"At least two or three years will be better!" Xu Xudong, chairman of Taiwan Yumin Shipping, is confidently optimistic about the dry bulk cargo shipping market .
Benefiting from the three major factors of the Russian-Ukrainian war, infrastructure demand and insufficient capacity, the bulk carrier market is expected to continue to flourish in the next few years.
After the container shipping market began to reversal, dry bulk shipping rose against the trend. In the first quarter of this year, the bulk shipping market was not slow in the off-season, and the performance of bulk shipping companies also improved across the board. Due to the lack of global capacity, demand for bulk carriers has increased significantly since last year. This year, due to the impact of the Russian-Ukrainian war and the epidemic, the ship turnover rate has remained low, and the problem of ship shortage is difficult to alleviate in a short period of time. It also allowed many ship owners to invest in shipbuilding and actively expand their fleets.
Huiyang Shipping Chairman Lan Junsheng analyzed, "The ship contract is now expiring. If the ship dealer does not renew the contract, at least four or five ship dealers will line up to sign the contract." Lan Junsheng, chairman of Huiyang Shipping, the leader of dry bulk shipping in Taiwan, revealed.
Lan Junsheng pointed out that Ukraine is the main exporter of wheat. Ukraine cannot export due to war, so it needs to import grains from Australia or South America, which will increase the sailing distance of ships and reduce turnover, thereby pushing up capacity demand. On the other hand, epidemic prevention measures at ports in various places have also lengthened the number of ship routes, and the overall capacity has been reduced by about 10% on average.
From the Baltic dry bulk freight index (BDI), when the Russian-Ukraine war broke out on February 24, the BDI index fell at 2187 points, soaring to 3369 points in mid-May. Even though freight rates fluctuate recently, the BDI index remained at 2331 points on June 24, and the market will usher in the peak season for cereal exports in Central and South America in the third quarter.
Against the backdrop of a decrease in ship turnover rate but continued optimistic demand, Wang Shuji, general manager of Yumin Shipping, also said that China's economy was affected by the epidemic in the first half of the year, and infrastructure construction will continue to be promoted in the second half of the year. Europe and the United States have also invested heavily in infrastructure, which has greatly increased the demand for iron ore sand and steel transportation, the main force in bulk carrier transportation. Therefore, it is optimistic that the market conditions in the next two or three years will have growth potential.
Taiwan Airlines Chairman Liu Wenqing said bluntly that the bulk carrier market has no right to be pessimistic. "The bulk carrier market will be good this year and next year." Xu Xudong, Chairman of Yumin Airlines, said more optimistically that the market "will be better for at least two or three years."
Two major factors in the Russian-Ukraine war and infrastructure demand have pushed up the demand for bulk carriers this year, but what really supports the market's prosperity in the next three years is the insufficient capacity of global bulk carriers. Data shows that the global bulk carrier fleet is currently operating about 10,000, but this year the delivery of new ships is less than 300, accounting for less than 3% of the global bulk carrier fleet. In recent years, the tide of orders for container ships has squeezed the delivery volume of bulk carriers. By 2025, the supply of new bulk carriers only accounts for 7% of the existing fleet capacity, which shows that the supply of energy-saving ships is in short supply.
"There is a shortage of ships now, and the capacity is not enough at all!" Lan Junsheng said that the current market capacity is seriously insufficient, not only is there a shortage of ships, but almost every type of ship of bulk carriers is lacking.
Not only that, the International Maritime Organization (IMO) will implement new emission reduction regulations for the existing ship energy efficiency index (EEXI) and carbon intensity index (CII) next year, which will further amplify the strong demand for energy-saving ships in the market. Lan Junsheng explained that if the new emission reduction policy takes effect next year, the capacity gap will be even greater. Taking Cape of Good Hope as an example, the average fuel consumption of old ships is 65 tons per day, while the new ship is only about 45 tons, a 20 tons difference in fuel consumption per day will directly affect the effectiveness of emission reduction.
However, the number of energy-saving bulk carriers in the market that complies with the new regulations is quite small. Most ships must slow down their navigation in order to comply with regulations, which will directly affect the ship turnover rate and greatly increase the operating cost of .
"If the carbon reduction policy is implemented next year, the capacity gap will be even greater by then." Lan Junsheng said.
In fact, more and more dry bulk shipping companies have begun to invest in shipbuilding. Due to the investment in new ships, the market supply and demand may be imbalanced before 2025, but considering this wave of building energy-saving ships, even if global capacity increases, the owners who are the first to be eliminated are the old ships. In other words, as long as there is an energy-efficient bulk carrier, the contract is not a problem.
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