PARIS, June 14 (Reuters) – The dry bulk delivery {industry} could not emerge from a protracted downturn for an additional two years and a few smaller companies will likely be squeezed out, the chairman of France’s Louis Dreyfus Armateurs stated on Tuesday.

The dry bulk sector that transports commodities like coal and iron ore has suffered from oversupply of vessels and faltering world industrial demand, pushing freight charges to a file low this 12 months.

Some ship operators had taken coronary heart from indicators of a pick-up this 12 months within the Chinese metal sector, however the dry bulk {industry} must be prudent given the overcapacity to be cleared, Philippe Louis-Dreyfus instructed Reuters.

“I don’t see the end of the tunnel for another 18 months to two years,” he stated on the sidelines of a delivery convention. “It worries me that some ship owners are saying things are picking up again.”

Ship provide had levelled off however the {industry} nonetheless needed to take in capability partly ensuing from speculative orders by buyers betting on a market rebound, he stated.

An industry-wide transfer to scrap dry bulk vessels which can be greater than 20 years outdated would assist rebalance the market whereas lowering environmental and security dangers, however this view has met with opposition from some ship homeowners, Louis-Dreyfus stated.

The extended downturn has already prompted some casualties, with Norwegian agency Bulk Invest submitting for chapter in March and Greece’s DryShips final week expressing doubts about its capacity to remain in enterprise.

Dry bulk delivery was heading for a consolidation interval wherein mid-sized, household companies like his could wrestle to compete alongside large commodity transporters, Louis-Dreyfus stated.

His agency had held up within the disaster because of its diversification into logistics and marine companies, together with devoted vessels for industrial purchasers like Alcatel and Airbus, he stated.

These actions offset losses in dry bulk and allowed it to put up a bunch revenue final 12 months, he stated. The firm doesn’t publish monetary outcomes.

The group remained dedicated to dry bulk, wherein it has about 30 vessels, and anticipated its use of partnerships in nations like Indonesia to permit it to compete in a consolidating {industry}, he stated.

Philippe Louis-Dreyfus took management of the agency a decade in the past by buying what was previously the delivery division of worldwide commodities group Louis Dreyfus. (Reporting by Gus Trompiz; Editing by Ruth Pitchford)

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