Leading dry cargo owners and operators have distanced the present upturn from the false start seen in 2013 but are cautious about the growing optimism for a rebound in the market.
The Baltic Dry Index has been bouncing along at a three-year high and with an improving picture there are easy parallels to be drawn between today and early 2013.
“I have had this feeling before and we all got it wrong,” Herman Hildan of Clarksons Platou Securities said as he began a panel debate on the dry market at a Capital Link forum in London.
Gary Vogel, chief executive of Eagle Bulk, said: “There are a lot of differences. One thing was [in 2013] there was a lot of focus on building a lot of eco ships on the back of high oil prices and being a low cost provider on that basis and also looking at the reversion of the rates to 2007 2008 at really high levels.
“We have come through a challenged period here and the big difference is where we are on the supply side.”
Herman Billung, chief executive of Songa Bulk, also saw differences in the level of capital available to the industry today. “The finance world looks quite different right now compared to 2013 and we all know how counter-cyclical the banks are,” he quipped.
Western Bulk chief Jens Ismar suggested it was a bit scary sitting in a room with peers and everybody agreed the market is in for a good run.
“You really need to ask yourself what is the black swan? The black swan always pops up when you least expect it.”
While there was consensus the market was recovering, the panel was split on the course the upward trend is likely to take.
“Maybe we are in a bit the same place now as we were in 2013,” said Birgitte Ringstad Vartdal of Golden Ocean.
“The market had a good run in 2013 and into 2014 before it became bad in 2015 and 2016.
“Maybe that is where we are today that we will see a run for a year or two and then there can be some ordering and you will see it go back down again. You need to think about the cycles.”
Vogel said he felt the revival was very much in the early innings. “Every single day we come to the office we need to look. Where is supply? Where is demand? In order to make those calls.
“If you believe in a general GDP increase and the supply side where we are and I think we are in the early innings of a recovery.”
Ismar predicted the market will track a similar path to that seen in the 1990s. “We are not talking about the market that was there between 2003 and 2008,” he said.
“We are talking about a totally different thing and we need to be very careful how we balance it otherwise it could go wrong again as it did in the past.”
Billung, who quipped there were more experts on China than there are people living in the country, said Songa had pitched a supply side recovery story.
“This is not going to be a straight line. We will see a lot of volatility,” he said.
“We believe in the supply side. The good thing with supply is you have a certain visibility there and you have some lead-time.
“When people start to order that will be at least our red flag and then it’s time to exit.”
