Very Large Ore Carriers (VLOCs) have been unfairly blamed for overcapacity in the bulk sector, claims Morgan Stanley.
A new study by the US investment bank suggests that VLOCs account for only 1% of the capacity of the current dry bulk fleet.
It also argues that VLOCs only account for 8% of the total dry bulk orderbook backlog by capacity, the smallest of the five main segments.
“Even after full delivery of the entire existing backlog, VLOCs will account for only 3% of global dry bulk fleet capacity, which is quite immaterial,” say analysts Andy Meng and Edward Xu.
“If we focus only on the big fleet segment with tonnage in excess of 100,000-dwt, VLOCs still only account for 2% of capacity in the existing fleet, but 21% of the backlog.”
Meng and Xu contend that even after full delivery, the VLOC fleet will still only account for 6% capacity in the big fleet segment.
“Based on these data points, we believe the construction of VLOCs is not the root cause of industry overcapacity,” they write in a note to investors.
They argue that the key issue was the massive newbuilding of capesize bulkers during the period between 2007 and 2008.
“The latest backlog of capsize vessels suggests a further 25mdwt due for delivery in 2012 and 21mdwt in 2013,” the pair say.
In contrast only 63 VLOCs are due for delivery between 2012 and 2015, according to data from Athenian Shipbrokers.