U.S. Navy’s First John Lewis-Class Oiler Launched at NASSCO
The first ship in the U.S. Navy’s new class of fleet replenishment oilers has been launched at General Dynamics NASSCO in San Diego. The John Lewis-class oilers will provide underway...
The dry bulk shipping market continues to see the fleet and orderbook grow. In January 2014, the worldwide capacity of dry bulk vessels grew by nearly 8 million deadweight tons (dwt), increasing 1.1% in the first month of 2014. The increase in January of 116 new bulk carriers was spread across all dry bulk sectors – Handysize, Handymax, Panamax and Capesizes.
By the end of January 2014, the orderbook for dry bulk increased from 133.3 million dwt to 139.0 million dwt corresponding to an order of 51 new ships, or 1,707 total vessels on order. The increase in January 2014 represents a 4.3% in one month. Approximately, 9% of the December 2013 gross dry bulk fleet is due by year-end (including January 2014 contribution). All sectors of the dry bulk fleet are expected to materially increase in 2013.
The growth of the dry bulk orderbook is a harbinger of challenges to come for the shipping market. The orderbook is now being ignored by analysts and shipowners/investors alike, as capital investment continues, while demand from steel and power plants trends lower.
The Chinese economy is slowing and we expect the impact to be reflected over time via lower shipping rates. The dry bulk shipping market will continue to remain under pressure as the orderbook over the next three years is delivered and beyond 2017 should the global economy experience slower growth. We do not expect central banks will be able to continue, at current level, their exceedingly strong accommodative monetary policies. As such, the dry bulk orderook may continue to pressure shipping rates for years to come. And, in so doing, the Chinese steel mills and power plants as well as other charterers will become “price takers,” a bad position for shipowners to end up becoming.
The question is, at what point do analysts and shipowners/investors come to this realization that the market will languish for years to come? And finally, what will be the action taken by those investors who entered the shipping markets, but who are really ”tourists”?
Jay Goodgal can be reached via email at [email protected]
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