Advances in Tech, LNG Bunkering Could Cause Shipping Market Oversupply Situation: Braemar

Monday September 11, 2017

Henry Curra, Head of Research at Braemar ACM (Braemar), says technology advancements, including the development of liquefied natural gas (LNG) bunkering, could throw off market fundamentals by creating an oversupply in the shipping market, Tradewinds reports.

"Technology could produce oversupply in its own right, irrespective of the market levels," said Curra.

"We don't know what the pricing will be for LNG but it's probably going to be attractive and it might incentivise orders of much more fuel efficient ships that will meet the carbon emissions criteria."

As Ship & Bunker reported in May, a report by Moody's Japan K.K. (Moody's) suggested that, with signs of recovery in both the dry bulk and container shipping segments, the outlook for the global shipping industry is stable.

"We are at a low point in the market and things start to pick up," said Curra, adding: "for bulk carriers they do pick up and you see a decent pick up already this year.

"That recovery continues, probably until about 2019, then we have some trouble with Chinese iron ore imports that could damage that market slightly. We are encouraging restraint on the ordering side."

Looking to other possible market pressures in the future, in August, Glander International Bunkering (GIB) CEO Carsten Ladekjaer told Ship & Bunker that the introduction of a 0.50 percent sulfur cap on marine fuel in 2020 will result in increased financial pressure on both the shipping market itself and physical suppliers.