As 2010 draws to a close and many owners and operators brace themselves for what will inevitably be a very tough year ahead, reasons for ship repairers to be optimistic may not be immediately apparent. Deep economic uncertainty still prevails throughout large areas of the developed world. Global finance markets may no longer be teetering on the brink of collapse, but they are by no means rock solid. Shipping’s largest-ever fleet looks likely to be in oversupply for some time. And the pace of economic development in the so-called BRIC nations – Brazil, Russia, India and China – is so dramatic that long-established trade flows are being radically altered, with huge implications for global shipping. Against this backdrop, the shipping industry’s principals – primarily its owners – must base investment decisions on the acquisition of expensive assets which are likely to last at least two decades, and possibly three. In times past, owners often received assistance in these decisions from charterers and cargo interests keen to secure the long-term supply of fairly priced shipping capacity. Such transactions are still evident on occasions, but tend to be the exception rather than the rule. Faced with an extremely complex decision-making process, it is no surprise that shipowners – sometimes with the help of their bankers – get things wrong. Sentiment is very important and they often follow each other in the ordering of too many ships of one type, and not enough of another. They give in to bossy shipbuilders who wish to carry on building the same relatively inefficient ships as they have done for decades. Change costs money, they are told, but equally, no change costs money too … as the shipping industry is now discovering. This forms the basis, as 2011 dawns, for three good reasons to be cheerful. One, shipping is in the environmental spotlight as never before. Climate change sceptics, particularly in the US, may continue to bury their heads in the sand, but shipping’s environmental pioneers are already recognising that change means opportunity – particularly in long-established ship design and operational parameters. In fact, it is spawning the design of a wide range of equipment and systems for retrofit – from exhaust gas scrubbers to...
Read MoreThe views of the Publishers do not necessarily correspond to the views of Lambos Maritime Services Ltd. What do you do with a couple of empty newbuilding docks when there’s little prospect of filling them for a while? Cast your mind back, if you can, to the mid 1980s where a virtual halt in new contracting left many modern ship construction facilities in Japan, particularly, but elsewhere too, with nothing to do. Being the ultimate pragmatists that they are, the Japanese filled in docks or closed some of them down and, as a result, many of the country’s shipbuilding entities are still around today. Yards in Europe were less fortunate: many simply could not compete with highly automated production processes and cheaper prices in the East and went out of business as a result. Today, however, there is a new generation of shipbuilders, many of them in China and elsewhere in Asia. And, if you’ve just built a new shipyard and you don’t have the same degree of Japanese pragmatism, you could well be more reticent about filling in a dock or changing its function. Instead, you might well hang on grimly in the hope of better times around the corner. Experts believe that world shipbuilding has reached another watershed – in much the same way as it did in the 1980s – and some very tough decisions are now needed. Global shipbuilding capacity has reached record levels and, despite a flurry of orders in various sectors – orders which, by the way, are of deep concern to analysts – there is virtually no chance that it can be taken up any time soon, if ever. Just a few days ago, Fincantieri chairman Corrado Antonini who is also the current head of the Community of European Shipyards Associations (CESA), warned that more than 50% of shipbuilding capacity could become surplus to requirements over the next ten years. Antonini was speaking at the Jecku meeting in Nantong, China. Shipbuilders from Japan, Europe, China, South Korea and the US were meeting to discuss the industry’s future: Antonini’s message was not a happy one. Calling the potential capacity surplus the biggest problem that the world’s shipyard now face, he said that orderbooks...
Read MoreAs a flood of new ships has forced the dry bulk market into free-fall once again, some are asking how anyone can possibly have thought that the worst of the bulk carrier sector’s crisis was over. Tonnage equivalent to around 60% of today’s bulk carrier fleet remains to be delivered. It comprises of around 750 Capesize bulk carriers, 800 each of Panamaxes and Handymaxes, and 850 Handysize units. As things stand, the ships will deliver over the next 36 months or so but, by then, the number of punters left sitting at the dry bulk table may have fallen sharply. As we have said before, sentiment can be the shipping industry’s Achilles Heel, tripping it up at almost every turn. Anxious not to be left behind or afraid to appear too cautious, bulk carrier owners – fuelled with a heady mix of testosterone and more than a wisp or two of cloud nine – went on an unprecedented spending spree that was bound to end in tears. And for those who still think the worst could soon be over, think again! Things will get a lot worse before they get much better. The Baltic Dry Index has crashed again over the last eight weeks or so, falling almost 60% between May and the middle of this month. Part of the decline is down to the sheer scale of new tonnage joining the fleet – just at a time when they are least needed – and part of it is a result of easing demand for raw materials, notably in China. What is so puzzling is that the Chinese writing on the wall has been there quite clearly for many months. Although still growing, the pace at which the Chinese economy was growing fell off sharply. And yet early this year, dry bulk owners started signing up for still more ships. Goodness knows what they were on! In practice, the scale of new deliveries is likely to be less than some industry statistics would suggest. For a start, analysts believe that a sizeable chunk of the orderbook has not been properly financed yet – owners may have put down the contract signing instalment and may be ready to cough up...
Read MoreChinese New Year Holidays will start as from 2nd Feb 2011, one week before and 2-3 weeks after that date (almost one month in total), the Work progress will be affected inevitably. All Shipyards in Mainland China will try to keep Labor even at high cost but the Workers prefer to travel to their Homeland and spend the Holidays with their families rather than stay in Shipyard. Following completion of the Holidays it is an opportunity for them to change occupation and location in order to secure better income as it is considered the beginning of a New Year. The Labor force situation during the above period creates Production problems not only to Mainland Chinese Shipyards, but also other Industries in China and in fact how long this kind of Labor shortage situation will last and when will be relieved cannot be predicted. Therefore it is advisable to avoid any of your Vessels to be inside a Mainland Chinese Shipyard during the period which is affected by the Chinese New Year Holidays as from 25th January 2011 up to 23rd February 2010. In this respect we look forward to receive your Inquiries in order to guide you accordingly and ensure timely completion of the DD/Repairs of Vessels of your Fleet. Our Company through more than 20 years of long term cooperation and personal relations with the Management of certain Shipyards is always in a position to secure favorable Terms & Conditions for our Clients ensuring that their Projects are completed to Owners’ satisfaction. In more detail kindly find below a List of Mainland China Shipyards which are securing for us Dockspace and Services in priority: North China: QINGDAO BEIHAI SHIPYARD – Facilities for Drydocking up to VLCCs Shanghai Area: CHENGXI SHIPYARD – Facilities for Drydocking up to Capesizes HRDD – HUARUN DADONG DOCKYARD – Facilities for Drydocking upto Capesizes Ningbo Area: ZHOUSHAN IMC YY SHIPYARD – Facilities for Drydocking up to VLCCs South China: GUANGZHOU DOCKYARDS CO. LTD. – Facilities for Drydocking up to VLCCs Our competitive Services are offered also in other Ports and Locations Worldwide including SINGAPORE, HONG KONG, FRANCE, TURKEY MED, NORTH EUROPE etc. We look forward to receive your...
Read MoreMOORE STEPHENS: International accountant and shipping consultant Moore Stephens reports an average fall of 2% in total annual operating costs in OpCost 2010, its unique ship operating costs benchmarking tool. This is the first time since 2002 that OpCost has revealed a fall in total operating costs, which compares with the 15.8% average increase recorded in OpCost 2009. All cost categories were down this time, except for crew costs, which in recent years have been the single largest contributor to total increases. OpCost 2010 reveals that the majority of vessel categories experienced a decrease in total operating costs in 2009, the financial year covered by the survey. Costs for the main vessel types in the three sectors covered – bulkers, tankers and container ships – were down. The bulker index decreased by 4 index points (or 2.3%) on a year-on-year basis, while the tanker index witnessed a bigger decrease this year of 5 index points (2.7%). The container ship index (with a 2002 base year) experienced the biggest decrease of 13 index points (7.5%), having recorded the smallest increase amongst the three sectors the year before. The increases in crew costs in 2009 were at their most moderate levels for a number of years. Costs in this category were up overall by 2.2%, compared to the 21% recorded for the previous year. All tankers experienced increases in crew costs of 2.5% on average. For bulkers, meanwhile, crew costs for smaller tonnage increased by 2.9% on average, but those for the bigger vessels – panamax and capesize – decreased by an average of 2%. The box trades experienced decreases in crew costs ranging from 1.2% for container ships to 5.2% and 4.5% for container feedermaxes and container main liners respectively. For repairs and maintenance, there was an overall decrease across all vessel types. The average decrease of 11.3%, which was the biggest decrease across all cost categories, was in stark contrast to the increase of 13.5% for 2008 and of 12.8% for 2007. There were variations in the cost movements experienced within vessel categories. In general, bulkers recorded an overall decrease of 11.1%, while for tankers and container ships the decrease was 12.6% and 15.9% respectively. Stores experienced the second...
Read MoreThe recent rapid expansion in the world’s fleet – and the even faster-growing proportion of large vessels – has prompted some to warn that global ship repair capacity may come under serious strain in the years ahead. Facilities in appropriate locations capable of accommodating latest generation ultra large container ships, for example, which ideally require dockings at either end of their mainhaul trade, are likely to find their services in increasing demand whilst other yards capable of working on large vessels will also be able to rely on a steady stream of VLCCs, Capesize bulkers and the latest generation of vast ore carriers. Established drydocking practices – at least for container ship owners – look likely to change, however, as class societies and flag states investigate the scope for extending drydocking intervals out to as many as 90 months. The possibility of pushing out docking intervals to more than five years has been discussed in class circles for some time, with various pilot projects initiated at Lloyd’s Register (with Maersk), ABS (also with Maersk), Germanischer Lloyd, DNV and ClassNK. However, flag states have been less than enthusiastic and, until recently, class has found its hands firmly tied. This looks set to change, however, as a number of prominent flag states appear more receptive to lengthier drydocking intervals. With their weighty container ship focus, it is no surprise that Denmark and Germany have been in the vanguard of the latest developments but other flags embracing these moves include Liberia, Singapore, the UK and the Marshall Islands. And it is no coincidence that these flag states are also home to a significant number of container ship owners who stand to benefit from any changes to the present regime. Bulk carriers and tankers will not be eligible for extended dockings because the requirements of the Enhanced Survey programme require a drydocking at every Special Survey. Lloyd’s Register’s work with Maersk and the Danish Maritime Authority has been under way for more than five years and the class society is keen to stress that extended docking intervals are certainly not a means by which Special Survey controls and requirements can be side-stepped. Under the scheme, it is explained, certain drydockings are replaced by...
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