Industry Note No. 19 - Supply Side Dynamics

Fluctuations in the global supply of tonnage are a primary factor behind freight rate volatility. In 2015, DPP net fleet growth of <1% supported a surge in spot rates and TCE earnings, drawing owners to shipyards for new vessels. This pick-up in ordering activity has contributed to an acceleration of supply growth since 2016, and stands as a major factor behind the freight rate weakness currently observe in the market. In this note, we review the evolution of the clean and dirty fleets in 2017 as well as provide guidance through 2019.