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Oversupply of ships to continue for next 2-3 years: Anglo Eastern

February 09: There is significant oversupply of ships in the shipping sector, especially in the bulk segment, which is likely to continue for the next two to three years, an official of a leading shipping company said.

“There is a total oversupply of ships and for the next two or three years, and everybody knows this, especially in the bulk, there will be a big problem.  We will be in enormous problem,” CEO of Hong Kong- based ship mangers Anglo-Eastern Group, Peter Cremers said.

Talking to reporters on the occasion of announcing their plans in India, Cremers said, “I always try to make comments out of my professional experience. We are a ship manager and not commercial operator. So my view is that in shipping, it is a question of demand and supply. And ship owners are a very strange breed of people; if one soul does something, everybody else will do the same thing; this is leading to an oversupply of ships in the market.”

He further said: “At some stage shipping is driven by shipyards. Now in China, there is such a shipyard production capacity and these guys keep on making ships, and ship owners keep on buying ships and so the fleet is growing and is still growing and there is not much scrapping, and not much growth in transport. Because of that, there is overcapacity and that is not going to go away in the next one or two years.”

Asked whether it meant there is unlikely to be any buoyancy in the freight market in coming years, the CEO of Anglo-Eastern said, ”If I knew all these, I would be making much more money. But I can see from our perspective that tanking business is going all right; of course, gas is in huge expansion because of the export of gas from the United States. And the nuclear power plants in Japan are still stopped, so we see a huge explosion of gas tankers.”

He felt that the crude oil market seems to be okay at the moment and is mostly driven by storage, “because if the crude oil prices are changing you can make money out of storing”.

“In the bulk, there is total oversupply of ships that will not be good for next few years,” he added.