Dry bulk fleet
For 2014, DryShips, Inc.’s (DRYS) total dry bulk fleet growth is expected to end up at approximately 5.9%, much lower than the highs of 17% in 2010 and 15% in 2011.
Demolition activity was stalled somewhat in 2014 compared to 2013, due to expectations of a more profitable freight environment. In the first nine months of 2014, 11.5 million deadweight tons were removed from the fleet, compared to 18.5 million deadweight tons during the same period in 2013.
Meanwhile, it’s important to note that there’s still considerable scrapping potential. Approximately 9% of the fleet is 20 years or older, and 10% is between 15 and 19 years old. Also, DryShips expects slippage to approximate 25% in 2014, which will help limit net deliveries.
Suezmax and Aframax deliveries have declined steadily, so supply growth will remain at minimal levels for 2014 and 2015. Orderbooks of the respective fleets remain at manageable levels, with the majority of new orders due for delivery in the second half of 2016 or later.
The delivery of new builds will impact DryShips and other companies, including Safe Bulkers, Inc.(SB), Navios Maritime Holdings Inc. (NM), Diana Shipping Inc. (DSX), and Navios Maritime Partners L.P. (NMM). Delivery will similarly affect the Guggenheim Shipping ETF (SEA), which holds stock in these companies.
Finally, DryShips believes that non-deliveries from yards facing financial issues may potentially reduce the orderbook even further. Approximately 11% of Suezmax and Aframax vessels are between 15 and 19 years old, and 3% and 4%, respectively, are more than 20-years old.