The dry bulk market could become profitable again in 2019 – but only if a series of extremely tough and sustained measures are taken by shipowners, year on year, according to Philippe Louis-Dreyfus, President of BIMCO.
This message comes ahead of Posidonia 2016, as BIMCO releases new market analysis – ‘The Road to Recovery’ – on what the dry bulk sector must do to return to profitability.
BIMCO has developed a new analysis model designed to highlight the actions needed for struggling shipping markets to recover – and to be able to track the progress of the recovery.
Using this model, BIMCO has developed a ‘zero supply side growth’ scenario for recovery of the dry bulk market.
This scenario requires ship-owners to neutralise the delivery of new ships every year by scrapping an equal amount of capacity from the existing fleet.
Mr Louis-Dreyfus said: “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 ship-owners.
“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.”
He also said that scrapping older vessels is not only a good way forward to a better market, it is also an essential measure in favour of the environment and the safety of crews.
The first piece of analysis using this model focuses on the dry bulk sector, but BIMCO will later also use the model to analyse fundamental changes in other shipping markets.