Sunday, September 25, 2016 6:24:30 PM
On September 12th, BIMCO came out with a study which confirmed what those following the shipping segment have been suspecting throughout 2016; a massive drop in contracting that represents the lowest amount of new builds ordered in over 20 years.
A low level of contracting is exactly what the shipping industry needs in order to eventually restore the fundamental balance between supply and demand."
As of start September 2016 there were 402 active yards, down 57% on the 2009 peak. Alongside this drop in the number of active yards, newbuild output has fallen and this year is projected to stand 34% below its 2010 peak in CGT terms.( in the analytical framework used here, a yard is defined as ‘active’ if it has at least one vessel (1,000+ GT) on order, with ‘inactive’ builders with no orderbook suggestive of highly vulnerable capacity.)
Of course, curbing available supply, given a constant demand (or even slightly increasing demand in the case of shipping) should result in price increases. The degree of this price movement is predicated upon the magnitude of the supply side shift.
Removing tonnage from the equation through increasing demolitions has the same effect as curbing new build orders; a reduction in available supply which causes a price shift.
Excess capacity must be removed on a fairly large scale.Curtailing of that excess capacity may unfold over the next couple years according to another recent report by Clarksons Research.
If the trends described above, and in my previous linked article, continue to hold or even gain momentum we could be setting up for another bullish cycle.
http://seekingalpha.com/article/4007538-shipping-companies-just-got-best-news-20-years?li_source=LI&li_medium=liftigniter-widget
http://www.hellenicshippingnews.com/global-shipbuilding-the-challenge-to-remain-active/
(Shipping Turnaround)
$$$$$$$$$$$$$$$$$$$$ TEUFF $$$$$$$$$$$$$$$$$$$$
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