Sri Lanka moves to win ship lay-up business

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Wednesday, 06 May 2009

Sri Lanka is trying to position itself to attract the growing ship lay-up business triggered by the global economic slump and has earmarked safe anchorages for vessels, a senior Sri Lanka Ports Authority (SLPA) official said. "We have got clearance from the security authorities now to lay up vessels in safe anchorages outside Colombo harbour," said SLPA managing director Nihal Keppetipola.
"We have been having several requests from shipping lines on the possibility of laying up their ships in our anchorages."
The SLPA is also holding talks with the defence authorities on using the eastern port of Trincomalee for laying up ships.
Trincomalee, one of Asia's biggest natural harbours, was used for ship lay-up during down turns in the shipping market before the outbreak of the ethnic war in the early 1980s.
Shipping industry officials said the country can earn fees for laying up vessels and also providing services to maintain the ships until they are recalled for service when the market recovers.
The demand for ship lay-up arose with the collapse in the shipping market caused partly by the global economic crisis which has reduced trade and partly by a huge over-supply of vessels.
Shipping lines seek to lay up their vessels when it becomes uneconomic to operate them when the slump in the market hits earnings because of reduced demand, delivery of new vessels and fewer ships being scrapped.
The worst hit by the downturn were container ships and bulk carriers with tankers also now getting affected because of the lower oil market.
With charter rates plunging and earnings poor, loss-making shipping lines are scrambling to pull ships out of the market and lay them up until the market recovers.
The over supply situation arose because of a heavy bout of ordering in recent years during the boom in shipping.
Some container lines now have almost a quarter of their ship capacity in lay-up with the average figure being nine percent for the top 24 container lines.
The situation is so bad that some newly built vessels are heading straight for lay-up.
Countries like Malaysia have been successful in promoting some of their anchorages for ship lay-up.
Source: LBO