Drewry All Earnings Shipping Index surges 50% on tanker gains
The Drewry All Earnings Index, which covers the main bulk shipping markets, jumped 53% in October to stand at 200 points on account of large gains for tanker owners, according to the Shipping Insight report published by shipping consultancy Drewry.
Suezmax tankers registered a remarkable 400% gain on West Africa-US East Coast routes as oil prices slid and demand for imported oil picked up in the US. Meanwhile, in other bulk shipping sectors activity was subdued.
The recovery in October earnings followed two consecutive months in which the index slumped 32%, caused by declining earnings by tanker and LPG owners (see graph above). The index is an average of time charter earnings for dry bulk, tankers and LPG markets, weighted according to estimated market share.
“Near term, activity will remain strong in the tanker market on a seasonal increase in crude demand,” said Drewry’s lead bulk shipping analyst Rahul Sharan. “However, looking further ahead supply disruptions associated with civil unrest in Iraq and Syria, as well as slackening economic growth in China risk adversely impacting cargo demand.”
LPG rates had a volatile month, with the Baltic Index reading for very large gas carriers (VLGCs) on the Arabian Gulf-Japan route slipping US$5 per tonne over the month to reach US$98 per tonne. Meanwhile, Drewry’s freight rate assessment for conventional LNG carriers improved marginally to $48,000pd on subdued market activity.
“Vessels kept piling up in the Far East in search of business during the month, as low cargo demand from Asian countries kept them waiting,” added Sharan. “Hence, we may see many vessels making backhaul journeys to the Atlantic in the coming months.”
Meanwhile, all sectors in the dry bulk market were subdued in October except Panamax, which remained strong as grain exports from EU and South America increased owing to good yields.
Drewry’s All Earnings Index reached a four-year high of 310 points in December 2013 on the back of a strong recovery in time charter rates across all sectors, but has since weakened. October’s reading was the highest it has been since January and took the index 61% above its 3-year average.
