Thursday, March 05, 2009
Thursday, 05 March 2009
Shipping firms have mixed views on how long it will take business to recover, with one small player believing the storm has already passed, and a bigger one not seeing any improvement until next year. Khalid Hashim, managing director of Precious Shipping (PSL), a leading dry-bulk shipping firm, yesterday said he believes that the Baltic Dry Index (BDI) - the freight rate indicator for the marine transport business, particularly in dry-bulk shipping - should not top 2,000 this year.
Although economic stimulus packages in several countries have been launched, they will only work their magic on those domestic economies this year.
"We should see the result of increased exports next year," he said. However, he cannot predict the freight rate for dry-bulk shipping next year.
"If banks are strong financially and have confidence to lend, other businesses will benefit as well. So, banks should improve first," he said.
PSL would secure contracts for only about 60 per cent of its fleet to diversify risks from the downturn.
PSL's average freight rate this year would be at US$14,000 (Bt505,400) per ship per day, lower than the $16,325 posted last December. Operating expenses would decline about 10 per cent from $4,804 per ship per day on average last year to $4,400 this year, thanks to lower oil prices and crew costs.
PSL plans to discharge 25 vessels this and next year. It has already sold three so far this year. It will purchase 18 new vessels arriving through 2013, bringing its fleet to 60 vessels.
Chanet Phenjati, president of Jutha Maritime, said the world supply of vessels has declined sharply since the last quarter of 2008, as several ship owners had gradually demolished vessels to reduce costs.
"I said in November that the shipping business will recover within three months. And now I believe that the business crisis has already bottomed out. The BDI has gradually risen from 600 in December to nearly 2,000 now. This proves that the situation is improving and I strongly believe that the BDI should surely exceed 2,000 this year," he said.
Vessels with combined tonnage of 20 million dwt will be demolished this year, which should help push up freight rates.
Demand in some sectors, particularly consumer products, has already picked up from last year.
Jutha has witnessed a recovery since January as Japan and South Korea have resumed buying rice and sugar from Thailand. The company serves liner shipping on that route.
Jutha has seven vessels in its fleet - two for liner shipping and five for charter shipping. Chanet expects the freight rate for its liner service will be below $10,000, down from the $15,000 or so it enjoyed last year.
The BDI last year set a record high at about 11,000.
Source: The Nation Business