Page 42: of Maritime Logistics Professional Magazine (Mar/Apr 2018)

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BULK CARRIER REPORT – where iron ore, coal, grain and widely followed indices of drybulk market health saw record other raw materials dominate – is lows. That said, in mid 2018, the outlook is brightening.

The still wrestling with a decade-long Indeed, optimism is returning to the beleaguered market, hangover that began with the fnan- according to the latest Shipping Confdence Survey from drybulk cial collapse of 2008. A recovery Moore Stephens. The London, UK-based international ac- sector ensued in 2010 and 2011, but, fol- countant and shipping adviser reported that “Shipping lowing the time honored trade pat- confdence reached a four-year high in the three months to tern, the brighter outlook brought about an avalanche of new end-February 2018” based on a periodic survey of market build orders and another drop in rates ensued. The pattern, participants, with an emphasis on intentions to make capi- with cycles each extending approximately three to four years tal investments. Mr. Richard Greiner, Partner at Moore Ste- in duration, repeated in 2014 – when a slightly stronger mar- phens, adds, “Net freight rate sentiment is positive in all main ket sowed the seeds of its own demise … yet again. tonnage categories … it increased both in the drybulk and

Volatility, brought about by the intersection of demand and container ship trades.” supply, has been a hallmark of the drybulk markets; indeed, ‘Shipping Confdence’ is one thing, but these expectations market observers looking back see the boom of 2003 to mid- can be quantifed. London’s Baltic Exchange, which produces 2008 as corresponding with the peak of a “commodity super extensive data on drybulk hires and freight, looked at the mar- cycle.” Prior to that, the last super cycle peaked circa 1980, ket for forward physical freight, saying in a late March edition and before that, during the 1950s. Over time, commodity of its Bulk Report, “Period rates were still being agreed at demand predictably ebbs and fows. And, while recent years numbers considerably higher than spot values. The New Or- have seen growth, these gains have albeit come at a slow pace, leans, a Capesize bulker of 180,960-dwt, built in 2015, fxed and have been no match for the robust increase in both num- to charterer SwissMarine for 11 to 13 months trading with bers and tonnage associated with sector newbuilds. 25 March delivery China at $21,000 daily, with other well- described ships having achieved similar levels.”

Sentiment Brightening

Conversely, spot hires for Capesize ships in early March

Regardless of commodity demand, it is the supply side – were around $12,000/day, so a savvy charterer willing to take the global feet – that continually sees overbuilding. Because on a vessel at a daily hire of $9,000/day above spot levels ships have a useful life of 20 to 25 years, they will be around shows considerable optimism. Or, if you are a pessimist, it – cluttering up the market, for multiple trips through the eco- arguably shows desperation, a fxture on the wrong day, with nomic cycle. So it went in 2016 and into early 2017, when the wrong options and other parameters.

42 Maritime Logistics Professional March/April 2018 | |