Tanker and dry bulker rates to sink this year, forecast says

Freight rates for dry bulk shipping will decline by 25 percent, while those for tankers will drop by 15 to 20 percent in 2006, suggests the General Directorate for Strategy and Financial Analysis of the National Bank of Greece in a report. The main factors behind this decline in rates are the increased supply of new ships (orders have reached 25 percent of the existing fleet) and the shifts in demand that may occur by developing countries and mainly China, India, Russia and Brazil. In this context, Greek ocean-going shipping has managed to expand its presence and maintain its leading position. The Greek-owned fleet is developing steadily, by 2.2 percent over the last two years, even though its overall share is shrinking. This year the share of Greek shipping is calculated at 16 percent, based on shipping capacity. The sector employs more than 160,000 people, while the foreign currency it fetches covers one-third of the country’s trade deficit. However, the number of Greek seamen is in continual decline, due to competition from crew originating from countries such as the Philippines and India. That is also why the contribution of maritime transport in the Greek economy has only risen to 4.6 percent and not more, when the rise could have been three more percentage points on an annual basis had there not been such a decline in Greek crews. For 2006 the NBG report forecasts a 2 percent increase in net revenues from shipping, reaching 8.5 billion euros. Consequently the sector’s contribution to growth of the gross domestic product is estimated at 0.2 percent. The great increase of freight rates in 2003 and 2004 led to a renewal of the Greek fleet. The realized profits of shipowners in previous years allowed them to make important investments so that today the average age of the Greek-owned fleet has dropped to just 15.3 years, against 20.3 years in 2000. Another recorded trend concerns the marked decline in the number of shipowners (by 25 percent over the past seven years), particularly of those owning one or two vessels. A worrying sign has been the drop in the Greek register’s competitiveness, as it includes only 31 percent of the Greek-owned fleet, down from 42 percent in 1996.