Marine Log - January 2008 - (Page 4) Nick Blenkey Senior Editorial Consultant Second Thoughts A cautionary tale his being the start of a new year, it’s traditional to make some predictions and forecasts. So, let’s start with world shipbuilding, where all the signs seem to be that we are heading for another boom year. So far, so good. But if we look a little further out than this year, prospects are much more worrisome. To illustrate what I’m talking about, here’s a cautionary tale. Way back when, Sweden was the world’s No.2 commercial shipbuilding nation, second only to Japan. What Swedish yards did with amazing efficiency was to build Vry Large Crude Carriers (VLCC’s)—and ever larger VLCC’s at that. I recall sitting in the office of the CEO of one of those Swedish yards. Outside his offices, the town was being torn up. The local railroad line was being relocated inland in order to allow the further enlarge of the shipyard’s already whopping building dock. “Wasn’t the investment involved in this expansion a sizeable gamble?” I asked. “Nobody,” he told me sternly, “has ever overestimated the future demand for tankers, or the size of those tankers.” Events, of course, proved him wrong and not too long after, Sweden made a decision to exit the shipbuilding business. One monument to those days is a 128 m crane known as the “Tears of Malmö,” which towers above the Hyundai Heavy Industries shipyard in Ulsan, South Korea. Hyundai Heavy bought it for $1 from Sweden’s Kock- T ums AB in Malmö and residents of that city are said to have wept as they watched it depart. Unfortunately, sentiments as wildly optimistic and unrealistic as those that once prevailed in Sweden are now in evidence in Chinese, Indian and other aspiring shipbuilding nations, including Turkey and the Philippines. Those who have read some of our recent features on emerging shipbuilding nations will know that the expansion plans being hatched in China and India in particular are absolutely staggering. There is simply no way that world newbuilding demand can long sustain the sort of capacity that is now projected to be in play by as soon as the end of this decade. One of the comparatively few voices to warn of the trouble ahead has been that of Chris Wiernicki of ABS. In last month’s issue we published extracts from a presentation in which he warned that much of the new global shipbuilding capacity is projected to come on stream—or to reach peak productivity levels—at a time when demand for new ships of all types is expected to begin a downward cycle. If you didn’t read Wiernicki’s analysis last month, you should. How the coming crunch will play out remains to be seen. History never exactly repeats itself. And it is interesting, for example, that Korean shipyards have invested in quite a lot of capacity in countries that might seem to be threats to Korean shipbuilding dominance. Let’s make one more prediction that’s related to shipbuilding before turning our attention to shipping. This is an easy one. Congress and the Navy won’t be able to do much to rein in the costs of U.S. Navy shipbuilding and the shape and size of the future Navy will be dictated less by military need than it should be and more by which congressmen have the clout to steer contracts in the direction of their constituents. I do hope that I am proved wrong. On to a couple of predictions for shipping—or, to be more precise, shipping regulations. In a 2006 poll conducted on www.marinelog.com, respondents were of the opinion that maritime security regulations would prove a bigger headache for shipowners than environmental regulations. That is very likely to change. Whatever your personal beliefs about global warming and its human causation, the facts are that the folks who write the laws that turn into the regulations do believe that human activity is a factor in global warming. They are also increasingly concerned about the role played by emissions from ships, including CO2 emissions as well as NOx and SOx. My prediction is that IMO will not be able to fend off pressures for emissions curbs that the shipping industry will view as unreasonable, impracticable and draconian. nblenkey@sbpub.com 4 MARINE LOG JANUARY 2008 www.marinelog.com http://www.fleettech.com http://www.fleettech.com http://www.marinelog.com
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