Ship market trends (Simplified version)

brief introduction:

The market is balanced by supply and demand. When supply exceeds demand, the market will have a downward trend. When demand exceeds supply, the market will have an upward trend. In the ship transportation market, the demand for maritime cargo transportation (demand) drives the total tonnage supply (supply) of ships. When demand exceeds supply, ship profits will continue to increase and drive asset prices upward. At the same time, the market will add new Ship orders and total ship scrapping volume will decrease at the same time. The result of this trend will soon be that supply exceeds demand, at which point the market will move in the opposite direction. The balance between the two forces determines the profitability of the ship.

This book mainly introduces several connections: 1. Net Demand Growth (NDG): NDG = Growth in demand for maritime cargo transportation - Growth in total ship tonnage supply 2. T/F ratio = (Total annual maritime cargo transportation volume)/(annual total fleet tonnage): 3. C/F ratio = (annual new shipbuilding order tonnage)/ (annual fleet total tonnage) 4. D/F ratio = (annual new shipbuilding order tonnage)/( Annual fleet tonnage) 5. S/F ratio = (Annual scrapping ship tonnage) / (Annual fleet tonnage) It takes 2-4 years or more from the signing of a new shipbuilding order to the delivery of a new ship, depending on the ship type and The shipyard’s capabilities are long-term plans for future fleet growth based on the current market. Scraping old ships is the most direct response to the current market, which will quickly reduce the number of fleets (supply). If scrapping is stopped, the number will also rise quickly. When supply exceeds demand, a large number of scraps will reduce the fleet. When demand exceeds supply, discontinuing scrapping will reduce the fleet.

This book also explains the relationship between second-hand ships and ship earnings. Ship earnings directly affect second-hand ship prices. When ship earnings are good, ship owners are willing to invest in second-hand ships to push up ship prices. When ship earnings are low, ship owners are willing to invest in second-hand ships. Willingness to invest in ships will decrease, driving down ship prices. New ships are highly planned and take a long time. When ship earnings are good, ship owners are willing to place more orders, pushing C/F upwards, and new ship prices will move upward at the same time. When ship earnings are low, ship owners The willingness of the East to order new ships will decrease, which will drive the C/F downward, and the price of new ships will move downward at the same time. Almost all the discussions in the previous chapters are based on comparing the current year's values ​​with their values ​​in the last three years.

The final chapter explains the direction of market movement. The most important thing is that after comparing the moving average with the current time, divided into 30 days, 12 months, and 3 years, when the market moves upward, we find that the current value will be more likely to move above its average value. When the market moves downward, the current value is more likely to move below its mean. When the present value crosses its mean, and its mean changes direction, the market is more likely to change here. The moving direction of the mean guides the direction of market movement in the corresponding period.

The book's illustrations, text, and historical information come from Clarkson and the Baltic Exchange. Their support in completing the book is gratefully acknowledged. All discussions in this book are based on a relatively active and relatively transparent market, mainly discussing dry bulk carriers, oil tankers, and container ships. When I started planning to write this book, it was at the end of March and beginning of April 2017, when the M/V STELLAR DAISY sank to the bottom of the South Atlantic Ocean and unfortunately took away the lives of 22 crew members.

I would like to donate the proceeds from this book to the World Seafarers Union to commemorate them and those ancestors who gave their lives for maritime transport. Seafarers Worldwide, celebrating their 200th anniversary in 2018, is a global maritime charity dedicated to supporting seafarers and their families around the world.