exporting countries shows a strong effect of the sanctions on the movement of goods to Russia directly.

But does this mean that sanctions worked? Zooming out to the region, the team discovered an interesting reality. There are some winners in global imports. The former Soviet states showed a split result. One group of countries shows a robust growth of more than 20% increase in imports over the past two years.

Taken as an absolute value, a 20% increase over a twenty-four-month window is not immediately a sign of growth. Placed in the context of a global decline in imports and exports for the same period of 30% or more, it raises some questions.

Returning to the WSJ proposal, the D&B team took a broader lens. Rather than looking at shipments directly to Russia, what if there were intermediary countries that were not part of the global consensus to restrict Russia’s economy?

Additionally, using the -30% as the baseline for organic change, all former Soviet States apart from Moldova, Belarus and Turkmenistan are showing signs off an economic renaissance.

The discussion of the three countries that are excluded from the import boon, it seemed clear why these markets were excluded from the shared benefits. Moldova and Turkmenistan are facing extreme headwinds resulting from a disruption political change, ongoing monetary disruptions of exaggerated inflation and reframing of the value of their natural resources.

Belarus also makes sense to the D&B team. With the strategic relationship and geopolitical support Belarus telegraphed for Russia, the Russian shadow had a material impact on the reputation of Belarus as a free economic partner with rest of the world.

This discovery of the former Soviet states' import activity leads to a significant reduction in confidence in the proposed answer to the question: Do sanctions work?

The team feels it is too early to tell if the transition of shipments is a sign of expansion of global trading partners or more disappointing result of introducing a middle actor to act as a go between for a sanctioned entity.

The Dark Fleet, with Michelle Wiese Bockmann of Lloyd's List

The global maritime industry is facing an undercurrent of hidden challenges, brought into the limelight in Christopher Aversano’s latest episode of popular podcast, The Last Dinosaur, featuring Michelle Wiese Bockmann, senior analyst for Lloyd's List Intelligence, and markets editor Lloyd's List.

In this compelling episode, they delve into the murky waters of the "dark/grey fleet," a shadowy sector of our industry that has been largely under-reported until now. Michelle's expertise illuminates the origins, development, and recent surge of the dark fleet, revealing how geopolitics, particularly Iran's evasion tactics and Russia's invasion of Ukraine, have contributed to its growth.3 examples where predictive analytics is impacting shipping

Highlights:

• The "dark fleet" represents a significant portion of the international fleet, operating outside regulatory frameworks and posing numerous risks.

• Iran's evasion tactics laid the foundation for the dark fleet, but the Russian invasion of Ukraine caused a significant surge in its size.

• A discussion of the methodology used to track the dark fleet and discusses the challenges introduced by Russia's involvement.

• Michelle elaborates on how geopolitical changes like the invasion of Ukraine have shifted global trade lanes, with an increased global distribution of Russian diesel.

• The episode concludes with a discussion on the need for diversity and better self-promotion in the maritime industry.

BETA ACCESS PROGRAM 💥 | 4 Beta Programs providing exclusive access to brand new solutions from our network of vetted partners.

For full details on all Beta Access Programs visit: https://www.maritimedata.ai/beta-access-program

BlackSky launches proof of concept, MCS to address the rise in deceptive shipping practices and support compliance and sanctions professionals with the tools to track vessels during periods of darkness.

• Multi-Source Data Integration

• Real-Time Vessel Identification and Classification

• Continuous Vessel Custody

🗓️ Deadline for Submissions: July 15th, 2023

Register your interest in receiving trial access

Marine Benchmark builds on 20+ years of marine fuel modeling experience to bring us Benchmark Carbon, a comprehensive solution that accurately tracks Carbon Intensity Indicator (CII) and Attained Emission Rating (AER) for all vessels in the world fleet.

• Monitoring CII & AER Rating

• Current Year CII and Year-to-Date Trend

• Future Prognosis and Filtering

🗓️ Deadline for Submissions: July 15th, 2023

Register your interest in receiving trial access

CSBL and Maritime Data are collaborating to create to a master database of the executed fixtures contributed by the 14 participating brokers.

• Dry bulk fixtures covering up to 40% of certain markets.

• 10,000 - 20,000 uploads per annum

• Historical records for backtesting

🗓️ Deadline for Submissions: July 28th, 2023

Register your interest in receiving sample data

Co-Founder of Commodity Flow launches DataCutter to help lower the techincal barriers of working with AIS and other big maritime data sets.

• Data Transformation and Enrichment

• Scalable and Robust Data Handling

• Enhanced Interpretation Capabilities

🗓️ Deadline for Submissions: July 28th, 2023

Register your interest in receiving trial access

3 ways the shipping industry is adopting predictive analytics

A post by Nexocode

Nexocode is an AI development company that specializes in developing machine learning solutions, including predictive analytics, anomaly detection, and dynamic pricing engines for the shipping and logistics industry. Apart from supporting the full life-cycle of AI product development, the Nexocode team supports clients with building robust, scalable cloud infrastructure and developing integrations with other solutions.

The maritime industry is currently undergoing significant changes, driven by the emergence of new technologies. Predictive analytics has become increasingly vital in the shipping process. The article explores the impact of predictive analytics in the maritime industry and highlights its importance as a potentially valuable tool for shipping companies.

We picked out 3 particularly interesting use cases:

For the container carriers, having access to precise forecasts on supply and demand is a priority as it conditions their financial safety and efficiency. Particularly nowadays, when the global supply chains are getting increasingly affected by the changing geopolitical situation, predictive analytics becomes a powerful weapon against business trouble.

Using socio-economic data (GDP, population, median income, employment rate, etc.) as input and pairing them with detected trends and seasonality in the time series data as well as geopolitical factors, shipping companies estimate the realistic container demand instead of relying on historical data.

For ports and shipping companies, predictive modeling is a win-win. Having accurate predictions, the carriers can reduce the number of empty containers and prepare for the increased demand with additional investments or routes. The ports, on the other hand, end up being at lower risk of congestion since the shipping companies feel safe enough to rely on just-in-time management.

Everyone – the on-land delivery companies, wholesales, and e-commerce shops, and, of course, the final customer – wants to know when and where the shipped goods will arrive. A big part of the consumers may even abandon their shopping cart if they do not get the shipping time estimation right away. Introducing predictive analysis for timing and locations is thus in everyone’s interest.

After identifying the relevant inputs (which may include such features as gross weight, route, the destination port, and so on), the model trained for time or location prediction can come up with accurate output that help the carriers plan their routes, and the ports – effectively manage the offloading process. There are quite some machine learning models that can serve that purpose. Random forest and linear regression seem to be the most popular ones with their relatively fast training.

Interested in learning more about predictive shipping solutions?

Even though dynamic pricing model isn’t favored by the customers, it’s becoming increasingly common. With so many dynamically changing factors influencing the final cost of the shipping, the dynamic pricing models save the shipment carriers from operational inefficiency. In such competitive times, they cannot just preventively overcharge, and charging too little compromises their financial safety.

How dynamic pricing strategy works? The model estimates how changing variables impact the price and possible demand for profit maximization.

With dynamic pricing, shipping companies can adjust to the demand-supply dynamic. Such models estimate the cost of the shipping service in real-time, updating the prices at least a few times per day. For example, when the cost of oil suddenly peaks – what has happened a few times in recent years – the model adjusts the estimation, preventing the customers from ordering service at an irrelevant price.

Machine learning algorithms get trained with structured and unstructured data (including the time-oriented and location-specific data) to find the correlations between prices and different variables (like route, distance, fuel cost, demand, season, etc.). This way, they learn to predict relevant prices that fuel sales while sustaining financial security and growth.

Oil's Resilience: Oil Demand slows but maintains dominance amidst rising electric vehicles and renewables

A post by Neil Atkinson

Recently, two important bodies have published interesting reports that, taken together, show that whether it is desirable or not, the world is going to be using a lot of oil for a long time to come. The International Energy Agency’s report Oil 2023 – Analysis and Forecast to 2028 takes a medium-term view and bravely concludes that global oil demand will peak in 2028 or very soon after. The IEA also suggests that there is sufficient investment in the upstream oil industry that ample supply will be available to meet demand. The UK-based Energy Institute published their Statistical Review of World Energy (formerly published by BP plc). This is a treasure-trove of fascinating data and one of the starkest numbers is that in 2022 fossil fuels contributed 82% of global primary energy consumption. \This shows extraordinary resilience compared to a share of 85% in 1973, the date when oil prices saw their first major spike and changed the whole oil picture. So much for the energy transition.

Looking at the IEA’s report, one of the striking conclusions is that oil demand will continue to rise through to 2028 reaching 105.7 million barrels a day compared to an expected 102.3 mb/d for this year. OECD demand will fall back and developing countries, led by China and India, will provide all the growth However, by the latter part of the forecast period the annual rate of growth will have fallen to only 0.4 mb/d versus the stellar post-covid growth of 2.5 mb/d in 2023.

A factor behind the dramatic slowdown is the rise in the number of electric vehicles on the road and the continued improvements in the efficiency of internal combustion energy vehicles. According to the IEA this will lead to a peak in gasoline demand as early as 2025. If they are correct, in the period 2022-2028 nearly 8 mb/d of oil demand will have been avoided. This is a brave outlook, and my view is that rising costs for inputs into electric vehicle manufacturing are likely to restrain the pace of uptake by customers. Another noteworthy data point is that due to the ongoing popularity of working from home, in the period up to 2028 about 0.4 mb/d of oil demand will be lost each year as white-collar workers spend two or three days a week at home.

For shipping, the IEA expects that seaborne freight traffic will grow by an average of 3% per year from 2022 to 2028. Bunker fuel consumption will rise by 0.3 mb/d by 2028, reaching 4.5 mb/d. The rate of growth will be restrained by tightening efficiency standards imposed by the International Maritime Organisation. The IEA used fleet composition data from the United Nations Conference on Trade and Development (UNCTAD), to reach the conclusion that the average gain in fuel efficiency of global shipping could approach 10% during the period to 2028 depending on the rate of retirement of older, less-efficient vessels. Another interesting data point from the IEA report is that although marine fuel consumption will grow by 0.3 mb/d by 2028, if the IMO regulations are not fully implemented the growth could close to 0.5 mb/d.

With oil likely to remain the dominant fuel for personal vehicles, trucking, shipping, aviation and petrochemicals, the IEA’s outlook for a dramatic slowdown in the rate of growth of demand in just a few years from now is regarded by many as questionable. This brings us back to the Energy Institute’s Statistical Review of World Energy. For all the huffing and puffing about investment in clean energy, the stark reality is that the big picture for energy has changed little in fifty years. While it is possible to foresee a gradual decline in fossil fuel use in the decades to come as government policies have an impact, the reality for now is that new energy sources are an addition to the global energy picture with little in the way of actual replacement of fossil fuels. For sure, in power generation renewables are growing their share but as the Energy Institute shows, they contributed only 14.4% of global generation in 2022 and meanwhile the use of coal and natural gas in the sector both reached an all-time high.

There are of course enormous uncertainties in forecasting energy markets with little certainty where oil prices will be next week, let alone in five years’ time. The IEA deserves credit for trying to paint a picture of the oil market in 2028 and I urge anybody interested to download Oil 2023 – Analysis and Forecast to 2028 from the IEA website. It’s free!

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