Dry bulk shipping rates are expected to recover later this year due to the strong trade growth, moderating fleet development and deployment of new, fuel-efficient vessels, Drewry’s latest Dry Bulk Forecaster revealed.

Compared with older units, modern vessels command higher rates because of their superior fuel efficiency and environmental credentials, the report stated.

The average age of the dry bulk fleet has declined from 12 to nine years since 2011, and it has also helped to support charter rates.

Drewry dry bulk shipping lead analyst Rahul Sharan said: "We expect rates to remain under pressure through the first quarter of 2015.

"Earnings will recover as modern, fuel-efficient ships gain employment at higher rates relative to older ships."

"However, thereafter earnings will recover as modern, fuel-efficient ships gain employment at higher rates relative to older ships. This is one of the reasons why average charter rates recovered in 2014 compared to 2013, despite continuing capacity pressure."

According to Drewry, the dry bulk shipping trade increased 8.3% in 2014 with the help of strong iron ore demand and a 20% rise in grain trade.

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By GlobalData

In contrast, new vessel deliveries decreased as ship owners delayed orders in the wake of a weak market, therefore, fleet growth in 2014 was 5.3% compared with 6.2% in the previous year.

"We expect to see some acceleration in 2015 deliveries despite a moderating orderbook, thanks largely to increased slippage from 2014," Sharan added.

Image: A Panamax container ship transiting the Panama Canal. Photo: courtesy of Williamborg.