A glance at secondhand sales done this year shows clearly many view dry bulk as bottoming out price-wise, and investors not as confident in the brittle tanker markets as the listed giants of the sector would have you believe.
Analysis by brokers Intermodal shows that there have been 234 bulker S&P deals done this year, more than twice the 113 tanker sales completed.
“This shows a correlation between market confidence and opportunity recognition. To be more specific there is a lack of confidence on the wet side and a clear acknowledgment of investment opportunities on the dry side despite of the dismal earnings,” Intermodal said in a weekly report.
Almost every bulk carrier that enters the market gets sold as long as it is built post 1997, Intermodal stated.
“[B]uyers seem willing to bet big when they believe that the absolute market bottom has been reached and that psychology is at its worse,” the broking house commented on the volume of dry bulk sales.
The opportunities in the dry second hand market are for the cash buyers , since most probably, they have to operate the ships at a marginal loss for the next couple of years. Of course they will be the winners of the next cycle.
“[B]uyers seem willing to bet big when they believe that the absolute market bottom has been reached and that psychology is at its worse,”
Interesting comment. Yes, indeed, it is just that…another bet. I don’t disagree at all that there are tremendous opportunities in the “purchase” of excess tonnage today. Especially by shrewd buyers that have the financial resources to weather this economic storm that we are still in.
The comment above by Thomas is spot on.
My question for for Brokers Intermodal is; “What economic indicators are present today, that cause you to believe that we have reached bottom?” All the experts never saw the oil and gas sector collapse as it did this past year. The same poor analysis never saw the shipbuilding collapse in Asia. The experts in the global shipping industry (including owners and operators) never had the sense to monitor market demands (or LACK thereof) to slow their building binge either. MORE and BIGGER seemed to be the meme they all followed, eh?
I for one see nothing happening on the horizon that is going to change the economic fundamentals on a global scale such that our industry will be positively impacted and trade in all markets will grow again. I don’t want t found like a pessimist. But let’s be pragmatic about all this. And honest.
Does Broker Intermodal have the sense things will turn around soon? Or is it wishful thinking. In America we are poised to dramatically change our political picture (yes!) or continue with 4 more years of economic cancer. It’s not about whether you love or hate Trump or Clinton. Its about what will happen to a country that is the biggest economic machine in the world? We buy and sell everything from the everyone else in the world. Our problems (and successes) are shared by everyone else. And our industry clearly is impacted by that.
I see nothing happening in the next few years that will have any significant impact on global shipping in a positive way that will place buyers of second hand tonnage in a good financial position. “Psychologically” as an American, if Clinton takes over the White House, our country will be subject to 4 more years of economic malaise that we (and the rest of the world) have suffered through the last 8 years. This will not be good for anyone’s psychology.
A lot of experts out there shoreside prognosticating about the future. Out here on the water, many Captains and crews are fearful of their livelihood and future. Emails from the office daily (hourly) suggest to ship Captains (and Chief Engineers) to closely reign in expenditures and operational costs. Be careful. These brand new ships that are being maintained and operated on severely tight budgets, will fail you just as quickly as some old rust bucket…if you don’t invest in it’s proper maintenance. We see that everyday…already. How many more years can owners & operators keep this up, before it has negative consequences on your “relatively” new ships?