Two factors are to fall into place if dry bulk carriers are to thrive in 2023, says Eagle Bulk chief exec Gary Vogel.
According to chief exec Gary Vogel, US bulk cargo carrier Eagle Bulk can expect great things from 2023 following a rather disappointing 2022.
Following last couple of years’ historical freight rates for carriers, 2022 will go down as the first contraction in dry bulk tonne-mile demand in twenty years.
The challenge going forward will be drivers to bring back demand growth
Gary Vogel, CEO, Eagle Bulk
Demand has especially been put to a halt by the end of the year with China as one of the main growth obstructers.
But expectations are high when the US national looks towards the coming year, even though he concedes to a string of challenges needed to be met.
”Given our constructive view for the medium-term and our strong liquidity position, we will likely continue to take advantage of the pullback in vessel values and add modern Ultramax tonnage on an opportunistic basis,” says Vogel.
”We also believe we will see volatility return to the market in 2023 which is a welcome trait given our active management platform.”
Few ships and climate regulations
The volatility he expects to reappear is especially due to demand, which is often viewed as the biggest challenge to a market where supplies of vessels and new ship orders are at a record low.
A string of other significant bulk executives also point to record-low ships and waning order books at shipyards as the biggest contributors to a strong dry bulk market for many years to come.
Uncertainties in regards to future climate demands cause many shipowners to think twice before ordering new vessels these days – and besides, the shipyards have their hands full with building container vessels.
At Eagle Bulk, Vogel clings to those factors and the potential they carry, but he admits that especially two things are to fall into place during 2023 if the market is to stabilize completely.
”The challenge going forward will be drivers to bring back demand growth. Although supply growth is quite low, we still need to see Global GDP Growth normalize and also see a reopening and recovery in the Chinese economy,” he says.
China to play a crucial role
China, the biggest engine under the dry bulk market, still has severe Covid curbs in place effectively keeping production at a minimum, while the country’s import of crucial raw materials like steel and coal has gone up substantially.
The country is expected to map out more stimulus steps when Xi Jinping and his cabinet assemble to set next years economic agenda.
The measures taken are to help GDP growth recover in 2023 following a year where the country’s 5.5 percent growth ambitions are expected to land at a mere 2.7 percent, according to The World Bank. Growth outlook, however, is subjected to uncertainties regarding China’s actions in the first months of the new year,
”While we expect the market to remain muted in the early days of 2023, we are constructive for the medium term,” says the dry bulk chief exec, who views his carrier as ”very well positioned to take advantage of the market, however it evolves.”
Eagle Bulk is headquartered in Stamford, Connecticut and owns a fleet of 53 vessels with an average age of 9.5 years, the carrier revealed in a presentation of its third quarter earnings.
Here, the carrier showed a generated net income of USD 77.2m, dropping from USD 78.3m in the same period last year, and from USD 94.5m from Q2 this year.
