Overcapacity is causing a “long-term disruption of the international shipping markets”.
The situation is unlikely to improve for about 18 months, according to Dagfinn Lunde, member of the Board of managing directors at Germany’s DVB Bank and responsible for shipping finance.
Resulting liquidity problems are leading to fire sales and foreclosures.
In an interview in DVB’s in-house Performance newsletter he says that demand development is slower than originally expected, but there is still healthy growth. “The problem in most market segments definitely is the significant overcapacity of ships.”
He points out that shipbuilding capacity is about 2.5 times bigger than necessary for the immediate replacement of tonnage.
“We expect China and [South] Korea to continuously put ships into the market. Prices for newbuilds will further decline. The oversupply is killing the shipping markets.”
Mr Lunde says that DVB expects a further downward trend in the dry bulk market, in some of the tanker markets and also the container market for the next 18 months.
“We do not anticipate a turnaround before the end of 2012.”