ClarkSea Index Competition – A Surprise On The Upside?

Clarksons

Every year, readers of the Shipping Intelligence Weekly are invited to submit their predictions of the value of the ClarkSea Index at the start of November the following year. Last week the ClarkSea Index stood at $12,323/day, up 31% on the 2016 average level. This reflects some improvements in shipping market conditions, but how did it match up to the views of the entrants in our competition?

Ever The Optimists?

It might be the general perception that shipping industry players should be an optimistic bunch. Markets are extremely volatile (VLCC spot earnings are 2.5 times more volatile than the FTSE-100; see SIW 1,220), and shipowners after all are paid to take the risk of controlling the assets on the water. When shipping markets have been in the doldrums, one might still expect that participants do their level best to retain a positive outlook.

Glass Half Empty

However, the entries in our 2017 ClarkSea Index competition tell a different story. As the graph shows, the index on Friday 3rd Nov stood at $12,323/day, but 70% of the predictions stood below that level. 51% of entries stood below $11,000/day and 26% south of $10,000/day. It seems that our entrants weren’t so optimistic about the year ahead back in Nov 2016 after all. The average entry, however, was $11,519/day, just 7% lower than the actual outcome.

Downturn Blues

‘Battle fatigue’ since the onset of the global economic downturn might explain some of this behaviour. Since the start of 2009 the ClarkSea Index has averaged $11,694/day. That’s a significant drop from the boom period 2002-08 when the index averaged $25,543/day, and a mighty way short of the average in the first three quarters of 2008 of $38,283/day. Since 2008 the annual index average has surpassed $12,500/day only twice. Perhaps it’s no wonder that market watchers didn’t feel so bullish at the start of last year, 8 years into the downturn with the ClarkSea Index standing at a fairly sickly $9,207/day.

Looking Up

So this year, the market appears to have surpassed the expectations of many, based on our competition at least. As the graph shows, the average index level this year so far stands at $10,462/day. In the first half of the year the index averaged $10,040/day but with improvements in the bulkcarrier sector and containership gains holding, in the second half so far the index has averaged $11,071/day, topping the $13,000/day mark in October. Modest gains in a wider context, but still something to provide some cheer.

Good News For Someone

For most of our competition entrants however, the actual ClarkSea Index level on 3rd November meant that they had set their sights too low. Having said that, 30% did predict levels above the actual index outcome and 27% of entries fell within $1,000/day of the eventual value. The closest (winning) entrant had the foresight to predict the actual level within a range of just $73/day. Congratulations! We’ll be in contact and the champagne will be on its way soon. Have a nice day.

grph

[clarksons]

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