How the Shipping Industry Can Create Real Value

By Jim Dolphin

The great freight recovery of 2000 has been welcome news to shipowners, bankers and investors. While nearly all freight markets have strengthened, the post-Erika tanker market has seen the greatest increases, with spot rates doubling to tripling since the beginning of the year.

Additionally, owners are bullish that this run will continue for the next 18 to 24 months for a variety of reasons: the world economy keeps chugging along, OPEC is promising incremental production, the orderbook is largely set, and there remain a large number of older vessels which look likely to retire should freight rates drop, which hopeful owners see as a self correcting mechanism to keep supply tight and rates firm.

With all of this good news, what could be wrong? Simply stated, shipping destroys capital – and these “good times” may postpone necessary industry restructuring.

This is only an excerpt of How the Shipping Industry Can Create Real Value

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