Dry Bulk Shipping Will Not Return to Profitability before 2017

The gloomy outlook for the dry bulk shipping market continues to afflict ship owners

Drewry Maritime Research
Drewry Maritime Research

London, UK—Dec. 2, 2015—The gloomy outlook for the dry bulk shipping market continues to afflict ship owners and the market is not expected to return to profitability before 2017, according to the Dry Bulk Forecaster report published by global shipping consultancy Drewry.

Ship owners continue to struggle to recover their costs as commodity demand falls far short of owners’ expectations. As a result, ship owners continue to downsize their vessel holdings, which will enable oversupply to reduce over the next five years. The second-hand market remains active, as owners with sound financial backing acquired many vessels in distress sales. The global dry bulk fleet grew just 2 percent in the first nine months of 2015, reaching 773 million deadweight tonnage (DWT).

On the demand side, the iron ore trade is forecast to grow at a moderate pace of 3 to 4 percent over the next few years; coal imports to China slowed down and a rebound is not expected any time soon. Although India does have an over-ambitious plan to become self-reliant in thermal coal, the country cannot simply lessen its dependence on imported coal, as demand continues to rise steeply.

“Dry bulk freight rates are expected to improve from the fourth quarter onwards. Drewry’s view of a more stable supply-demand balance hinges largely on the expected improvement in the demand outlook and an anticipated moderate growth in the supply perspective. However, a recovery to the point that ship owners start earning profits will remain elusive for at least another year,” continued Saran.

Drewry expects the dry bulk shipping market to return to profitability only from 2017.

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