- The shipping industry, already known for its volatility, is currently undergoing an extraordinary period of extreme fluctuations in earnings.
- Research by Evercore ISI’s shipping analyst, Jonathan Chappell, reveals significant volatility across various segments over the past 18 months.
Earnings Fluctuations Across Segments
The study highlights unprecedented swings in rates for Very Large Crude Carriers (VLCCs), capesizes, LNG carriers, LR2s, and Very Large Gas Carriers (VLGCs). Rates for some segments have surged by over 600% since August 2022.
ClarkSea Index Swing
The ClarkSea Index, a crucial shipping barometer, reflects a 100% swing during the 18-month period. This index, managed by Clarkson Research Services, provides a weighted average of earnings across tanker, bulk carrier, containership, and gas carrier segments.
Factors Contributing to Extremes
Chappell attributes these extremes to shifting trade routes and disruptions related to geopolitical events, including Russia/Ukraine tensions, Panama Canal water levels, and Red Sea disruptions. Geopolitical uncertainties, coupled with extreme weather conditions, are influencing shipping demand and trading routes.
Caution and Warning
Chappell cautions against extrapolating temporary rate spikes, emphasizing the potential for quick model changes. He warns against underwriting anomalies, suggesting that predicting the duration and magnitude of market trends requires careful consideration.
