Market outlook for the east of Suez logger bulk market from 2012 to 2016

• Main Author: Xing, Chan.
• Other Authors: School of Civil and Environmental Engineering
• Format: Final Year Project
• Language: English
• Published: 2013
• Subjects: DRNTU::Engineering::Maritime studies::Maritime management and business
• Online Access: http://hdl.handle.net/10356/51073
• Institution: Nanyang Technological University

This project is a study of the market outlook for logger bulk shipping sector in the East of Suez region from 2012 to 2016, with the objective to justify investment decisions from shipowner’s perspective. The first part of this research includes a highlight of the critical demand and supply factors governing the logger market from existing literature. The result gives rise to the formation of hypotheses and propositions which identify the relationships of each market variables with freight rate. Univariate technique is employed to test the validity of these hypotheses and provide the framework to make deduction in market sentiments. Based on the forecasted market condition and past freight market trend, it is predicted that the market sentiment in the next five years will improve slightly to reach a weak state due to the current pessimistic market condition. This finding suggests that average freight earnings of loggers will fall within the range between USD 9,396 to USD 11,906 per day. Discounted cash flow model is then used to calculate the Net Present Value (NPV) on the economic feasibility under different investment scenarios including acquiring a new ship, buying second-hand ships and chartering in a ship. For each scenario, sensitivity analysis against a range of freight earnings and Weighted Average of Capital is performed. It is found that the investing in a 15 year old second hand ship is the most viable option for deep-pocket investors who want to start a business in the logger market. However, the overall prospects are not very promising for all cases. Thus, conservative investors are advised to stay away from the logger market in the next five years.