International shipping association BIMCO said in a recent industry report that while demand in the dry bulk market has improved, the supply side still leaves a lot to be desired.
With ship owners’ interest in demolitions abating, BIMCO reports, supply levels have become undesirable and inauspicious for profitability.
Still, the organization said fundamental market balance is seeing improvement, and could reach healthy profit levels by 2019. This possibility remains in the hands of ship owners, however, because recovery needs tough initiatives that need to be sustained year on year.
“The freight market remains lossmaking and (is) in a very bad state. The market has (rose) only from ‘catastrophic’ to ‘gloomy’—so the need for ship owners to take decisive action remains,” explained BIMCO chief shipping analyst Peter Sand.
The first five months of the year saw operators controlling capacity by limiting the effects of new deliveries with the demolition of older vessels.
BIMCO further reported that members were set to meet the organization’s capacity target of a net supply growth of 10 million deadweight tonnage (dwt) for the full year from January to May with the aforesaid strategy.
However, the balance tipped in October when carriers stopped the demolitions of excess capacity, while continuing to absorb new builds.
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