“We are slowly and steadily getting back to normal after being burdened by significant capacity, generated by all that cash that was available,” said Ralph Leszczynski, head of research at Banchero Costa.
Speaking to delegates at the Dry Bulk Shipping Forum organised by S&P Global Platts on Tuesday in Singapore, Leszczynski recalled that in 2011-12, approximately 100m dwt or 1,200 units of new bulk carriers swamped the market each year.
In 2018, just 28m dwt or 300 units entered into operation.
For 2019, Leszczynski forecast 40m dwt or 410 units with actual deliveries will hit the waters.
“We expect to see relatively modest deliveries for 2019-21, but demolitions have been disappointing. 2018 is bad despite high demolition prices,” he said.
Demolitions are expected to stayed modest due mainly to the age profile of the fleet. Only 9% of the trading vessels are over 20 years old, while 21% are less than five years old.
In newbuilding contracts, the first nine months of this year saw 105 units or 10.4m dwt newly contracted vessels.
“We expect 3% net fleet growth in 2019 compared to 4% in 2018 amid limited scrapping,” Leszczynski said.
Shipowner Pacific Basin is expecting to see a continuation of a generally tight market in the fourth quarter, with freight rates benefitting from what is typically the peak demand season as well as global fleet inefficiencies as many larger ships are taken out of service for several weeks for dry-docking in the run up to IMO 2020.
The shipowner noted that in the run up to 2020, a majority of the world’s dry bulk vessels will be switching to more expensive low sulphur fuel which will have a positive effect on the dry bulk supply and demand balance as higher fuel costs reduce ships’ optimal operating speeds.