Maritime CEO Forum: Dry bulk stars in alignment a cause for concern

Maritime CEO Forum: Dry bulk stars in alignment a cause for concern

The sense of optimism among the majority of speakers at yesterday’s high level Maritime CEO Forum dry bulk debate led one panellist to question this near universal sense of hope for a sector that has been in the doldrums for much of the last decade.

All speakers at the show, which took place at the Fullerton Hotel in Singapore, were confident the next couple of years looked good for dry bulk.

However, Michael Nagler, head of chartering at Noble Group, cautioned: “The problem is when everyone thinks it is all perfectly aligned – it is very rare that this happens.” Nagler predicted freight rates would be good for the coming two years and then would “fall off a cliff” as owners take in another swathe of newbuilds. The only reason they might not, he said, is due to finding finance becoming more difficult.

Fiete Kallenberg, head of capes in Asia Pacific for Cargill Ocean Transportation, predicted a sustained recovery with capes having reached a “very good base” of $30,000. A growth of less than 1% for 2018 and 2019 for capes was “next to nothing”, Kallenberg told delegates, while demand remains very robust citing long ton mile lanes from Brazil and West Africa to Asia.

“From a capacity utilisation point of view we have not seen anything like it for the last five years,” Kallenberg said, adding: “The next two years should average $20,000 to $25,000 and if the stars are aligned it could hit $40,000.”

Handysizes too have hit a “fantastic” base of $8,000 a day, Rob Aarvold, the general manager of Swire Bulk, told delegates predicting the sector should kick on to hit $11,500 a day.

“With the right assets there is more liquidity. There’s more upside to come but I’m just waiting for that volatility,” Aarvold said.

Khalid Hashim, the veteran managing director of Thailand’s Precious Shipping, agreed demand is growing above supply and that this year and next should be good for those in dry bulk. Hashim said the sale and purchase market will be as volatile as the freight market.

“Let two quarters of profit happen and you’ll see every shipowner and his dog looking to buy tonnage,” Hashim warned.  

A full report of the dry bulk session will be carried in the next issue of Maritime CEO magazine. 

Maritime CEO Forum was sponsored by Cobham, Compas, Dualog, DVB Bank, Liberian Registry, Marlink, OSM Group, ShipServ, Veritas Petroleum Services and Wartsila.

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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