The oversupply of vessels in the tanker market will soon be offset by the removal of non-double hulled tonnage, while the additional fleet growth will be absorbed by the growth in demand, a senior official from an international shipping consultant and shipbroker said.
Dr Philip Rogers, head of research at Galbraith’s, said fleet growth will outpace demand in 2009 leading to a “slightly softer” market. But by 2010 – although the overall market surplus for Very Large Crude Carriers (VLCCs) will be greater than the year before that – the rates will be firmer.
“In 2010, we expect that rates may be firmer as the main phase out of non-double hulled tankers kicks in and China and South Korea prohibit single hulls trading to their ports and terminals,” Rogers said.
The market will further tighten in 2011 and 2012, he said, adding that strong economic growth in the Middle East will also keep up pace of demand in the Gulf. The dry bulk sector, however, will continuously rally an upward trend for more than 45 years.
“Chinese demand is at exceptional levels and is expected to grow further this year, he said.
“India is finally emerging as a significant importer of coal and raw materials after years of only being seen as an iron-ore exporter.”
The order book, which currently stands at 228.8 million deadweight tonnage, is at record levels and can accommodate a cargo growth of 1,200 metric tonnes. Of this total, 171.5 million dwt is for delivery by 2010, shows his paper presented to Marine Money conference in Dubai. Demand is therefore expected to grow by about 405 metric tonne over this period hence an excess capacity.
However, even if demand has been underestimated by 200 per cent, the fleet capacity surplus is still evident, said Rogers.
Although the fundamentals are consoling, there are still a number of factors that are not within the control of the shipping industry, he said.
One of the main concerns is the shortage of labourers and material supply. “Will all the Greenfield shipyards be built, and even if they are, where will the skilled workers come from? Will all the main engines and cranes be delivered on time,” questioned Rogers.
New vessels will complement high demand