[250212.EN.SEA] International Chamber of Shipping Chief Calls a Halt For Boxship Building

THE chairman of the International Chamber of Shipping, Spyros Polemis, is pleading for a suspension of new containership building.

"Until the crisis is over we do need a moratorium on new orders for ships that have no economic purpose. Current markets would appear to be demonstrating just how seriously damaging the oversupply of ships has been to shipowners' revenues, with many now struggling to meet operating costs," he said, according to London's Financial Times.

The call comes in response to the challenges facing global shipping in the year ahead, reported American Shipper. Cargo trade volumes have weakened in once traditionally, strong markets, crippling freight rates and knocking the supply-demand balance off course from earlier growth projections.

Speaking at a shipping conference in Athens, Mr Polemis said "rates for all bulk carriers are a fraction of what they were a few months ago."

He warned against a ruinous quest for market share: "Whatever the insatiable appetite of individual owners, the biggest danger perhaps is the overcapacity that exists in the shipyards, with an almost obsessive commitment to market share being displayed by the three major shipbuilding nations: China, Korea and Japan, where 90 per cent of world tonnage is built.

"Even if some shipyards go bankrupt, it is almost certain that their governments will step in to support them so that they can continue to produce ships which few people want, other than speculators who may be tempted by knock down prices.

"Or, with China having a widely recognised goal of wanting to carry a much larger proportion of its cargo - perhaps 50 per cent - on board its own ships."

Mr Polemis also warned that this year is widely expected to be a difficult year for shipping, as "much of the industry is still struggling with the serious consequences of a truly massive contraction in economic activity, with global trade estimated to have declined by nearly 10 per cent."

Mr Polemis also said the sovereign debt crisis in Europe will result in banks tightening lending to the shipping industry, particularly, as most shipping banks are based in Europe and thus are affected by the Euro crisis. These factors are likely to lower finance available to shipowners.

Source : SN-TR, 23.02.12.