Shipanalysis.com - Q & A.
The concept is generally quite simple: When there is a trend reversal in shipping it generally lasts for a while. The trick is to identify these trend reversals and to time them. By using our models as a timing tool executives will be able to optimize their predictions and decisions. The main model we use - "FroXgen" - commenced it's evolvement in 1997 and have produced satisfactory results ever since
Trendchanges vs. Forecasts?
Over the years we have seen many models claiming to forecast prices or indexes in the future. Forecasting price/indexes is one of the most difficult tasks there is, and generally it is not only difficult but also not prudent to use, as price/index relationships will always change in the future. Spotting trend changes however, can be done with much higher accuracy. On occasions we supply targets of how much we think the market will move, however our main aim is to identify the actual trend change. Our model has, in some shipping sectors, been up to 94% correct in trend reversals. For an executive in the market, ShipAnalysis is an invaluable tool!
Research - Data
Most of ShipAnalysis's research is based upon spot data from different sources. In other words - the spot rate published daily or weekly for a specific route or index. Why do we use spot rates? Quite simply - its the best source of data there is. Using forward FFA or physical indicators makes the data less reliable and prone to errors. In addition - the correlation between spot rates and forward rates are amazingly high in most markets, contrary to popular opinion. In other words - timing models using spot rates can be used for forward decisions.
How can the information be used?
Our research can be used in different ways:
1. Physical shipowners/charterers in the spot market. Using our trend analysis a participant in the physical shipping market can try to; "time" his freight decision. For example: A shipowner has a panamax dry cargo ship that will be spot for a USG/Japan grain cargo within the next 6 weeks. He can decide to fix the ship now or to wait for a time closer to his "position". Assume the ShipAnalysis.com trend model is currently bearish (Bearish means negative - i.e. the market will go down). Utilizing our research he can try to optimize his return by waiting for a potential reversal in the trend, identified by us. When such a reversal occurs he will be alerted both by email and on the web, and fix his ship accordingly. If no such signal occurs he would fix close to his dates.
2. The trend reversal information can be used to time speculative positions both in the physical freight and the freight futures market. Generally our trend reversals are better to use from relatively short term decisions, like for example 2nd FFA or 60 days forward spot.
3. ShipAnalysis easy to use analysis of trends can be used by executives to get an overview over the market.
4. Our research can be used to time purchases of shipping shares. In general, the shipping stocks reacts relatively slow to changes in the freight market. Therefore, especially on highly geared shipping shares like Frontline our research can assist in timing purchases.
