Dr. Martin Stopford, president of Clarkson Research, says that shipping is past the bottom of the trough but will not enjoy the benefits of bullish trade growth until a 19% capacity surplus in the world fleet is removed.
Speaking at the Capital Link Singapore Maritime Forum today, Stopford said that world industrial growth currently stands at 4.3% and is rising. Global trade increased by 3.9% in 2017 and is expected to reach 3.4% this year.
These figures, he said, were at the upper echelons of a growth cycle.
“The world economy is doing well. Things are not so good on the supply side though," he said.
Stopford estimated that the world fleet currently has a 19% surplus based on current demand. Approximately 70m tons of capacity is expected to enter the market in 2018 and a further 65m to 68m tons of capacity will follow next year. These figures represent about 10% of the current fleet.
Scrapping, he said, is very robust with levels at around a third of the tonnage being delivered.
“It could be better,” he added, referring both to a reduction of new tonnage and an increase in scrapping.
Stopford equated the demand situation of the past ten years as being similar to the 1990s when it took about a decade for the market to clear the capacity surplus that accumulated in the 1980s.
He predicted that the current surplus should clear during the early years of the next decade.
