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Live From Posidonia 2016
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Dry bulk shipping needs zero fleet growth to be profitable by 2019: Bimco

Zero fleet growth is required in the dry bulk sector over the next few years to bring it back into profitability by 2019.

Ahead of Posidonia 2016 Bimco president, Philippe Louis-Dreyfus described the dry bulk market as being in a “terrible condition”.

Analysis by Bimco titled the “The road to recovery” shows that zero fleet growth will be required with owners scrapping as much tonnage as is added to the fleet this year.

“We need to demolish an enormous number of ships and refrain from building new ships,” Louis-Dreyfus said.

Bimco estimates that breakeven for dry bulk shipping happens at a utilisation rate of 74.4% based on zero fleet growth this would happen in 2019.

In 2015 utilisation dropped to 71% meaning a 227m dwt surplus in capacity.

As shipowners have no control on the demand side of the equation, scrapping is the only solution they can employ to get the market back to profitability.

“We cannot expect to be helped by growth in demand, the recovery of the market is wholly and exclusively in the hands of us, the shipowners,” Loui-Dreyfus commented.

“The medicine is not going to be easy to take, zero supply growth has been achieved only three times in recent history, during the 1980s and 1990s. The task ahead of us is huge and must be sustained year after year.”

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