Heightened volatility in freight rates is set to continue over the next few years as the global shipping industry absorbs new tonnage and cargo demand remains uncertain, a senior analyst at Goldman Sachs said.
Tom Kim, a global head of transport research, said the shipping industry was 'in a downturn that would last some time'.
Kim said the problems of low demand growth and overcapacity would be especially felt by owners of tankers and dry bulk ships.
In the long term, the growth in global tanker demand was forecast at 2.3 per cent a year, he said. As a result, it would take six years for the large number of tanker orders to be absorbed. Similarly, demand for dry bulk ships carrying cargoes such as iron ore, coal, grain and metals was estimated at 3.7 per cent a year.
But with 2,419 dry bulk ships on order totalling 200 million deadweight tonnes and equivalent to more than 30 per cent of the existing fleet, Kim said it would take almost five years to absorb the new vessels.
Kim also said there would be 27 per cent growth in the global container fleet, while annual boxship demand would grow 9.9 per cent as national economies and consumer sales rebounded. But the days of 10 per cent demand growth in container trades was over.