The oversupply of ships will be a major issue over the next 12 to 18 months, credit rating agency Moody’s Investor Service has warned.
In a report published on Tuesday, the company claimed that dry bulk is at most risk of a difficult time over the next two years as new vessels entering the market will lead to further lowering of freight rates.
Moody’s said that freight rates are already moving lower in 2011 than they were in 2010 and, with orders for 80% of new dry-bulk vessels expected to be complete in the next 18 months or so, this could be driven down further.
Meanwhile, the company added that, as well as dry bulk, tankers also faced overcapacity. However, Moody’s said this over-capacity issue was likely to run until at least 2013.
Part of the reason for this over-capacity was said to be down to companies realising that storing crude oil at sea on very large crude carriers (VLCC) had become unprofitable and this had led to more tankers being returned to fleets.