Very nice and informative writeup!
http://www.valuebuddies.com/thread-3788-...l#pid86034
If I may add there are 2 more factors for supply: Port congestion and repair docking schedules which usually happens in 2Q low season.
BDIY is also the only index I can recall that collapses 95% in one year. Even the dot com bust was not so dramatic. Prices is much more elastic vs airlines mainly because there is no concept of national carriers in the shipping industry. There is no concept of national pride. In the airlines the loss leaders, usually the national carriers tend to put a floor on the tarrifs... not the case with shipping.
But like the airlines they are burdened with the round trip cost. Sometimes you have to lose money on one trip to make money on the return trip due to the trade dynamics.
Lastly like u said the freight rates forecast is highly speculative. That makes capex plans even more speculative when a new built you order today likely arrives 24 months later. Shippers are essentially deep cycle cyclicals vs normal commodities cyclicals.
Presentation material on:
“
Global Economic Trend and the Market Outlook for the Shipping Industry”
By Dr. Stavros Tsolakis
The MPA Professor in Maritime Economics and Shipping Finance,
Singapore Management University
10-April-2014
http://moorestephens.com.sg/docs/SSC2014...dustry.pdf
________________________________________________________________________________________________________________
Interesting presentation materials which also provide some interesting statistics on:
- Shadow Banking System (SBS) in China.
- PCTC (Pure Car Truck Carrier) market
- Dry Bulk market – demand for iron ore, coals from China and India
7th largest in the world has been managed by "Land Grabber" not Seafarer. And it is going down. If not for AH GONG, i think it has gone forever already.
http://www.bloomberg.com/news/articles/2...ut-endures
Shipping Industry Gloomiest Since 2009 in Survey as Glut Endures
by Bill Lehane
July 6, 2015 — 7:01 AM SGT
The shipping industry is the most pessimistic in six years about its prospects as a fleet surplus persists, according to a survey by law firm Norton Rose Fulbright.
Two thirds of respondents working in the industry said they were pessimistic about its prospects, the most negative outlook since 2009, the London-based company said in a statement. The biggest contributor to their negative view was excess fleet capacity.
While parts of the maritime industry such as the market for hauling oil are surging this year, others are slumping. Rates for delivering Saudi Arabian crude to Japan, a benchmark route, just had the highest first half of a year since at least 2009. The Baltic Dry Index, measuring coal and iron ore freight, had the worst first six months ever.
“Shipping is a notoriously speculative business,” Harry Theochari, the firm’s global head of transport, who has worked in the industry for more than 30 years, said by phone. “We have this huge overcapacity but a lot of shipowners are still going out and ordering ships.”
The survey collated responses from 94 people working across the maritime industry. More than half saw over-capacity as shipping’s biggest challenge, and continuing orders for newbuild vessels has led to increased pessimism, according to Theochari.
Tanker rates from Saudi Arabia to Japan averaged $63,476 this year, according to Baltic Exchange data. The Baltic Dry Index averaged 627 points, the lowest for the start of a year since it was first published three decades ago.
Depends which segment you are in.......
During the two year base period under the new employment, FSL Shanghai’s net daily rate represents a 54% increase while FSL Hamburg and FSL Singapore’s net daily rate represents a 31% increase for each vessel as compared to the previous time charter agreements.
FSL Trust announces new time charter contracts for three tankers worth up to US$61 million
http://infopub.sgx.com/Apps?A=COW_CorpAn...c880ef735c
Uni-Asia executive chairman Michio Tanamoto added: "There is limited supply of containerships of this size going forward. In the past few years, many liner companies placed orders for much bigger containerships, of 20,000 TEU, for example. The economics of these big vessels were better when the oil price was high."
Reputable publication TradeWinds reported that the Howe Robinson Containership Indexhas recently climbed above 600 for the first time since Oct 2011, a rise of 25% over the past two years.
The index is projected to grow to average over 1,000 in 2017 and 1,200 in 2018, it reported.
UNI-ASIA: Buys 2 containerships for US$36.2 m total
http://nextinsight.net/index.php/story-a...8-uni-asia
(So which listed companies own this size of containerships??? you got to do your homework
)
(06-07-2015, 11:12 PM)greengiraffe Wrote: [ -> ]http://www.bloomberg.com/news/articles/2...ut-endures
Shipping Industry Gloomiest Since 2009 in Survey as Glut Endures
by Bill Lehane
July 6, 2015 — 7:01 AM SGT
The shipping industry is the most pessimistic in six years about its prospects as a fleet surplus persists, according to a survey by law firm Norton Rose Fulbright.
Two thirds of respondents working in the industry said they were pessimistic about its prospects, the most negative outlook since 2009, the London-based company said in a statement. The biggest contributor to their negative view was excess fleet capacity.
While parts of the maritime industry such as the market for hauling oil are surging this year, others are slumping. Rates for delivering Saudi Arabian crude to Japan, a benchmark route, just had the highest first half of a year since at least 2009. The Baltic Dry Index, measuring coal and iron ore freight, had the worst first six months ever.
“Shipping is a notoriously speculative business,” Harry Theochari, the firm’s global head of transport, who has worked in the industry for more than 30 years, said by phone. “We have this huge overcapacity but a lot of shipowners are still going out and ordering ships.”
The survey collated responses from 94 people working across the maritime industry. More than half saw over-capacity as shipping’s biggest challenge, and continuing orders for newbuild vessels has led to increased pessimism, according to Theochari.
Tanker rates from Saudi Arabia to Japan averaged $63,476 this year, according to Baltic Exchange data. The Baltic Dry Index averaged 627 points, the lowest for the start of a year since it was first published three decades ago.