Selected years 2009 (post GFC), 2016 (worst year ever), and 2020 (impact from Covid-19).
In each of the prior year’s ship orderbook to existing fleet ratio was astronomical and explains why the industry was in a recession for 12 years – 2008 to 2020 – to absorb the excess supply.
2020 is different – the new ship orderbook to existing fleet ratio is the lowest in 20+ years. This means that even if there is minimal scrapping, new ship supply will be insignificant and allow owners to make good money over the next few years.
2020 new ship orderbook has been restrained due to 12-year long recession; banks not lending to shipowners; capital markets remaining frozen; uncertainty surrounding new regulations on GHG curtailing forward orders.
Cargo volume growth by 2050 will be 3.5 times 2008, requiring 3.5 times more ships, yet GHG MUST be cut by at least 50% if not more than in 2008!
Any ship built with Internal Combustion engines after 2025 would have a shortened economical life of just 10 to 15 years before being replaced by zero GHG emitting vessels for future regulatory compliance.
In 2020 demand fell by 3.42% yet Cape size ships got a high time charter daily rate of USD 34,896 with fleet growth of 3.89%! FH 2020 was weak, SH was strong. Demand dropped in FH due to Covid-19 by about 7% and was flat in SH to arrive at an average of -3.42% ton-mile demand growth. Confirms Supply/demand balance is at hand!
2021 has demand growth rate of 5% (Clarksons) to 6.7% (asper DNB Markets) versus a net fleet growth rate of 1.3% (Clarksons) to 1.5% (DNB Markets). This will result in strong time charter rates. 2021 will be the start of 2 to 4 years of good earnings for dry bulk ships.
20+ year old ships are at 6.53% of the fleet at end of Q3. Another reason for strong markets for the next few years!
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