Inside Opinion: Cautious Optimism or Just Caution?

Whisper this quietly folks. Things might be looking up, you know?

The usual suspects have been saying how terrible things are for what feels like years. in fact it has been years. 2010 wasnt bad all things considered, but we've been talking at dinner parties and IBIA events through gritted teeth about "the markets" since 2008 near enough.

Even so, the markets are starting to look up.

VLCC rates are doing better, Capes are showing some inertia after an awful start to the year and even box rates are comparatively sprightly.

Anyone with a Panamax anything, be it wet, dry or box, is surely still feeling the pinch, but one suspects their nightmare may continue for a lot longer. The smaller tankers are trading above opex as are the smaller bulkers, and we're seeing bulk orders start to flood into the Asian yards again, only this time without so much hand-wringing and derision as before.

The good sectors are still good, the bad ones are, in most cases anyway, trading better. The cruise industry has enjoyed some of the most profitable years in history and tellingly, they too are ordering megaships again.

A former mentor of mine once told me, "the best barometer of the outlook on world trade you can get is the orderbook for the biggest bulkers and container vessels." There's a lot of truth in that I suppose, although you could certainly add cruise, gas tankers and even the offshore sector to this list.

But are things really picking up, or are we due another dip in the rollercoaster?

Boom or Bust

I think we as an industry are a lot more cautious than we were, and that includes making predictions of boom or bust.

The credit report providers with their act together have gone from strength to strength. Bunker companies are insuring a lot more of their credit risk. Many more have credit managers than before 2008, and price hedging has gone from almost unknown pre-2008 to a huge business in bunkers these days.

Companies are taking lots more currency hedges these days as well.

Ship financing is a lot more difficult to obtain, which should (we hope) make newbuilds harder to order without a solid business case. We can hope that the days of taking speculative newbuilds with the bank's money in a bulk spot market hit and hope are now if not at an end, greatly reduced.

There will always be room for these wildcat punters but we can now say the industry is no longer predicated to any large extent on this sort of business.

People are much more careful about their time charter partners these days, despite the poor markets. CoA performance is now something those with a less than spotless record can no longer keep quiet. Transparency rules.  

We as an industry have taken a myriad of small steps to reduce risk on many levels and this is something we can all be thankful for.

But lets not break out the streamers, jelly, and icecream just yet.

We're not out of the rough weather yet, we're just much better equipped to get through it.

Call me a cynic, but I'm going to carry on treating everyone the same as I was in 2009 and 2011, when things were really dark. I suspect every single person reading this agrees with me. Which if you think about it, is real progress.

Hooray for caution and cynicism eh?