On July 6, 2011, Shanghai International Shipping Institute (SISI) issued 2011 Q2 Shipping Market Analysis Report. According to the Report, the global economy registered a stable performance in Q2, coupled however with increased risk expectations. All major economies drifted downwards, pointing to resurged risks of Euro-zone sovereign debt crisis. Still under immense pressures of overcapacity, the shipping market showed a weaker recovery than in 2010 Q2, manifesting a plain performance at large.

To be specific, the international container shipping market featured a slight rise in cargo volume, accompanied by a constant release of shipping capacity. The proportion of idle ships shrank to less than 1% as of the early June, with large ships of 5,000 TEUs or above all put into service. Liner companies failed to live up to their expectations through several freight hikes, with freight rates still running below par. The Pacific, Asia-Europe, Persian Gulf and South Africa/South America lines unveiled greater YoY setbacks than their Japan, Australia, and South Korea counterparts; and were outperformed by the rebounded Atlantic line. The international dry bulk market staged a V-shape recovery in the second quarter. Standing virtually at around 1,400 points, BDI closed at 1,414 points by June 23, jumping by 7.6% from the end of last quarter. As confirmed by the boosted freight rates, the shipping volume of iron ores, coals, grains and other major commodities advanced on a month-on-month basis, coupled with an overall shipping capacity of 563 million dwt, a MoM increase of 2.2%. In Q2, due to a decelerated recovery of global oil demands, BDTI presented an anticlimax after a promising start; the same trend also applied to BCTI except for a weaker rise. The coastal dry bulk market carried on the downward trend of Q1, readjusting itself amidst fluctuations. Coal shipping remained thriving.

Though generally facing an increasing pressure from domestic inflation, major economies reveal varying outlooks. Weighted down by heavy debts and the recent failure of quantitative easing monetary policy, the U.S. sees only a slim chance of breaking out of the economic recession. Europe exhibits signs of further decline, but China shows the possibility of a restored economic growth. The world economy is estimated to present a visible downturn in 2011 Q3. As some liner companies decide to trim shipping capacity under the pressure of overcapacity, the freight rate may slowly climb back. However, due to tardy moves among liner companies towards mutual capacity control, coupled with huge amounts of new ship deliveries, the market will only see a limited recovery and remain stagnant.

In the third quarter, the lingering uncertainties over global economy may translate into a less-than-expected growth in mass dry bulk shipping volume, with the international dry bulk shipping volume basically sustaining the Q2 level. With a decelerated rise in shipping capacity, the international dry bulk fleet is estimated to reach 578 million tons, advancing 3.7% MoM; however, since the capacity steps up on a sequential basis, the supply-demand gap will be further widened and the BDI will remain a low profile. According to market predication, a MoM rally will be manifested by crude oil and refined oil demands; but ship deliveries and disassembling will decline to some extent, pointing to a slight fall in overall shipping capacity. Varying freight hikes are expected in all vessels but refined oil tankers. Though normally marked as the peak season for electricity and coals, this third quarter may expect no substantial upsurge in coastal dry bulk shipping market, but a sluggish freight hike instead.

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