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This year will be a tough year for shipping

This year will be a tough year for shipping

02-01-2017 12:00:00


The prospect of minimal growth in the world economy is negatively contagious on shipping, which must look forward to a year of tough competition once again. A competition that will affect the tanker- and bulk market.

However, there is a tiny bright spot for the container market, where the decline has stopped.
This is predicted by BIMCO, the world's largest international shipping association, in its annual analysis of the overall market.

The already pressured dry bulk sector can look forward to another tough year in 2017. The bottom was reached in February of last year when the Baltic Dry Index (BDI) reached an all-time-low of 290, but later recovered. However, the sector is still marked by significant overcapacity to be reduced before the sector can really see improvements.

"Scrapping and not building new ships is essential, as we cannot expect the same growth in demand that we have seen so far," said Peter Sand, chief shipping analyst for BIMCO.

He points out that there is a very large number of vessels on order for delivery in 2017 and 2018, while scrapping is at a very low level. It should reach 30 million DWT annually to neutralize the impact of the new ships.

The tank-market experienced pressure after a very good year in 2015, due to small increases in demand, while the fleet grew by 6% in 2016. BIMCO predicts that growth in 2017 will be 3% and that scrapping will be at the highest level in five years - but still not enough to prevent the market from being unprofitable.

The challenged container market seems to face a bearable 2017.

In the past year shipowners were adept at using tools such as slow steaming and decommissioning to reduce costs, while volume of new business was limited, scrapping increased - and the market consolidated.

Overall, the market conditions were improved in 2016, as the increase of tonnage ended up being lower than the growth in demand. That has not happened since 2010.

BIMCO predicts, based on a net fleet growth of 3.1%, that the container market will neither worsen or improve in 2017.

Source: BIMCO / Maritime Denmark


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