Athens: There is no "China factor" to provide new demand and thus mitigate the over-supply of ships in the months ahead. The shipping markets face stormy weather which will continue for several years. These are the views of ship financier Paul Slater, who addressed a Financial Times Shipping Conference in Athens yesterday. His comments come as Asian lines pull tonnage off the trans-Pacific and New Alliance members APL, Hyundai Merchant Marine and MOL are reported to be slashing two services from Asia to the North American west coast by the end of this month, cutting almost a fifth of the Alliance's capacity on the world's second most important liner trade.
Slater, who is Chairman of First International Corp and an MD of US investment bank Griffin Holdings, believes shipping will have to "retrench and downsize" in order to re-energise the freight markets but he believes this will take several years. Significant lay-ups and further cancellations of new orders should be expected, he warned.
"The dry cargo markets look very vulnerable in all sizes," he told delegates, "and we are likely to see rates weaken significantly and remain there for several years. Ships delivered in the last year and those due to be commissioned over the next two years will struggle to meet their debt service and will earn no profit for their owners," Slater predicted. The Baltic's dry bulk indices have continued their free fall in recent days, with its Dry Index slipping 14% since the beginning of the month. Despite a brief recovery last Friday and Monday, the Baltic Capesize Index, at 4057 yesterday's close, is down 6% so far this month whilst the Supramax Index has plunged 27%. [09/10/08]
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