Page 28 - Annual Review 2021 full

Indian National Shipowners’ Association

Point To Ponder
Shipping is a notoriously volatile industry, one
that has burnt many investors over the years. Yet,
even by its own extreme standards, the volatility
experienced across all the main shipping segments
during the pandemic has been extraordinary, with
all sectors experiencing earnings up by at least
100% as well as down by 50% since the start of
2020.
Analysts at investment bank Evercore have charted
the indexed performances for VLCC, MR, Capesize,
LNG carrier, VLGC and neo Panamax containership
TCE earnings or main trade spot rates since the
beginning of 2020 (see chart below) highlighting
the extraordinarily fast peak and troughs in earnings The sharp moves both up and down have made
for shipping during the Covid-19 era.
it tricky for shipping stock investors beyond the
shortest of time periods, Evercore suggested,
“Core fundamentals do not result in this level of noting how in pre-Covid times the supposed appeal
extreme volatility, with anomalous factors like port of shipping equities have been the sharp cyclical
congestion, floating storage arbitrage, and regional volatility that provides opportunities to capture
commodity shortfalls (and associated arbs) the tremendous upside in tight markets and equally
primary reasons for the massive peaks and valleys. robust downside when the pendulum swings the
These temporary drivers are not new to the industry other way. The “level of whiplash” over the past
but have reached a new level of impact in the last couple of years, Evercore said, has been bruising
two years, making it harder for investors to trust even for the most nimble investor.
what is secular and what is temporary,” Evercore
stated in a note to clients.
(Reproduced from an article by Sam Chambers in
Splash 24/7 dated 23/11/2021)
The level of whiplash over the past couple of years
has been bruising even for the most nimble investor.

Disclaimer
Though data has been sourced from various publications like UNCTAD Report, Clarksons Review, The
Economist, IPA and Institute of Shipping Economics & Logistics, the views professed in the report and
conclusions drawn are those of the INSA secretariat alone.

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