The shipping industry has experienced a particular blast of cold air during 2016, with few sectors escaping the frosty grasp of the downturn, according to Clarksons Research.
The shipping markets have in the main been pretty icy since the onset of the global economic downturn back in 2008, Clarksons said. Since the start of the fourth quarter of 2008, the ClarkSea Index has averaged USD 11,948 per day, compared to USD 23,666 per day between the start of 2000 and the end of the third quarter of 2008.
Investor appetite for vessel acquisition has often added ‘heat’ to the market in the form of investment in newbuild or secondhand tonnage, even when earnings remained challenged.
According to data on historical newbuild and secondhand asset investment in terms of value, shipping appears to be as cold as back in early 2009. This year the ‘Heat Index’ has averaged 36, standing at 34 in fourth quarter of 2016, which compares to a four-quarter average of 43 between the same quarter in 2008 and the third quarter in 2009.
This, in part, reflects the earnings environment as the ClarkSea Index has averaged USD 9,329 per day in the year to date and is on track for the lowest annual average in 30 years. In August 2016, the index hit USD 7,073 per day, with the major shipping markets all under severe pressure, Clarksons informed.
“The investment side has seen the temperature drop even further. Newbuilding contracts have numbered just 419 in the first eleven months of 2016, heading for the lowest annual total in over 30 years, and newbuild investment value has totalled just USD 30.9 billion,” according to Clarksons.
Such weak volume sector markets, and a depressed offshore sector, have outweighed positivity in some of the niche sectors as 50% of the value of newbuild investment this year has been in cruise ships.