Despite hopes that global trade levels are recovering, it could take some time for the shipping industry's chronic overcapacity to improve, an industry expert warned.
The shipping industry has been through rough waters during the economic crisis, with a decline in global demand resulting in a substantial capacity glut – especially on the Asia-Europe route. This hit the shipping lines' revenue hard: the Baltic Dry Index (BDI) -- which tracks day freight rates for dry bulk shippers – fell to a 26-year low in 2012.
However, this year has seen signs of a recovery on the back of global economies returning slowly to growth, rising consumer confidence and a rebound in Chinese commodity demand. As such, the BDI has risen almost 200 percent this year.
Richard Meade, editor of the maritime industry newspaper Lloyd's List, told CNBC that a return to the supply-demand balance in the global shipping industry would be a slow process, however, warning that there were still "unknowns" facing the industry.
"There is general consensus in the market now that we have reached the bottom -- if you look at asset values in terms of the ships we're at record lows here – and I think people are going to be looking to consolidate, find operational efficiencies and move into the up cycle," Meade told CNBC Europe's "Squawk Box" on Monday
Read more: Shipping industry not out of danger yet: Analyst - by Holly Ellyatt |
However, this year has seen signs of a recovery on the back of global economies returning slowly to growth, rising consumer confidence and a rebound in Chinese commodity demand. As such, the BDI has risen almost 200 percent this year.
Richard Meade, editor of the maritime industry newspaper Lloyd's List, told CNBC that a return to the supply-demand balance in the global shipping industry would be a slow process, however, warning that there were still "unknowns" facing the industry.
"There is general consensus in the market now that we have reached the bottom -- if you look at asset values in terms of the ships we're at record lows here – and I think people are going to be looking to consolidate, find operational efficiencies and move into the up cycle," Meade told CNBC Europe's "Squawk Box" on Monday
Read more: Shipping industry not out of danger yet: Analyst - by Holly Ellyatt |
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