Buyers of secondhand tonnage need to inspect the vessel, making the demand for third-party pre-purchase inspection reports a good indicator of the strength of the S&P market
Generally, sale and purchase (S&P) activity in January and February is dormant. In the northern hemisphere, the winter holidays drag shipowners and shipbrokers to the ski slopes and the Chinese New Year holiday brings a significant shipping nation to a halt.
So far, 2021 has been very different, with lockdowns across Europe bringing the traditional getaways to a halt and S&P activity being uncharacteristically high. Third-party specialist pre-purchase inspection providers are reporting enquiries were higher than normal in January and February 2021.
One driving force was owners looking for tonnage to take advantage of the high freight rates in some sectors to compensate for the decrease in newbuilding activity. The demand for pre-purchase inspection reports centred around the dry bulk carrier sector, which was enjoying an increase in earnings.
Demand for pre-purchase inspection reports was also firm in the tanker sector. Freight rates were weak in the tanker sector during January and February 2021 and this opened up the opportunity for buyers to win a favourable transaction from distressed sellers.
However, enquiries for pre-purchase inspection reports has decreased during March 2021, foreshadowing a slide in S&P activity. The indications are for a slowdown across the dry bulk sector, where secondhand prices have risen to five-year average levels.
Enquiries for pre-purchase inspections in the tanker sector are also weak, probably driven by the short- and medium-term outlook for freight rates, indicating an expected fall-off in S&P activity in the coming months.
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