The dry bulk market could become profitable again in 2019 – but only if a series of extremely tough and sustained measures are taken by shipowners, year on year. This is the message from Bimco president, Philippe Louis-Dreyfus, ahead of Posidonia 2016 as Bimco releases new market analysis on what the dry bulk sector must do to return to profitability.
Bimco has developed a new analysis model designed to highlight the actions needed for struggling shipping markets to recover – and to be able to track the progress of the recovery. Using this model, Bimco has developed a ‘zero supply side growth’ scenario for recovery of the dry bulk market. This scenario requires shipowners to neutralise the delivery of new ships every year by scrapping an equal amount of capacity from the existing fleet.
Commenting on the new analysis Louis-Dreyfus described the dry bulk market as being in a “terrible” condition. He said: “We cannot expect to be helped by growth in demand, the recovery of the market is wholly and exclusively in the hands of us, the shipowners. The medicine is not going to be easy to take, zero supply growth has been achieved only three times in recent history, during the 1980s and 1990s. The task ahead of us is huge and must be sustained year after year. We need to demolish an enormous number of ships and refrain from building new ships.”
He just said the obvious. More scraping and no orders is the only way out.But this demands change of attitude. Shipping is a marathon, not a sprint.
Dear Thomas,
In order to manage, first you have to measure. All shipowners need to contribute to this, otherwise a growth rate of zero for the supply side will not be achieved.
BIMCO will monitor and report to the industry on the progress going forward.
The dry bulk industry has not been profitable since 2011. This is indeed a marathon. The goal-line is not 2019, only the first year of profits IF a the present decision makers of the industry step up to the challenge. The new normal has certainly arrived, one where we have to pay due attention to the supply side every day – beyond 2019 too.