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Dry bulk rates to remain weak for rest of decade: Goldman Sachs

New York: Dry bulk freight rates are set to remain low for the rest of this decade as overcapacity will haunt the sector, Goldman Sachs has said in a research note.

The bank said that utilisation of the global dry bulk shipping fleet is set to decline from around 90% between 2008 and 2010 to 70% from 2015 to 2019.

“Faced with the risk of leaving vessels idle over long periods, we believe that shipowners will continue to charge low charter rates. This compounds the impact of lower fuel prices, resulting in a period of cheap freight that should last until older vessels have been scrapped in sufficient numbers to balance the market,” Goldman maintained, adding: “We expect low freight rates to persist at least until the end of the decade.”

The bank’s view is one held by one of shipping’s best-known analysts, Dr Martin Stopford. Speaking at a breakfast organised by our sister title, SinoShip, last year, the president of Clarkson Research warned that dry bulk was unlikely to show much improvement for the rest of this decade.

Short-term, many readers of this site remain concerned that more pain is to come for the dry bulk sector. In an ongoing poll carried by Maritime CEO on this site, 56% of the 400-plus respondents to date believe the Baltic Dry Index has yet to bottom out. The poll, results of which will be in the next issue of Maritime CEO magazine due out in early June, is accessible by clicking this link.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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