The Global Lockdown – as the International Monetary Fund has termed this year’s recession – has also put the brakes on secondhand purchases. It’s not just that shipowners want to hold on to their cash in this economically uncertain period, it’s the difficulties of sealing a deal in these quarantined times – how to inspect a ship, how to get crew in place? As a result April is shaping up to be one of the most quiet months on record for concluded ship sales.
Brokers have been advised by the International Transport Intermediaries Club (ITIC) that they should consider ship valuation wordings due to the coronavirus.
During these unprecedented times, ITIC recommends that brokers should consider stressing the current unusual market conditions in their ship valuation certificates.
Following the financial crisis of 2008, brokers providing valuations included additional wording in their certificates to reflect and take into account the state of the market at the time. These wordings highlighted that the lack of comparable sales made the assessment of values uncertain.
Considering the current ongoing coronavirus outbreak and the disruption to the market, a number of brokers are reviewing their valuation certificates.
Noticeably in a weekly report from earlier in the month, Clarksons, the world’s largest shipbroker, added a proviso when providing S&P details.
“Due to the market turbulence originating from the current pandemic, the sale and purchase market is becoming increasingly complex including a widening of price ideas between buyers and sellers,” Clarksons noted, adding that it’s important to take this complexity into account when viewing price assessments and indices.
“The almost non-existent activity on the SnP front is evidence of the uncertainty that continues to prevail across all sectors, while as the gap between sellers’ and buyers’ ideas remains fairly wide in most cases, we expect the market for the remainder of April to be equally quiet,” Greek broker Intermodal noted in its latest weekly report.
On the dry bulk S&P market, Allied Shipbroking witnessed a further plunge of activity this past week.
“The uncertainty that dominates the global economy at the moment and the poor freight market despite the last few weeks of improvements are factors that have diminished buying appetite. However, in the case that requested prices start to drop significantly in the following weeks, we may see a slight gear up in action,” Allied Shipbroking said, adding that things have been more stable on the tankers side as the freight market continues to fluctuate within a satisfactory range in almost all segments.
“The COVID-19 situation may have curbed some interest from buyers, but the healthy fundamentals, especially after the ramp up in oil trade noted lately, will have as a result the upkeep of buyers’ appetite,” Allied Shipbroking said.
In the containership S&P market, according to Braemar ACM Shipbroking, interest remains subdued as the lockdown continues, however, both buyers and sellers have been actively working together to find solutions to delivering vessels.
“Questions remain over charter rates in the short term, whilst so far they have remained relatively stable in comparison to the decline in volumes it is safe to assume that with the number of blanked sailings from the lines along with the large amount of tonnage being redelivered that a correction in rates has to come at some point,” Braemar ACM suggested earlier this week.