It's no wonder that the dry bulk market has been tethering since the start of the year. The overflow of tonnage has been so enormous, that even China in its best of years, wouldn't be able to keep up with the current supply dynamics. In fact, analysts have mentioned that it would take for a couple of more China's nowadays, in order for demand to catch up with the current fleet of dry bulk carriers. As of the start of the year, the global outstanding order book for dry bulk vessels stood at 2,375 ships, with a potential carrying capacity of approximately 200 million DWT tonnes.

According to the latest weekly report from shipbroker Intermodal, out of the alarmingly large total of these orders, 1,677 ships of 139 million DWT were scheduled to be delivered during 2012. Under this scenario approximately 70% of the bulker order book was scheduled to be delivered during 2012.

With 7 months already gone by and as of August 1st 2012, it is interesting to see the progress. Intermodal's Mr John Cotzias said that "The active bulker fleet stands at 8,477 ships and 645mil tons of carrying capacity. During 2012 the active bulker fleet has grown by 6% in ships and 8% in total DWT. VLOC's in 2012 have grown by 17%, Capsize 4%, Post Panamax 14%, Panamax 6%, Supramax 12%, handymax reduced by -5% while Handysize increased by only 2%.

At the same time, Newbuilding bulker deliveries are holding strong with around 4 new ships being delivered every day (809 ships of 70 million tonnes DWT)!! It is worth noting that slippage (expected deliveries less actual deliveries) was calculated at about 15% for the 1st Half of 2012 while it is accelerating after June, giving us a present figure of around 17%. There were 1,677 ships deliveries originally scheduled for 2012, so we could assume that if the current trend continued, there would be 1,390 ships delivered in 2012.

However as the slippage rate increases and traditionally as we move towards November to December 2012 more ships are belated to take advantage of a later year of built, so we may expect that the total dry bulker deliveries for 2012 will reach a record high number of around 1,250 ships and about 108 million tonnes of extra DWT carrying capacity. Slippage therefore is estimated to reach around 23% to 25% for the current year.

The report stated that "According to Intermodal, looking into deliveries of specific bulker size segments in 2012, we have recorded 49 VLOC's, 91 Capes, 73 Post Panamax, 168 Panamax, 226 Supramax, 13 Handymax and 189 Handysize being delivered. In 2013 the world bulker fleet will have a capacity of about 750 million tonnes and this is a reality that we all have to face."

Mr Cotzias said that "There is just too much supply of tonnage that will only push further the gap between available ships for trading and available cargoes. Fleet growth for 2012 is estimated at 20%, and this increase can never be matched by seaborne dry cargo growth which may run at a mere 4% to 6% given best world economic conditions. Scrapping has aided the bulker sector tremendously, as more than 21 million tonnes of DWT, about 340 ships have been removed from the active fleet, this gives us around 1.6 dry bulker ships scrapped per day! Average age of the ships scrapped is now coming down to 21 years. Offered scrap prices looked rather attractive during first half of 2012 and that further assisted most owners in deciding to send more vessels to the breakers rather than seek buyers for further trading. According to our estimates about 500 ships of 30 million tonnes to 31 million tonnes of DWT will be taken for demo during 2012 and this is approximately 6% of the active fleet. Let's keep this scrapping going."

Source - Hellenic Shipping News Worldwide

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