Executive Briefings

Prospects for Dry Bulk Shipping Market 'Fairly Dark' Until at Least 2018

Shipping companies transporting coal, iron ore and other commodities are urgently seeking ways to conserve cash and withstand the worst market downturn on record as too many ships chase shrinking business.

A shortage of financing - estimated at $30bn and caused in part by banks cutting lending to sectors such as shipping - has also hurt companies, sending some to the wall.

"The overall prospects for the dry bulk market are fairly dark - it seems that there is little faith in the market for a recovery. The market mood deteriorates by the day, despite the recent improvement of the Baltic Index," said Basil Karatzas, head of consultancy and brokerage Karatzas Marine Advisors & Co.

The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry bulk commodities, earlier this year crashed to an all-time low of under 300 points.

While it has moved up to just over 600 points of late, the index –  which global investors look to for changes in sentiment for industrial demand – is still nearly 95 percent down from its all-time peak in 2008.

"Owners should be prepared to face a market which does not improve until 2018 but hope that improvement comes earlier," said Tony Foster, chief executive of British shipping asset manager Marine Capital.

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A shortage of financing - estimated at $30bn and caused in part by banks cutting lending to sectors such as shipping - has also hurt companies, sending some to the wall.

"The overall prospects for the dry bulk market are fairly dark - it seems that there is little faith in the market for a recovery. The market mood deteriorates by the day, despite the recent improvement of the Baltic Index," said Basil Karatzas, head of consultancy and brokerage Karatzas Marine Advisors & Co.

The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry bulk commodities, earlier this year crashed to an all-time low of under 300 points.

While it has moved up to just over 600 points of late, the index –  which global investors look to for changes in sentiment for industrial demand – is still nearly 95 percent down from its all-time peak in 2008.

"Owners should be prepared to face a market which does not improve until 2018 but hope that improvement comes earlier," said Tony Foster, chief executive of British shipping asset manager Marine Capital.

Read Full Article