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The maritime fraternity must
be prepared to face an oversupply of ships, as
the new vessels will flood the market in the
next two years.
Malaysian Shipowners' Association (Masa)
chairman Nordin Mat Yusoff said some 100 new
liquefied natural gas (LNG) vessels, 500 tankers
and over 100 mega-size container ships would be
delivered by 2010.
“The euphoria to build new ships started in 2004
when sharp increases in freight rates left ship
owners with a lot of cash.
“Since then, ship owners have been on the rush
to invest by ordering more ships.
“This can create an oversupply of ships and the
impact is still unknown as the shipping business
is volatile and cyclical,” he said at the 5th
Asia Maritime & Logistics Conference and
Exhibition recently.
He added that even traditional players in the
stable LNG market were inclined to trade in the
the volatile spot charter market.
Nordin said the oversupply of ships and capacity
constraints in most shipyards globally,
especially in South Korea, China and Japan,
reflected a slowdown in the shipbuilding
industry.
“Most shipyards are fully occupied until 2012
and the sharp increase in the price of steel
over the past few years has also dampened the
industry. The price of steel has increased to
US$1,300 per tonne from US$700 per tonne last
year.
“Shipyards have to endure the current high cost
of raw materials if they had not hedged back
then,” he said, adding that the prices of ships
had also increased sharply over the years.
The price of a very large crude carrier (VLCC),
on average, had doubled to US$160mil currently
from US$65mil to US$70mil in 2004.
Nordin said the maritime industry was also
facing an acute shortage of seafarers.
“It is reported that the industry needs more
than 12,000 seafarers. Many ship owners ordered
ships without any plan to build their
workforce,” he said.
However, Nordin said the oversupply of ships
could be mitigated by massive scrapping of old
ships due to new rules and regulations. This
include the International Maritime
Organisation's double-hull requirement for
tankers, effective Jan 1, 2010, and the new
water ballast tank coating, effective Jan 1,
2008.
“But there is no crystal ball answers for the
future of the shipping industry as there are a
lot of uncertainties in the maritime business,”
he said.
Nordin noted that the driving force in the
shipping industry would be the “BRIC” (Brazil,
Russia, India and China) factor.
He said China demand, pre and post Olympics,
would affect shipping patterns as well as major
developments in upcoming world economic drivers
that include Brazil, Russia and India.
The issues will be discussed by captains of
industry at the 5th Asia Maritime & Logistics
Conference and Exhibition from June 23-26,
organised by Masa.
Some 21 international speakers will present
their views on issues such as the state of
shipping, technical developments and changing
shipping regimes, shipbuilding and technology,
shipping and logistics and the global outlook.
In addition, 20 higher learning institutions
which offer maritime and logistics-related
courses would participate in the exhibition to
generate interest among youths to join the
industry.
Prime Minister Datuk Seri Abdullah Ahmad Badawi
will deliver the keynote address and former
Prime Minister Tun Dr Mahathir Mohamad has
agreed to present a luncheon talk on
geopolitical aspects affecting the maritime
industry.
Masa expects about 500 local and international
participants at the conference.
Established in 1976, Masa's main objective is to
protect and promote the interests of local
shipowners.
Its members represent about 70% of the country's
shipping players. |
