The shipping industry is hopeful that 2013 will be the last of five years of rough sailing, although executives concede the wave of bankruptcies among shippers, shipyards and bankers lending to shipping firms is not finished yet.
The downturn started in 2008when the financial crisis erupted in the United States, and has lingered ever since. The economic boom before 2008, driven by demand for commodities such as steel and copper, drove shipping companies around the world to place orders for new vessels like there was no tomorrow. The Baltic Dry Index (BDI), the main gauge of freight rates for dry bulk carriers, reached a record high of 11,793 in mid-2008.
However, a lot can happen between the time a ship is ordered and the time it leavers a shipyard two or three years later. As the impact of the 2008 crash spread, some customers who had placed orders either went belly-up or their shipbuilders went bust. The result was a glut of ships while the global economy continued to wobble along with no sign of recovery.
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