In today’s perplex market environment, savvy dry bulk owners have managed to profit from quick buy-to-sell trades of second hand bulkers, taking advantage of the appetite for modern tonnage at knock-down prices. As such, those who invested early in the cycle are now profiting from a quick resale just a few months down the line. Meanwhile, more conservative owners have been holding out, until they have a clearer view of things moving forward, as skepticism is still prevalent on the true prospects of the market’s recovery, after years and years of a low-rate environment.

According to Mr. Theodore Ntalakos, Newbuilding/SnP broker with Intermodal, “looking back at my previous end-of-year insights, for the last seven years, in each and every one of them, I begin with something like “there are about 1,000 new building bulk carriers scheduled to be delivered during next year”. Every year for the last seven years the orderbook has been casting a shadow over the long awaited shipping recovery. Despite record demolition activity, despite slippage and cancellations, too many ships were being delivered in the market for too long. As of today, we still have another 990 bulk carriers scheduled for delivery over the next 3 years – about 650 for 2017 only – so many shipping people are still skeptical about the market’s recovery”, Ntalakos noted.

Meanwhile, “on the other hand, at the end of 2014 the orderbook for 2015-2017 stood at 1,800 ships, whilst in December 2015 it was at 1,400! So, provided also that not all of the currently listed new buildings – many have been canceled without this being reflected in the books – will be delivered, we can see that we are on the downhill of Mount Orderbook”, said Intermodal’s analyst.

“We are again at a crossroad, with demand trying to find its support against supply (not only newbuildings, but also new ships waiting at shipyards, lay-ups, and slow-steaming) that can still put pressure on ships’ utilization. However shipping is mainly for investors who rely on directional investing, which simply requires the market to move consistently in the desired direction, which can be either up or down. So, while during the past years only one thing has been proven, that one cannot and should not make any predictions about the market. The latest momentum has shown that, if the mistakes of the past are not repeated, the next two years could give the consistency that our community has been long waiting in order to implement their strategy. Purchases during this year have so far been proven brave but profitable and as such, asset prices have been recently on the rise. Those ships built during the 2000s have benefited the most, and we already have a few cases where a quick but substantial profit has been materialized from buying and selling just a few months later”, said Ntalakos.

Additionally, “another variable that increases complexity in decision making are the upcoming but still ‘immature’ regulations, as well described in one of our previous insights by my colleague Vassilis, which are affecting not only the ship repair market, but also S&P decisions. The blurry scenery only makes some shipowners more conservative or others more speculative. Most owners however are price driven and look to buy older ships where the acquisition cost is still close to historically low levels and leave the decision of whether the cost to invest in upgrading is manageable or not, on how the market will be when the implementation time comes. So on top of our warmer wishes for the holiday period, our quote for the year end is borrowed from the philosopher Epictetus: “Make the best use of what is in your power, and take the rest as it happens”, Intermodal’s analyst concluded.