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Shipping industry gloomiest since 2009 in survey as glut endures

Monday, July 6, 2015 - 07:14
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The shipping industry is the most pessimistic in six years about its prospects as a fleet surplus persists, according to a survey by law firm Norton Rose Fulbright.

[LONDON] The shipping industry is the most pessimistic in six years about its prospects as a fleet surplus persists, according to a survey by law firm Norton Rose Fulbright.

Two thirds of respondents working in the industry said they were pessimistic about its prospects, the most negative outlook since 2009, the London-based company said in a statement. The biggest contributor to their negative view was excess fleet capacity.

While parts of the maritime industry such as the market for hauling oil are surging this year, others are slumping. Rates for delivering Saudi Arabian crude to Japan, a benchmark route, just had the highest first half of a year since at least 2009. The Baltic Dry Index, measuring coal and iron ore freight, had the worst first six months ever.

"Shipping is a notoriously speculative business," Harry Theochari, the firm's global head of transport, who has worked in the industry for more than 30 years, said by phone. "We have this huge overcapacity but a lot of shipowners are still going out and ordering ships." The survey collated responses from 94 people working across the maritime industry. More than half saw over-capacity as shipping's biggest challenge, and continuing orders for newbuild vessels has led to increased pessimism, according to Theochari.

Tanker rates from Saudi Arabia to Japan averaged US$63,476 this year, according to Baltic Exchange data. The Baltic Dry Index averaged 627 points, the lowest for the start of a year since it was first published three decades ago.

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