During the last few months, members of various shipping groups were agonizing over the
surprising number of ships recently sent to the scrap beach. Stumbling
across this article might give in part the reason for the sudden spate
of lost ships. The actual story is quite long. Here's the precis.
... Its fairly complicated to people outside of the shipping boardrooms but its actually very simple. There is too many ships chasing a limited amount of cargo. In the case of Algoma and CSL you can suddenly see their motives. They don't want to add to shipping capacity but they need new modern vessels in order to keep their competitive advantage.
... It fully explains the major shipper's strategy. They don't want to sell these older vessels because it simply means that the presence of those ships added to the over all competitive capacity on the water. The greater the amount of shipping capacity the lower the revenue on per cubic metre of cargo space. More shipping capacity the lower the freight rates to the customer. Plus there are fewer buyers in a period like this. Owning a ship might sound great to the ego, but there are only limited opportunities for new business.
... It also explains the Algoma purchase of another company's ships. Simply put they needed to get more shipping revenue then they wanted that fleet's capacity in their corporate structure. They also needed to renew their fleet. But when launching a new ship, They had to eliminate the older cargo capacity by scrapping the older ships. Its the harsh economics of modern cargo ship ownership.
... Capacity the one reason that many owners are pressed into scrapping ships. But why the pressure to acquire new modern ships. There is a time factor directing shipping plans. The present time window makes it an unbelievably good time to re-equip fleets. The caveat barrier is capacity. Rebuild and modernize a fleet but don't expand the existing capacity of shipping overall. Why now?
... Three favourable factors contribute to the time pressures on planning shipping businesses. These reasons propel change. One must appreciate the larger business environment. The most obvious condition is financing. All these new vessels must have financing. Contorting the plans of ship owners are very favourable existing interest rates. At historically low levels the interest rates in Canada will remain unbelievably low until at least the next federal election. After that its unlikely another low interest rate financial environment will exist in the next thousand years. Interest rates remain the second parameter pushing the construction of new ships. Its now or never.
... Algoma, a successful shipping company, pursues an aggressive, expensive, risky policy of complete fleet renewal. Many of the ships in its fleet are still very functional vessels. Under the criteria of ship obsolescence previous to 2010, many of these ships should still have decades of usefulness. Algoma isn't the only shipping company facing the future. Canadian Steamship Lines (CSL) has noticeably been aggressive in revitalizing its fleet. At the very least four new CSL and Algoma vessels enter the Great Lakes trade in the 2015 season.
... Its fairly complicated to people outside of the shipping boardrooms but its actually very simple. There is too many ships chasing a limited amount of cargo. In the case of Algoma and CSL you can suddenly see their motives. They don't want to add to shipping capacity but they need new modern vessels in order to keep their competitive advantage.
... It fully explains the major shipper's strategy. They don't want to sell these older vessels because it simply means that the presence of those ships added to the over all competitive capacity on the water. The greater the amount of shipping capacity the lower the revenue on per cubic metre of cargo space. More shipping capacity the lower the freight rates to the customer. Plus there are fewer buyers in a period like this. Owning a ship might sound great to the ego, but there are only limited opportunities for new business.
... It also explains the Algoma purchase of another company's ships. Simply put they needed to get more shipping revenue then they wanted that fleet's capacity in their corporate structure. They also needed to renew their fleet. But when launching a new ship, They had to eliminate the older cargo capacity by scrapping the older ships. Its the harsh economics of modern cargo ship ownership.
... Capacity the one reason that many owners are pressed into scrapping ships. But why the pressure to acquire new modern ships. There is a time factor directing shipping plans. The present time window makes it an unbelievably good time to re-equip fleets. The caveat barrier is capacity. Rebuild and modernize a fleet but don't expand the existing capacity of shipping overall. Why now?
... Three favourable factors contribute to the time pressures on planning shipping businesses. These reasons propel change. One must appreciate the larger business environment. The most obvious condition is financing. All these new vessels must have financing. Contorting the plans of ship owners are very favourable existing interest rates. At historically low levels the interest rates in Canada will remain unbelievably low until at least the next federal election. After that its unlikely another low interest rate financial environment will exist in the next thousand years. Interest rates remain the second parameter pushing the construction of new ships. Its now or never.
... Algoma, a successful shipping company, pursues an aggressive, expensive, risky policy of complete fleet renewal. Many of the ships in its fleet are still very functional vessels. Under the criteria of ship obsolescence previous to 2010, many of these ships should still have decades of usefulness. Algoma isn't the only shipping company facing the future. Canadian Steamship Lines (CSL) has noticeably been aggressive in revitalizing its fleet. At the very least four new CSL and Algoma vessels enter the Great Lakes trade in the 2015 season.
... Efficiencies appear listed as valid
reasons for new ships. Efficient propulsion. Efficient use of fuel.
Efficient cargo handling. Efficiency in crew numbers. Certainly, that
list contains major considerations. Environmental reasons seem to
step up onto the list. Facing domestic pressures, governments apply
rules to industries that appear polluting. Environmentally speaking,
any present ship under any criteria is by far and away cheaper and
causes the least environmental damage per mile than any other mode.
Ships make favoured targets.
... Given the list of reasons for new
ships, they alone would not effect the long term vision for shipping
companies. Interest rates, environment, energy are all concerns but
doesn't really effect the bottom line competitive environment. Energy
environment is number two reason but the third factor is the big one.
.. The monster looming in the mists of
the future is the definite influence of new technology. Those who
foresee and embrace new technology own companies like Fujii. Those
who don't are Kodak shareholders.
... Technology rules. The future world looms. New advanced shipping designs seem to emphasize the no crew or crew-less ships. That evolutionary event will occur in very short order perhaps in as short as ten years. Certainly, by 2025 crew-less ships could ply the ocean trade routes. Inshore, and Seaway routes will have some crew or tug control since navigation is close quarters. Remote control crewless ships crossing the oceans will be boarded by small pilot crews as the new vessels reach the destination harbor or taken control by local tugs.
... Technology rules. The future world looms. New advanced shipping designs seem to emphasize the no crew or crew-less ships. That evolutionary event will occur in very short order perhaps in as short as ten years. Certainly, by 2025 crew-less ships could ply the ocean trade routes. Inshore, and Seaway routes will have some crew or tug control since navigation is close quarters. Remote control crewless ships crossing the oceans will be boarded by small pilot crews as the new vessels reach the destination harbor or taken control by local tugs.
... The new ships being built now are
capable of being converted to remote control crewless vessels fairly
easily since control and operational controls are digital. Their
systems are or are capable of interfacing with remote control
wireless technology. It is why ships like the Quebecois and the
Montrealais went on the scrap list. These ships would be costly and
nearly impossible to convert since the majority of the technology
within their hulls (outside of navigation radar and GPS systems) are
analog. More ships are on the way to the scrap dealers because as the
companies engage in assessments of each ship and whether the
individual ship can be . Some of those ships heading to scrap will be
surprises as time goes on. In a different future those ships would
have decades of operational ability. In this future vector, they have
none.
... The ships of the smaller companies
won't face the same technology threat for other reasons. Yet they
remain at threat because the larger firms can move material without
much labour cost. This means that the smaller shipping companies
can't tender the lower cargo rates that the big ship companies are
going to offer. While many small companies will survive moving niche
or special cargoes like concrete and aggregate in and out of minor
ports, their competitive position visa-a-vis large long term bulk
contracts becomes nonexistent. If their ownership embraced any smarts
they would invest in tugs to service the crewless ships into, out of
ports and through canals.
... Technology, finance, fuel saving, environment promotes new ship construction. The need to maintain the same level of capacity means new ships without adding cargo capacity on trade routes. Regardless, it is not a good time to be an old boat.
... On the following link you will be taken to a page which outlines the technology concept of future ships. They are at present only proposed future designs. Yet, they are functional designs well within the reach of present day technologies. Most of the designs involve smaller crew numbers, or no crew ships.
... Technology, finance, fuel saving, environment promotes new ship construction. The need to maintain the same level of capacity means new ships without adding cargo capacity on trade routes. Regardless, it is not a good time to be an old boat.
... On the following link you will be taken to a page which outlines the technology concept of future ships. They are at present only proposed future designs. Yet, they are functional designs well within the reach of present day technologies. Most of the designs involve smaller crew numbers, or no crew ships.
http://www.marineinsight.com/marine/marine-news/headline/10-major-ship-designs-and-concepts-launched-in-2014/
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