Home / Shipping News / Dry Bulk Market / The Global Recovery’s Delay Will Impact The Shipping Market’s Recovery

The Global Recovery’s Delay Will Impact The Shipping Market’s Recovery

As long as lockdown measures apply to many parts of the world, the recovery of global demand is bound to take much longer. In turn, this will hinder the recovery of the freight rate market, which has been nosediving for the most part, since the summer months. In its latest weekly report, shipbroker Allied Shipbrokingg said that “we are slowly coming to the end of what has been one of the toughest, most volatile and unpredictable years noted in over a decade for the global market economy. Any past trends and positive have been stalled in their tracks, while we are now focusing on how 2021 will be the year in which damage control is made and a strong recovery can slowly be set on course. We have been seeing a number of positive news come to light over the past couple of weeks in support of this end, something that has helped generate a renewed sense of optimism in shipping markets as well”.

Source: Allied Shipbroking

According to Allied, “that’s not to say that we don’t still have numerous hurdles to overcome. Just this week we saw further strain being pulled on US-China trade relations, as the incumbent President, Donald Trump unveiled an executive order prohibiting U.S. investments in Chinese companies that are owned or controlled by the Chinese military, with a list of 89 Chinese aerospace and other companies with apparent military ties now rumored to be close to being issued. This, as expected, had Beijing issuing an imminent and strong critic on the matter, giving a sense of how relations have now further soured. This new ban also threatens share holdings in these companies by American investors and threatens to create a whole new series of compliance problems for global investors. What makes things worse is that all this has taken place on the backdrop of a worsening global pandemic situation, with the number of new cases still rising rapidly in the US and Europe, while the threat still looming of even stricter lockdown measures being put in place. Yet the despite all these factors weighing down on the market, things are very different from where they stood back in Spring or even where they stood just 1 month prior.

Source: Allied Shipbroking

According to Mr. George Lazaridis, Head of Research & Valuations with Allied, “a light has started to shine at the end of the tunnel, with a surge of renewed optimism being felt as to how strong a recovery may well be for global markets next year. All this optimism has in turn helped driven renewed appetite for speculation amongst global investors. This is something that has also been heavily reflected in shipping markets and particularly that of the dry bulk sale and purchase market. We have seen a large surge of activity take place during the past month, while there has also been evidence of an upward pressure mounting for modern tonnage in certain size segments of this sector. Confidence seems to be surging back into this market despite the overall performance being noted right now in the freight market. This positive tone however has not been shared across all shipping sectors. The prevailing environment in the tanker markets has been very different to the one being seen in the dry bulk space.

Source: Allied Shipbroking

Lazaridis added that “freight rates have been severely hit since the summer months and have been unable to show signs of recovery since. Though overall the average figures for the year will still seem positive when stacked against previous years, given the prolonged bottoming out of rates and the fact that demand for crude oil and petroleum products continue to tumble, general appetite for speculation has all but evaporated for the time being. For the tanker market to be lifted from its current doldrum state it would most likely take a complete lifting of the current lockdown measures in play, so as to allow for gradual renewed demand to emerge from the likes of industries such transportation and travel to pull in a renewed consumption drive. This is likely to be a much longer process than what would be ideal and will be likely played out during the whole course of 2021”, Alled’s analyst concluded.

Source: Allied Shipbroking

Nikos Roussanoglou, Hellenic Shipping News Worldwide

Recent Videos

Hellenic Shipping News Worldwide Online Daily Newspaper on Hellenic and International Shipping