Tuesday, September 22, 2009
Tuesday, 22 September 2009
The need to scrap more vessels and cancel as many new building contracts as possible becomes even more urgent as 2009 nears its end. According to Allied Shipbroking’s latest weekly report, the global orderbook for all ship types equals to more than 4,800 vessels, with expected deliveries from 2009 and up to 2012. During this year, there are expected deliveries of 690 dry bulk vessels, with their numbers almost doubling at 1,273 in 2010, before dropping to 940 in 2011 and even lower at 345 in 2012. As far as tankers are concerned, owners are expected to accept deliveries of 508 in 2009, 600 in 2010, 400 in 2011 and just 56 in 2012. As for particular vessel types, a record 146 capesizes will be added this year, equal to 28 percent of the fleet, according to Fearnley Consultants A/S.
With such unprecedented numbers of new buildings, it’s bound that a part of them will face – or is already facing – financing troubles, something which many cash-rich ship owners are looking to take advantage and secure some value deals. For instance, as Hellenic Shipping News previously reported, NJ Goulandris bought three tankers from Metrostar, with all vessels scheduled for delivery before the end of 2009. Besides, Hellenic ship owners, Chinese owners have been looking out for such opportunities throughout the year, investing aggressively in newly built vessels.
Last week, National Bank of Greece predicted that new building cancellations will reach about 40% of the total orderbook, which means that 100 million dwt will never reach the water. This, coupled with an estimated 70 million dwt of scrapping of older tonnage, could allow for a gradual recovery of dry bulk usage, close to the 10-year average of 87% of available hiring days. Should this scenario come through, dry bulk rates will drop below 2,000 points during 2010 and recover higher than 3,000 points during 2011, which could be deemed as very satisfactory, should one consider the current imbalance in the market.
The biggest-ever order book for new carriers, according to Lloyd’s Register-Fairplay, may hurt profits at shipping lines while providing higher returns for traders. Rates for capesizes have fluctuated more than 50 percent in seven of the past eight years. Earlier this month, BIMCO said that the global fleet has already grown by 4.2% this year. Expected increase in gross dry bulk ship supply was scheduled to be 71.3 million DWT, equal to 17% of active dry cargo fleet. In terms of tonnage, the total bulk fleet still to come on stream so far in 2009 exceeds that of 2008 as a whole. On top of the tonnage already delivered, 46.1 million DWT over the next 5 months is due to leave the yards and enter into the active fleet.
“The monthly average of delivered tonnage in the first seven months of 2009 was 3.5 million DWT. That average figure has to go up to 9 million DWT during the last 5 months if the total scheduled order-book is to be delivered before year-end. Tendencies to some delays have materialized, but can still be considered insignificant. The delayed tonnage has been added on to the remaining deliveries to calculate the monthly average” BIMCO said.
Since the low-point of the BDI in December 2008 and January 2009, demand has surprised on the upside and has returned the BDI to a more “normal” level above 2,000. It should be noted that this has happened while the active fleet has grown by a significant 17.7 million DWT. This supply side pressure is bound to affect rates downwards, especially if this is coupled with an anticipated weaker demand.
So far, 6.8 million DWT has been demolished in 2009. And that figure is bound to increase due to the scrapping potential of the bulker fleet. 67.5 million DWT is more than 25 years old. Moreover, very low scrapping during the most recent super-cycle has resulted in an overhang of old tonnage still in business. This has left the average scrapping age in recent years closer to 30 years rather than 25 years of age. Increased scrapping is deemed necessary to prevent considerable weakening of the market balance.