Bigger ships impact

The introduction of ever larger ships into a market that is already over supplied has had the effect of increasing rate volatility. The reason is that not only does the upscaling of vessels increase the capacity deployed but also there is the individual carrier behaviour, especially with this first wave of record ships, where shipping lines don’t want to have the ship sail half empty on its maiden voyage. So on top of the structural effect of increasing supply, we’ve noticed the very short term effect of carriers grabbing extra cargo to assure the ship is nicely full and the only way to do so is by dropping the rates. With the prospect of new ULCV’s entering the trade with a rate of 1 per week between now and the end of the year, we expect freight rate volatility to increase further.