In 2016 only the fittest of the shipping companies would survive because of the deepening crisis caused by less demand and a surplus of vessels for hire. The predicament facing dry bulk carriers is partly the result of slower coal and iron ore demand from leading global importer China in the second half of 2015.
The Baltic Exchange’s main sea freight index plunged to an all-time low this month. But, tankers that transport oil have in recent months enjoyed their best earnings in years.
As crude prices have plummeted and driven up demand, shipowners have aggressively decided to scrap vessels to reduce loss. Bulk carriers will also file for protection from creditors.
The dry bulk shipping downturn began in 2008 and had worsened significantly this year as the Chinese economy has slowed. The Baltic Exchange’s main BDI index is more than 95 percent down from a record high hit in 2008.
“The (tanker) market is on fire,” said Deutsche Bank analyst Amit Mehrotra, but added: “Owners of dry bulk ships are likely to spend the holiday break quietly reflecting on how they will further endure the worst market many have seen in their lifetimes.”