Is fear of missing out or an appetite for disruption informing investor decisions, asks Thomas Zaidman, the managing director of Sagitta Marine? Dry bulk market players are used to volatility; they naturally prefer it to calm seas because of the opportunities it creates. As Splash recently reported, higher, more persistent volatility has become a fact of life. Risk is the flipside of this coin, but again, owners and operators view risk management as a daily process. But how are we to explain the market’s current strength when set against a lower performing Chinese economy and flatlining European economic growth. True, the US economy is unchained from economic (and maybe by the time you read this, political) reality, but it has less exposure to this sector. Asset valuations remain way above what commodity demand would suggest and charter rates imply a strong forward market when the outlook is full of uncertainty. The dry bulk market is used to technical supports; rail strikes at ports, vessel queues at discharge locations, but these are not being cited as cause for the tightening. Disruption from US hurricane season was expected to be severe but despite a big local impact, the effect was probably less than expected and shorter lived too. Higher tonne miles caused by diversions from the Red Sea are good for fleet utilisation and analysts insist this situation is temporary, though it doesn’t feel that way right now. The mixed messages of China’s economic slowdown and the attempts to drive activity with massive stimulus are just that. China’s economic growth – and that of other Asian economies – is healthy enough in a global context, but investors don’t seem to be buying a return to the boom economy of previous years. The true drivers then, are geopolitical risk and – thanks to the consolidation of ownership among fewer big players – fear of missing out. The dry bulk market has progressively bifurcated between the biggest owners for whom the answer to everything is consolidation and the smaller operators who provide the majority of the day-to-day market liquidity. The big players are often listed entities, with complex financial structures and strategies that push them towards ever bigger positions. For some that makes sense, though one might also say that to a CEO with a hammer, everything eventually looks like a nail. The growing concentration of the newbuilding orderbook among only a handful of companies – with less than 10% of shipping companies actually having tonnage on order – suggests a continuation of the trend. I remember being told on founding Sagitta Marine only a few years ago that the vessel operator model was dead. Operators wouldn’t succeed because they failed to bring value that couldn’t be derived from scale. The fact that we have grown tenfold since then disproves the argument but also demonstrates a truism. Operators bring vital liquidity to the market; they take trading decisions that others do not and get more into the detail of the market than others are prepared to. Some shipowners are happy to be just that. They don’t want to get involved in the market and are happy to put their ships out for charter. The value is there for others to work for. The dry bulk market is full of small and medium sized operators and without them the market would be a lot less efficient and easier to manipulate because only a few players control the majority of tonnage. The enormous disconnect between asset prices and market demand suggest