Enrico Paglia at IREPAS: Freight market hit hard by oversupply
Wednesday, 03 October 2012 18:04:53 (GMT+3)
|
Speaking at the SteelOrbis Fall 2012 Conference & 67th IREPAS Meeting held in Munich, Enrico Paglia from Italian maritime service provider Banchero Costa said that daily rates earned by ships have been extremely depressed in the last two years, following the rapid recovery observed after the world economic crisis back in 2008. The major reason for this depression, according to Mr. Paglia, is the overcapacity created by oversized fleets, due to the flood in new ship orders during the boom in 2008 just before the crisis
Indicating that 30 percent of ship orders for this year have been postponed to next year, Mr. Paglia said that, even with these delays, the growth in total dry bulk fleet capacity is expected to reach 13 percent this year and it is expected to be 10 percent in 2013. In 2014, almost all existing ship orders will be delivered and supply and demand will gradually start to regain balance again, said the Banchero Costa research analyst, adding that a reduction in supply may be observed after 2014, as a result of demolitions.
Regarding dry bulk demolition activity, Paglia said that in the first nine months of the current year the volume of tonnage demolished surpassed the total volume in 2011. However, the demolition volume is still low compared to the delivery rate (one vessel is demolished against every three delivered), especially for bigger units, he added. He continued by stating that average earning rates for vessels in the spot market are so close to operating costs that shipowners are seeking to reduce the supply side.
Similar articles