Supply growth interventions, combined with a mild improvement in seaborne trade, is expected to result in the reduction of persistent overcapacity in the maritime industry.
These developments are forecast to push the dry bulk shipping market to recovery, shipping consultancy Drewry said in a World Maritime News
Further, select charter rates are also expected to double in the next five years, as they bounce back from this year’s lows.
“Dry bulk shipping has bottomed out and a market recovery is underway, albeit a slow one,” Rahul Sharam, Drewry’s lead analyst for dry bulk shipping said in the report.
The additional cost of installing ballast water treatment systems (BWTS) will also force ship owners to send younger tonnages to the scrap heap, Drewry said, explaining that operators are barely keeping up with operating costs and “the additional cost (of BWTS) will mean increasing losses.”
Drewry also said in the report that the sustained scarcity of private equity has kept the growth of new vessel orders in check this year. Investors are expected to remain wary of the dry bulk market, resulting in low demand for new ships.
“With investment remaining out of reach from dry bulk owners, even a modest growth in demand will help support market recovery. Meanwhile, the increasing cost of running an old ship will mean more vessels go to scrapyards, tightening supply over the next five years,” Sharan observed.
As supply thins, prospects for shipping demand are rosy, Drewry said, as Brazil gets a lion’s share of China’s iron ore imports, and drives higher demand for tonnage.
Asian coal imports are likewise expected to contribute to the dry bulk recovery as countries such as Vietnam, Korea and Taiwan ramp up imports to meet growing energy demand. Drewry projected sustained growth for coal demand in the next five years.
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