Dry bulk ship deliveries to outpace demand
The global shipping industry faces mixed fortunes over the next few years as a record number of deliveries of dry bulk ships outpace the growth in iron ore and coal demand, according to an analysts' report.
In the container shipping sector, the Macquarie Research report said some lines could make record profits in the third quarter while the sector as a whole could see a shortage of ships in 2012. But Macquarie added that the tanker sector has become becalmed while it awaited a recovery in demand.
Overall, the Macquarie report said: 'Attitudes within the shipping industry remain cautiously optimistic. Dry bulk operators continue to pin their hopes on strong demand for iron ore and coal from China and other emerging economies. Containership operators remain wary of the strength of the economic recovery in developed nations, but note that so far volumes remain firm.'
The report by analysts, including Tokyo-based Janet Lewis and Hong Kong's Benjamin Wang, said: 'We believe the best profit growth opportunities over the next three years are to be found among the specialist containership operators.'
The top pick was Orient Overseas Container Line for which Macquarie raised the target price of parent company Orient Overseas (International) to HK$84. By comparison, the stock closed nearly 1 per cent up at HK$63.50 on Wednesday. The stock market was closed for a public holiday yesterday.
The report said while the global seaborne volumes of coal and iron ore were expected to grow between 6 per cent and 8 per cent a year, the global fleet of dry bulk ships would grow by 14.6 per cent this year.
Most of the new deliveries are capesize ships of around 180,000 deadweight tonnes. This growth in capacity is likely to limit any rise in charter rates.
By comparison, container lines have seen a rebound in container volumes and freight rates this year which saw 20 of the world's top carriers post collective operating profits of US$3.8 billion in the first half of this year. This compared with a collective loss of US$6.9 billion in the same period last year.
The Macquarie analysts forecast that global spending on capital expenditure would support 8 per cent growth in container volumes in 2011. And while there would be 10 per cent growth in the container ship fleet in 2011, this increase would fall to 6 per cent in 2012.
They added that shipping lines were likely to limit placing new orders for container ships because they would focus on rebuilding their financial reserves after last year's losses.
Financing constraints would also reduce the ability of container lines to award shipbuilding contracts, the analysts said.
Macquarie Research says coal and ore volumes will grow by single digits
But its report says the global fleet of dry bulk ships will expand this year by: 14.6%