MSI analyses impact of COVID-19 on Time Charter Markets

impact of COVID-19, time charter markets

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As per a recent analysis of Maritime Strategies International (MSI), as an impact of COVID-19, time charter markets have broadly retreated in the last few weeks.

MSI, a market forecaster for offshore, shipping, and allied industries, in its latest Container Shipping Forecaster, has examined the impact of COVID–19 on time charter markets.

As per the examination, a 10 – 15% earnings retreat has been noticed by the majority of benchmarks ever since 2020 has started. The analysis has also concluded a lowering of fixtures volume from general seasonal trends.

The time charter market is speedily heading into crisis due to the recent blows to the liner companies’ finances. Its primary focus has now shifted to near-time earnings, the major hindrance to which would be idle fleet.

The past trends reveal the reverse proportionality of idle fleet and vessel earnings. The volume of idle containership fleet is expected to rise as liner companies shrink their capacities under cash flow pressures.

With an unplanned and unusual hike in the announcement of blank sailing by the companies and tumbling bunker costs, the rates of spot freight are all set to take a hit downwards.

Daniel Richard’s say on Time Charter Market’s situations

According to a senior analyst of MSI, Daniel Richard, with the industry imbibing the current wave of a sharp and sudden drop in trade volumes and liner companies stressing on the cash flow implication of business hindered during China’s led shutdown, the decline in the time charter earnings is undefendable.

Richard has also shown his concern towards the extent earnings would fall and the duration of its continuity. Mentioning the market conditions of 2016, he said of not expecting earnings not to fall that far, rather expected a recovery over the second half of the year.

As per him, in comparison to 2016, today’s supply-side developments are healthier, and containership ‘cascade’ is more efficient.

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