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Hi. I am a shipping company director, transport academic, author, family man and all round nice guy. I have worked as shipbroker, shipowner, freight trader and bulk charterer, in senior positions, with some of the largest and most disrespected (joke) companies in the world. Ask my advice on all things shipping and you will receive my blunt and always honest answer. Hang around to learn more about chartering and ship broker salaries, chartering and ship broker jobs, chartering and shipbroker recruitment agencies, cheap freight, maritime education, chartering and ship broker qualifications, become a ship broker, tips on how to be a successful bulk shipping executive, philosophy, Zen and the art of shipbroking, and much more. Yours The Virtual Shipbroker (recently proclaimed the guru of shipbroking) Copyright © 2009-17 by Virtualshipbroker

Thursday, September 1, 2011

Volatility - Handies vs Capes

Why is it that the smaller ship market segment is less volatile then larger sizes?


Good Question  (see previous post) and some excellent answers.  Thanks for the contributions and you are all spot on. And btw Gambalistic will go into my linguistic repertoire from now on! Love it...
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Here is my take

The markets for larger ships have been more volatile than smaller ships for following reasons.
1. The market for larger ships is dominated by a small amount of larger players. This means that any significant change in market conditions will result in large market fluctuations. In shipping speak this means 3 things. The market is dominated by a) China b) coal and Iron Ore and C) Larger corporate style shipowners who control more than a handful of ships.

2. The market for smaller ships is dominated by many smaller players. This means that any change in market conditions does not necessarily affect the price of ships to a huge extent. Smaller ships go everywhere and carry everything. There are thousands of shipowners some controlling just one vessel and therefore unable to be a price maker in any way.

3. The world has built more larger ships than small ships, over recent times. Meaning that an over-supply of larger ships has led to a weakening market. Smaller ships, until recently, were being ignored by major players and are now facing catch-up. This means that a relative undersupply has meant firmer rates.

4. Larger ships and the trades they pursue are more likely to get involved in congestion issues, leading to decreased supply and more volatile rates.

Hope this helps. Anyone else care to add more reasons feel free. Any more ripper questions keepem coming.

The Virtual Shipbroker

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