One of my students (VS dry cargo shipbroking cert) asked the following which I thought would make for good discussion
Good to see the BDI is up.
Wanted to ask - To what level does sentiment play on freight rates? Like stocks, can a general consensus push or drag freight rates? i guess for ships there is a more tangable/physical element. but if all ows/ops expect mkt to rise and hold out for higher rates, would this not push up rates.
Yes, as with stocks sentiment is a huge factor in shipping especially in the short term (volatility). Over the long term (trends) then sentiment plays a part but fundamentals become more important. Many however, argue that all markets are about just about one thing "sentiment". Think about it - If you FEEL confident you may charter a period ship or build a ship. If you dont FEEL confident then vice versa. No one knows the future so in reality the forward price of something is just a combination of thoughts and feelings (from the market participants).
Read ur last post...if congestions can play such a big role: wont a certain aspect of an increased order book/tonnage be cancelled out by the result of this adding to congestion issues (given constant level of orders)?
(Not really because congestion is predominantly a demand side issue. More demand for coal and iron ore = more shipments = more congestion. Order books issues are supply side. Just because you have more NEW ships doesnt necessarily mean there will be more shipments especially if demand for commodities stays low. What may happen is that an oversupply of ships will leed to layups and scrapping)
BTW we are more than half way through the 'VS dry cargo shipbroking and chartering certificate'. Many of you have expressed and interest to be in the next intake. I will be releasing details on how to enrol sometime in late August.
- The Virtual Shipbroker
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