Chemical shipping companies will suffer low rates for another 12 months as fresh tonnage ordered during the boom that ended in 2008 is slowly soaked up by the market, leading transporter Stolt-Nielsen told Reuters. Global trade plunged as recession hit many countries in 2009, driving down shipping rates but also creating opportunities for consolidation, said Hans Feringa, president of Stolt-Nielsen's key Stolt Tankers & Terminals unit.
'There is a slow pick-up in demand at the moment. Overall demand isn't that bad, but we need to soak up more of the supply from newbuildings,' Mr Feringa of the Oslo-listed company said in an interview.
He estimated the overall tonnage under construction to equal about 16 per cent of the global fleet.
'These ships are due for delivery by the end of 2012,' he said.
Stolt-Nielsen operates between 60 and 70 deep-sea ships, and about 70 per cent of the volume they carry is covered by long-term contracts.
Rates vary with overall demand though, and the recession sent the 2009 operating profits for its fleet down by 81 per cent to US$24.8 million.
'That's obviously not satisfactory. What we really need to see is a pick-up in global trade. We need a return of stronger manufacturing,' said Mr Feringa.
'We expect the economic recovery to be slow, so the coming 12 months are likely to be tough.'
He said that the company would take advantage of a strong balance sheet as it considers expansion.
'We're patient. Markets remain tough, but there have been many new entrants that are creating opportunities for consolidation,' Mr Feringa said. 'I would expect some consolidation in the industry.'
'There is a slow pick-up in demand at the moment. Overall demand isn't that bad, but we need to soak up more of the supply from newbuildings,' Mr Feringa of the Oslo-listed company said in an interview.
He estimated the overall tonnage under construction to equal about 16 per cent of the global fleet.
'These ships are due for delivery by the end of 2012,' he said.
Stolt-Nielsen operates between 60 and 70 deep-sea ships, and about 70 per cent of the volume they carry is covered by long-term contracts.
Rates vary with overall demand though, and the recession sent the 2009 operating profits for its fleet down by 81 per cent to US$24.8 million.
'That's obviously not satisfactory. What we really need to see is a pick-up in global trade. We need a return of stronger manufacturing,' said Mr Feringa.
'We expect the economic recovery to be slow, so the coming 12 months are likely to be tough.'
He said that the company would take advantage of a strong balance sheet as it considers expansion.
'We're patient. Markets remain tough, but there have been many new entrants that are creating opportunities for consolidation,' Mr Feringa said. 'I would expect some consolidation in the industry.'