Feasibility of bulk shipping investments – investment into the handysize segment with time horizon between 2023 and 2027

Abstract

This paper aims to provide a freight market outlook for the Handysize bulk carrier segment from 2023 to 2027, aiding investors in making decisions on the feasibility of investing into the Handysize market. In this paper, demand and supply drivers are analysed to determine their impact on the future freight market. Demand drivers include the coal market, political regulations, China’s economy, the world economy and substitutability of bulk carriers. On the supply side, orderbook volumes, demolition market and second hand market will be analysed. The interactions between these factors and their combined effects has led to a freight rate projection and future freight rates are projected to be between USD12,043 to 15,458 per day for the next five years. The Handysize freight market is concluded to be stronger than usual historical freight rates due to an undersupply. This forecasted freight rates accounts for the fundamentals of analysing the Handysize freight market and will be used in Volume 2 and 3 for further analysis. This forecasted freight rate will then be used in Volume 2 for the generation of cash flows to determine the investment potential of the Handysize segment when operating the asset. Lastly, in Volume 3, value of different investment strategies will be compared to identify and conclude which is the most optimal strategy to perform. Hence, the three volumes are to be read in sequence.