Friday, October 24, 2008

The voice of experience

Whilst perusing the blogs at Lloyds List, I ran across the below comment.

Unfortunately, the post is anonymous. Obviously the writer knows a thing or two about charter markets.

This should be required reading for anyone born after 1965.

Comment by Anonymous - Friday 10 October 2008
Sea freights market always had an appeal on me for being one of the most 'pure and flexible' markets, compared with many other economic sectors. It has always been strongly a demand-and-supply thing, though many could argue that in the recent years the physical market has been more and more conditioned by the derivatives, following the global trend. Nevertheless the way the dry cargoes market has recently fallen caught all of us by surprise. During the recent long boom everybody consolidated the idea that the past hard times would never return as they were. We have higher bunker prices, higher running costs and wealthy owners able to keep it up. What recently happened is deeply concerning. It indicates that historical weakness of the ship owners did not change so much during the years. I belong to those who lived (or better survived) during the mid 80's crisis and I am disappointed to note that we are repeating the same old mistakes. Nowadays there are a couple of factors making things worse: 1) The massive newbuilding capacity of Chinese yards. 2) A financial system which has allowed owners to expand and modernise their fleets with close to zero equity. I am afraid that this time the lesson will be much harder and do not believe we will learn it.

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