This week I have become a small-time media star, and found the experience at turns enjoyable and unnerving. I was asked to speak by both Intergr8, the bunker traders, and BIMCO, the maritime organisation in Copenhagen on the current state of the dry bulk market. I found out a few things about myself:

–         I find it difficult to talk when I don’t know exactly who I’m talking to

–         I don’t find it difficult to share an opinion once I get going

–         I find it frustrating that I can’t get to the point speaking as well as I can when writing

–         I don’t like the sound of my own voice when I hear it played back to me

–         I need to look into the camera and stop moving around all other the place

–         I enjoyed it very much, perhaps too much

–         I still don’t know what’s really going on in dry bulk, but I know it’s different, and I know it’s hot


All that said I found the experience very useful. If you want to see what I said in both events, please see the following links:

If you cannot face listening to me for periods of time that you will never get back, here is a short summary, in writing, for the record:

This Is Different

I have not seen a market like this before, ever. This is not surprising, as history never repeats itself, either tragically or farcically, but I see it as an inverse mirror image of what happened in 2015-2016 when supply caught up with demand, and the freight market collapsed into a deep hole and struggled to get out of it. Now demand has caught up with supply and charterers are chasing after ships, which is a welcome change for owners. They now have many happy choices rather than a few awkward ones. That this has happened gradually until the balance of play was emphatically tipped into the owners’ favour is evidence, in my view, that this is not a mere blip, or spike, but has strong foundations. Look up supply inelasticity in the text books. That it also happened bottom up, and caused, momentarily, another inversion when the biggest earners were the smallest ships, is also unique and shows a refreshing change in that demand is global, and diverse.


This Is Not A Commodity Supercycle

Talk of a commodity supercycle appeared in the financial press, coinciding funnily enough with the beginning of the freight market boom, causing some people to draw a link between the two. This is not so. Firstly, in financial terms, a commodity supercycle is talking about the prices of commodities, not the amounts moved. In shipping we want to know from where, to where, how much volume and for how long, in other words tonne-mile demand. Talking up the share price of miners or commodity traders doesn’t talk up the share prices of those owners listed on the stock exchanges, or vice versa. Tonne-mile demand is a much harder thing to work out, especially as it involves time, space, cargo before we even talk about the relative strength of differing economies. Add the spice of sentiment in there, and it is impossible to compute, and therefore impossible to predict.


The Paper Market Is Not The Future

It is an opinion with a price attached crystalised into a contract that helps owners, operators and charterers to hedge their longer-term risks. These opinions change over time, which is why the FFA prices change too. If they were the future – or even vaguely accurate – we would all have to go home.


This Is Not 2003

Or 2006. Or even 2013. This is 2021 and we have a completely different world to deal with. In 2003 and 2006, and even in 2013, China was a completely different entity, a hungry if benign, and rapidly growing infant economy, insatiable in its demand for raw materials. That is not the case now: the child has grown and learnt how to bite the hand that fed it. In any case, this boom is not China driven, at least not unilaterally. It is a big factor but not the only story.



In the two hours or so that I was talking, COVID was mentioned once or twice, and only then as either ‘this is what happened then’ or ‘imagine what happens when the economies really start rolling.’ The US Fed predicted 6.5% growth for this year. This is Chinese levels of GDP growth. And the US is still the worlds largest, most significant, and connected economy. This matters.

So after all that, I concluded that this market was here to stay, fundamentally, because I cannot see where the fall in demand comes from. My friend Peter Sand at BIMCO agreed, if only in the short to medium term, but he has to be more cautious perhaps.

I was accused, jokingly, that as a sale and purchase broker I always have to be positive. I guess I have that tendency, as I recently discussed here. But as regular readers will know, I am not just going to tell a story to get a deal. So it may carry more weight here than on a webinar when I say that I do think that we are in for the long-run, meaning months and years, rather than days and weeks, until there is a fundamental change in the demand and/or supply of ships, either in the water, in the spot market, or in the S&P market.

And I repeat, if you want to buy a ship now, you should get on with it, unless you can wait until later this year, or next year, or the year after. There are deals to be done to be sure, and they continue to make sense as the freight market rises. But the freight market cannot rise forever at the same rate, and prices become less and less attractive as they get higher and higher.

The most important thing I learned this week however by preparing for my discussions with Matt and Peter, and testing my theories with them was that I believe them. Granted I was made very welcome, and treated with respect, but I do think that there is some substance to my opinion, and I can defend it. I am not saying this because I want to do deals, but because this is a market that has been a long time coming, and whilst it may not always be booming the way it is now, it will remain strong and positive for some time to come. Until it doesn’t. In the meantime, I will consider working on my camera profile. Or not. On reflection, some things are better just left well alone.

Simon Ward