Dry Bulk Shipping Report 2015-16

OPENING STATEMENT

Welcome to the first industry report focused purely on

Dry Bulk shipping.

Shipping is an industry which can be traced back thousands of years.

As a method to both facilitate and stimulate early international

trade, its historical importance is clear, but its current significance

is also indisputably huge: world trade is largely dependent upon the

availability of adequate shipping

with some estimates suggesting

that over 90% of global commodity movements are carried out by

ocean-going vessels

Dry Bulk shipping is an essential Shipping sub-sector providing

a worldwide distribution method for a range of vital commodities

such as iron ore, coal, grain, timber and steel which are transported

in “ bulk” form loose within cargo holds, as opposed to carried in

containers or other unit loads.

As a result, it is influenced by world and regional economic and

demographic conditions, as well as supply and demand of vessels

and cargo. This affects charter prices, producing cyclical trends. The

development of emerging nations has a considerable influence on

market movements within Dry Bulk shipping. China has been the

most notable of these for the last decade, but other Asian nations and

a global population which is predicted to increase by almost a billion

within fifteen years, to create increasing Dry Bulk shipping demand

in the next five years

Weak market conditions in Dry Bulk shipping have combined

to cause a major fall in vessel prices. This has led some experts to

believe that lucrative investment opportunities now exist given

the proximity of second hand vessel values to their scrap value. The

typical two-year time frame for delivery of new ships and a historically

low order-book suggests the possibility of limited availability of

vessels when market conditions improve. This will cause an increase

in charter prices and consequent rises in vessel values.

However, the sector has experienced significant volatility of both

charter rates and shipping values over recent years, and whilst

this provides the possibility for high returns, if the cycle is judged

accurately, the presence of downside risk is also an important factor

requiring specialist consideration.

The sector offers a tangible, alternative investment opportunity, but the

high cost of capital has historically tended to preclude smaller investors.

This report is intended to inform advisers, intermediaries and

sophisticated investors about the potential risks and benefits in Dry

Bulk shipping investment.

GuyTolhurst

Managing Director

Intelligent Partnership

EDITORIAL

Lisa Best

CREATIVE

Mar Alvarez

SUB-EDITING

Guy Tolhurst

Daniel Kiernan

RESEARCH

Samantha Goins

Lisa Best

MARKETING

Michelle Powell

Four Way