Thursday, March 05, 2009
Bloated bulker orderbook 'spells disaster' for shipping markets
Michelle Wiese Bockmann - Wednesday 4 March 2009
THE world’s bloated bulk carrier orderbook “spells disaster” for shipping markets and could produce “a wave of destruction for banks to rival the sub-prime crisis”, one of London’s most respected shipbrokers forecast on Wednesday.
Howe Robinson’s annual dry cargo report for 2009 appealed for owners, banks and shipyards to urgently and responsibly work together to “re-order” newbuildings and keep shipping solvent over the next decade.
“The newbuilding profile needs putting back in a tube, from whence it can be squeezed out again over many years to come,” the report said.
“If this does not happen the road to recovery will be littered with many more bankruptcies — and they will not just be shipowners.”
The warning comes as many owners remain embroiled in contentious talks with shipyards in Asia to scale back, cancel or delay orders made at the height of the six-year shipping supercycle.
Shipping is in “the eye of the storm” as the global economy and world trade faces its most serious crisis in 60 years, Howe Robinson said.
At the same time there are more than 3,000 bulk carriers on order at 155 different yards in 15 countries by 479 known owners. All are scheduled for delivery by 2011.
“Yards, owners and banks must realise that it’s not going to rosy in the future unless they do something about this,” said one of the report’s authors.
“The penny really needs to drop for people to realise how serious this problem is, and rather than just talk about it, or assume that this orderbook won’t deliver, they need to take action and do it.
“The banks need to realise the true extent of potentially what they’ve got on their books, because it has the potential to be rather significant.”
Howe Robinson said the “anarchic” orderbook included 922 newbuilding bulk carrier deliveries of 75.6m dwt in 2009, including 171 capesize vessels, representing 26% of the existing fleet.
“Even if you slash the orderbook it’s still too big and banks may not realise that with these defaults and moving into a recession they may become one of the biggest shipowners around,” a Howe Robinson spokesman said.
Analysis reveals a staggering mismatch between supply and demand. But iron ore volumes are unlikely to grow more than 5%, while coal trades are forecast to decline.
Sister company Maritime Strategies International forecasts 11.4% of the orderbook will be delayed but only 6.7% cancelled in 2009. Cancellation rates are forecast to reach 22% in 2010 and peak in 2011 at 22.9%.
Howe Robinson forecast 2009 fleet growth at 18%-21% for capesize bulk carriers, 6% for panamaxes and 13%-15.3% for handymax bulk carriers.
That comes as Howe Robinson said headline numbers remained “gloomy” for 2009 steel output — the main driver of bulk carrier demand.
Although European and Japanese demand for seaborne iron ore was set to fall, Chinese imports could see overall 2009 levels rise by as much as 46m tonnes, from 856m tonnes last year.
“The supercycle era is bust,” the report bluntly concluded. “It is difficult to write a plot that does not signal the onset of a sharp recession.”
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