Orders for new ships in China have fallen by nearly 50% in the first half of the year.
It’s difficult to estimate how much of the effect is due to recent overbuilding and how much is due to the slowdown in the global economy.
Shipbuilding and shipping capacity surged because of speculation fueled by China’s demand for raw materials. The government also provided low-cost financing for new vessels to help support shipyards.
At the end of the day, it may be in China’s interest to overbuild ships. An abundance of supply will lower the cost of shipping goods abroad, helping to make its manufacturing sector more competitive.
Three-year charter rates have tumbled to around $10,000 a day from about $55,000 five years ago.
