2017 will see another year of die-hard competition, which now includes tankers, says International shipping association Bimco.
The shipping industry has its work cut out going forward in 2017 as the International Monetary Fund (IMF) forecast the lowest level of global GDP growth since 2009.
In 2016, the container shipping industry bit the bullet in terms of demolition and consolidation to help the market to recover. The dry bulk sector needs to copy that approach«. Bimco said in market outlook released today.
Looking forward to 2017, Bimco said that it is vitally important that shipowners handle the supply side of the market 'with great care'.
A continuance of the alarmingly low level of demolition activity in the second half of 2016 simply would not deliver the needed zero fleet growth.
A significant number of new ships are on order for 2017 and 2018. The only way to neutralise the impact of this influx of new ships will be to scrap 30 million DWT annually. The analysts expect the supply-side to grow by around 1.6% in 2017 (2.2% in 2016E).
For the tanker market, it is suggested that in coming years the end-consumption of oil will need to catch up – and bloated oil stocks must be drawn on – before the market can be rebalanced. Global oil supply continued to grow in 2016 despite many disruptions to production in key exporting countries.
BIMCO expects the crude oil tanker segment to see a net fleet growth of around 3% in 2017 (6.0% in 2016E). It estimates the supply side growth rate of the oil product tanker fleet to be around 2.5% (6.1% in 2016E).
Nevertheless, market conditions ended up improving in 2016 as fleet growth was lower than demand growth, the first time since 2010. BIMCO expects the container shipping segment to see a net fleet growth of around 3.1% in 2017 (1.1% in 2016E).
If the multiplier gets back to one, and the IMF forecast of 3.4% becomes reality, the market will neither improve or worsen in 2017.