Among the major companies shrinking their fleets and cancelling orders is Kawasaki Kisen Kaisha, Japan's third-biggest shipping line.
The ship operator said last week it would shed 24 ships in the coming year, and postpone plans to expand its dry-bulk fleet to 300 vessels. It blamed ship deliveries outpacing global demand for iron ore and coal.
The Baltic Dry Index, a benchmark for commodity-shipping rates, has tumbled about 40 per cent in the past year, forcing other operators to cut their fleets too.
Daiichi Chuo Kisen Kaisha, another bulk carrier line said in October it intended to cancel ship orders, and cut its fleet to help it to weather the slump in dry-bulk rates. The company is now in talks about cancelling or delaying 10 of 60 dry-bulk carriers it has ordered as it heads toward a second straight annual loss.
Shares in the Brazilian shipbuilder OSX Brasil tumbled last week to a four-month low after the Brazilian state-owned energy giant Petroleo Brasileiro cancelled a contract for five drilling ships it was expected to build.
In May, the transportation arm of Petroleo Brasileiro suspended a contract to buy 16 vessels from the Brazilian yard, Estaleiro Atlântico Sul.
The German ferry operator Scandlines last week decided to cancel contracts for two ferries with the German shipyard, P+S Werften. The two new vessels were originally ordered in 2010 to service routes in the Baltic Sea.
It was the second cancellation blow for the yard. In September, the Danish shipping and logistics company DFDS also cancelled two new ships, first ordered in November 2010. P+S Werften has now filed for insolvency.
[ dblack@thenational.ae ]