with the massive amount of newbuildings contracted for,what will be the outcome in a global downturn

Implications: With order books for new vessels bulging and no delivery prospects past 2010/11,does this mean that the bulk markets will continue to expand? Already we are seing a slowing down of growth in world trade.If this continues,what is going to happen when these ships hit the market. The Baltic Index is a very good indicator I believe of where these markets re going.

Analysis:  So it seems rather worrying that the index has fallen by a third since its peak in November. Admittedly, that may tell us more about global shipping capacity than about trading volumes. The last five years has already seen two big swings in the index. In the first phase, between the end of 2002 and the start of 2005, the index jumped from below 2,000 to 6,000, as both trade and commodity prices surged. But shipowners eventually responded to this increase and shipping rates fell sharply. This told us nothing about trading activity. The Baltic Dry picked up again in 2006, helped by the surge in food prices; it hit its peak of 11,000 in November. While shipping availability may be responsible for its subsequent drop, Capital Economics reckons “it seems unlikely that a large amount of shipping capacity has suddenly (and unexpectedly) come into the market.”