What is a bulk carrier? ③ Focusing on tonnage by type, aging fleet, and backlog of orders

Let me introduce you to the last part of the bulk carrier overview. Among the basic fundamentals of demand (transportation volume) and supply (vessel capacity), demand was covered to some extent in the first chapter, so this episode will focus only on supply. First of all, to point out one thing, I wrote that supply = amount of shipping.

 

The capacity of a ship is expressed as the number of ships. In other words, since it is the total amount of cargo carried by the ship, when talking about supply in the industry, it is expressed in terms of the volume of the ship rather than the word ship.

We will start by examining the global tonnage trend.

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1.    Trends in dry bulk carrier capacity

 

Let's first take a look at the current status of bulk carrier fleets around the world. The blue bar graph is the total volume of bulk carriers by year, and the orange line is the rate of change (%) by year.

 

• What is noteworthy is that 1) It has increased every year except for one negative growth (-0.2%) in 1998 2) It recorded an increase of 5% in the mid-2000s and over 10% in the late 2000s. However, since mid-2010, the average annual growth rate has been only about 2.7%.

In particular, before and after the peak in BDI history in 2008, shipping companies were swept up in the competition for sales rankings, and ships that were ordered competitively ended up in 2009 (10.6%), 2010 (17.1%), 2011 (14.8%), and 2012. It caused oversupply over the past year (10.6%), which was a big factor in hitting the lowest point in the BDI in 2016.

 

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2.     Classification of tonnage by type

Looking at the tonnage capacity by ship type in terms of dry weight tonnage (DWT), the forecast for 2024 is 390 million DWT for Cape, 250 million DWT for Panamax, 230 million DWT for Supramax, and 100 million DWT for Handy Size. Estimated at 10 million DWT. In terms of proportion, it consists of 39%/26%/24%/11%.

 

So let's be a little more specific, even within a linear, by size. The trend of larger ships, which was definitely a trend in the 2010s, is the most noticeable. VLOC vessels of 260,000 DWT or higher account for only 1.5% of the total bulk fleet, 193 out of 13,000, but account for a whopping 6.7% in terms of tonnage (DWT).

 

It can be seen that the proportion of Kamsarmax and Post Panamax-class ships of 80,000DWT or higher is high in Panamax ships, and the Ultramax ships of 60,000DWT or more are high in Supramax ships.

 

In other words, as the competition among shipping companies intensified amid rapid economic development, ships have become larger amid the trend of cost reduction, economy of scale, and port size.

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3.     Classification of old vessels

The scrap age of ships varies depending on market conditions. An aging ship refers to a ship that is approximately 20 years old or older, and operating such an aging ship requires a lot of unexpected costs. Frequent troubles occur in ship operation, resulting in high maintenance costs, many restrictions in chartering business such as charter/shipping, and too many unfavorable cases depending on the presence/absence of eco-friendly equipment such as scrubbers.

Nevertheless, in the high market, even considering all cases, the profit from operating the old ship is greater than the cost, so the fleet is operated.

 

Looking at the age of scrapping of bulk carriers by year, the average is about 27 years. When the market was good in the mid-2000s, ships were used for nearly 30 years, and in 2016, when the market was worst, only 23 years were used. Looking at the recent five years, the age of use of ships has risen considerably, and in particular, in 2021, shipping companies chose a strategy to delay ship scrapping and pursue profits through the management of old fleets amid high market conditions.

 

Then, let's take a look at the proportion of seniors older than 20 years in detail by line.

Within Capesize, there are about 50 general Capes (160,000~200,000DWT), 400 Panamax (65,000~80,000DWT), 320 Handymax (40,000~50,000DWT), 470 Handy (20,000~35,000DWT), Small Handy. (10,000~20,000DWT) is about 180 vessels, confirming that many old fleets are distributed in the small fleet.

 

Since the trend of larger ships mentioned above is relatively recent, there are almost no old ships in the VLOC and Large Cape class, whereas many old ships are seen in small ships that have been ordered and used for a long time in the past. In other words, when various issues (IMO, low market conditions, etc.) occur, ships with many outdated fleets will be dismantled first, and I think that the market will rebound first, focusing on these ships.

 

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4.     backlog of orders

Let's take a look at the order book by year/country. It can be confirmed that bulk carriers are mainly ordered and built by shipyards in China and Japan. In particular, the total share of Korea, China, and Japan is 94.5%, with 64%, 30%, and 0.5% respectively, and the rest are being built at Philippine shipyards.

 

Looking at the above order performance, it is estimated that Korea has moved a lot of orders to LNG carriers, which are high value-added ships, and it can be seen that China is still placing a lot of orders mainly for bulk carriers.

 

The total order backlog of bulk carriers is approximately 71 million DWT, and the ratio of order backlog to the total fleet currently stands at 7.4%, which is very low. Considering that the order backlog ratio soared to 78% in 2009, the current order backlog is at a very low level, and if demand recovers to some extent due to these supply restrictions, the bulk carrier market will be positive.

 

 

What is a bulk carrier? I divided it into 3 chapters on the subject. I personally think that I have covered some of the things I really want to know, such as market conditions, BDI composition, cargo volume, and fleet volume. We will discuss in more detail later what we have not covered this time.

Next, we will continue the series by moving the topic to ‘Container Ship’ related to the overview of the shipping industry. In addition to the interim series, we will analyze and deal with interesting news related to market conditions, so please give us a lot of interest.

 

thank you