The coronavirus crisis may turn out to be a blessing in disguise for the dry bulk industry this year, as the outbreak will delay deliveries of newbuildings by several months, shipowner Polys Hajioannou said.
This was supposed to be a delivery-heavy year for dry bulk shipping. A total 49m dwt of bulkers were supposed to hit the water, according to Clarksons figures.
But the Hajioannou, chief executive of US-listed Safe Bulkers, said the Covid-19 coronavirus outbreak led to business disruption, which will postpone much of these deliveries into next year.
“I am pleased to say that the Chinese [yards] will be off for at least two months,” he told Capital Link's Cyprus Shipping Forum in Limassol. The shipowner said equipment manufacturers will likely be hit by even longer delays.
“I expect that more than 30% or 40% of this year’s orderbook will fall in 2021,” said Hajioannou, who has ordered about 50 ships in his career. “This may save our day and help us [the bulker industry] be profitable in 2020.”
Turning even a slight profit has been difficult over the past few years, since the industry is still struggling under an overhang of ships irresponsibly ordered in the boom years of 2007 and 2008, the shipowner said.
'Counter-cyclical' investments
“We’ve actually been investing counter-cyclically for the past six years,” he said tongue-in-cheek, sparking laughs from the audience of about 300 shipping executives attending the event.
John Michael Radziwill, chief executive of CTM, also expressed an optimistic view of markets, expecting freight rates to recover.
“I think we’ll have a coil spring effect,” Radziwill told the same conference.
He based his confidence on Brazilian mining giant Vale getting its act together after last year’s disruptions to production.
“I think they [Vale] think they have their production in line, and so when the problems with the coronavirus ease away, you’ll see Vale come and ramp up their production, he said. “So I think you’ll see some real fireworks.”
Recovery, however, will be neither quick nor painless, warned Aristides Pittas, chairman and chief executive of containership owner Euroseas and bulker company Eurodry.
“This disruption will create losers, companies may become bankrupt,” Pittas told the panel. “But at the end of the day, things will change. After every pain there is a recovery and that will happen for sure, and I’m quite confident for the longer term.”
