| 01 Sep 2010 |
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Freight rates to rise this year
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Containers, tankers and bulk cargo have started showing positive signs of recovery in the Gulf, a new study has revealed.
Demand for international shipping containers will continue to increase in 2010 owing to global economy recovery, as well as north-south Asia and the Gulf Cooperation Council routing expansion, a report prepared by KFH Research said.
The effects of global financial crisis on the shipping industry has seen the worst and completed the longest leg thus far, the report said.
"We believe the worst is over for the shipping industry. Prospects for 2010-2011 are much brighter, as real GDP growth for the major economies are expected to return to positive growth territory."
In 2010, global container shipping demand will keep rising on an improved global economy. Faster growth will be seen in north/south-bound routes in South America, South Africa and other emerging markets, as well as in routes in Asia and GCC.
"We believe the mood in Asia and other major economies in Europe, the US and the GCC region are considerably more upbeat this year as compared to 2009. Various economic indicators like trade and industrial production across countries in Asia, US, Europe and the GCC region have surprised on the upside in recent months, confirming that economic activity is gaining traction," said the report.
The resumption in trade will augur well for the global and GCC shipping industry moving forward. The three major segments of the shipping industry, i.e. the container, tanker and dry bulk segments, have already shown positive signs of pick-up in recent months, with the improvement of trade activities globally.
For the container shipping segment, the market began to pick up in the fourth quarter last year, with relatively fast growth seen on the European, GCC and Asian routes.
In the tanker market segment, the rise in global demand for oil will consequently push shipping volumes higher in 2010.
"We expect freight rates to pick up in the second half of 2010 as shipping demand resumes growth while capacity growth slows.
Time charter rates as of April 2010 for all segments of the tanker segment have also bottomed, and the rate of contraction on year-on-year basis have narrowed significantly.
In the dry bulk segment, global bulk shipments are expected to rise, driven mainly by increased demand for iron ore and coal from China, Europe and the US.
With global iron ore trade expected to surpass the one billion tonne mark, and overall coal trade expected to easily surpass the 800mt mark, the outlook is increasingly positive for a stronger recovery from the decline witnessed in 2009. Time charter rates for capesize bulkers have risen 43 per cent to $28,500 in Mar 2010, from $20,000 in March 2009.
"We believe that the current market environment with historically low asset values and where shipping companies face difficulties in relation to both financing and chartering out of vessels also provides for excellent opportunities for an "Asset Play" strategy," the report said.
By Staff
© Emirates 24|7 2010
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