With over 10,000 ships and some 1,200 owners consolidation in the bulker sector is unlikely to happen anytime soon, according to a top industry executive.
“It’s very difficult to carry out consolidation in any meaningful way,” Golden Ocean chief financial officer Per Heiberg told delegates at the Marine Money Asia conference in Singapore Wednesday.
Lei Yang, managing director of China’s Sumec Ocean Transportation, said that out of all the sectors in shipping, dry bulk was the most difficult to achieve consolidation.
“Dry bulk has the lowest barriers to entry, so it attracts far more speculative investors such as private equity or leasing companies.”
However, Yang said shipping pools offered the best chance for industry consolidation with owners combining their commercial interests rather than ownership.
He said pools such as Capesize Chartering Ltd – the tie-up between Golden Ocean, CTM, Bocimar and Star – now control over 150 capesize bulkers.
When asked what currently makes him excited about the dry bulk sector Golden Ocean’s Heiberg said it was “enjoying the current market”.
He said owner’s indecision about ordering new ships in the face of up and coming regulation was helping the market by stopping owners ordering new ships.
Looking ahead, Yang forecast that the second half of this year and the first half of next year will be “quite good” for the dry bulker market.
He said the market was set to benefit from the “IMO 2020 affect” as timelines for scrubber reftro-fits were getting pushed out to, in some cases, 50 days.
“I’m quite confident about the market for the next nine months, due to the disruptions caused by IMO 2020,” he told delegates.
