Dry-bulk rates set to surge, says OSC

PUBLISHED : Wednesday, 23 February, 2000, 12:00am
UPDATED : Wednesday, 23 February, 2000, 12:00am

A report from British-based Ocean Shipping Consultants (OSC) predicts freight rates in the dry-bulk sector will recover strongly over the next five years.

In Bulk Shipping Freight Markets And Investment Prospects, OSC said the outlook was very positive and the time was right for speculation in bulk-vessel values.

It based its predictions on the recent 'over-ordering' of new ships and the continued backlash from Asia's economic crisis, which has led to a slump in productivity and profitability.

The report pointed to several indicators that strong recovery in all sectors was around the corner.

The amount of new tonnage on order has fallen to relatively low levels, while scrapping has risen to its highest level since the mid-80s.

A rise in global steel demand, grain volumes and steam coal should increase the demand for the world's bulk fleet, the report said.

Given the predicted rate surge and the undesirability of adding new ships, OSC believes owners should buy in second-hand tonnage.

'The potential for capital gains by correctly timed investment in the second-hand market is now greater than for many years,' it said.