Golden Ocean Group Limited, the shipping line chaired by Norwegian billionaire Mr John Fredriksen, said that more than a fifth of the world’s fleet of capsizes vessels for hauling coal and iron ore has been idled after fees collapsed.
Golden Ocean said that "Utilization of the total dry bulk fleet is estimated to be around 80% to 85% and it is believed that more than 20% of the capsize fleet is idle and waiting for employment. There is concern overcapacity in the dry bulk market today, combined with the weak global economic condition will continue to put pressure on the market."
It added that the order book for new dry bulk ships at the end of September 2008 will swell the global fleet by 70% if completed. Tight financing will lead to canceled orders, while there has already been an increase in ships scrapped.
Golden Ocean has 30 vessels on order worth USD 1.6 billion, with about 55% already financed. It is in talks to cut, delay or seek funds for the remainder. Its third quarter profit more than doubled after a USD 54.4 million gain on the sale of two ships. Net income advanced to USD 118.7 million from USD 52.9 million a year earlier.
Shipping rates slumped after a 20% to 30% cut in global steel output cut demand for deliveries of iron ore, and a freeze on credit made it harder to fund cargoes. Rates for renting out capsize vessels have collapsed by 99% from a record in June 2008 to USD 2,425 a day as compared with daily running costs of about USD 6,000. Normally about 250 capsizes compete for spot bookings.