There's no denying the slow global economic recovery has impacted the overall shipping industry. From a macroeconomic view, global trade is not growing at the same level that it's been growing at for a number of years. That means that time charter rates in the shipping sector have not improved dramatically. Nonetheless, certain segments of the industry are performing better than others.
The dry bulk market is still struggling and part of that has to do with new building supply issues. However, there are bright spots - such as the increased demand for maritime transportation of crude oil. So much so that some companies are converting their new build orders from dry bulk vessels to tanker ships.
In addition to the glut of ships that came to market over the last few years, other factors inhibiting a faster recovery include the need for companies to be compliant with new regulations regarding clean fuel and the addition of ballast water treatment systems; declining steel production in China as well as Chinese imports falling, and reduced Brazilian iron ore exports.
There are several additional issues impacting the maritime industry, including:
Svein Engh is Group Head and Managing Director of CIT Maritime Finance, where he is responsible for overseeing financing activities of oceangoing cargo vessels including tankers, bulkers, container ships and car carriers, as well as offshore vessels and drilling rigs. He has more than 25 years of experience in the global financial services sector, with emphasis on shipping, offshore oil services and transportation sectors.
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