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It
means they will need to look for innovative
ways to serve the shipping industry. Rather
than contribute to the persistent problem
of oversupply, shipyards should be looking
at designing and building ships that will
at least aid ship owners and operators to
save on costs.
"The
yards that are able to build more high-spec
and sophisticated designs are expected to
outperform those yards that are only able
to build simple tonnage with little variety
into other segments like offshore service
vessels, larger container ships, LNG, ECO-designs,ˇ¨
Mr Sands said.
This
is something some of the more advanced yards
have been doing, and there have been some
great strides made in terms of creating
ships with greater fuel efficiency.
But
this still does not solve the larger problem
of the huge oversupply of shipbuilding facilities
and capacity, particularly in Asia.
According
to the China Association of the National
Shipbuilding Association, there are today
a total of 1,536 shipyards throughout China.
Compounding
the matter further is the ˇ§state interventionˇ¨
by the Chinese government, which plans to
prop up its native shipbuilding industry.
It is widely believed to offer subsidies
and other financial inducements to yards
so they can remain in business.
Some
yards, however, have simply not been able
to, such as Zhejiang Jingang Ship Building,
which has filed for bankruptcy. Ningbo Hengfu
Shipping Trade (Group) Co. and Ningbo Beilun
Sky Shipbuilding Co., both Zhejiang-based
shipyards have also filed to sell assets
according to state-run China Daily.
"It
is a pretty depressing environment,ˇ¨ said
Ajay Mirchandani, a Singapore-based JPMorgan
Chase & Co. analyst. ˇ§You just have
too many yards and too few orders, which
is hurting pricing and profitabilityˇ¨,
he told Bloomberg.
Simply
put, some yards will have to go out of business.
The
simple message for the shipyards is this:
innovate or evaporate.
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