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SHIPYARD
capacity could be slashed by as much as
40 per cent across the world and the industry
would still be able to meet the demand for
new ships for 2015, senior BIMCO analyst
Peter Sands told HKSG Group Media.
This
is just how badly oversupplied the market
is today.
Certainly
the worldˇ¦s shipping lines can relate to
the predicament of excess supply versus
a shortage of demandˇK
Nevertheless,
there has been a rush on newbuilding orders
among shipping lines and non-operating owners,
which is only further exacerbating their
own supply surplus problems.
But
the trouble is that shipyards, facing their
own supply-demand crisis, are offering shipowners
very low prices for new vessels. This is
something evidently that has been too good
to pass up for many.
However,
what does this say for the strength of the
shipbuilding industry?
Mr
Sands argues that the summer rush on newbuildings
was a sign that these yards were running
very low on cash and thus needed those installments
to remain in business.
The
trouble is that this all creates a vicious
cycle as an oversupplied shipping industry
will inevitably translate into future problems
for the shipbuilding industry.
So
yards that continue to try and get orders
by lowering newbuilding prices, which according
to the China Association of the National
Shipbuilding Industry are now at an eight-year
low, are only exacerbating the current supply
surplus in the market and ultimately prolonging
the pain.
The
only way out of course is a massive recovery
in shipping demand. But this is not on the
cards at the moment, given the ongoing economic
doldrums now being experienced across the
globe.
Mr
Sands notes that consumer confidence is
well down in the major consumer markets,
particularly in Europe and this will continue
to weigh on global shipping demand going
forward.
High
unemployment is a chief cause for the gloomy
sentiment in both Europe and the US, and
it is a factor that is unlikely to change
to any significant degree for the foreseeable
future.
So
what does all this mean for the shipyards
of the world?
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