In January 2012, four analysis reports were issued by Shanghai International Shipping Institute (SISI) on the shipping markets, focusing respectively on the 2011 review and 2012 outlook of international dry bulk shipping market, international container liner shipping market, international tanker shipping market and Chinese coastal dry bulk shipping market.

The reports indicate that global economic development witnessed an obvious slowdown at large in 2011, an anticlimax in spite of a promising start. Major developed economies were harassed by debt crisis, growing risk of government debt and stubbornly high rate of unemployment, while their emerging counterparts represented by Brazil, China and India were confronted with ever-growing inflation pressures and deteriorating export environment.

It is also noted that despite the YoY reduction in the delivery of new ships, the supply/demand ratio of the markets further went up due to the weak recovery of shipping needs in 2011. Meanwhile, under the influence of global economic slowdown, fiercer competitions of liners and influx of cargo owners into the markets, the freight rate plumbed its depth and the markets remained sluggish on the whole. To cap it all, liners were facing oil price hikes, mounting expenditures of corporate management, the withdrawal of international hot money from shipping industry, and cash crunch. As a result, most of these companies recorded plummeting profits or severe loss, and some of them had filed for bankruptcy protection or fallen into liquidation.

Looking into 2012, the reports hold that global recession will continue despite a fat chance of "double-dip recession”. Global economic recovery is to be led by the fast growth of Asian economy, which is in turn shored up by the smooth development of China, India and the ASEAN, the post-disaster reconstruction in Japan being the icing on the cake. The US economy will continue to turn for the better, yet the recovery is weakened by heavy debt and high unemployment rate. Affected alike by the high unemployment rate, aging population, high welfare standards and heavy debt, the EU economy may encounter a double-dip.

        International Dry Bulk Shipping

For this market, international trade in iron ore and coal bears the brunt of the spreading European debt crisis and global inflation, followed by the slow recovery of real estate and auto industries in the US and Japan, the slowdown of China’s fixed asset investment, the insufficient housing starts, and the shift in steel mills’ focus to the exploitation of domestic ore mines. It is estimated that global dry bulk shipping volume will amount to 3.804 billion tons in 2012, up 4.7% YoY. On the other hand, the large increase in the number of disassembled dry bulk ships cannot offset the rapid clearing of ship order backlog, and the overall capacity of dry bulk ships is to reach an estimated 713 million dwt in 2012, up 14.9% YoY. Furthermore, the successive delivery of ships by Vale and other cargo owners will pose a substantial impact on the market. There may not be a huge rise in freight rate, and the market will remain at a low level of periodic recovery in 2012, with an estimated mean annual BDI of about 1700.

        International Container Liner

It is estimated that the consumer markets in Europe and the US will remain sluggish, as some of the major European and American developed countries have set out to lower the wage and social welfare standards under the burden of heavy government debt and high unemployment rate. Moreover, these countries may resort to trade protectionism as a way of creating more jobs and stimulating the export, which will lead to frequent bilateral trade friction and pose a threat to international trade. As to their emerging counterparts like China and India which are suffering the exogenous pressure of export deceleration and the endogenous challenge of economic slowdown, their focuses are being shifting to domestic demands. In 2012, global container shipping volume will reach an estimated 160.12 million TEUs, up 6% YoY. As of the end of 2011, global markets had reported an order backlog of 3.9 million TEUs of container liners; in 2012, an estimated 1.5 million TEUs of container liners will be delivered, with a capacity growth of 7 - 9%. The freight rate of various lines relies heavily on the gaming of liners. Given a new business alliance, the freight rate will grow slightly to the break-even point; otherwise the market will bear witness to fiercer competitions of liners and remain at the low level of 2011.

        International Tanker Market

Although the growing demand for oil is curtailed to some extent by the reduction in oil consumption in the US and the EU as well as the high level of oil price, it is further boosted by the filling of strategic petroleum reserve in China and India, the energy needs driven by the post-disaster construction in Japan, the sustained development of oil refining markets in the Asia-Pacific Region, and the rapid growth of auto markets in Asia. In 2012, the oil shipping volume will reach an estimated 3.307 billion tons, among which 2.387 billion tons for crude oil, up 2.0% YoY, and 0.92 billion for refined oil, up 2.68%. In light of the existing orders, the gap between the supply and demand of tanker capacity will continue to grow in 2012, and excess capacity is to be a pressing concern. It is estimated that crude oil tankers in the market will register a capacity growth of 8%-9% and refined oil tankers of 5%-6% in 2012. The market will basically remain sluggish with little room for the growth of freight rate.

        Chinese Coastal Dry Bulk Shipping

China’s economy tends to make a soft landing in 2012. Albeit slowed down to some extent, the development of high energy-consuming sectors including power, metallurgy and cement material industries will maintain the great momentum, thus ensuring that the demand for coal and coastal coal shipping will continue its uptrend. However, such factors triggering the upsurge of coal shipping volume as the severe drought in southern China and the soaring coal price abroad are not likely to recur. The growing demand for coastal coal shipping will see an obvious slowdown, and the excess capacity of coastal shipping markets will further aggravate due to the large number of new ships delivered and the return of some vessels, jointly run by domestic and foreign enterprises, from overseas services. In light of the coastal shipping costs, there is little room for the reduction of freight rate.