International shipping association BIMCO says that a steady improvement in the global economy has and will continue to bode well for most shipping sectors, but an oversupply of ships and newbuilding orders will likely delay a long awaited market recovery.
In the foreward to BIMCO’s annual “Reflections” report, released Wednesday, President John Denholm notes that even though there is an estimated 20% more tonnage than required across the bulk carrier, container and tanker fleets, there is still an alarming number of newbuild orders taking place as high bunker prices and new regulations drive the need for energy efficient ships.
“The oversupply is aggravated by very high bunker prices,” Denholm says. “On the one hand this is forcing slow steaming that is absorbing some of the over-supply. On the other hand, it is driving the desire for new energy efficient ships.
“As a result,a worrying amount of ordering is taking place, adding tonnage to an already excessive world fleet. This will delay a return to a balance between supply and demand and hence the long awaited market recovery. To add insult to injury, the ever increasing regulatory requirements impose significant costs on our industry at a time when it can ill afford them.”
Still, BIMCO’s “Reflections 2014″ report says that windows of sustainable earnings are likely to occur more often going forward despiten”regulatory burdens” -particularly concerning sulphur limits, ship efficiency, ballast water treatment and NOx regulation- continuing to provide a major challenge to the cash-strapped maritime industry.
Reflections 2014 also takes a closer look at maritime security, with greatest emphasis on the scourge of piracy, but also combating of narcotics and terrorism. The piracy situation is dynamic, BIMCO says, and despite attacks in the Gulf of Aden and Somali basin dwindling the situation could reverse and the shipping industry must not drop its guard.
BIMCO’s full Reflections 2014 Report can be downloaded HERE.