Expectations of a rate correction in the charter market are high as owners and buyers look for solutions for delivering vessels.
In the short-term rates have stabilised, but with the reality of cancelled services, nearly 400 to date, and the growing number of vessels being redelivered it is only a matter of time before charter rates will find a new, lower, level, said the Braemar.
Activity, while not totally stagnant is severely subdued, added Braemar, with owners and buyers collaborating on vessel deliveries, while the closed demolition market, “has seen Buyers looking to offer Owners solutions for delivering vessels including taking over crew contracts for a period of time, or offering basis ultra-wide laycans to give Sellers security that facilities will have reopened by the time a delivery takes place.”
Meanwhile, the macroeconomic signals remain pessimistic in tone with the World Bank expecting the next Covid-19 hotspot to be the Indian Sub-Continent, with its crowded cities, the region is home to 1.8 billion people.
The World Bank’s growth projections for the region have slumped, from the original forecast of 6.3% to between 2.8 and 1.8%.
Taking a broader perspective Kristalina Georgieva, the head of the International Monetary Fund (IMF), has warned that the coronavirus pandemic will turn global economic growth “sharply negative” this year.
According to Braemar, Georgieva said the world faced the worst economic crisis since the Great Depression of the 1930s. The IMF has estimated that global GDP will decline by 3% in 2020, while a UN study said 81% of the world’s workforce of 3.3bn people have seen their workplaces fully or partly closed through the Covid-19 outbreak.
