Intermarine Inc.

Intermarine Inc.

President and chief executive

www.intermarineusa.com

The almost-universal rise in global freight markets is affecting all segments of trade, including project and breakbulk cargoes. In 2004, the ability to maintain reliable and cost-effective transport for project-cargo customers will rapidly become a much greater challenge.

The unprecedented boom in the bulk ship charter market has seen charter hire rates for these vessels increase by as much as 400 percent. This pressure has also significantly affected the cost and, more importantly, the availability of multipurpose tonnage. As a result, operators relying solely on spot charters are having difficulties in meeting commitments and-or maintaining regular service.

Similarly, many project forwarders must re-evaluate their approach to pricing future cargoes. Where in the past they could generally count on last-minute vessel space being available at basement prices, this new market requires a policy of securing proper carrier backing and is bringing a revival to the near forgotten term, "book early."

In the end, the carriers best-positioned will be those with a large, modern fleet of vessels that can be supplemented with additional charter tonnage as and where it becomes available. This ability will allow the carrier to enhance its service capability while still providing reasonable rates in a very strong market.

Of course the key ingredient needed to accomplish this is knowledgeable and innovative people. With vessels in high demand, economic transport can only be achieved through creative and efficient scheduling. A fleet cannot afford to be fixed in a structured, merry-go-round schedule. Each voyage must be tailor-made to not only meet the specific delivery requirements of the cargoes at hand, but to ensure the most economic use of vessel time.

In closing, 2004 should see rising project-cargo volumes and limited vessel resources, which will result in higher freight rates.