June 25, 2009
European yards seek push for green marine technologies
The Community of European Shipyards Associations (CESA) is asking European countries to push for the application of green marine technologies.
CESA is expecting a "painful correction period" for the global shipbuilding industry" and says "the key maritime sectors face their deepest slump ever."
All three main markets for standard ships, containerships, bulk carriers and tankers, are substantially oversupplied. And, though shrinking cargo volumes cannot fill existing ships, orders for new ships that are already on the books will trigger a global fleet growth of nearly 50% by 2012. Buyers and their bankers are trying to dispute signed contracts and are urging shipyards to accept delays and cancellations or face a prolonged order drought. Yards are reluctant to follow such requests but often have no choice as many orders have not been financed and often buyers are cash strapped..
As early as 2006 CESA experts warned that a massive supply and demand imbalance of at least 50% was building up. However, capacity expansion, mainly in Asia, further accelerated, stimulated, says CESA "by a distinct absence of globally applicable trade rules."
Since September 2008, demand for new ships has declined by 92%. In the first quarter 2009, global production volume was 11.5 million cgt while new order intake was only 1,1 million cgt. In this situation, warns CESA, substantial parts of the global shipping and shipbuilding community will face bankruptcy.
CESA says fast growth has been a main root of the current situation. Now, it says, sustainable operations are the key for a sound course towards the future.
European producers have a significant head start due to their concentration on innovation rather than mass production, asserts CESA, European shipyards have refrained from an excessive expansionist courses like many Asian competitors. They have largely focused on niche markets with high technology requirements which have remained fundamentally healthy and profitable. The financial crunch is currently causing substantial difficulties even in these markets but a relatively fast recovery is expected once financial resources are again obtainable.
With significant lead time needed to launch new innovative shipbuilding projects, also many high tech yards in Europe will need new orders in the coming months in order to avoid or at least limit temporary or permanent lay-offs. It is not acceptable that in the absence of global level playing field should cause irreparable damage to this skill base.
CESA anticipates that the current gap in both demand and financing will lead to structural damage in the European maritime industry. Small-to-medium enterprises and technologically less advanced companies, in particular, will face severe, in some case fatal challenges.
"A united approach of European producers is needed to ensure that feasible and competitive companies do not become victims of ill-advised business practices elsewhere," it says, warning that "comprehensive government interventions" in some parts of the world are likely to aggravate the situation.
CESA says that European producers have vast experience in developing advanced products with outstanding environmental performances. Europe has a strong interest in maintaining its technological capabilities in the maritime field. CESA calls for a "concerted European action to facilitate a decisive push for the application of green maritime technologies."