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An ASM publication EDITORIAL DIRECTOR Sam Chambers sam@asiashippingmedia.com CHIEF CORRESPONDENT Katherine Si katherine@asiashippingmedia.com CORRESPONDENT Jason Jiang jason@asiashippingmedia.com BEIJING Li Deng Bai SHANGHAI Engen Tham HONG KONG Alfred Romann DALIAN Mark Downing GUANGZHOU Wang Fanglei TAIPEI Joshua Samuel Brown CONTRIBUTORS Bei Hong, Charles De Trenck, Matthew Flynn, Paul French, Max Hong, Li Dong, Manish Singh PHOTOGRAPHERS André Eichman, Basil Pao, Cover: NHST Events All editorial material should be sent to sam@asiashippingmedia.com or mailed to Office 701, 9 Renmin Lu, Zhongshan District, Dalian, China 116001 COMMERCIAL DIRECTOR Grant Rowles grant@asiashippingmedia.com CHINA SALES DIRECTOR Tom Wu sales@asiashippingmedia.com SinoShip advertising agents are also based in Japan, Korea and Scandinavia — to contact a local agent email grant@asiashippingmedia.com for details. Media kits are available for download at:
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The spectre of obsolescence A recurrent theme in this issue is the very likely development of a two-tier dry bulk market caused by the move to green designs and the possible obsolescence of a vast swathe of the international merchant fleet. Obsolescence was the hot topic at the recent SinoShip Dry Bulk Business Breakfast in Hong Kong, and the idea that ships as young as 10-years-old might be redundant soon had a number of owners at the event in the Foreign Correspondents’ Club very ill at ease. “The great thing about a bad market is you can build good ships because shipyards will sit down and speak to you,” noted the ceo of Wah Kwong Maritime Transport Holdings, Tim Huxley. Oak Maritime’s Jack Hsu mused that with fuel prices at $700 a ton shipyards are creating new designs that are 5, 10, 15% more fuel efficient than previous generation ships, previous generation meaning the ships that are hitting the water now. “This creates economic obsolescence,” he said, adding: “In previous years the average age of scrapping for capes was 23 to 25 years, panamaxes 25 to 27 years and handies at 30 and beyond. Is that going to change?” The banker’s point of view was made clear by Evan Cohen from DVB Bank, who said less efficient ships — aged between 10- and 15-years-old — have very limited capital value and will struggle to raise much debt finance. “Owners are getting capital based on quality,” he said. KC Maritime’s boss Vikrant Bhatia wondered how obsolescence will impact the pricing of ships. “If we see 10-yearolds that are not going to trade for another 15 years will that make the 10-year-olds suffer in value and in turn will that impact newbuild prices?” he asked those attending the exclusive shipowner gathering. Quick to respond was Wah Kwong’s Huxley. “There will be a differential on
prices for sure,” he reckoned. “This might be a tipping point, the 2012-built ships that are being built with this still slightly dated technology compared to what you might be able to get from 2013 onwards, well that might be the tipping point in a big differential in values,” he posited. For more on this fascinating theme check our Yards reporting on page nine plus the acerbic comments from new columnist Max Hong on page 37 and for all the latest news on China’s shipowners and shipyards check out our news site at www.sinoshipnews.com.
Sam Chambers Editor sam@asiashippingmedia.com Sinoship AUTUMN 2012
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