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Braemar sees better times ahead for shippingBraemar sees better times ahead for shipping

The market commentary scattered throughout Braemar's first quarter earnings release paints a reasonably positive picture of things to come.

Seatrade Maritime

May 15, 2013

2 Min Read
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Braemar's remarks start with the overcapacity currently being experienced across the industry, with deliveries still outweighing scrapping levels and freight rates suffering from the increase in surplus tonnage.

Despite looking out from a market trough, light shines on the horizon for some, "the oversupply will correct in time due to a reduced propensity to order new ships and an increase in scrapping. This is a trend which is accentuated by the shortage of available bank finance," the company said.

Seaborne dry bulk trade rose 4.4% in 2012, inching up from 4.3% in 2011 and Braemar expects this improving trend will continue into 2013. Alongside falling fleet growth for dry bulk, 13% in 2011, 10% in 2012 and projected 8% in 2013, the fundamentals look to be moving in the right direction for long suffering bulk carrier owners.

Crude tankers, the other headline sector for exceptional suffering in recent years, is experiencing a freight market at its low point and product tankers are hovering around breakeven. According to Braemar, the seasonal upward swing in the fourth quarter was not as pronounced as hoped, falling short of covering the year's costs for many owners.

Change is again on the horizon though, as energy trade patterns shift dramatically; the US's increasing self-sufficiency and rising oil hunger in Asia is creating demand for transport of refined products.  The tanker market remains oversupplied and Braemar highlights the ordering of eco-ships but adds no comment on the impact of the vessels on the market. Precious Shipping boss Khalid Hashim and Scorpio Tankers are perhaps keeping that particular topic hot enough as it is.

 Container trade growth has slowed compared to world GDP growth, fleet growth outpaced demand and rates subsequently suffered. Braemar estimates that at the end of calendar year 2012 there was 36% overcapacity, up from 34% in 2011, and as a result average time charter rates fell significantly year on year.

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Seatrade Maritime

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