APRIL 2014 ISSUE
Analysing the state of the global shipping industry is a difficult business. While generally positive figures for the UK’s economy were issued during January, suggesting that for some things are looking up, is the global shipping industry also in a better shape in 2014?
When the recession started in 2008, the industry was seen as an indicator of how the world economy was faring. A key measure used by industry to track freight rates, the Baltic Dry Index, has been seen as a forecaster of global economic demand. And although it has lost half of its value recently, demand for dry cargo ships is getting stronger, say owners and analysts, as growth in bulk cargoes such as iron ore and coal outpaces the supply of new tonnage for the first time in seven years.
With this news it seems that the global shipping industry is poised to emerge from its longest downturn in three decades, buoyed by an end to years of over-capacity that have depressed freight rates since the end of 2008. And there is good news from the tanker sector too, where rates for very large crude carriers (VLCCs) on routes to Asia have climbed.
But one company, Shipping Corporation of India (SCI), said that, although its vessels were fully deployed, it was not getting good freight rates, as there is still an over-supply of vessels in the market. And with ever bigger container ships being built, as we report in Waterfront news, this will inevitably have an impact on future freight rates, possibly to the detriment of the industry as a whole.