Wednesday, April 22, 2009

Excess container ships

Last week I mentioned a recent report by Drewry Shipping Consultants stating

FAILURE to take the bold steps required to eliminate unwanted containerships will drive some lines out of business.

That is the verdict of Drewry Shipping Consultants in a report that urges ocean carriers to “act now” in order to survive the crisis which has seen freight rates plunge after a collapse of cargo volumes.

Box lines will have to lay up the biggest ships in their fleet and should be prepared to cancel newbuilding orders even if that means forfeiting downpayments.

The company has a pipeline of 26 vessels scheduled for delivery between 2010 and 2012.

As I mentioned

What Drewry is forgetting is a lot of the tonnage out there is not owned by the carriers. It is owned by companies whose business is just to charter out ships.

And today, we see this example in the press. Quote by Lloyd Fonds, a KG House in Germany.

Germany offers tax incentives for investing in ships. These KG Houses enable individual investors to buy a piece of a ship.

Lloyd Fonds is under pressure to find employment as 14 of the vessels that it has ordered have no charter contracts.

They include four 12,800 teu vessels that the company ordered with shipowner NSC Schifffahrtsgesellschaft from Hanjin’s Subic Bay facility.

So, what will they do with these ships? It will just add capacity in the world, and cause more problems for the international ocean container carriers. The carriers lay up ships, only to see KG house ships being delivered to compete with them.

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