Shipping firms face unhappy new year
Charter rates continue to plummet with the scenario of idle tonnage becoming a certainty for the near future, especially as newbuildings ordered during the ‘good times’ are now being delivered. Unsurprisingly, the volume of these deliveries is unlikely to be repeated for some time.
So as ship operations feel the pinch, so are the shipyards in a big way, as the banks withdraw from providing finance to them and the aforementioned drop in demand exacerbates their plight.
German plight
The latest statistics released by Paris-based AXS-Alphaliner show that container ship orders have dropped to a 13-month low, for the first time to under the 6.5 million TEU mark.
Another example of the current shipbuilding situation was highlighted in Fairplay Daily News Service last week. It said Germany’s Federal Government has pledged hundreds of millions of Euros in financial guarantees and disbursements to German yards and ports to mitigate the economic downturn by the provision of guarantees intended to make it easier for yards to gain funding from commercial banks.
Fairplay went on to quote the German Shipbuilding and Ocean Industries Association (VSM) that from an aggregate orderbook of 192 ships, 55 projects are in limbo because they lack support from banks.
This malaise is being reflected in China that has now become a world leader in shipbuilding because of price competitiveness.
According to China Economic Net the estimated 3,000 or so shipyards in China had expanded at a stunning rate on the back of the country’s robust economic development.
Last year, total orders at Chinese shipyards beat Japan, and were second only to South Korea. In terms of new orders, China became Number 1 in 2007, reaching a staggering 98.5 million deadweight tons (DWT), or 42 per cent of the world’s total.
However, the current pessimism is now evident here with Chinese yards admitting that ship buyers now are starting to hold back their orders while banks have tightened their fund guarantees amid gloomy market sentiments.
Drop in new orders
China Economic Net goes on to quote a recent report from the China International Capital Corporation Limited (CICC) that says the number of new ship orders worldwide dropped 66 per cent year-on-year in September.
Chinese yards, in particular, experienced a 34 per cent drop in new orders in the first nine months of this year.
Then there is the piracy issue that has rocketed into the news because the world media suddenly woke up to a problem that has been present for quite some time.
So at a time when the current economic situation is seriously impacting world shipping, the additional, frightening burden of cost for managing the risk of piracy will have to be borne by the ship operators, and eventually the customers.
As long as recession pressures persist, things look gloomy in the new year.
Source : gulfnews
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