LONDON, Aug. 26 (Reuters) – Tufton Oceanic, advisers to the world's largest shipping hedge fund, expects the dry bulk fleet to grow for up to three years and freight rates to be under pressure.

''What looked in January 2010 like a two-year challenging supply situation is now really looking like a three-year challenging supply situation because of the fast pace of new orders,'' said Andreas Vergottis, head of research at Tufton Oceanic.

The advisers to Oceanic Hedge Fund, which has $1.7 billion in assets under management, said annual fleet growth has accelerated to 14-15 percent in the past 12 months from 3 percent in the early part of the decade and 6 percent in the latter part.

''It could be more, depending on how well the yards improve on their execution performance. Fifteen percent is the minimum and 25 percent is the maximum potential for fleet growth,'' Vergottis said.

He said owners started ordering ships in massive numbers in late 2006. Given the three-year time lag between ordering a vessel and delivery, ''it is only now we are seeing the effects of the decision," he added.

But companies also are placing new orders in anticipation of a recovery in economic activity from the financial crisis.

''They order now ahead of any sniff of any kind of upturn,'' Vergottis said. ''We are now seeing pre-emptive ordering. So ships may keep arriving before the cargoes arrive.''

The Baltic Exchange's main sea freight index or BDI hit its highest in over two months on Monday at 2,841 points, buoyed by Chinese iron ore import inquiry and grains activity.

Average earnings for the larger capesize vessels, which typically haul 150,000-tonne cargoes such as iron ore and coal, rose to $37,321 a day on Monday, their highest since June 14.

Even so, ''don't get enthusiastic when things go up, and don't get too depressed when things go down,'' Vergottis said.

''It has been my view since mid-2009 that we are in a trading range, and we will remain in a trade range for any time between two years and four years,'' he added.

Until 2002 average capesize earnings fluctuated between $10,000 to $30,000 a day, he said. They rose to $116,000 per day on an average basis in 2007 and then slipped to $106,000 per day in 2008 and $43,000 per day in 2009.