As newbuilding orders for bulker have expanded greatly this year after a slowdown last year, fears are growing over a splurge on new orders.
Freight rates for bulker are showing a recovery movement after having hit its historic low in 14 years at the end of March and global shipowners are aggressively pushing ahead with placing new orders for bulker with high-efficiency design to take advantage of low newbuilding prices. They are securing considerable amounts of newbuildings through private equity fund.
Over this trend, Chairman Henning Oldendorff of Germany’s leading bulker operator Oldendorff Carriers said, “The ordering wave is indeed worrying,” and added, “"If it coincides with a China slowdown and possible recession in the global steel industry, then freight rates could potentially stay low for many years to come," reported by Reuters.
According to the statements of Henning Oldendorff, around 35m dwt of bulker newbuildings were placed around the world solely in the first half of 2013, which greatly exceeds the annual new order records seen from last year, or 22m dwt.
Arjun Batra, managing director at Drewry Maritime Services said for the dry bulk sector, "The risks outweigh the upside potential", and added that a flood of new orders and a slowdown in demand of dry bulk shipping will delay recovery of bulker freight rate market for years to come.