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The Impact of COVID-19 and PSL’s Response

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  • Selected years 2009 (post GFC), 2016 (worst year ever), and 2020 (impact from Covid-19).
  • In each of the prior year’s ship orderbook to existing fleet ratio was astronomical and explains why the industry was in a recession for 12 years – 2008 to 2020 – to absorb the excess supply.
  • 2020 is different – the new ship orderbook to existing fleet ratio is the lowest in 20+ years. This means that even if there is minimal scrapping, new ship supply will be insignificant and allow owners to make good money over the next few years.
  • 2020 new ship orderbook has been restrained due to 12-year long recession; banks not lending to shipowners; capital markets remaining frozen; uncertainty surrounding new regulations on GHG curtailing forward orders.
  • Cargo volume growth by 2050 will be 3.5 times 2008, requiring 3.5 times more ships, yet GHG MUST be cut by at least 50% if not more than in 2008!
  • Any ship built with Internal Combustion engines after 2025 would have a shortened economical life of just 10 to 15 years before being replaced by zero GHG emitting vessels for future regulatory compliance.
  • In 2020 demand fell by 3.42% yet Cape size ships got a high time charter daily rate of USD 34,896 with fleet growth of 3.89%! FH 2020 was weak, SH was strong. Demand dropped in FH due to Covid-19 by about 7% and was flat in SH to arrive at an average of -3.42% ton-mile demand growth. Confirms Supply/demand balance is at hand!
  • 2021 has demand growth rate of 5% (Clarksons) to 6.7% (asper DNB Markets) versus a net fleet growth rate of 1.3% (Clarksons) to 1.5% (DNB Markets). This will result in strong time charter rates. 2021 will be the start of 2 to 4 years of good earnings for dry bulk ships.
  • 20+ year old ships are at 6.53% of the fleet at end of Q3. Another reason for strong markets for the next few years!

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