French orders to foreign shipyards

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32 The situation then worsened again, when even fast new tonnage suffered from these depressed conditions and their owners had to accept further rate reductions. Employment had to be found on trips, single voyage charters or often non-container trades. Fixture levels for typical ships: modern geared ships of 250/280 teu at 14 tons, 15/16 knots, were constantly fixed for short periods in the $4,000/4,400 range. Smaller and older geared units of 200/220 teu at 14 tons stayed in the $3,000/3,500 range. For gearless tonnage in this size, we noted more activity in European waters, although this was not enough to improve daily hire levels. The future for this size range appears to be uncertain, as a number of charterers have chosen to go for larger tonnage. Conclusion With the trend towards larger vessels, more big ships are likely to eat into medium size vessels’ market share. More pressure for rationalisation will also work in favour of large vessels. The current East-West demand for midsized ships could be limited in time and North-South demand patterns are changing. Consequently, the best hope for maintaining the recent charter rate improvements is a resurgence in demand in the intra-Asian markets, growth in other intra-regional trades and a development of higher volumes on North- South and even South-South routes. As the situation is currently balanced and should traffic in these trades stagnate, the medium-sized containership market could once again be plunged into gloom. As we pointed out above, the abundance of post-Panamax tonnage still to be delivered will have cascade effects on the lower categories of the market. Furthermore speed remains an essential factor in all sectors of the market. Having established their schedules and advertised their high-speed services to their shippers, the carriers cannot afford to allow these timetables to slip or to be modified, whatever the price of bunkers would be. (bunker prices have risen by about 100% in the last 12 months!) Another key question emerges: with such tremendous improvement in terms of transport capacity, both in size and speed, is vessels’ utilisation satisfactory? It is unclear whether the large units have actually been chartered due to a real need for additional capacity, or because the low charter rates offered the potential for raising volumes and revenues from extra slots. Furthermore, as we stressed during the past few years, all alliances between liner companies, huge mergers or take-overs will naturally lead to further integration of fleets and probably to a reduction in chartered tonnage. During this year for instance, opinions were mixed about the impact of Sea-Land’s take-over by AP Moller. First, the market experienced some increase as the merged carriers rationalised their fleets, but thereafter such consolidation is quite likely to result in reduced charter activity. To conclude on a more optimistic note, the upward trend could come from strong growth in long-term chartering, as we have already noticed in several cases. We have observed very distinct policies amongst the various mainline operators. As an example, out of the operators who launched new transpacific services this year, we have distinguished two categories. On one side, six of them preferred to use their own ships to run these new services (Maersk, Sea-Land, Evergreen, P&O/Nedlloyd, Cosco and Norasia). Seven others decided to rely on chartered ships (CMA-CGM Group, MSC, Americana, Zim, Wan-Hai/Madrigal, Fesco, Great Western). But, why do ocean carriers continue to order ships for their own service networks instead of making greater use of the charter market, so freeing resources to invest in the shore-side facilities and equipment needed to support their logistic services? Unlike pure owners who concentrate on managing their assets, the liner operators have many other interests and spend much less time working out the optimum use for their ships. This also means that carriers often deploy the wrong ships in a trade simply because they owned them at this time. We are of the opinion that they would rather establish a specific department to manage their fleet as an asset, chartering out or selling at the right time, as well as hiring ships. We believe that more and more operators will try to establish long-term commercial relationships with traditional owners or financial investors who will provide the ideal tonnage when required, for the intended fixed period of time. Thereafter, the liner operators will enjoy more flexibility and freedom to move along the market’s constant changes in ships’ sizes and specifications. The containership second-hand market The second-hand market, usually a good source for reliably forecasting market fluctuations, was caught completely off guard by the abrupt reversal of the situation in the market after the beginning of the year 1999. Up through last December, the majority, if not all analysts, were counting on a two-year best-case purgatory that probably would extend to three or four years for the least optimistic forecasters. To be honest, even though we were among those with the most optimistic outlook for the sector, the turnaround was a complete shock. Having earlier outlined the reasons for this change, let us examine market players’ reactions to it. First of all, there seems to be unanimous consensus among shipowners and operators that the market will remain firm. Only a major economic or political event on a worldwide scale would shake peoples’ opinion about the strength of this trend. Can any sector still consider
4,000-4,999 teu 17% 3,000-3,999 teu 18% Containership existing fleet as at January 1, 2000 5,000 teu and over 10% itself sheltered from the major container operators? Despite a courageous but futile resistance effort, both the conventional reefer ship market and the roll-on/roll-off market, with the exception of ro-pax units, should in the short to medium-term give way to the relentless containership. Prices in this category should continue to fall, in view of the mergers, acquisitions and alliances, that are currently underway and that are to come between operators. The sector is also being simplified by the incredible rate of technological and computer-related progress that is ongoing. There is a sentiment of potential growth and sustainable stability that is drawing significant interest from investors from all points of the compass. The second-hand market has thus afforded the opportunity to several newcomers to gain a foothold in a promising sector without too much of a capital outlay. The lowering of interest rates in the German KG market due to a new tax law that is less attractive to joint-ownership investments has allowed companies like Zodiac out of London, Ofer Brothers from Israel and the Norwegian corporations Tornevold and Actinor to move in. Clients of the groups Zodiac and Ofer alone have bought some twenty units, about a third of the sales recorded over the period, which totalled around 65 vessels. To this non-exhaustive list may be added the traditional Greek buyers Costamare, Tsakos and Goldenport, the Cypriot company Interorient and others. Almost all the acquisitions carried out by these shipowners had either an attached use or a partial time-charter back to the seller for relatively long periods. It is interesting to note that most buyers were not interested in periods greater than two or three years because they wish to be able to take advantage of potentially higher freight levels when these periods are over. source: Alphaliner 1,000-1,499 teu 15% 2,000-2,999 teu 26% 1,500-1,999 teu 14% In view of the strong attraction for containerships this year, it is surprising that so few transactions occurred overall. This is mainly due to the extremely weak inventory of ships available for sale. It is easy to understand shipowners’ desires to take advantage of the sudden improvement in freight rates, if only to try to cover losses incurred over the previous eighteen months. It should be remembered that these same shipowners bought their ships at market highs and that prices in effect in 1999 were very far from those reached two years ago for certain categories of vessels. The other important reason that activity is so weak in the second-hand market is that prices for newbuilding vessels have plunged up to 30 to 40% for some sizes (1,600/1,800 teu geared). A pitiless competition has sprung up for the rare sellers of second-hand units, coming from Japanese, Korean, Chinese and several European (especially Polish and Croatian) shipyards. How does one sell a 2,500 teu containership, built in 1985 and bought for $26 million in 1996, when a Korean or Taiwanese shipyard will produce a vessel of the same size with two knots more power for around $31-32 million. This example summarises quite well the situation faced by end-users and investors who swarmed on the newbuilding market, ordering no fewer than 235 new vessels of greater than 1,000 teu. So while some operators like CMA-CGM ordered their own ships, others, greater in number, like P&O Nedlloyd prefer to let an investor handle the carrying costs of the vessel and remain long-term charterers, with or without buyback option at the end of the charter period. This desire to shun vessel ownership among regular liner operators is becoming widespread and seems to illustrate a will to concentrate on a single activity that they have to master in-depth. This is preferable to engaging in investments that detract from this priority even though T h e c o n t a i n e r s h i p m a r k e t S H I P P I N G A N D S H I P B U I L D I N G M A R K E T S 2 0 0 0 33
Page 3 and 4: Bad and good reasons ? At the end o
Page 5 and 6: The shipbuilding market in 1999 The
Page 7 and 8: Quarterly orders in gross tonnage (
Page 9 and 10: In contrast, most Chinese shipyards
Page 11 and 12: As an example, production costs for
Page 13 and 14: China As it was the case last year,
Page 15 and 16: 10 9.5 9 8.5 8 7.5 7 The European C
Page 17 and 18: The Asian challenge is clearly felt
Page 19 and 20: Norway Norwegian shipyards, which a
Page 21 and 22: The cruise market in 1999 1998 was
Page 23 and 24: success. Carnival tried in vain to
Page 25 and 26: European sector. Very few second-ha
Page 27 and 28: The containership market in 1999 Br
Page 29 and 30: (before absorption), Evergreen, P&O
Page 31: Teu 300,000 250,000 200,000 150,000
Page 35 and 36: The reefership market in 1999 Anoth
Page 37 and 38: The spot market Compared to 1998, t
Page 39 and 40: concluded until very late. • Expo
Page 41 and 42: The dry bulk market in 1999 The pes
Page 43 and 44: 14 12 10 8 6 4 2 0 Jan 96 US$/tonne
Page 45 and 46: US$/day 15,000 13,000 11,000 9,000
Page 47 and 48: older ladies in the 15 years-old br
Page 49 and 50: The tanker market in 1999 Crude •
Page 51 and 52: 15% At the same time, youth in the
Page 53 and 54: for us just how stagnant this marke
Page 55 and 56: their specifications and their SBT
Page 57 and 58: Dwt 12,000,000 10,000,000 8,000,000
Page 59 and 60: The chemical carrier market in 1999
Page 61 and 62: the previous year. Deliveries for t
Page 63 and 64: There are two corollaries to this.
Page 65 and 66: The liquefied petroleum gas shippin
Page 67 and 68: We believe that further consolidati
Page 69 and 70: In this respect, the Chevron/Dynegy
Page 71 and 72: Perceptions As mentioned, the conso
Page 73 and 74: The liquefied natural gas shipping
Page 75 and 76: In Malaysia, the Japanese market wi
Page 77 and 78: The offshore market in 1999 Allow u
Page 79 and 80: The oil-drilling world also acknowl
Page 81 and 82: 35,000 30,000 25,000 20,000 15,000
Page 83 and 84:
The fishing vessel market in 1999 D
Page 85 and 86:
45,000 40,000 35,000 30,000 25,000
Page 87 and 88:
The marine insurance markets in 199
Page 89 and 90:
of future resources in order to mee
Page 91 and 92:
French shipyards deliveries and ord
Page 93 and 94:
Chantiers Piriou • Ships delivere
Page 95 and 96:
French orders to foreign shipyards
Page 97 and 98:
• Samsung (South Korea) FDS 2000
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French orders to foreign shipyards

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