URSABLOG: Keep Walking

How do you think about life? Most of us I suspect think of life like a road that we are travelling down, a pretty straight one at that, and that the events that happen, or people that we meet along the way either crash into our path or change direction to travel in the same way that we are going. So, to borrow from the Wizard of Oz, it could look something like this:

And we see happiness, or fulfilment, or destiny, as the arrival at our destination, where magically we will be happy, or fulfilled, or even destined to be happy and fulfilled. Disappointment arrives when we reach the city of dreams to find out that actually we still have the same feelings of unhappiness, we are still unfulfilled, and our destiny has yet to be reached.

In shipping however, we know this to be false because we live in cycles not straight lines. Cycles are not circles of course, but circles cut in half and then added on to each other to make waves:

 But unlike the nice smooth waves of undulating rolling fields of theory:

The shipping markets are pointy and spiky:

Like the forbidding mountains of a desolate landscape:

Not much comfort to be found in these peaks and troughs. So shipping people are used to the brief elation of success mixed with perilous declines and climbs, but we know we will become better people as long as we don’t fall off. But the risk of falling is great, as is the risk of getting lost or losing track of the path through.

The road is not straight, the path is not true, the way is fraught with risk, the rewards are great as long as we persevere, but they may prove momentary as the next storms bear down on us.

Which is all by way of introduction to say: what the hell is going on in the dry market? And as we imagine our way forward, we cling to metaphors or pictures or stories as a way of making sense of our place in the world.

One of the things that I have learnt, sometimes painfully, is that our sense of the future, and where we are going, is in large part informed by how we see our past. I would like you to try a little thought experiment, but for it to work you have to be brutally honest with yourself and not reinvent the past. To assist you, you don’t have to share this assessment with me or anyone else, but you have to be cleareyed.

1)     What were your new years resolutions (an easy one this, and I guess most were blown away by the coronavirus, if they hadn’t been blown away by real life beforehand)

2)     How did you think the market would progress over the year?

3)     What stage of the dry bulk (or whatever other market you are in) market cycle do you think we were in then?

4)     What stage of the cycle to you think we are in now?

 To assist you, use this illustration as a guide:

5)     In view of the above, how do you think the market will progress now?

Ok, have you done that? What do you think? Ok, I thought so. Me too.

Maybe, however, you are not lost like me. When I talk to people about this, I hear things like ‘V’ shape recoveries, Nike ‘swoosh’ like recoveries, U’s, saucers, inverted L’s and so on. The best thing I can come up with is an ‘internet’ recovery: lot’s of lower case w’s – www – gradually arcing upwards over time, combining everyday volatility with a gradual improvement of the fundamentals of trade over time. I think it has some merit, but I think everyone else’s ideas have merits too.

And this is the problem: we all think in lines. Like the straight road of our lives, in reality it is nothing but straight – full of detours, and distractions, and breakdowns, and, well, just taking the long way home. We see our own history as if it was intended, and we take a trajectory, a bearing, from that line to map our future. When our present changes, so does our past, and therefore so does our future. But if we didn’t we would go mad, or go bust, or become inconceivably rich, or stay the same for the simple reason that in shipping so much of our success is dependent on something else, things our of our control. All we can do is work hard, do our best to improve what we can control, gradually, over time, and hope that our decisions bear fruit when conditions change.

One of the most devastating things about the coronavirus is not that it has destroyed or broken the shipping cycle; it has nothing to do with the cycle whatsoever. All it has done is added huge uncertainty to an already perilous place. Those of us working in dry have not seen that much of the high peaks to make us very happy recently: the cycles since 2012 have been short and sharp, and the troughs have been deep and bruising. Coronavirus has added to the pain and increased the sense of helplessness.

But nils desperandum. We have been here before, and will be there again. If we take stock of where we are, and resist the temptation of thinking in lines, or hoping that the cycle will come back round, and instead just look behind us, and see the difficult road we have already travelled, not just the last few weeks and months, but over many years, and we will find that here we are, still here, and ready to turn around and carry on with the journey through whatever the world throws at us. The market will get better, or worse, and we can do nothing about it. The future will happen, whether we like it or not, and as they say in the whisky adverts, we just have to keep walking.

Simon Ward

www.ursashipbrokers.com