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  28th July 2008 - STAR MARITIME

Shipyards need to grow capacity

SHIPYARDS are in need of new strategies to cope with on-time shipbuilding and vessels delivery.

Maritime Institute of Malaysia Centre for Ocean Law and Policy senior researcher Capt S.T. Rakish said despite having fat order books, shipyards were impacted by rising cost of raw materials, especially steel, and shortage of shipyard capacity.

“Ship owners are hoping that shipyards will continue to look into new innovations and measures to meet market expectations.

“Demand for new ships far exceeded the delivery capacity and shipyards are facing a worsening order backlog,” he told StarBiz.

As a result, prices of vessels have risen quite substantially in the past four years and shipyards must expand their building capacity, he added.

The situation is further exacerbated by the International Maritime Organisation's (IMO) deadline for ship owners to use double-hull tankers by 2010.

For safer shipping environment, the IMO has issued the new guidelines for ship owners transporting liquid cargo.

Rakish said inadequate building capacity and rising raw material costs would further inflate the price of new ships.

The average price of very large crude carriers, the biggest type of oil tanker, has nearly doubled since 2004 to an all-time high of about US$150mil per vessel now.

In the past four years, the average price of bulk carriers that move iron ore and coal have increased by about 50% while prices of other types of ships, including liquefied natural gas vessels and containerships, have also recorded significant increases.

Most of the new shipbuilding activities now are dominated by Asian shipyards, led by South Korea, China and Japan. Asia currently accounts for 85% of the global market.

Escalating steel prices have also contributed to the spike in the prices of vessels .

Last year, heavy plates used in shipbuilding rose by US$200 per tonne to almost US$900.

Rakish said delays in shipyard delivery due to the massive increase in orders had forced ship builders to build new docks and hire more people.

He said that in 2002, there were about 21 yards in China and nine in South Korea that were capable of building vessels larger than 30,000 deadweight tonnes.

“By the end of 2007, the number of yards has increased to 82 in China and 22 in South Korea. Both countries accounted for three-quarters of all new orders in 2007.

“According to their order books, deliveries for 2007 to 2010 are set to increase by 150% and 60% in China and South Korea respectively,” he added.


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