MarCy17: Profitability Is Around the Corner?

Regaining profitability in the freight transportation industry is a tangible target for the very near future, it was concluded during a panel on Market Forecasting on the final day of Maritime Cyprus 2017 conference in Limassol on Wednesday.

The prediction has been based on improving fundamental balance between the supply and demand being experienced at the moment.

However, the scrapping of superfluous tonnage has been singled out as the key prerequisite for maintaining the much-needed balance.

By keeping a high level of scrapping shipowners can influence the supply of vessels, since the demand aspect is beyond their control, it was noted.

Speaking of the market recovery, Peter Sand, Chief Shipping Analyst of BIMCO, said the recovery was fragile, adding that “we need to treat it carefully”. Furthermore, Sand stressed that the industry needs to get used to the ‘new normal’, meaning that we can no longer expect a trade multiplier of 2, it will be more like 1 from now on.

With regard to respective shipping sectors, the panelists pointed out that a substantial demand in dry bulk was recorded in the first half of this year, a clear sign of positive development in the industries affecting global shipping.

Regarding oil tankers, the market is estimated to increase by 2020 provided the balance between supply and demand is maintained. The tanker fleet is still growing while scrapping is affected by the current age profile of the fleet.

“We don’t expect the level of VLCC newbuildings to continue, but tanker fleet growth is likely to be significant,” Fotios Katsoulas, Shipping Data Manager and Fleet & Newbuilding Analyst of Affinity Research LLP  said.

With respect to the container shipping sector, the panelists said that container rates have shown an increase during the last months and hence the market looks promising.

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