There is a recent dilemma encountered by the shipowners. The rates are being driven down as many of the segments are facing an oversupply of vessels. On the other hand, the shipyards are starving for business and offering new builds at multi-year low prices.
What are the possible consequences of this contrasting situation?
Owners may continue to shun new builds and allow the market to rebalance.
Or
The lower prices inspire more orders which could threaten to prolong the downturn.
A report was made after starting a Shipping 101 Series. In the latest instalment the supply side of the maritime was examined. The dry bulk market is experiencing supply and demand disequilibrium. This was the result of too many ships being ordered prior to the 2008 crash to supply a commodity demand boom that was unsustainable in the long run. There was a massive amount of supply that was ordered before 2008 and being delivered as late as 2014 due to shipyard backlogs and the drawn-out nature of the shipbuilding process. Thus, the available supply soon outpaced post-boom demand, resulting in market disequilibrium.
Recently, the oversupply issue in dry bulk has been met with waning global demand for key commodities, compounding the problem.
The container segment has seen a massive influx of mega-box ships that have created yet another oversupply problem just as key trade routes have experienced some slowing. This has resulted in some of the lowest charter rates in several years for many classes.
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Source: Seeking Alpha
