Feasibility of bulk shipping investments – investment into the handysize segment with time horizon between 2021 and 2027

Abstract

To acquire capital, shipping companies must show that they are able to create value for their shareholders. Therefore, the basis for any investors’ decision to invest comes from understanding and deriving the value of a particular asset. Hence, this volume seeks to compare the value of different investment strategies available when investing in the Handysize segment and identifying the most optimal strategy to perform.

The research will be adopting a quantitative approach due to the nature of deriving value, which requires the analysis of historical data to make a judgement call on feasible strategies. Data will be collected from 2010 – 2021 to determine the feasibility of investing into the Handysize segment from 2023 -2027.

The results initially showed that it was not profitable to invest in shipping due to the largely negative returns from the shares of shipping companies. However, it was later found that market fundamentals are a better indicator of the profitability for shipping companies as compared to share price. Therefore, that even though the dry bulk industry has turned into a high risk low reward industry, there are still opportunities to invest in the Handysize market. Specifically, it is still feasible to invest in acquiring vessels through the second-hand market or time charter, but the choice of employment will ultimately determine the overall value of the strategy. The most optimal strategy that generated the highest value would be to acquire a 15-year-old vessel and perform yearly time charter trips.