Profitability Of Bulk Shipping Dependent On Safety

Friday, December 10, 1999
Bulk shipping has been under the international microscope of late, with spectacular structural failures resulting in sudden loss of lives and ships, vexing designers, builders and owners alike as to the solution to structural and operational problems. Last week industry experts discussed another matter near and dear to bulk shipper's hearts, the future profitability of the depressed bulk shipping business. The overriding message: bulk shipping profitability is inextricably linked to safety and environmental controls. Removing poor quality operators through strict enforcement of international regulations could reduce the capacity oversupply that has caused low freight rates in the tanker and bulk shipping sectors, they said at a London Conference organized by the City University. "The only way to strip out the unfair advantage for substandard operators is through rigorous Compliance to international standards. There must be nowhere to hide," said Tim Jones, chief executive of Lloyd's Register, the shipping standards organization. Substandard operators enjoyed a 14 percent cost advantage over companies that complied with international standards, said William O'Neil, secretary general of the International Maritime Organization (IMO), the U.N. marine agency. "This is an unacceptable position. It must not be allowed to continue...Quality must be rewarded in a tangible way otherwise our efforts will be in vain," he said. Growth in the world fleet had outstripped demand due to low levels of ship scrapping, Jones said. Old ships survived to trade at low rates and drag down prices for better operators. In the last few years ship Completions have averaged 25 million gt, while scrapping has been around 11 million gt. International Maritime Industries Forum (IMIF) chairman Jim Davis proposed a ship scrapping tax similar to one used in the Netherlands for cars. A one percent ship scrapping tax levied on the price of new vessels could create an environmentally friendly scrapping scheme and reduce chronic oversupply which had existed since the late 1970s, he said. Michael Everard, chairman of U.K. shortsea tanker operator F.T Everard & Sons Ltd., welcomed regulations and inspections that ensured better standards. "We, the shipowners, have been guilty of looking too much at the supply side rather than demand," he said. Bulk market demand would always be cyclical. Ship casualty rates have improved to a current two ships per 1,000 from 4.5 in 1980 despite the average age of the fleet rising to 20 years from 13 as a result of improved standards. "But improvements in safety cannot go on if we continue to put the entire burden on shipowners," Davis said. However, Jones said international trade, which is 98 percent carried by ships, was growing by four percent a year. Cargo volumes of 5.5 billion tons a year would double by 2010, according to World Bank figures. "Ship owners who can manage environmental and safety risks Cost effectively will benefit disproportionately from the forecast growth in world trade," he said. Putting an economic value on social and environmental requirements was necessary, said Basil Papachristidis, chairman of Papachristidis Holdings and owner of a tanker fleet of two million dwt. "Bulk shipping markets are no longer perfectly Competitive, and shipowners Could profit from abandoning the pretence that they are. Charterers certainly have," he said. Consolidation of the industry would provide greater efficiency and better returns allowing easier access to capital markets and more orderly renewal of shipping capacity. But ships and freight were more than just commodities, he said. Transport has to be seen as a service for industry striking a balance between the economic good of cheap transport and the social good of clean seas while providing a sufficient return on investment. "Until we recognize this, the industry will tread a precarious path," he said. - (Paul Berrill, Reuters)
Maritime Reporter February 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Bulk Carrier Trends

Shipping Confidence Hits 2.5 Year Low

Overall confidence levels in the shipping industry fell to their lowest level for two-and-a-half years in February 2015, according to the latest Shipping Confidence

Baltic Sea Freight Index Up on Higher Capesize Rates

The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry bulk commodities, rose on Tuesday, mostly on higher capesize rates.   The index,

Shipbuilding: Mitsui Delivers Bulk Carrier

Mitsui Engineering & Shipbuilding Co., Ltd. (MES) completed and delivered a 56,000 dwt type bulk carrier M.V. Desert Osprey (MES Hull No. 1862) at its Chiba Works

Ports

All American Marine Delivers Ferry to Seattle

All American Marine, Inc. (AAM) today announced the delivery of a new passenger ferry that will serve the city of Seattle.    The vessel, MV Sally Fox, was dedicated

Port St. John to Install KleinPort System

Klein Systems Group Ltd. announced today that it has entered into an agreement to install the KleinPort Port Management Information System at Port Saint John, New Brunswick.

Hermes Unit, Canadian Fund to Buy $2.4B Stake in UK Ports Group

The Canada Pension Plan Investment Board (CPPIB) and Hermes Infrastructure are prepared to buy a 30 percent stake in Associated British Ports for about 1.6 billion pounds ($2.

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Security Naval Architecture Navigation Offshore Oil Pod Propulsion Port Authority Sonar Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1246 sec (8 req/sec)