The Shanghai International Shipping Institute (SISI) predicts a surge in bankruptcies within China's dry bulk shipping industry, Reuters reports.
The overall business climate in China continues to deteriorate and dry bulk shipping companies, being hit the hardest, are likely to be swept by a new wave of bankruptcies.
The institute basis its prediction on a survey of 50 of the country's biggest dry bulk shipping lines, which found that over 60 percent are struggling with long-term losses and 40 percent are facing liquidity problems.
In the fourth quarter of 2015, shipping business climate index was at 82.04 points, the report shows, which is still a relatively depressed level. The shipping business confidence index was at 34.42 points, also slumping heavily.
Shipping companies’ transport capacity, space utilization, freight revenue, profitability, corporate finance and loan capabilities were all down due to deteriorating business conditions.
"The market is extremely depressed and these conditions are likely to continue in 2016, exacerbating dry bulk firms' losses, increasing costs and creating obstacles to obtaining financing. This will kick-start a wave of bankruptcies," state-backed SISI said in a report published on Tuesday.
Among the Chinese firms that have already gone bust are dry cargo shipper Winland Ocean Shipping Corp, which filed for bankruptcy protection in February last year, and state-owned shipbuilder Wuzhou Ship Repairing & Building Co Ltd, which filed for bankruptcy last month.
The SISI, which also surveyed container shipping, ports and shipping services firms, said business sentiment across these sectors had also slumped.