China: Capacity Soars, but is Quality, Finance Keeping Pace?
For those who have been in shipping for a decade or three, warnings of excess shipbuilding capacity will engender a sense of déja vu. First it was the Japanese, then the South Koreans and now, together with those, the Chinese. Clarkson Asia managing director Tim Huxley, addressing the International Union of Marine Insurance (IUMI) conference in Singapore this week, identified rapid shipyard capacity expansion in China, coupled with productivity increases at yard facilities in Japan and South Korea. Apart from a global economic crisis, excess capacity now posed the single biggest threat to the world’s shipbuilding industry, Huxley declared.
OECD Shipbuilding Countries Launch Capacity Negotiations
The world's principal shipbuilding economies have launched negotiations at the Organization for Economic Cooperation and Development (OECD) on ways to counter over-capacity and plunging prices in the ailing world shipbuilding industry. Current levels of over-capacity, estimated at around 15 percent, are largely the result of subsidies and other forms of government support measures that have allowed shipyards that would otherwise have gone bankrupt to continue to operate. The result has been to push new ship prices to artificially low levels, as many shipyards reduce their prices to below economic levels in order to attract the business needed to keep their workforces employed.
Shipbuilding Subsidy Talks Paused
Senior government officials meeting in Paris agreed to a pause in their work on an agreement to tackle market-distorting measures in the shipbuilding industry. The pause will provide participants with an opportunity to explore the scope for advancing the talks in key areas and to strengthen the industry support required for the negotiations to succeed. The decision was made at a high level meeting of the Special Negotiating Group on a new Shipbuilding Agreement. Attended by officials from 26 OECD and non-OECD economies, the meeting was called by the Chairman, Switzerland’s Ambassador to the OECD, Wilhelm Jaggi, in an effort to deal with a number of key issues where blockages had developed in the course of the normal negotiating process.
