How important is the bulk trade in grains and oilseeds for the world bulk shipping fleet?
The somewhat deflating (to farmers) answer from Trevor Lavender of Summit Maritime Corporation is that it’s not greatly important.
Bulk crops only make up a little over 10 percent of world bulk shipping. Iron ore and coal are much more important. So the outlook for demand and trade in those commodities does a lot more to set the outlook for bulk ocean freight than projections about world crop trade.
The good news (from a shippers’ perspective) is that there’s still a giant fleet of idle ships waiting around for freight to haul, keeping prices modest. New capesize vessels are still being launched, ships ordered in the height of the 2006-08 commodity bubble.
Lavender is describing a shipping industry in financial crisis, as a glut of shipping is met by low prices but shipowners are having to accept extremely high interest rates on loans. The industry got overbuilt by “cheap credit and careless equity,” and is now facing an almost total disappearance of bank credit. Shipowners are having to go to the junk bonk market instead, where they have to pay up to 12 percent interest rates.
Read Also
Farmer ownership cannot be seen as a guarantee for success
It’s a powerful movement when people band together to form co-ops and credit unions, but member ownership is no guarantee of success.
“They have no alternative, as their bankers have essentially closed for business.”
