When readers of Clarksons Research’s Shipping Intelligence Weekly made annual rate predictions for 2020 last November, no one foresaw the global turmoil caused by the imminent Covid-19 pandemic.
But were their forecasts really so wide of the mark?
Clarksons Research analyst Sarah Holden said that last year the predictions were made against a background of potential higher fuel costs due to IMO 2020, with the prospect of slower steaming providing possible additional upside to generally steady fundamentals.
The average guess from readers for the ClarkSea Index of rates in the first week of November 2020 stood at $19,488 per day, the highest prediction since 2008.
The actual figure turned out to be $12,511 per day, having remained in the range of $12,500 to $13,500 per day for the past 14 weeks. The closest guess was $13,235 per day — $724 above the result, and within the lowest 5% of all forecasts submitted.
“Of course, none of our entrants could have predicted the major challenges and disruption seen across the shipping industry this year, but it can still be useful to review where sentiment was a year ago and how the markets have evolved since,” Holden added.
The index saw huge variations, easing back seasonally in January and February, before the deep shock to oil demand from lockdowns led to a surge in demand for floating storage, and another tanker market “super-spike”, she said.
In March and April, VLCC earnings averaged $165,198 per day and the ClarkSea Index $21,808 per day, the highest level for any two-month period since 2008.
“This was despite continued significant pressure in the bulker sector [bulker earnings averaged $6,870 per day] and a containership market that was weakening as severe pressure from Covid-19 on seaborne box trade built,” Holden said.
Then, as floating storage started to ease, the tanker market softened during the rest of the second quarter, and by mid-June, the ClarkSea Index had dropped to $10,461 per day. As tankers fell further in the third quarter, bulker and boxship improvements lifted the index to $13,482 per day in late August.
Holden concluded: “This year has certainly been highly unpredictable, and with major uncertainty over the market outlook remaining, predicting where the ClarkSea Index will end up in the first week of November 2021 will still be tricky.”
