BIMCO warns of 'wall' of newbuildings this year

BIMCO's "Reflections 2011" report emphasises that all of the main shipping segments are facing what it describes as a "wall" of new ships to be delivered in 2011.

This oversupply of capacity is likely to cause immense problems, particularly for the dry bulk segment which is forecast to be hit hardest, as BIMCO predicts that the fleet will grow by as much as 14 per cent in 2011.

For containerships the fleet is forecast to grow not less than eight per cent and bulk rates are generally set on a long contract basis as opposed to the published tariffs of the box carriers who often work in agreement with each other, anti-cartel regulations not applying to certain sectors.

BIMCO points out that supply growth is mainly biased toward the bigger ships, illustrated by the ratio order book to active fleet.

For containerships of more than 8,000 TEU, the ratio of 95 per cent, for capesize bulkers, it is 67 per cent and for very large crude carriers (VLCC's) the ratio is 38 per cent.

In a normal year, this ratio is 30 per cent for the containerships and 20 per cent for bulkers and tankers.

Despite healthy demand growth forecasts across the board, the main short and medium term challenge for the industry remains oversupply of tonnage.

There are copious notes in the document regarding the recent consecutive 35-day fall of the Baltic Dry Index due, it concludes, to the Chinese initiative to slow growth, and it relays predictions that total dry bulk demand is forecast to grow in 2011 by seven per cent, down from nine per cent in 2010.
(Source:www.schednet.com)