Shipping is currently facing the unusual situation of all the main shipping segments performing below the seven-year historic trend, now the tanker market has also dropped below that line, Clarkson Research Services non-executive president Martin Stopford told the Capital Link Shipping, Marine Services & Offshore Forum in London.

Growth in global sea trade has slowed to 2.3 per cent and global industrial production is at the bottom of its cycle, Dr Stopford said. As a result of this economic slowdown and shipping overcapacity shipping earnings are well below their 25-year trend and in some cases at operating cost levels.

Newbuilding deliveries have continued to add overcapacity, with shipyard output in 2016 about 5 per cent up on 2015 as the backlog of earlier orders is delivered. Net fleet growth in 2016-17 will be about 3 per cent. However, new contracting is down by about 70 per cent, and the lowest since 1998.

Scrapping has increased and is about 40 per cent of new deliveries. But Dr Stopford warned: «Scrapping alone is not enough for the market to recover. The key is stronger growth in demand.» He estimated that the current overall surplus capacity is about 17 per cent. Shipping markets will recover but the timing and speed of recovery in each segment will depend on their individual fundamentals.

He commented that other developments such as environmental regulation, including on ballast water treatment and emissions, will also have an impact on shipping markets. Moves towards autonomous shipping, use of big data and improved communications will also be felt in the years ahead, Dr Stopford suggested.

source: http://www.lngworldshipping.com/news/view,shipping-at-bottom-of-cycle_44872.htm