User:Snorre Blix

MARKET STRUCTURE
Livestock trade by sea is very small and specialised trade. There are only a few major players in the market, and the trade is heavily influenced by political decisions concerning the transport of live animals. Even though the livestock trade by sea is a very small trade in the context of international trade and even in the context of international meat trade, the livestock export trade is a billion-dollar trade for the major exporting countries in the market; Australia and New Zealand. The main trade is between the Middle East region, with countries such as Kuwait, Saudi and Dubai, and Australia. This long haul livestock trade has developed because the religious rituals of Halal slaughter require live animals. The two most important animals traded are cattle and sheep. Pigs, which are an important commodity in general meat trade, has proved to be unsuitable in long haul operations as they easily get stressed with its damage to the meat. The export value of the livestock trade from Australia is a $1.26bn dollar (1997/98), generated by 511,000 head of cattle and 7m sheep. In addition to the trade with the Middle East there is also a substantial trade with other Asian countries such as the Philippines and Indonesia. In recent years North African countries have also imported live animals from Australia. In a much smaller scale other types of livestock are also traded by sea, including other countries such as the U.S.A, Canada and Britain. However, this trade is much concerned with breeding animals thus being quite insignificant in terms of volume, although the value is greater per animal.

The trade from Australia and New Zealand is dominated by Kuwaiti and Dutch operators with ‘KLTTC’ (Kuwaiti Livestock Transport & Trading Co), and [‘Vroon BV’] as the two most important ones, with a total fleet of 63,675 dwt and 47,533 dwt respectively. There are also several other operators running out of Saudi such as ‘Saudi Livestock Transport’ which in fact operates the largest livestock carrier in the world, the Mawashi Al-Gasseem, a 46265 dwt carrier with the capacity of 125,000 sheep.

DEMAND
The demand for livestock carrier capacity is obviously heavily dependent of the volume of live animals being exported. Over the past years the trade has been relatively stable. However, there has been five-year suspension on imports of sheep from Australia to Saudi due to health reasons. In addition to this, long haul transport of live animals has also been under heavy criticism on sheer animal welfare grounds. These are two examples of the fact that the trade is vulnerable to political issues and decisions, hence distorting the usual dynamics of a market. It is also worth mentioning that ‘KLLTC’, arguably the most important player in the market, does not only operate their own vessels but also owns the cargo and the farms on both sides of the Indian Ocean. This may suggest that entering the livestock carrier market can prove difficult.

Westpac Banking Corporation’s Agribusiness Dept. expects, without stating any figures, a growth in both cattle exports and sheep exports into the next millennium due to the recovery of the South East Asian economies and the fact that the export of sheep to Saudi is expected to resume in year 2000. The industry has also taken measures in order to improve standards and animal welfare. These measures may improve demand for livestock carrier capacity in two different ways. Improved standards in the whole transport chain will hopefully change the image that people in general, and indeed the animal welfare movements, have of the live animal trade by sea, thus making it more acceptable with long haul transport of livestock. Under such conditions a prosperous development of the trade is more likely and the total demand for livestock carrier capacity will increase. The other way improvements of standards can have on demand of capacity is that the current tonnage may not be adequate for the new standards, thus creating a demand for modern ships.

SUPPLY
For a small market as the livestock market it is very difficult to interpret from any particular trends or tendencies regarding the development of the trade. The age profile does not show any particular newbuilding peaks of the past. In fact using the year of build is probably not appropriate as most the livestock carriers are converted general cargo vessels, tankers or car-carriers. Even passenger ships, ferries and bulk cargo ships have been converted to serve this trade. However, in Fairplay May 1999, ‘KLTTC’ states that they wish to replace their 1973-built Al Kuwait (118,000 sheep) with a fast converted car-carrier with a capacity of about 80,000 sheep. By doing this ‘KLTTC’ will be able to cut down on the journey time, thus expenditures on animal feed and water, and as a result being more competitive. This may be a response to demand for faster and modern vessels where a zero death rate for the livestock is the only acceptable rate. It is interesting to note that the replacement of Al Kuwait will have less loading capacity than its predecessor. In fact, the largest ship built after Mawashi Al-Gasseem (46,265 dwt) was built in 1977 and has a dead-weight of only 26,726 tonnes. And the two other ships ever built in the same size as Mawashi Al-Gasseem, the Al Qurain (1967) and Azak II (1967), have been scrapped without any similar replacement. After 1980 there has not been built any livestock carrier over 15,000 dwt and most of the new carriers entering the market are within the range from 3,500 to 12,500 dwt. This does not imply decrease in total capacity as the ships go faster and therefore can make more voyages, creating a more constant flow of livestock.