Shipping Freight Rates to Stay Low Until at Least 2020 Says Goldman Sachs

By Henning Gloystein

SINGAPORE, May 7 (Reuters) – Shipping freight charges, which have hit report lows this 12 months, are set to stay weak for the remainder of the last decade or longer as there are too many ships and since low gas costs are capping working prices, Goldman Sachs mentioned.

The low freight charges would profit massive iron ore and coal producers as they’ll entry new markets, whereas excessive price producers would undergo from better competitors and a declining share of their regional markets, the U.S.-bank mentioned in a word.

Steep drops in Asian transport charges have additionally added to fears about slowing commerce, as a fall in export orders from nations throughout the area depresses demand for ships.

Goldman mentioned China’s financial transition from funding to consumption, along with a shift in the direction of regionally sourced cleaner power had led to a pointy deceleration in dry bulk commerce.

The each day constitution charge for a capesize vessel has fallen from a peak over $100,000 in 2008 to beneath $10,000, whereas the common utilization charge of the dry bulk transport fleet is about to say no from round 90 % between 2008 and 2010 to 70 % over 2015 to 2019, the financial institution mentioned.

“Faced with the risk of leaving vessels idle over long periods, we believe that ship owners will continue to charge low charter rates. This compounds the impact of lower fuel prices, resulting in a period of cheap freight that should last until older vessels have been scrapped in sufficient numbers to balance the market,” Goldman mentioned.

“We expect low freight rates to persist at least until the end of the decade,” it added.

(Reporting by Henning Gloystein; Editing by Richard Pullin)