BIMCO: Dry Bulk Fleet Tops 800 Mn dwt

Driven by a drop in dry bulk demolition and a surge in deliveries, the dry bulk fleet grew by 2.6% year-on-year in January 2017 exceeding 800 million dwt, according to shipping association BIMCO.

Dry bulk demolition was halved in the first month of 2017 when compared to the same period a year earlier, while total dry bulk deliveries reached the highest level since January 2013.

As the fleet continued growing at 2.8% in February 2017, BIMCO informed that if the fleet growth remains above 2%, the dry bulk shipping industry “cannot rely on global demand to cure the oversupply caused by this fundamental imbalance in the market.”

The shipping association said that industry actions, such as demolition, need to get back to the activity levels seen in the first half of 2016, where demolition figures balanced out close to 80% of the inflow of new dry bulk ships to the market.

Despite an uneasy start to 2017, fleet growth will start to stagnate and BIMCO expects to see a supply growth of 1.6% for the whole of 2017.

“We expect to see an increase in the fleet across the board for dry bulk shipping in the first quarter of 2017, in part because this is always the quarter with the most deliveries of newbuilt ships,” Peter Sand, BIMCO’s Chief Shipping Analyst, said.

Some 19 million dwt could be sent to the shipbreaking yards in 2017, less than the previous two years of demolition activity when the industry scrapped around 30 million dwt annually.

Segmented demolition and delivery activity

The capesize segment breached the 2% fleet growth barrier in January 2017, after a constant increasing growth rate during 2016, since a 0% fleet growth rate in January and February 2016.

This increasing capesize fleet growth is a result of capesize deliveries exceeding demolition activity. The first half of 2016 saw net capesize fleet growth of 0.3 million dwt and 5.6 million dwt in the second half of the year. In the first two months of 2017, the capesize fleet has grown by 2.2 million dwt.

The panamax segment experienced a stall in fleet growth in the first three quarters of 2016, which led to a decrease in the growth rate. As the second half of 2016 delivered the lowest number of panamax bulkers in seven years, the demolition activity also stalled and the year on year fleet growth went from – 0.3% in October 2016 to 1.7% in February 2017.

The handymax achieved the largest drop in fleet growth rates of all four segments, as it decreased from 7.2% in January 2016 to 4.9% in October 2016. However, it is still the highest fleet growth rate across all dry bulk segments, but shows an increasing willingness towards scrapping, as 4.3 million dwt of demolished handymax tonnage in 2016 was the second highest ever.

The handysize segment saw the lowest amount of dwt entering the market in eight years, while demolition activity also dropped to the lowest amount of dwt in six years. Thereby, the dry bulk shipping industry did not reap the full benefit of the reduced handysize deliveries, although handysize fleet growth decreased from 1.7% to 1.5% during 2016.

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