Athens: Asian shipyards can now rebuild the world fleet once every nine years, and this fleet is already 25% larger than is needed, veteran ship financier Paul Slater told conference delegates in Athens yesterday.
‘Speaking at a Lloyd’s Shipping Economist ship finance gathering, he described the present orderbook as “totally overwhelming”, noting that “contractual cancellations have been minimal”. Although deferrals are being widely negotiated in all ship types, he said, this will only spread the deliveries over three or four more years. Around $750bn had been spent by “reckless owners” on new ships in the five years prior to 2008, with $500bn still on order “and due to be delivered into markets that have evaporated or never even existed”, he said. But yard capacity shows no sign of declining and China is already filling deferred spaces with new ships for Chinese owners with cargo contracts to Chinese industrial groups. Warning that this could have an “enormous negative effect on the dry cargo markets and delay any recovery by years”, he noted that the moves are in line with China’s central government edict in 2005 that set an objective for 75% of all China’s imports to be carried in Chinese ships by 2020. It is also a major part of the Chinese Government’s $1bn stimulus package for shipyards, announced two months ago.