Danish shipping company D/S Norden said the dry cargo market reached its lowest point last year and will not recover this year under the weight of overcapacity and the Chinese economy's transition away from an industrial economy.
China's insatiable appetite for coal and iron ore that profitable freight rates for dry cargo vessels has now gone, Chief Executive Jan Rindbo said
"The industry undergoes huge changes these years. It is connected to the transformation of China's economy to a service-driven economy from a industrial-driven economy," Rindbo told Reuters
Copenhagen-based D/S Norden reported a 2015 loss of $284.9 million, from a loss of $415.6 million the year before.
The average growth rate for transported dry cargo has been around six percent the last ten years but growth is now flat, Rindbo said.
"It is mainly import of coal to China that has fallen. Iron ore import has gone up a bit as a result of the production of iron ore in China has been replaced with imported iron ore," Rindbo said.
The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry bulk commodities, has lost about 98 percent of its value from a peak of 11,793 in May 2008, marking the lowest level since records began in 1985.
D/S Norden has reduced its fleet by selling some vessels and cancelled some vessels ordered from shipyards in Japan but the shipper still has more than 200 vessels.
With combined cash and credit facilities of $663 million at end of 2015 D/S Norden is better capitalised than many other shipping companies in the industry.
"More scrapping of old vessels is needed to restore balance between supply and demand but it will take years," Rindbo said.
The global dry bulk fleet amounts to around 9,950 vessels and orders for around 1,250 vessels has been placed with shipyards.
"Many new vessels are expected to hit the water in 2016, although recent cancellation activity has improved the outlook," said Maersk Broker
(Reporting by Ole Mikkelsen, editing by Louise Heavens)