A new report, released by Lloyd’s Register - Fairplay Research, predicts that the world’s dry bulk carrier fleet will continue to show strong growth over the next five years, spurred largely by surging demand for iron ore and metallurgical coal to feed China’s undiminished appetite for steel production. The forecast provides a review of the global business environment demand for seagoing transport, market conditions and capacity utilization for these classes of vessels, and gives a detailed five-year shipbuilding forecast, including new orders, deliveries and demolitions.
The report estimates that the dry bulker fleet, currently standing at 7,839 ships with a total capacity of 432 million deadweight tons (dwt), will grow by an average of 9.5 percent through the end of 2013, up from 6.5 percent annual average growth the previous five years. The fastest growing segment will be very large ships over 200,000 dwt, increasing at 16.8 percent per annum.
Deliveries of new bulkers through year-end 2013 will amount to some 318 million dwt, up 150 percent from the last five years. This will be offset by an increase in scrapping, with 76 million dwt of capacity to be removed from the fleet. Shipyard order books for new bulkers will diminish as the large number of ships ordered during the boom years of 2007 and 2008 are delivered to the fleet. The contract forecast for 2009-2013 stands at 139 million dwt, considerably lower than the last five years, but a respectable size nonetheless, due to expected orders for new tonnage to be placed by Chinese and Japanese interests.
The continuing surge in Chinese imports of iron ore and coal will be the primary growth engine for the world’s bulker fleet, offsetting the falloff in grain and agricultural product exports and generally low freights for bulk commodities, according to the research report.
The growth curve for general cargo ships will be much flatter, according to the report. In August 2009, the general cargo fleet consisted of 17,137 ships with a total capacity of 81 million dwt. It is predicted to grow by just 2.5 percent annually through 2013. There are still a large number of newbuilds to be delivered – a hangover from the ordering binge of 2007 and 2008 – but scrapping will remove 12.7 million dwt from fleet capacity through 2013, and new orders will plummet by 63 percent as demand softens. The report also notes that the market for specialized refrigerated cargo vessels will continue to decline, with only a handful of ships on order.
Given China’s dominance in the steel industry, it is no surprise that China holds the top position in shipbuilding for the dry bulk and general cargo sector. China’s share of the orderbook through 2013 is a whopping 50 percent, while Japan and South Korea come in a distant second and third place. The report notes that bulker and general cargo ship deliveries from European yards have more or less disappeared over the last 30 years, and concludes “there is absolutely nothing that points to a reversal of this trend.”