The current crisis in the dry bulk shipping sector could have a wider impact with effects on other major sectors of shipping such as tankers and containers, according to BIMCO’s latest report.
Looking at the “road to recovery” for dry bulk shipping beyond the current market difficulties, BIMCO predicts major changes, including consolidation, greater focus on risk management and higher finance costs.
Namely, consolidation and risk management will be the new industry model for dry bulk shipowners with parallel effects in other sectors.
“The fragmented ownership of the dry bulk fleet cannot be sustained over the length of the downturn and we will see greater consolidation, meaning fewer and bigger companies,” Bimco said, adding that company stakeholders will seek a more sophisticated business model with better quality information and a greater focus on risk management.
At the same time, shipbrokers will need to provide a broader range of services as the new, larger shipping companies will seek to deal directly with larger customers on major trade routes, plus more long term COAS and digitalisation will also place brokers under pressure to widen the services they offer.
Additionally, BIMCO said that the Basel III and the proposed Basel IV regulations will increase the cost of bank finance for shipping, while shipyards will have to diversify with many of them opting to close or consolidate.
“This crisis will affect shipping companies, not only economically and financially, but also sociologically. We will see deep changes in the fundamental structure of the shipping world and in shipping companies, mainly the smaller ones. A new business model will emerge, not just for shipowners but also for brokers, shipyards, financial institutions and other stakeholders,” BIMCO President, Philippe Louis-Dreyfus, said.