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Trump in a different light

Trump in a different light

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There has been so much knee jerk, doom and gloom drudgery written in the days following the election of Donald Trump as US president, some even on this site.

Personally, I think most people have got it wrong when it comes to the Donald and what his rise means both globally and indeed from a shipping point of view.

Populations are fed up with endless politicians and administrations whose monetary polices only benefit the 1%. Trump and Brexit are just the beginning. I can sense similar vibes across many European nations – most of whom have rather important elections coming up – such as big economies like Germany, France and Italy.

The fact is for much of the West, middle class income has stopped growing. If you look closely at what Trump wants to do economically such as his plans to change the tax system, this will inevitably have some trickle down benefits. Moreover, wooing big American firms back to the US to pay tax and invest at home will help stimulate growth.

Long term, getting the middle class growing is clearly a good thing for shipping – you just have to look at the booming economies across Asia and now also Africa for this demographic fact.

Then there are the billions of dollars he’s earmarked for infrastructure projects – and no, this is not just a wall across the Mexican border! Infrastructure improvement in the US is urgently needed; most of it dates back to the 1930s and 1940s. This work will also help the US to grow again – more activity immediately and more efficient domestic logistics systems will further help.

Trump bashers will no doubt at this point raise the issue of protectionism, and the risk of trade wars. I feel that this is unlikely – and even if there is the odd trade spat it is likely to only hit the container segment, a sector that I have been downbeat about already for ages. In fact, I do not see the container trade growing for a long time. I have always been sceptical of these big ships – you just cannot fill them all. That said, I am still bullish on the sub-3,000 teu sector as it’s clear that is a very old and comparatively underbuilt fleet.

So that’s my container predictions, what else do I see happening in the year ahead? I am still a big believer in the growth stories coming out of Africa and Asia and believe that in 2017 the demand side for shipping will be good, despite an anemic picture in Europe.

Oil prices remaining low is potentially fantastic. Low energy prices drive industries and consumerism around the world.

Nevertheless, tankers I feel are in for a tough year with the age-old shipping story of supply coming to kill the golden goose once again, especially for VLCCs.

Dry bulk has clearly bottomed out – and I am a fan of ships of sizes below the post-panamaxes in particular for this sector.

It has unquestionably been a tough year for shipping and it remains very hard to make money in this industry. However, with ship prices so, so cheap there are bucks to be made by those agile enough to dart in with asset plays and with some staying power. The 30% increase in prices for good Japanese built bulkers in the last six months is a good sign. As ever, there’s never a dull day in shipping.

This article first appeared in Maritime CEO magazine. You can access the entire issue by clicking here.

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