Golden Ocean CEO Says Shipping Market Is Worst in Modern Historyby and
Capesize rates don't even cover cost of paying ships' crews
Company predicts wave of bankruptcies across the industry
Shippers ferrying coal, iron ore and grains across the globe have never had it this bad and should expect little respite for another two years, according to Golden Ocean Group Ltd., a company part owned by Norway-born billionaire John Fredriksen.
An enormous oversupply of vessels isn’t sustainable and the dry-bulk industry will soon be contending with “a lot of bankruptcies,” Herman Billung, chief executive officer of Golden Ocean, said at a conference in Oslo on Thursday. Fredriksen, whose personal fortune is about $10.5 billion, is the company’s biggest investor, according to data compiled by Bloomberg.
“In dry bulk, we haven’t seen as bad a market since the Viking age,” Billung said in an interview after speaking. “Has it ever been this bad in modern history? I would say no.”
Dry bulk shipping has been hit by a chronic oversupply as well as faltering demand from China, where the economy is growing more slowly and shifting away from commodity-intensive heavy industries. A shipbuilding boom saw fleet growth double in the seven years through December on the belief China’s economy would continue growing at a record pace. With more ships available than the market requires, the average daily rent to a 1,000-foot long Capesize bulk carrier has fallen below $1,000 for the first time ever.
Golden Ocean shares rose 0.2 percent to 5.03 kroner (58 cents), giving the company a market value of 2.62 billion kroner.