Year of Recovery in Rates, Brought New Records in Ship Sales Volumes

A recovery in freight rates, combined with underinvestment during the past 12-18 months, has led to a remarkable rise in ship sales. In a recent note, shipbroker Allied Shipbroking said that “it has been a year of recovery for shipping markets, while the remarkable come back change has led to a series of records being set in terms of both earnings and investments. Nowhere has this been more evident than in the secondhand market, where we witnessed new record levels of activity taking place”.

According to Allied’s George Lazaridis Head of Research & Valuations, “remarkable enough it wasn’t the highly profitable containership market that drove most of this renewed appetite and strong sales (with most of the attention there directed towards newbuildings). The dry bulk market, which already accounts for the lion share in SnP activity, was the one which saw the most significant boost in transactions, noting a 64% increase from 2020 and being at the same time 34% higher than the recent peak of 2017.

This remarkable increase has been in the making since the 4Q20, with momentum rising and reaching its peak in May 2021 as freight market conditions continued to improve and drove a rampant appetite that was already in full momentum. In terms of which sub-markets of the dry bulk sector drove all this activity, in its majority it was the Panamax, Handysize and Supramax markets that showed the biggest gains, with increases of 80%, 75% and 47% respectively compared to 2020. The Capesize market seems to have shown most of its gains in 4Q20, leaving little growth in activity during 2021, while its relatively poor freight market performance for the first half of the year compared to the rest of the dry bulk segments, inevitably led to a level of activity below what was seen in 2016 and 2017”.

“Yet as it seems, we have already started to see a scale back from all this frenzy buying, with 4Q21 already scaling back its numbers and asset prices seemingly locking into place for the time being. The extensive levels of uncertainty which are still overshadowing the market and the slight retreat in charter rates from their summer peak, have brought back some caution, while given current asset price levels, the risk undertaken by most new opportunities seems to be considerably higher than what it was a year ago. That’s not to say that we don’t see things remaining relatively bullish moving forward. It’s just that we seem to have lost the fast-paced upward momentum enjoyed throughout most of 2021, while 2022 looks to be a more normalized ground given all indications seen from global markets right now. Wishing all our readers a prosperous New Year full of health and happiness”, Lazaridis concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide