Dry-bulk shipping sector faces worst crisis in years
Industry survey of delegates at a summit in Xiamen shows that a slide in freight rates and glut of new buildings are major concerns for owners
Dry-bulk shipping, which is facing its worst crisis in years due to a slump in freight rates and too much tonnage, is unlikely to fully recover until at least 2016, according to industry executives.
Despite the glut of new tonnage hitting the water and weak cargo growth leading freight rates to slide, many shipowners would invest in new vessels now.
This emerged from a poll involving about 700 executives from Western and Asian maritime-related companies, including China Ocean Shipping (Group), China Shipping and China Merchants, during last week's World Shipping (China) summit in Xiamen.
In the poll, sponsored by HSBC, 46 per cent thought the dry-bulk sector, involving the transport of cargoes such as iron ore, coal and minor bulks, such as cement and specialist steels, would not recover until 2016 or after. About 38 per cent, including Cosco chairman Wei Jiafu, thought the recovery would take place in 2015.
Of those polled in Xiamen, 55 per cent said overcapacity and dismal freight rates were the most negative factors affecting the industry.
"There is not a supply overhang, but a supply hangover," Hermann Klein, chief executive of Germany's Blue Star Holding, said, referring to the massive amount of tonnage ordered during the boom shipping years up to mid-2008 that is now being delivered.
Arjun Batra, group managing director of Drewry Shipping Consultants, said the global dry-bulk fleet had grown 26 per cent to 664.6 million deadweight tonnes (dwt) since January last year. By comparison, there has been single-digit growth in cargo volumes.