With so many commentators broadcasting to the marketplace, the content-rich eco-system supports value added comparing and contrasting, rather than lamenting about “too much information”. The experts do not always agree; it is the differences in their views- not just the actual opinion of each expert, which helps readers identify pressure points and fulcrums around which a market could turn, or not.
The container shipping sector has been an attention-grabber, for me, because of the interaction of exogenous influences on the normal stuff such as fleet sizes and box volumes. A Twitter posting by commentator Olaf Merk, taking the 50,000 foot view (maybe we should say “the 22,000 TEU view”) of shipping and its role within bigger trade currents, referred to “The End of Globalization as We Know It.” He pointed to a paradigm shift that transcends supply of vessels, and demand for them, which grew at a multiple of less than the anemic global GDP growth.
A trio of reports by industry insiders provides visibility into the sector, though lacking the peripheral vision into the mind games- a second cousin, perhaps, of market sentiment, that will be played vigorously by political figures and trade ministers during 2017 and beyond. Mr. Merk’s views provide a much needed context to frame the views of the experts.
In a piece Twittered around by a publicist for Maritime Strategies International, the obvious salutary impacts of more scrapping amidst , sensibly, backdrop of hoped for trade growth post 2017 was stated. MSI acknowledged that “supply side adjustments” - consolidation through mergers, or alliances - are a lever that can be controlled. Importantly, the authors drew the distinction between liner operators, who may benefit as trade grow,s and charter owners, who will continue to get buffeted by both downward cascades, replete with vessel redeliveries and financial headwinds.
Similarly, Alphaliner, another liner expert, noted in a recent report that 2017 would be another year on the treadmill- supply hubris would need to be worked off - reminiscent of those post holiday trips to the gymnasium.
Drewry, also with great expertise in the box trades, took a guardedly optimistic view of what might happen with “intense consolidation” and the current orderbook running off. Drewry went so far, in a late December report, as to hint at a coming “Golden Age” for container-line profitability, comporting with MSI distinction between the operators and the charter owners. Importantly, Drewry’s analysts are cognizant of sentiment’s role, with financial analyst Rahul Kapoor, in an early 2017 release, writing: “container shipping is undergoing a massive supply side normalisation after years of supply growth, we expect return expectations to rise owing to the shifts.”
One open question here- I don’t know the answer but wanted to posit the query, is whether political pivots towards protectionism impact regulators’ views on liner mergers, and concentrations of market power? My first intuition would be that pro-business administrations would be pro-mergers, or, at least, less anti-merger, and would indeed support consolidation moves by the operators and carriers. Hence, the hyper component, maybe.
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