The dry-bulk shipping industry may not emerge from a protracted downturn for another two years and some smaller firms will be squeezed out, the chairman of France’s Louis Dreyfus Armateurs said on Tuesday.
The dry-bulk sector that transports commodities like coal and iron ore has suffered from oversupply of vessels and faltering global industrial demand, pushing freight rates to a record low this year.
Some ship operators had taken heart from signs of a pickup this year in the Chinese steel sector, but the dry-bulk industry needs to be prudent given the overcapacity to be cleared, Philippe Louis-Dreyfus told Reuters.
The prolonged downturn has already caused some casualties, with Norwegian firm Bulk Invest filing for bankruptcy in March and Greece’s DryShips last week expressing doubts about its ability to stay in business.
Dry-bulk shipping was heading for a consolidation period in which midsized, family firms like his may struggle to compete alongside giant commodity transporters, Louis-Dreyfus said.