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Sustained upturn for bulk market to take hold from 2017-18: U-Ming

Sustained upturn for bulk market to take hold from 2017-18: U-Ming
The sluggish dry bulk shipping market has passed the rock-bottom stage but the recovery will remain fragile over the next couple of years, according to CK Ong, president of U-Ming Transportation Corp.

The global bulk shipping sector has been beset by prolonged low freight rates and too many ships chasing after uncertain growth in demand, especially with China slowing down its imports of commodities.

“We believe the worse is over, but it would probably take another one to two years before we see a more sustainable recovery as the market needs time to digest the oversupply built up over the last decade,” Ong told Seatrade Maritime News.

The Baltic Dry Index (BDI) touched a historic low of 290 points on 11 February 2016, and has since rebounded to 688 points on Monday, although this is still below operating cost levels.

“While the market struggles to digest the excess or/and less efficient tonnages, we believe the market will adapt itself to the China ‘new norm’ of moderate growth,” Ong said.

“We also expect China’s continuous urbanization and the rapidly rising infrastructure demand of emerging economics especially Asean, South Asia, Middle East, and South Africa etc, stimulated by China’s One Belt One Road initiative and the AIIB, will bring back the balance between supply and demand in a long term,” he explained.

Ong said the important focus now for Taiwan's U-Ming is to push forward with fleet renewal program by replacing the old and less energy efficient ships with new fuel efficient and more eco-friendly vessels.

“We also step up our investment in IT technology, and shore-to-ship connectivity to improve our overall competitive edge,” he said.

As at 21 June 2016, U-Ming operated a fleet of 39 ships with an average age of 8.9 years. The fleet comprised of 14 capesizes, 16 panamaxes, two supramaxes, five cement carriers and a pair of oil tankers.