Tuesday, October 16, 2012

[Marine] Replacement demand to grow

Replacement demand to grow

Amid stagnant shipping volumes, shipowners will sell older vessels for scrap and invest in medium-sized newbuildings in order to enhance fuel efficiency.

Analyst Park Mu-Hyun of E*Trade Securities said the number of commercial ships passing the Suez Canal has not grown much.

According to him, this represents that there has been stunted growth of volumes from European routes and freight rates will be difficult to rise, not accompanied by increasing demolition.

He pointed out that Maersk pulled out its 19 ships from the European routes due to shrinking traffic and plans to scrap eight vessels from the service and reduce uncompetitive old ones.

Park added "Newbuilding order is, after all, replacement demand for enhancement of efficiency and there will be more investment in Eco mid-sized newbuildings."

Published : October 16, 2012

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