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Huge Bulk Overcapacity In Absence of Demand

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Author(s): Rahul Sharan, Lead Research Analyst, Drewry, New Delhi, India

The dry bulk market is grappling to survive in absence of demand. Trade of the major commodities, coal and iron ore, have almost become stagnant. Result: the big vessels (which largely carry the major commodities) are suffering the most.

However, dry bulk trade shifts comfortably from bigger segments (say, Capesize) to smaller ones (say, Panamax) rather easily and vice versa in case of a shift from smaller vessel to bigger, except for some cases like, ports and canal restrictions. So, with an overcapacity of more than 30%, the entire dry bulk market is living through some of the worst times in its history.

Much in line with Drewry’s presumptions, the Baltic Dry Index also kept falling, marking a new low every other day. It’s also probably one of the toughest times for dry bulk shipping companies as many have filed for bankruptcies over the past two years, and with no signs of recovery in sight, many more could follow the suit. Many vessels are being fixed at far below their operating costs largely because owners are finding it difficult to lay up their vessels for long…

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The Mega-Ship Issue

PTI Edition 69 • Digital & Print
Edition 69 of Port Technology has a special focus on shipping, with exclusive Q&A's with the world's top carriers, and insights into the shipping industry from analysts. Also featured are papers on areas such as port automation, LNG, security and the floundering dry bulk market.

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