28868 members and growing – the largest networking group in the maritime industry!


Wednesday, May 12, 2021

Maritime Logistics Professional

Bulk Freight Rates Drive Surge in Scrapping and Layup

Posted to SHIPPINGInsight (by on June 13, 2012

Faced by disastrous freight rates in the spot market, bulker fleets look to trim older tonnage.

I saw a news report this morning that Mitsui OSK Lines will remove 10-20 of its Capesize bulkers from the fleet  in a move to reduce its exposure to disastrous freight rates.  Although long-term prospects for coal and iron ore are positive, Capesize rates are currently averaging $4,100 per day for ships that cost some $20,000 per day to operate.  It doesn't take long to do the arithmetic. The law of supply and demand is relentless.

More evidence, if any is needed, that shipowners face a difficult business environment, which will not get much better anytime soon.  The survivors, I believe, will be the ones that find the right balance of scrapping older inefficient tonnage, strategic investment in more efficient new ships and reducing operating costs through more efficient fleet operations.

These are the subjects that will provide the focus of discussion at the 2012 ShippingInsight Fleet Optimization Conference, to be held in Stamford, Connecticut, October 8-10.  I encourage you to register now at ShippingInsight.com, and take advantage of early-bird discounts.