BIMCO: Dry bulk, tanker newbuild contracts surge in 2017

Since the start of 2017, newbuild contracts for the dry bulk and tanker shipping industries have collectively increased 20 percent from the corresponding 2016 period, according to the Baltic and International Maritime Council (BIMCO).    Newbuild contracts for the dry bulk and tanker shipping industries have been signed for at an increasing pace so far in 2017, collectively surpassing the corresponding 2016 period by 20 percent, according to the Baltic and International Maritime Council (BIMCO).
   Since the start of 2017, newbuild orders in these segments has collectively amounted to 19.6 million DWT.
   So far in June, 1.9 million DWT has been ordered in the crude oil tanker segment, 0.7 million DWT in the product tanker segment, and 0.5 million DWT in the dry bulk vessel segment.
   “BIMCO expected newbuild activity to pick up, so the recent development is not surprising,” BIMCO Chief Shipping Analyst Peter Sand said. “It is however not what the industries need given the present challenges in the market, as the earnings in all three segments gives little incentive for adding more capacity to the industry.”
   All three of the sectors are struggling from very low freight rates, and therefore, “it is important that the recent development in contracting activity reflects a short-term trend,” he added. “A continuous high level of newbuild activity will halt the current slow progressing improvement in the shipping markets.”
   Overall, the crude oil tanker sector has been the main driver for the increase in newbuild activity across the dry bulk and tanker shipping industry, BIMCO explained. During the first five months of 2017, 27 very large crude carriers (VLCCs) were ordered, which was the highest level of orders for the first five months of any year since 2008.
   Meanwhile, the delivery of VLCCs for the first five months of 2017 was the highest since 2011, and only two VLCCs have exited trading so far this year. “The surge in deliveries has been injected directly into the supply side, as the demolition activity for the crude oil tanker shipping industry has been close to zero in a large part of 2015 and 2016,” BIMCO said. “Thereby, the demolition activity hasn’t taken any supply out of the market and caused the fleet growth to climb similar to the deliveries.”