Clarksons: Shipping Sees Toughest 1H Since Financial Crisis

  • Business & Finance

Shipping is experiencing some of its toughest conditions since the financial crisis and, despite its many efforts, may well be heading for an appointment with the bankers, according to Clarksons Research.

With the spread of challenges facing the industry, Clarskons said that it is unlikely “the shipping markets would achieve many top grades,” however, the industry showed some improvement during the first half of 2016.

With widely reported historical lows in the bulker sector in the first half, Capes averaged below USD 5,000/day in 1H 2016, some 76% below the average since 2009.

Containerships fared little better, slumping to 54% below trend while offshore rates were also almost 50% down on trend and generally hovering around OPEX levels, Clarksons said, adding that the “prevalence of lay-up and stacking makes offshore arguably the most challenged sector at present.”

LPG rates also moved below trend, with VLGCs averaging USD 32,000/day, albeit following their stellar performance of 2015.

Meanwhile trade is heading towards more muted growth with an expectation of 2.2% in 2016 compared to a trend rate of 3.2%.

However, reduced fleet growth (1% to reach 1.8 billion dwt), increased demolition and extremely limited newbuild orders marked the first half of the year.

Although demolition of 29 million dwt was slightly below 1H 2012 levels, it was 43% above trend, while orders of 18 million dwt and USD 16 billion constituted a 35-year low and 68% down on the average since 2009, lower than the 19.1 million dwt in 1H 2009 and lower still if the Valemax orders of 12 million dwt are excluded.

“Further pain for the shipyards and pressure on newbuild prices seems likely as the year progresses,” Clarksons said.

Sale and purchase activity was well down in value terms but marginally above trend by tonnage, reflecting the strong buying appetite for bulkers as bulker sales were at 21 million dwt in 1H 2016, the highest tonnage figure since 1H 2007.

Although they eased back during the first half, tanker earnings continued to perform above trend with VLCC rates still averaging around USD 50,000/day.

Clarksons noted that product tanker earnings also eased back somewhat this year but remain above trend.

“The best performer across shipping was the Ro-Ro market, continuing its improvement from 2015 and 60% above trend, with the Ferry and Cruise markets also generally positive,” Clarksons said.

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