When the “cargo people” of the Association of Ship Brokers & Agents hold their annual conference in Miami Beach, the program is traditionally closed by an erudite PhD holder in economics from MIT. Marsoft founder and president Arlie Sterling did not disappoint in his usual role on 30 September. But thanks to technology, the MIT graduate now can poll conference delegates on their views, and that is where things got interesting. A robust 54% of those assembled told Sterling they see an 80% chance or better of a global recession in 2023, with nearly everyone else saying the odds are 50% or more. Sterling said it was the most pessimistic group he had polled to date.

So, what does it mean when the people who are the closest to shipping’s cargoes are that gloomy about near-term economic prospects? Streetwise caught up with Boston-based Sterling following the conference to get his takeaways. For starters, Sterling conceded that his previous polling on the recession question was not quite as formal as during the ASBA events: it consisted of some canvassing of Marsoft staff and delegates at the recent Global Maritime Forum in New York. “The previous reaction was more of a 50/50 split on recession chances,” he said. “What I thought was distinctive about the ASBA crowd was the number of Latin American voices reflected in the response.” The annual event often draws heavily from South and Central America, he noted. “Some of the Latin American countries have been hit very hard by higher prices and economies that are not as strong as the US economy is right now,” the economist said. “Prospects within the US are still pretty good, and people are optimistic. But the outlook outside the US is very difficult and much less optimistic.”

Sterling was quick to note that his own forecast is not so bearish. While he concedes that the overall picture for 2023 has darkened significantly, he sees a turnaround beginning by mid-year. “Should we go into a recession, we think it will be a relatively short recession that will soon ease,” Sterling said. “The interest-rate policies being used to fight inflation are coming on strong as they need to. We’ll get past what is going to be a very difficult winter in Europe. US oil production will increase. And then the contractionary policies will start to be reversed.”

So, are shipowners more aligned with the ASBA view or Sterling’s relatively moderate take? One tanker owner opined that a recession may very well be in effect now but the most technical metrics, and yet the tanker market is on a bull run. The optics of crowing about that countercyclical prosperity are not the best, he said, leading him to pass on the opportunity. One brave tanker executive who agreed to take the question head on was Svein Moxnes Harfjeld of DHT Holdings, who runs one of the biggest VLCC fleets in the world. “It simply comes down to the central banks and their balancing act. Will they stop increasing interest rates in time or will they overdo it,” Harfjeld said. “The former will provide a softer landing whilst the latter would be a hard line. It is very hard to predict which scenario [will prevail] in my view.”

A dry cargo executive who did not want his name used said he is in line with the ASBA response. “I think a global recession is extremely likely — maybe 80%,” he said. He described the outlook for dry bulk as “tricky. It depends a lot on China, and a little on the US and Europe,” he said. “Coal will do very well, and Europe’s demand for coal is probably not very sensitive to the state of the economy. Also, I expect the scrubber spread to remain high, as it depends on the cost of removing sulphur at the refinery.”

Still, there is another aspect to Sterling’s ASBA appearance that is worthy of consideration. The researcher always presents what he calls the ASBA shipping index, which takes an average of charter rates across the major operating sectors. The number topped $40,000 per day, the highest figure since 2008. “I never thought I’d see those numbers again,” Sterling told Streetwise. “It was mostly driven by dry bulk in 2008, and by container ships today. We fear that market has a long way to fall. I do suspect that the ASBA index could be a very different number come next September.”