Not quite Telegraph, no, not quite

The global shipping market has been violently shaken by the Chinese economic slowdown after a rapid debt-fuelled expansion in the early years of this decade.

The world’s shipping fleet doubled from 2010 to 2013 even as demand for shipped commodities dwindled. Loss-making vessels have nonetheless stubbornly remained in the market, accepting tenders well below their cost base, in order to pay down the minimum interest on crippling bank loans.

Demand for shipped commodities didn’t dwindle. It just didn’t double…..

8 thoughts on “Not quite Telegraph, no, not quite”

  1. So Much For Subtlety

    Loss-making vessels have nonetheless stubbornly remained in the market, accepting tenders well below their cost base, in order to pay down the minimum interest on crippling bank loans.

    So ….. transportation is getting much cheaper, so all that [email protected] from China is getting much cheaper, so we are all in effect richer or at least consuming more than before.

    Why is this bad?

    If some Greek and Norwegian ship owners take a bath providing me with even cheaper stuff, well, I am not going to cry myself to sleep over it.

  2. It’s what ship owners do. Markets are and always will be cyclical. You gouge charterers in the good times and take a bath during downturns.

  3. I know, I know, maintenance costs and all but a ship can be expected to have a 50 year lifetime. If economic conditions are fine when you pay for the ship you can expect to make your money back while still owning your own blue water navy. For most people having too many merchant ships will be good as competition will reduce the costs paid to transport their goods.

    As long as there is a strategic reserve of shipbuilders which satisfy the most logical naval needs why should I care if someone fails at their version of high stakes poker?

  4. LY>

    To quite a large extent a ship – or anything – has the service life designed into it. I don’t think large ships have designed lives of more than about 20-30 years, simply because while the ship may still work fine after that time at what it was designed to do, the chances are the optimum design will change – and even smallish differences over 20-30 years can be enough to make a new generation of ships economic.

  5. “Loss-making vessels have nonetheless stubbornly remained in the market, accepting tenders well below their cost base, in order to pay down the minimum interest on crippling bank loans.”

    I wonder whether that journalist even knows what he means to say?

  6. The current laker, ships built for use on the Great Lakes, fleet is comprised of ships that were built at least 35 years ago. Many are over 50 years old and still in service. It doesn’t matter that the ships were originally built for a 20-30 year service life. The ships still carry cargo to what remains of midwest industry and thus still have value.

  7. At lot of WWll stuff was slapped together quickly on the basis it only had to last a few years and chances were someone would try to destroy it anyway so a temporary solution was ok, quite a few were knocking around well after the war though despite that

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