Commodity-Ship Orders Will Be Delayed, Canceled

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Thursday, 11 June 2009

As many as half the ships on order to carry grains, coal, iron ore and other commodities may be canceled or delayed, DryShips Inc. said. "Anywhere between 25 to 50 percent of the order book will be canceled or fall back by as much as two years," George Economou, the shipping company's chief executive officer, said yesterday at a TradeWinds shipping conference in Oslo.
The Baltic Dry Index, a measure of shipping costs for commodities, rose to an all-time high in May 2008. It subsequently collapsed, posting a 92 percent full-year drop, after demand for commodities fell.
The global fleet of dry-bulk ships, which has a capacity of 425.5 million deadweight tons, will grow by 69.2 million tons this year and 107.9 million tons in 2010, according to estimates from London-based Drewry Shipping Consultants Ltd. The Drewry figures are based on current orders and don't include scrapping, delays or cancellations.
A 50 percent cancellation-rate may still not be enough to lift the market, Jens Ismar, CEO of Western Bulk Shipping ASA, a Norwegian ship owner, said in an interview at the conference.
"Even if you have 50 percent cancellations and delays, we will still probably be long ships," Ismar said. "You need to be a big optimist to believe that there is a strong basis for being optimistic."
There is "more of a probability" toward 50 than 30 percent he said.