Overcapacity and declining rates characterized container shipping in 2011 and 2012. Capacity reduction and export rush before the Lunar New Year holiday are expected to lead to rate restoration in early 2013. Delivery of new vessels in 2013 is estimated to represent nearly 10% of existing fleet capacity.

In 2012, the Baltic Dry Index posted its lowest average since 1986. Vessel scrapping increased as a result of high supply growth. The cancellations of major coal transportation contracts and the double-track price structure for thermal coal may add uncertainties to the coastal bulk freight rate in 2013. Capacity addition of large size vessels is expected to cause persistent low freight rates in near term.

The shipping industry faced challenges of high bunker costs amid low shipping rates in 2012. Slow steaming is an industry norm amid current market conditions of low freight rates and rising bunker prices. Average bunker prices are expected to remain high and keep rising in 2013. According to the 12th Five-Year guideline on the transportation sector, China aims to increase the number of deep-water berths to 2,214 by 2015.

Key Points:

• Deliveries of Capesize and Panamax will make up over two-thirds of new dry bulk vessels in 2013.

• The Chinese port industry concentration level is currently low but is expected to increase going forward as industry leaders continue to expand operating capacities.

• Increasing focus will be placed on the construction of coal, crude oil, iron ore and container wharves.