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Fundamental changes in global shipping industry

World Coal,

According to BIMCO’s latest report, the global shipping industry will continue to experience what it sees as “fundamental changes”, however, the company also sees a positive outlook materializing around the world.

Global economic growth, already stronger than expected three months ago, will provide the foundation for growth in the shipping industries, as key countries such as the UK, China and the US experience positive adjustments.

STORY Market outlook for dry bulk shipping

Growth in these “advanced economies” generates higher volumes of imported goods per unit of GDP – and thus more trade – than growth in the emerging market and developing economies. This is one explanatory factor, according to BIMCO, behind the fundamental economic growth that is generating a larger demand for shipping every day, but at a slower pace than pre-financial crisis levels.

In December 2013, the World Trade Organisation (WTO) succeeded in closing a trade deal involving 159 countries. The agreement is estimated to inject US$ 960 billion into the global economy and create 21 million jobs. The deal slashes red tape at customs around the world and gives improved terms of trade to the poorest countries.

Lunar New Year impacts Asian dry bulk shipping market

The Lunar New Year during the first half of February is likely to have a softening effect on dry bulk shipping rates, according to BIMCO. Adding additional pressure in the Handymax market is the Indonesian ban on exports of selected unprocessed mineral ores.

Demolition of existing fleet

As the positive trends in the shipping market continue, new build tonnage will likely need to be built to cater for demand. As a result, BIMCO expect a number of owners will take advantage of the currently strong demolition prices to let go of less efficient ships.

Steel market growth

World crude steel production increased 3.5% in 2013, driven forward by Asian production, where China more or less singlehandedly occupies the limelight due to its sheer size. Japanese growth of 3.1% and Indian growth of 5.1% is dwarfed by China, which brings its total production within striking distance of half the world’s production.

The increase in steel production is good news for metallurgical coal producer. The current slight oversupply in the metallurgical coal market will be corrected in the near term, as demand increases and new production projects and expansions are delayed or cancelled. As a result, the demand for metallurgical coal in the medium term may even exceed current forecasts of steady growth.

Edited from various sources by Sam Dodson

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