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Analyst Abstract


Liners are printing money by the billion. The year 2021 will go down as historic and unprecedented in terms of container shipping profits as rates continue their Eiger-like ascent.

Drewry’s World Container Index, published last Thursday, saw its steepest climb since its inception in 2012.

Drewry’s composite World Container Index rose a further 15.9% or $1,104 to reach $8,061.65 per feu, which is 332% higher than the same week in 2020.

Rates from Shanghai to Los Angeles increased by more than a third in the space of just one week to $8,548 per feu.

Commenting on the latest record-breaking box figures, Lars Jensen, CEO of consultancy Vespucci Maritime, stated: “I would expect upwards pressure on essentially all headhaul trades.”

Listed global carriers recorded a combined $16.2bn in operating profits in the first quarter this year, with seven of the 10 carriers recording EBIT of over $1bn in the three-month period, data from Sea-Intelligence shows.

Underscoring the record highs container shipping has been enjoying of late, the tallied results mark the the first time that all reporting carriers recorded a positive first quarter EBIT, a period that normally tends to be the slowest for liners. Q2 results are widely tipped to be even higher.

Dry Bulk

Geared ships have been the “star performers” in dry bulk this year, Braemar ACM maintains.

At $31,500 per day, supramaxes are on average earning almost three times what they were in January, and 28,000 dwt handies are currently trading at over $24,000 per day, their most expensive since the boom years of 2008, as new fixtures continue to emerge at levels which were almost unthinkable just a few months ago. Overall, the Baltic Dry Index remains at levels not seen since mid-2010, and has rocketed by 129% since the start of the year.

The solid start to the year for dry bulk is boosted by the declining orderbook.

“Last year’s jump in deliveries represented the peak of the most recent ordering cycle, and with the orderbook now thinning out, the pace of new ships joining the fleet is easing,” Braemar ACM stated in a report last week, suggesting total additions to the fleet so far in 2021 are 31% down year-on-year.

In updated projections made by Lorentzen & Stemoco Research this month, the Norwegian broking house estimates that seaborne volumes of dry bulk commodities will increase by about 6.6% year-on-year in 2021 to surpass the 5bn ton mark for the first time. Accounting for changes in trade patterns, as well as productivity factors such as vessel speed and ballasting as well as port congestion, Lorentzen & Stemoco suggests demand will rise by 9.4% year-on-year to almost 750m dwt on a ton-mile basis, which will raise vessel capacity utilisation from under 83% during last year’s pandemic year to an average of 88% this year, entering the threshold of an exponential rise in vessel freight rates.

Lorentzen & Stemoco is predicting the dry bulk fleet will grow relatively slowly, by only 3.1% this year and over the next two years the net fleet growth is expected at 2.6% and less than 1%.

“That means the vessel capacity utilisation will firm up from this year’s 88% and come into the 90%s, marking an additional change from a charterer’ market to an owners’ market,” the brokerage suggested.

Equally – and typically – bullish is Breakwave Advisors, who expect demand growth for dry bulk shipping to total almost three times the growth in net new supply this year, and although utilisation is still well below the record high levels of the 2000s, Breakwave believes that directionally, utilisation is heading to new multi-year highs that have the potential to push shipping rates much higher.


Credit where it’s due – those tanker owners who took the plunge and installed exhaust gas extraction systems on their vessels are now in a position to crow. It’s only scrubbers that are keeping tanker owners in profitable territory. Without one, you’re losing cash fast this year.

By the start of June, 26% of tonnage in the tanker sector was scrubber-fitted. For VLCCs, this figure stands at 40%, according to data from Clarksons.

The share of the fleet accounted for by ‘eco modern’ tonnage, which Clarksons categorises as vessels ordered from 2012 with an electronic injection main engine, has also risen, now standing at 30% of both tanker and bulker fleet capacity. Notably, more than half of VLCCs and Capesizes are now either scrubber-fitted, eco, or both.

With bunker prices having gradually risen since the Q2 2020 lows, eco premiums, reflecting the savings made from lower fuel consumption, have been increasing, with Clarksons estimates for June 18 for example suggesting premiums of around $7,200 a day for a standard eco VLCC.

Meanwhile, VLSFO/HSFO price differentials have ticked up to around $110 a tonne.

“Assuming consumption of 60 tons per day for a VLCC running laden, savings can now be made of about $6,600 a day burning HSFO on a vessel installed with scrubbers. In today’s market, that is make-or-break for many owners,” Lorentzen & Stemoco noted in a recent report.

The scrubber premium can represent the difference between earnings covering typical opex levels or not.

Clarksons suggests year-to-date spot earnings less opex are estimated at $0.9m so far in 2021 for an eco scrubber-fitted VLCC, compared to -$0.7m for a 2010-built non scrubber-fitted ship.

“Going forward, ‘tiered’ markets look likely to remain a key feature,” Clarksons predicted last week, suggesting tracking earnings across a more varied selection of standard ships is only likely to increase in importance.

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