Pacific Basin sees rebound in demand
Pacific Basin Shipping, which specialises in transporting dry bulk cargoes including fertiliser and steel, was expecting a rebound in demand and volumes in the second quarter that should temporarily buoy charter rates, the firm said yesterday.
But executive director Andrew Broomhead said: 'We still expect freight rates in 2012 will be weaker overall than in 2011 due to the continued influx of new capacity at slower, though still strong, Chinese growth and uncertainty in world trade. We still consider dry bulk shipping to be in crisis, with excess ship supply and a lack of traditional financing for secondhand vessel acquisitions.'
The first quarter was adversely affected by bad weather in Brazil, India, Australia and other countries which disrupted cargo loading operations.
Updated figures from the firm's first quarter of trading released yesterday showed that while the contract cover had increased, the average daily charter rate had fallen since the beginning of the year which reflected the poor market conditions.
It had 103 Handysize ships of up to 40,000 deadweight tonnes in its fleet in the first quarter. Some 54 per cent of Handysize revenue days were fixed at an average charter rate of US$11,480 per day on December 31. But while this had risen to 66 per cent of revenue days on April 16 the rate had fallen to US$10,840 per day.
Broomhead said the increment increase in vessel cover had been added at a charter rate of around US$9,000 per day. This was higher than the market rate for Handysize ships which fell to about US$5,000 per day in mid-February.
Average charter rates for the firm's fleet of 39 larger Handymax vessels had risen since January to reflect the increase in contract cover, which rose from 75 to 81 per cent from January to March, and higher lease rates.
Broomhead said the outlook for the firm's Australian towage business 'remains promising for the year' driven by offshore oil and gas developments and harbour towage. He said the firm would invest in new tugs as new towage projects were won.
But the charter market for the firm's fleet of roll-on/roll-off vessels remained depressed. Pacific Basin Shipping made an US$80 million impairment on its six ro-ro ferries last year to reflect the weaker outlook in the charter market and the ability of the firm to deploy ships profitably.
Broomhead said four of the six ships were on charter mainly at low rates, while it was seeking charters for the two others. He said the priority this year 'is to secure the best possible employment and utilisation for our ro-ro fleet'.
The impairment, in US dollars Pacific Basin Shipping recorded on its six ro-ro ferries last year
- The average rate is US$19,380 per day