Outlook 2007
At the beginning of 2007, most shipping markets are characterized by historically high or very high freight rates, which has also served to keep second-hand prices at very high levels. Newbuilding prices have increased as owners placed contracts of the order of 150m dwt during 2006, equal to 15% of the existing global merchant fleet and the highest ever recorded annual orders.
Strong economic growth will support demand for shipping in 2007 but some markets may be negatively affected by the large numbers of new vessels entering the market, with few likely to be scrapped due to the strength of the markets.
Bulk carriers
Demand for bulk carriers is expected to remain healthy, benefiting from the current strength of the world economy and continuing growth in China.
With deliveries of new vessels estimated at about 7% of the current fleet, tonnage supply growth might outpace demand growth in the last half of 2007. Although the age profile of the fleet in general indicates a strong basis for scrapping, owners’ present financial strength combined with expected rate levels suggest another year of modest demolition.
Gas carriers
Employment for small gas carriers is expected to remain healthy in 2007 as demand for petrochemical gasses is forecast to benefit from continuing global economic growth.
Based on the existing order book, 2007 deliveries will amount to about 9% of the current fleet. Practically all the new deliveries are either fully pressurized gas tankers (in the 3,500-7,200 m3 segment) or ethylene carriers (6,500-10,000 m3).
Reefer vessels
Demand for reefer vessels is expected to remain healthy. Availability of modern reefer vessels is becoming ever scarcer due to the limited number of deliveries and vessels on order. The continued influx of container ships with large reefer plug capacities is increasing competition in the traditional reefer trades.
Product tankers
The strength of the global economy with lower oil prices than in 2006 is expected to support continued strong demand for oil in 2007, and thus maintain a healthy demand for product and oil/chemical tankers.
The product tanker fleet will see yet another year of high growth possibly surpassing demand growth.
JL consolidated
Overall, market scenarios support yet another year of satisfactory earnings in 2007 with profits before tax in line with 2006.
Changes in activity levels including sale and purchase, energy prices and world economic trends may impact forecast results.
