“In China, ports are seeing their highest
congestion this month since July 2009.
“The number of capsize bulkers waiting to berth at
Chinese iron ore ports hit a high of 45 vessels in July 2009, but
for the last 15 days it has risen to 60.
“Globally, there are 27 capesize vessels waiting to
load iron ore off Brazil and 23 vessels waiting to berth in
Australia,” he told StarBiz.
Rakish said the recent Asean-China free trade
agreement would also result in a surge of goods moving between
Citing a Credit Suisse report, he said the market
outlook for offshore tanker storage was expected to be consistent
“The amount of oil in tanker storage will remain a
moving target due to several financial factors.
“The prospect of easy money from storing oil
onboard ships to take advantage of the oil price contango has
brought more than a few financial players into an arena that is
traditionally dominated by major oil companies due to the large
capital outlays,” he said.
“Other factors that would keep the floating storage
trend going in 2010 were the projected weak tanker rates, a record
new tanker fleet delivery and the phasing out of single-hulled
tankers,” he added.
On the impact of the global economic recession,
Rakish said the industry’s poor performance could be due to
inaccurate forecasts of strong growth for 2008 and 2009.
“Players then rushed for new buildings and when the
‘bull bowed’ at the end of 2008 and the first quarter of 2009,
there was notably a huge overcapacity of assets,” he said.
This resulted in freight rates and ship values
staying at the rock-bottom level.
“By mid-2009, 50% of the vessels over 10,000 dead
weight tonnes (dwt) in size built in China were delayed in
delivery while 15% of similar sized vessels in South Korea was
falling behind (delivery) schedule.
“The yards in these two countries represent 80% of
all tanker deliveries worldwide,” he said.
Rakish noted that the container sector was worst
hit when the total fleet reached about 130 million dwt while the
demand for tonnage stood at only 112 million dwt, resulting in the
utilisation rate falling to 72 million dwt of the total fleet last
“This has resulted in the collapse of charter and
freight rates that had forced liner operators to scale down
capacity, resulting in 10% of the container fleet now reported to
be inactive,” he said.
Rakish said the global economic recession had also
led to a 5% fall in seaborne oil volumes and even more tonne-mile
On the other hand, he noted that the dry-bulk
market in 2009 had performed stronger than expected.
“The main contributor to this was the high imports
by China and a few other countries,” he said.
Meanwhile, Rakish said piracy and armed robbery
would still be a fear factor to the industry.