Global shipping market recovery officially confirmed!
2017-08-17 09:00
After years of sluggishness due to overcapacity, the global shipping industry is finally signaling a confirmed market recovery. Importantly, this is not a temporary market improvement, but a fundamental shift.
Clarkson recently stated that since the global financial crisis, the global shipping industry has been hit by about 10 years of overcapacity and a sharp decline in trade volume. Now, the industry is finally starting to see a "fundamental shift".
Clarkson's revenue reached £157 million in the first half of this year, with pre-tax profits surging 25% to £21.9 million. Clarkson's CEO, Andi Case, said this is a fundamental shift, not a temporary market improvement.
Andi Case pointed out that the number of ships delivered has decreased significantly over the past four years, so shippers need to pay higher freight rates, which is also an important factor driving the strong recovery of the global shipping industry. He said that because the number of new ship orders has reached a new low, supply and demand have begun to balance. Andi Case said that existing capacity has begun to absorb new demand.
Andi Case pointed out that global shipyards delivered 2047 ships in 2013, but this number dropped to 217 in 2016. According to Clarkson data, the number of new ship orders this year has reached 267, but 266 have been scrapped. New ship construction has dropped to a very low level, the market supply and demand are beginning to recover balance, and existing merchant ship capacity is beginning to absorb new demand.
Changes in the BDI index best reflect the recovery signals of the global shipping market.
On August 15, the BDI index was reported at 1169 points, marking its 12th consecutive trading day of increase. The index has risen by more than 55% in the past six months and has rebounded by nearly 300% from its trough in February last year. This is because of the strong market demand for Capesize and Panamax bulk carriers is strong.
It is understood that the current freight rate for Capesize vessels is US$16,261 per day, up US$1,443 from mid-April; the Panamax freight rate is up US$224, at US$10,056 per day. Year-to-date, Capesize bulk carrier freight rates have increased by about 139% year-on-year, mainly due to reduced new ships and increased demand from China. The ratio of new ship order tonnage to existing capacity is 10.6%, significantly lower than 24% in 2014, which helps to rationalize merchant ship supply; in addition, the increase in coal freight volume also supports the rate.
Brokers point out that this is a fundamental upswing, not just a short-term market surge, and are optimistic about the outlook for 2018.
This is not the only sign of recovery in the global shipping industry. This year, South Korea's three major shipbuilders have continuously received a large number of new ship orders, almost completing their annual order targets half a year in advance, and are gradually emerging from the downturn.
However, some experts still disagree with the view that the shipping industry is gradually recovering. Securities firm Liberum said that although the shipping market continues to move in a positive direction, the main market remains quite sluggish. In 2017, ship supply was slightly lower than demand; however, whether the market can continue to improve depends on whether the industry can rationally control the supply.
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