Executive Overview: Merchant Ships

The end of year report from Barry Rogliano Salles (BRS), the shipbroker and shipping industry analyst, stated that 2009 was one of the worst years for shipping. Oil was the only market that did not suffer. There were very few vessel sales made, there were cancelled and delayed ship orders, 36 million tonnes were scrapped and the overall growth of the world fleet reached 7 per cent only, much lower than the growth in previous years. However, partly due to Super-Slow Steaming (SSS) – operating ships at much lower speeds to conserve fuel – many laid-up ships are now coming back into service. The container trades benefit particularly from this as they operate on fine margins; when freight rates increase, high speeds immediately become less cost effective. The effect on the environment with SSS measures significantly reduces energy consumption and emissions.

An expert from the ship brokers, Clarkson's, has predicted that world shipping could continue to suffer an economic slump long after the global financial crisis has come to an end. The main cause is a large order book which will fuel a long-term imbalance between supply and demand in key sectors. Demand has been slashed by the slump in industrial production; exports from China, for example, had almost halved. The president of the European Shipowners' Association (ECSA) has warned that merchant ship over-capacity (that is, too many ships for the amount of cargo to be carried) could reach as much as 60 per cent in the near future. The number of orders cancelled, in response to the economic downturn, is insufficient to reduce the order book sufficiently to avoid over-capacity.

However, on a positive note, a Shipping Confidence survey compiled by accountancy firm, Moore Stephens concluded that overall confidence levels among shipowners, managers, charterers and brokers had increased in the third quarter of 2009. This was the third successive quarter to show a rise indicating more confidence in undertaking major investments over the next 12 months.