Some sobering comments from the head of the world’s largest shipping association on the perilous state of dry bulk market, currently in the grips of the worst industry downturn in recent memory.
In a message ahead of Posidonia 2016, BIMCO President Philippe Louis-Dreyfus described conditions in the dry bulk market as “terrible” and warned that a full market recovery lies solely in the hands of the world’s shipowners, estimating that a return to profits is possible in 2019 only if tough and sustained measures are taken now and year on year by shipowners.
Using a new internal model to analyze recovery of down markets, BIMCO says that dry bulk recovery will take a “zero supply side growth” scenario, meaning shipowners will need to neutralize the delivery of new ships every year by scrapping an equal amount of capacity from the existing fleet.
“We cannot expect to be helped by growth in demand, the recovery of the market is wholly and exclusively in the hands of us, the shipowners,” commented Louis-Dreyfus. “The medicine is not going to be easy to take, zero supply growth has been achieved only three times in recent history, during the 1980s and 1990s. The task ahead of us is huge and must be sustained year after year.”
“We need to demolish an enormous number of ships and refrain from building new ships,” Louis-Dreyfus added.
Louis-Dreyfus also insisted that scrapping older vessels is not only a good way forward to a better market, but also essential for environment and the safety of crews.
The Posidonia conference held every two years in Athens, Greece is considered one of the world’s biggest shipping conferences, catering primarily to Greek shipping and shipowners.