Marine Log - December 2007 - (Page 19)

SHIPBUILDING years. In particular, the new shipyards that are coming on stream can be expected to leverage their low labor rates and offer very competitive pricing to establish themselves in the market. It is possible that there could be some shipyard consolidation but direct and indirect government support, as has occurred in the past, will be a wild card. It is possible that China, since it is already subject to firm government control of the shipbuilding sector, could follow the previous template established by the Japanese—designating shipbuilding as a strategic industry and providing support to the yards by backing orders from domestic owners for both international and cabotage trades. For owners, the lure of softer prices for newbuilds is offset by past history. Attractive pricing can be hard to resist, but such speculative ordering inevitably results in over tonnaging and depressed freight rates. To counteract this, the pace of scrapping can be expected to increase, although this will be largely confined to the bulk and container sectors. In turn, any surge in scrapping can be expected to depress the recent high Major Seaborne Trades Projected Annual Trade Volume Growth Ref. Case 2007 2008 2009 2010 2012 2014 2016 2018 2020 Crude Oil Trade 3.4% 2.7% 2.6% 2.5% 2.3% 2.1% 2.0% 1.8% 1.7% Oil Product Bulk Trade Trade 3.9% 3.1% 3.0% 2.9% 2.6% 2.4% 2.2% 2.0% 1.9% 8.0% 7.8% 6.7% 5.6% 5.1% 4.7% 4.6% 4.6% 4.7% Container Trade 11.4% 10.6% 9.4% 8.6% 7.4% 6.6% 6.1% 6.1% 6.0% LNG Trade 6.6% 7.0% 8.3% 8.5% 4.9% 4.3% 3.5% 3.6% 3.4% LPG Trade 5.5% 5.9% 7.0% 7.1% 4.1% 2.0% 1.7% 1.4% 2.1% Source: ABS Reference Case (probable) Outlook based on world GDP expansion of 4.5% on average. Tail off of growth over time mirrors economic growth tail off typical of long term projections. prices that the ship breakers have been paying. It may also place increased focus on the environmental consequences, spurring the IMO forward with its recycling initiative and possibly throwing up additional cost or administrative barriers that could distort the market somewhat. Will 2011 be a turning point for the world’s shipbuilders? They are already in the early stages of what is going to be a very interesting period that is bound to see some casualties. For the owners, the consequences depend upon how another question is answered—will owners learn from the downturns brought on by speculative ordering in the past? There is an old adage to the effect that those who fail to learn from history are doomed to repeat it. ML www.marinelog.com DECEMBER 2007 MARINE LOG 19 http://www.klevenmaritime.no http://www.klevenmaritime.no http://www.marinelog.com

Table of Contents Feed for the Digital Edition of Marine Log - December 2007

Marine Log - December 2007 Contents Editorial Second Thoughts Update Inside Washington Warning: Shipbuilding Over-Supply by 2011 Steely Resolve: Cutting Injuries What’s on Your Mind? Newsmakers Tech News Contracts Events InfoDirect Website Directory ML Marketplace Last Word

Marine Log - December 2007

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