Experts in the Far East have suggested that more than one third of the current number of shipping companies may go bankrupt in 2009, because of the global economic downturn.

Since the beginning of the crisis in September 2008, at least four companies, hit by a combination of falling rates and a global capacity glut, have had to seek bankruptcy protection in order to keep trading.

Analysts suggest that shipping lines will respond by scrapping almost one third of active vessels over the next 24 months. Shipping lines trying to offload vessels to reduce the size of their fleets are finding no buyers, causing prices to tumble. Although the stimulus packages announced by the US and China may help to revive demand, this may not come fast enough to save many marginal operators.

Bulk operators are suffering worst of all. The Baltic Dry Index crashed 92% last year as the result of a cut back in production in China. However, it has subsequently doubled this year, but, at the time of writing, was still around 70% lower than a year ago. With banks reluctant to give credit to all but the most financially sound companies, shipping lines will struggle to survive in the immediate future.

(Sourced from www.hellenicshippingnews.com)