Each year, in the first week of November, we invite readers of the Shipping Intelligence Weekly to predict the value of the ClarkSea Index one year ahead. The competition entries are always interesting, and give us an idea of what the shipping industry’s expectations of the market really are. However, as everyone knows, it’s hard to get it right and the competition can only have one winner…
Stick Or Twist?
In 2013, it felt like there was some consensus amongst industry players that the bottom of the cycle might have been reached and that markets would start to take a turn for the better. Shipowners contracted 176.9m dwt of new ships, the highest level since 2008, reflective of a more optimistic outlook than previously. The ClarkSea Index represents a weighted average of tanker, bulker, boxship and gas carrier earnings, and it is interesting to see if the entries in our annual competition supported this optimism.
At a first glance it seems that competition entrants had a cautiously positive outlook, with the average prediction of the early November 2014 index value at $14,553/day, well above the $10,843/day average prediction for November 2013 from last year’s competition. The average forecast was also far above the actual full year 2013 ClarkSea Index average of $10,263/day, and the value at the start of November 2013 of $10,767/day.
Looking at 2014 to date, this optimism may have been slightly misplaced. The ClarkSea Index overall has not performed particularly well since November 2013, averaging just $11,625/day. Crude tanker earnings have improved but have been spiky, while product tanker earnings have generally remained under pressure. Bulker earnings have seen limited upside aside from some helpful spikes in the Capesize market. Gas carriers have been the star performers, with significant earnings gains, but containership earnings have remained in the doldrums.
During most of 2014 to date, the index has stood below the $12,000/day mark. Across the 45 weeks in the year to date, the ClarkSea Index only exceeded the average competition prediction in three of them. However, last week, on 7th November 2014, the ClarkSea Index rose to $15,139/day, helped by more positive bulker and tanker markets and up 41% year-on-year, if still well below the 2004-13 historical average of $20,795/day.
Pipped At The Post?
So, although index levels this year have generally remained low, the recent rise has meant that the actual value on 7th November was higher than the majority of competition entries. Around 25% of the ‘forecasts’ stood in the $13-14,000/day range; maybe people were right to be optimistic after all? However, having dipped below the $10,000/day mark in September, the index has only really improved over the last month or so.
So, is the glass half empty or half full? Depending on your viewpoint, the cautious optimism has either been misplaced or justified. Whatever the case, this year’s winner is Mr Peter Bekkeston of Klaveness Chartering with a forecast of $15,123/day. Have a nice day, Peter; your champagne is on its way.