SHIPPING

AND
SHIPBUILDING
MARKETS
2005

Shipbrokers since 1856

Existe en version anglaise

 SHIPPING
AND
SHIPBUILDING
MARKETS
2005
The BRS annual review of world shipping

and shipbuilding developments in 2004

and prospects for the coming months…

●
1 Foreword

●
3 The shipbuilding market in 2004

●
25 The cruise market in 2004

●
31 The tanker market in 2004

●
45 The offshore market in 2004

●
51 The chemical carrier market in 2004

●
55 The liquefied petroleum gas shipping market in 2004

●
65 The liquefied natural gas shipping market in 2004

●
69 The dry bulk market in 2004

●
75 The containership market in 2004

●
87 The Ro-Ro market in 2004

●
91 The marine insurance markets in 2004

●
95 French shipyards deliveries and orderbook in 2004

●
97 French orders to foreign shipyards in 2004
 ANOTHER
POINTOFVIEW
I f we were able to rejoice in 2003 for the excel-
lent year that we experienced in shipping,
what can be said about 2004 where we went
from record to record?
The healthy state of the industry has had one
consequence, which has gone relatively unnoti-
ced, the reconciliation of the shipping world with
the stock market. Historically the Stock Exchange
had never shown much interest in the shipping
sector, too uncertain, too volatile, too specialised,
and shares always showing a chaotic tendency
and too low p/e ratios. However, discreetly, the
shipping sector has enjoyed this past year one of
the best performances amongst all other quoted
industries. The few indexes which comprise the
evolution of shares in shipping show an overall
progression of nearly 30 % with strong disparities
within the sectors. For example, according to the
“Tradewinds Equity Index”, values of oil tanker
companies have moved on average between
January 2003 and December 2004 from an index
of 100 to nearly 400 and for the container sector
from 100 to 250. A number of values have tripled
or even quadrupled in the course of the year,
taking the financial analysts by surprise, as up till
now they have paid little or no attention to ship-
ping and maritime activities.
This discovery by the financial markets of our sec-
tor of activity opens up new financing options for
owners (in addition to the traditional mortgage
financing) and should also allow for substantial
merger & acquisition operations, which we have
had a glimpse of in 2004:
◆ In April, Teekay Shipping bought Naviera
Tapias, who own four gas carriers and nine
modern Suezmaxes, with the intention of deve-
loping the LNG business and introducing Teekay
LNG partners onto the stock market.
Foreword 1
 ◆ The oil tanker owner Stelmar, having rejected
an offer from OMI and Athenian Tankers, is finally
on the point of accepting an offer from OSG
(Overseas Shipholding Group) of $48 per share,
or $1.3 billion.
◆ Elsewhere, John Frederiksen, the leading tan-
ker owner, has taken shares in Hyundai Merchant
Marine (6%), in P&O Nedlloyd (10%), and in
General Maritime (4.3 %). Nobody expects that
he will be satisfied with a minority shareholding.
◆ At the end of the year, the Greek owner Restis
managed to lay his hands on the bulk shipping
activity of MISC (Malaysian International Shipping
Corp.) namely 32 ships for $740 million.
Some owners, encouraged by the success of
General Maritime Corp., whose shares more than
doubled in the course of the year, are now loo-
king at a quotation on Wall Street, such as the
Stena group with their subsidiary Arlington Tan-
kers or Greek owners Dynacom, and this trend
should be accentuated, unlocking important
investment capacities within the shipping com-
munity.
Ironically, the rise in shipping costs has as a
consequence called into question this service,
which is often minimised in the economic chain
and has made operators reflect more deeply into
their logistics and operations, but also as to the
qualitative differences between owners. All that
is expensive is not necessarily good value…
Curiously it is in this context of highly priced mar-
kets that charterers are seeking long positions to
2 Shipping and Shipbuilding Markets 2005
which owners are resisting, given the inflated
values in the short term. Arbitrages between long
term/short term and purchase/chartering become
more and more strategic, with certain choices
being crucial in case of a brutal change in the
markets.
This year has also witnessed the steady decline of
the dollar, concealing to some extent the effects
of rocketing oil prices and shipping costs as
expressed in euros, but disastrous for European
shipyards, wiping out their productivity gains and
thus accentuating the competitive advantage of
the Asian countries with the exception of Japan.
However, if the dollar continues its downward
trend, a revaluation of some currencies, such as
the Korean won and the Chinese yuan would
become inevitable. Today this is a major concern
of Chinese and Korean shipyards who already
suffer from a massive rise in their supply costs,
steel in particular. Asian shipyards certainly have
their orderbooks full, but profits are not yet for-
thcoming despite substantial increases in their
sale prices. A revaluation of their local currencies
could jeopardise, at least temporarily, their
expansion.
We begin this new year with confidence, even if
we believe that certain excesses will correct
themselves, since the growth of the developing
countries, and especially that of China, is still very
much a reality. We remain nonetheless cautious
as to the evolution of the dollar which could
upset a number of economic calculations and tar-
nish the current glitter of the shipping sector. ■
 THE
SHIPBUILDING
MARKET
IN
2004
2004, the year that broke all records !
F or the shipbuilding markets, 2004 can justi-
fiably be considered as the year that broke all
records. This phenomenal upsurge of new-
building activity in 2004, has been characterised by
a number of salient factors:
◆ A flood of new orders in the shipyards. This has
been equalled only by the record volumes across
tonnage types achieved in 2003. During the course
of 2004, the world orderbook jumped from
125 million gt to nearly 165 million gt, representing
more than 3,700 ships. This figure was only 65 mil-
lion gt in mid 2002. Deliveries are spread out to
year-end 2008, and in some cases the shipyards are
committed through to 2009.
◆ A strong rise in sale prices. The top prices achie-
ved for tankers and bulk carriers at the beginning
of the 1990’s have been reached again and even
exceeded. The long-standing symbolic barrier of
$100 million for VLCCs and very large container-
ships has been surpassed; in some cases by as much
as 20 %. Exceptionally high freight rates have
brought on fierce competition between owners.
This has been witnessed in the numerous resales of
ships under construction, and in the second-hand
market ships have been purchased at prices above
newbuilding prices. These factors have conspired to
bring about the price hikes we have seen in 2004.
At the same time, builders have been facing excep-
tional cost increases mainly due to more expensive
supplies and a depreciation of the dollar. Shipyards
have in this respect received only the meagre left-
overs of the lucrative financial results being enjoyed
in the shipping sector.
◆ An increase of global shipbuilding capacity.
Korea has once again consolidated its position as
the world shipbuilding leader with an orderbook of
about 62 million gt compared with 49 million gt in
2003. Japan has reaffirmed its second-place posi-
tion with nearly 54 million gt as opposed to 43 mil-
lion gt twelve months earlier. China has continued
its inexorable ascent with near to 26 million gt
against 17 million gt at the end of 2003. Against
this increase in orders in the Far East, the Asian ship-
yards’ saturation has helped to bring about an
The Shipbuilding Market in 2004 3
 increase in activity in the West and East European volume of transactions on the second-hand and the
shipyards. Between year-end 2003 and year-end newbuilding markets.
2004, West and East European orderbooks climbed
from 6 to nearly 8.5 million gt and 5 million to Freight rates
nearly 7.5 million gt, respectively. The desperate Dry bulk freight rates continued their irresistible
search for newbuilding berths with early delivery ascent and achieved historic levels. This frenzy has
dates has sent owners off to other more remote been fed by the enormous demand for raw mate-
destinations (Vietnam, Iran, Russia, India, Brazil, rials generated by China, which has become the
Dubai…) whose figures have gone up from 4 to world’s main importer of most raw materials in a
7 million gt. few years. This drastic rise in rates has brought
◆ An adaptation to the new situation. Builders and about a fear of overheating throughout the year.
owners have been seen to adapt their attitudes The declarations of the Prime Minister of China at
facing this new situation. Builders have become the end of April certainly set the tune for the serious
more and more discriminatory. They have given pre- correction that occurred during the spring. This cor-
ferential treatment to ships of which the values rection was however short-lived. By the beginning
maximise the turnover of each of their berths, or of summer, rates had started to climb again. Despite
standard designs. They have also been seen to give very high volatility (the Baltic Dry Index swung bet-
priority to their faithful clients, and clients who are ween 2,600 and 6,200 points), these rates, which
deemed not too demanding. This behaviour has had already doubled on average between 2002 and
2003, doubled again between 2003 and 2004.
been brought on in large part due to the worrying
cost increases on existing contracts, which have In 2004, containership rates were bolstered by the
seriously dented shipyards’ profit margins in 2004, growth in commercial trade and Chinese exports.
despite the rise in newbuilding prices during the The American commercial deficit has reached his-
year. Owners, who are reaping the financial bene- torically high levels at nearly $ 600 billion. By and
fits due to a freight market, which has been une- large the containership rates manifested less volati-
qualled in modern times, are visibly more relaxed lity compared to the dry bulk or liquid markets as it
and even sometimes euphoric. Whereas only a is characterised by line operators employing owned
short time ago, owners used to bitterly discuss tech- or long-termed chartered ships on their routes.
nical specifications, prices and payment terms, Containership rates, which doubled on average
nowadays they are more pragmatic, accepting between 2002 and 2003, have tripled between
terms and conditions imposed by shipyards, provi- 2003 and 2004.
ded that they allow them to place new orders. For the first time the price of crude oil broke the
$ 55/bbl barrier in 2004, and the oil market has
The economy and trade remained extremely nervous throughout the year.
In 2004, the world economy made strong gains with Freight rates for tankers doubled on average bet-
an average GDP growth rate of 5 % per year. This ween 2003 and 2004.
signifies the largest increase during the past 30 years. Despite relatively high volatility, freight rates thus
In tandem with world growth, commercial trade has have achieved record levels in 2004, allowing
flourished, increasing almost 9 % compared to a owners to get substantial investment leverage for
growth of commercial trade of 5 % in 2003. ordering new ships. It was by no means obvious at
the end of 2003 that owners would be able to
This rapid expansion and the increase in the demand
order in 2004 as many ships as the previous year.
of raw material, largely explains the unprecedented Yet they did so, and at higher prices and for later
hike in freight rates as well as the large number and deliveries.
IMF Forecast (as % of GDP)
World USA Japan Euro zone China Orders
2003 3.9 3.0 2.5 0.5 9.1
Bulk carriers
2004 5.0 4.3 4.4 2.2 9.0
2005 4.3 3.5 2.3 2.2 7.5 With nearly 37 million dwt ordered compared with
33 million in 2003, orders for bulk carriers and in
IMF - September 2004
particular for Capesizes were numerous in 2004.
General trends
The orderbook has increased and gone from
2002 2003 2004 2005
53.1 million dwt at year-end 2003 to 71.6 million
World GDP 3.0% 3.9% 5.0% 4.3% dwt year-end 2004. The fleet on order at the end of
World trade 3.3% 5.1% 8.8% 7.2% 2004 represented nearly 22 % of the existing fleet,
IMF - September 2004

4 Shipping and Shipbuilding Markets 2005

 Freight rates evolution since 2000
Index 1,000 = January 98
6,000
P/C 1,700 teu
5,500
Baltic Dry Index (BDI)

5,000 VLCC 250,000 t G.Pers./Japan

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0
Jan 00

Apr 00

July 00

Oct 00

Jan 01

Apr 01

July 01

Oct 01

Jan 02

Apr 02

July 02

Oct 02

Jan 03

Apr 03

July 03

Oct 03

Jan 04

Apr 04

July 04

Oct 04
as against 17 % in 2003. The uncertainties sur- ciality (like Shanghai Waigaoqiao Shipyards (SWS)
rounding the future necessity for double-hulled ves- and Bohai for Capesizes, Jiangnan and Hudong-
sels was settled in May 2004 with a decision to Zhonghua for Panamaxes), Chinese shipyards are by
keep the status quo. and large moving to other types of ships. This leaves
predictably Japanese builders with the lion’s share
Owners faced several problems in finding berth
space to order their bulk carriers, ships often judged New orders during the year
to be too simple by builders. Korean shipyards pre-
(million dwt) 1999 2000 2001 2002 2003 2004
fer to build ships with better returns and bulk car-
riers in Korea only represent 5 % of the shipbuilding Tankers > 25,000 dwt 12.7 34.3 25.0 19.9 52.5 43.7
market as compared to 25 % in 2000. Apart from Bulkers > 15,000 dwt 21.9 17.6 7.7 21.6 32.9 36.8
certain shipyards that today are making it their spe- Containerships > 1,000 teu 7.0 13.7 7.1 7.1 26.6 25.4

Percentage of the active fleet on order by type

% dwt of fleet on order
60

Oil Tanker

Bulk
50
Containership

40

30

20

10

0
1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

The Shipbuilding Market in 2004 5

 Shipbuilding countries market shares evolution for containerships
% Korea
100
90
80
70
60
50
40
30
20
10
0
Mar 00 June 00 Sep 00 Dec 00 Mar 01 June 01 Sep 01 Dec 01 Mar 02 June 02 Sep 02 Dec 02 Mar 03 June 03 Sep 03 Dec 03 Mar 04 June 04 Sep 04 Dec 04
of this sector, with nearly 65 % but they also give
priority to domestic owners and are saturated.
Owners and operators are looking for economies of
scale and a number of 200,000 dwt bulk carriers as
well as 230,000 and 300,000 dwt ore carriers have
been ordered. The latest very large ore carriers were
delivered by Hyundai Heavy Industries in 1992 and
Daewoo in 1997.
In sum, demand for bulk carriers remains strong
and has not been totally satisfied yet.
Containerships
With close to 26 million dwt on order, demand for
containerships has been as sustained as in 2003.
The orderbook has grown at a consistent pace,
going from 35.5 million dwt at the end of 2003 to
54.3 million dwt in 2004. The fleet under construc-
tion at year-end 2004 represents a figure of 53 %
of the existing fleet, as against 35 % in 2003 (only
cellular ships), which gives rise to some concerns.
Korean shipyards, which hold nearly 65 % of the
market were unable or did not want to satisfy the
totality of this buoyant demand. They have concen-
trated almost exclusively on very large container-
ships, leaving opportunities for Chinese, Taiwanese,
Singaporean, German and Polish shipyards to fill
the void.
In a way, containerships have set the pace for the
newbuilding market in pushing prices higher. It is
indeed the sector which has seen the strongest
demand. Amongst the main three segments that
form the core of newbuildings, this is the one that
6 Shipping and Shipbuilding Markets 2005
Japan Germany
Others
offers the highest prices to the builders, other fac-
tors being equal. The added value to the shipyards
is also higher as these ships require less steel, less
external procurement, are often ordered in series
and can be easily adapted or modified.
As was the case in 2003, a number of over-Pana-
max containerships were ordered in 2004. With
close to 50 units over 7,500 teu in service, 170 units
were on order by the end of 2004. New size records
were achieved with the order of container carriers
of 9,300 teu for the account of AP Moller, whilst
CMA CGM and Hyundai Heavy Industries agreed to
extend the capacity of ships previously ordered from
8,300 teu to 9,300 teu. The 10,000 teu barrier will
shortly be broken, probably bringing about a new
wave of orders, motivated by a race for size bet-
ween operators. The coming about of a new gene-
ration of containerships above 10,000 teu will
nonetheless require to adapt port handling facilities.
In the meantime, demand for smaller container car-
riers (1,100, 1,800, 2,700, 3,500, and 4,300 teu),
which are usually employed as feeders for the large
mother vessels, has also been very healthy. This
trend can be expected to continue. Given that the
ratio of the fleet on order versus the existing fleet is
particularly high and that the predictable growth in
teu terms is above international trade progression,
the number of new orders might logically slow
down in the coming months.
Tankers
With some 44 million dwt ordered, demand for tan-
kers has remained strong, although lower than that
of 2003 with 52 million dwt.
 New orders of standard vessels 2002, 2003 & 2004 2002 2004

2003
Dwt
30,000,000

509
495
25,000,000

20,000,000
100
57 58

15,000,000
79

106
142
238 228
10,000,000
208 118 200
49 72

85

5,000,000 29 62

0
VLCC Suezmax Aframax Panamax Tankers MR Products Capesize Panamax Handy Containership
(above 1,000 teu)

The orderbook has nonetheless increased and has
gone from 83.5 million dwt at year-end 2003 to
102.3 million dwt at year-end 2004. The fleet on
order at the end of 2004 represented some 31 % of
the existing fleet as compared to 26 % a year earlier.
How does one explain this relatively-speaking smal-
ler demand this year, especially in comparison to the
progression of containerships and bulk carriers? To
understand this, it is important to recognise that the
renewal of the tanker fleet, started earlier, following
the oil pollution disasters of the ‘Erika’ in 1999 and
the ‘Prestige’ in 2002. The average volume ordered
each year since 1999 has in fact been 30 million
dwt for tankers as against 22 million dwt for bulk
carriers and 14 million dwt for containerships. In
addition, the competition with containerships in the
shipyards has also played its part.
Demand for ice-strengthened tankers has remained
sustained despite a mild winter, essentially respon-
ding to the development of loading of crude or refi-

Stena Polaris
75,000 dwt, ice class 1A
Panamax product tanker,
ordered at Split
by Concordia Maritime
for delivery 2006
and long-term chartered
to Fortum Oil

The Shipbuilding Market in 2004 7

 Specialised vessel contracting 2002, 2003 & 2004
Number of ships
80
77
70
60 59
50
45
40
30
26
20
20
10
0
Chemical carriers* LPG carriers LNG carriers
(dwt) (cbm) (cbm)
ned products out of the Gulf of Finland, the White
Sea and from the Sakhalin islands, where Russia
and the Baltic states are in the process of building
new ports and expanding their export capacities.
Thus there are 72 MR product carriers, 25 Pana-
maxes, 41 Aframaxes, and 17 Suezmaxes which are
ice-classed out of respectively 407, 161, 174 and 89
ships on order.
In addition, traffic is considerably increasing in some
tight waters and it is very likely that the strong
growth in Russian exports out of the Baltic or the
Black Sea will result in the enforcement of new
regulations and security measures from the borde-
ring countries to protect their coastlines. There is
regrettably one incident a month in the Baltic. Some
oil companies and European owners, who want to
improve the security of their ships, have jumped the
gun and ordered ships with double propulsion.
Specialised tonnage
New orders for specialised tonnage have also consi-
derably increased this year with the exception of
Ro-ro’s, and reefer ships. The number of specialised
ships remains, however, weak compared to standard
ones. Few sectors have remained inactive, which is
a sign of the vitality of the shipping market in 2004.
Stainless steel chemical carriers
The number of stainless steel chemical carriers orde-
red has gone from 59 in 2003 to 77 in 2004. The
orderbook is growing and has increased from
1.6 million dwt year-end 2003 to 2.1 million dwt
year-end 2004. The fleet under construction at the
end of 2004 represented some 16.5 % of the exis-
8 Shipping and Shipbuilding Markets 2005
2002 2004
2003
80
76
59
27
13 13
6 7
4
Ferries Ro-ro Car carriers Cruise vessels
(grt) (dwt) (cars) (grt)
ting fleet, against 13.8 % a year earlier. Most of
these ships have been ordered at Japanese shi-
pyards. The demand has not even been entirely
met, given that the price of stainless steel has sud-
denly become much more expensive and that yards
also suffered from supply disruption.
LNG carriers
During the course of the year the number of LNG
carriers ordered nearly quadrupled, going from 20
to 76. The orderbook has gone from 63 ships at the
end of 2003 to 116 ships, making a total capacity
of 17.1 million cbm, by the end of 2004. The fleet
under construction represents about 80 % of the
existing fleet compared to 48 % a year earlier.
Many ships have been contracted without long-
term employment.
This market, which has been so far very conservative,
is quickly changing. The maximum size of ships, which
was in the past ranging from 125,000 to 130,000
cbm, has progressively moved up to 140,000 cbm and
then 150,000 cbm. In order to meet the requirements
of the gigantic Qatari LNG export project, a series of
LNG carriers of 210,000 cbm has been ordered in
Korea. In addition, diesel-electric propulsion seems to
be progressively more sought after.
The majority of the orders was placed in Korea and
Japan in 2004. The European shipyards who inven-
ted this sophisticated type of transport and banked
on a strong future demand, are practically absent
from this market. This year, Hudong-Zhonghua of
Shanghai joined the “club” of LNG carrier builder
with the order in August 2004 for two ships of
147,000 cbm.
 LPG carriers
The number of new orders for LPG carriers has
practically doubled, going from 26 in 2003 to 45 in
2004. The orderbook has also risen, from 1,6 mil-
lion cbm at year-end 2003 to 2,6 million cbm at
year-end 2004.
The majority of the orders of small LPG carriers has
been placed at Japanese yards, whereas those of
bigger sizes have been placed in Korea, with the
exception of some large units contracted with Mit-
subishi Heavy Industries and Kasawaki Heavy Indus-
tries in Japan and with Gdynia in Poland.
Ferries and Ro-pax
The number of Ferries and Ro-paxes on orders went
from 13 to 27. The total orderbook increased from
32 ships at year-end 2003 to 46 ships year-end 2004.
With the exception of a Ferry ordered in Japan by a
domestic owner and an option to declare by Nor-
folk Lines for a newbuilding at Samsung in Korea,
the 27 Ferries and Ro-paxes ordered in 2004 have
been placed at European shipyards, with the Italians
being awarded nearly half of this total. This situa-
tion is largely due to the concentration of Asian
builders on more standard ships.
Ro-ro’s
Only a few Ro-ro’s were ordered in 2004. The few
European shipyards which possess a real expertise
in this type of ship are quoting prices in euros,
which are often prohibitive to charterers, given the
freight levels in this sector. Only a handful of pro-
jects actually materialised.
$/ton
800
700
600
500
400
300
200
100
0
Jan 01 Apr 01 Jul 01 Oct 01 Jan 02 Apr 02
Car-carriers
The number of Car-carriers ordered went from 59 in
2003 to 80 in 2004. The orderbook has increased
and reached a capacity of nearly 800,000 vehicles
at year-end 2004, a considerable increase from
526,000 vehicles at year-end 2003.
New orders have almost exclusively been placed for
large PCTC (Pure Car Truck Carriers) with a capacity
of 4,300 up to nearly 7,000 cars. These orders have
been contracted with yards in Japan and Korea, and
also in Croatia and Italy.
This sustained demand is a response to the growth
of the world automotive industry. The outsourcing
of production and the development of new mar-
kets, as in China, have helped increasing the
demand for new vehicles shipments. The latest
forecasts indicate an annual traffic of about
10 million vehicles by 2008 as compared to
8.7 million in 2004.
New requirements could soon come about for
intermediate size ships, around 2,000 to 3,000
cars, to be used as feeders for large carriers or for
regional trades in the intra-European or intra-Asian
markets.
Cruiseships
2004 signalled a comeback of confidence by crui-
seship operators of with 13 new orders, all signed
up with the four leading European builders who
are specialised in this sector. It has been the best
year since 2000. (see our article on the cruise mar-
ket.)
Evolution of Steel Prices since 2001
(ex-works prices, world average)
Hot Rolled Coil
Hot Rolled Plate
Cold Rolled Coil
Jul 02 Oct 02 Jan 03 Apr 03 Jul 03 Oct 03 Jan 04 Apr 04 Jul 04 Oct 04 Jan 05
The Shipbuilding Market in 2004 9
 Average exchange rates to the US$
$ US
1.40

1.35 100 yen

1,000 won
1.30
1 euro

1.25

1.20

1.15

1.10

1.05

1.00

0.95

0.90

0.85

0.80
Jan 03

Jan 04

Feb 04

Mar 04

Apr 04

May 04

June 04

July 04

Aug 04

Sep 04

Oct 04

Nov 04

Dec 04
Feb 03

Mar 03

Apr 03

May 03

June 03

July 03

Aug 03

Sep 03

Oct 03

Nov 03

Dec 03
Prices neous information. They have thus apprehended
news of the latest deals concluded more rapidly.
Newbuilding prices expressed in dollars have quickly
However, for the moment builders are not getting
progressed in 2004. The increase for all tonnage-
any benefits from this situation. They had to face
types was on average 40 %. By contrast the figure
unprecedented costs increases, as the raw material
was roughly 20 % in 2003. This figure appeared to
market took off in 2004. Steel prices doubled and
be a relatively modest rise given the strong increase
went from $ 300/t to more than $ 600/t; stainless
in the volume of new orders over the year (110 mil-
steel and non-ferrous metal prices have tripled. This
lion dwt in 2003 as against 50 million in 2002).
rising cost movement has affected not only steel
The volume of orders in 2004 remained at the same plates and profiles, but also pipes, cables, bul-
high level as in 2003 (more than 100 million dwt). kheads, machinery, pumps, heat exchangers and so
Nevertheless the situation has been different in forth. It should be remembered, for reference, that
2004 as the production capacities of builders, the main engine onboard a 8,500 teu containership
whose orderbooks in 2004 were spread out over weighs 2,400 tons. Finally, in addition to all this,
three to four years as against roughly two in 2002, energy also became more expensive.
became saturated. This factor militated to push up
Could the shipyards have protected themselves
prices to levels not seen since before the Asian cri-
against such increases? Shipyards traditionally orde-
sis of 1997 / 1998.
red their materials and spare parts, with suppliers
We have seen cascade effects on prices starting and equipment makers, soon after having signed
from the newbuilding market to have then an the newbuilding contracts in order to fix their costs.
impact on newbuilding resales and finally on This was at the time when ships could still be expec-
second-hand tonnage. The demand for tonnage at ted to be delivered within two years’ time. But the
any cost has pushed up the prices of ships with expansion of orderbooks, entailing procurement
prompt delivery dates, as well as the prices of recent exposures much further into the future, no longer
units, to levels above the price being asked by buil- allows for this. As to steel, it is usually payable by
ders for far later deliveries. The latter have been the builder the day of its delivery to the shipyard,
able to use these new benchmarks to increase their which means about twelve months before the deli-
own prices. very of the ship, given effective building delays
which have become shorter. In other words, the
Swift and significant fluctuations in prices help fos-
yard has to pay for its steel requirements nearly two
ter speculation. The behaviour of owners and buil-
years after contract has been signed.
ders alike, has changed over the course of 2004.
One saw a much greater reactivity on the part of Worst still, shipyards have had to face delays in sup-
builders, who have become more alert to the out- plies whilst they have nevertheless had to honour
side world thanks to the availability of instanta- firm commitments with their clients. Steel shortages

10 Shipping and Shipbuilding Markets 2005

Newbuilding prices variations (in million US$)
1993 4Q 2001 4Q 2002 4Q 2003 4Q 2004
Tankers VLCC 100 70 64 76 107
Suezmax 62.5 45 43.5 50 70
Aframax 45 36 34 42 60
MR Product 32.5 26 27 31.5 39
Bulkers Capesize 48 36 36 40 63
Panamax 29 20 21.5 24 35.5
Handymax 25 19 20 21.5 29
Source BRS

came to public attention when Nissan, the car market, some builders had accepted delayed pay-
maker, announced at the end of November 2004 ment terms and now face significant currency losses
that they had to halt production for at least a week. as a consequence.
Korean authorities decided during the year to post-
Prices for specialised tonnage have also risen, given
pone all exports of steel. Other sectors were also the increases in raw materials costs and a more sus-
hit. It was already by the end of 2004 becoming vir- tained demand compared to 2003. But these
tually impossible to find slow speed diesel engines increases were less significant, as competition bet-
for delivery in 2007 due to a disruption in the sup- ween shipyards remained strong. As an example, the
plies of essential parts. number of LNG carriers builders is basically the same
The dollar’s unrepentant decline has been another as for VLCCs or Capesizes. Thus the price of LNG
thorn in the pillow of shipyards. Exchanges rates at ships of 145,000 to 150,000 cbm remained at the
the beginning of 2004 were about 1,200 South very low levels achieved in 1999, in the region of
Korean won and 106 Japanese yen for one dollar. $155 million, until mid 2004, when it gradually
By year-end the won stood at 1,050 and the yen at increased to reach $185 million at the end of the year.
103 to the dollar. This trend has as yet shown no The unprecedented demand, the difficulties shi-
signs of weakness. Despite a fixed exchange bet- pyards face in executing current contracts, the
ween the yuan and the dollar, Chinese builders numerous doubts as to the price of materials and
have had to buy a large quantity of equipment equipment, the continued uncertainty of exchange
overseas (from Europe, Japan, and Korea) and have rates and the recurrent difficulties in obtaining sup-
thereby suffered from a similar exchange rate pres- plies without too long delays, should continue to
sures for their supplies. During 2002 in a difficult push newbuilding prices higher in 2005. As a saving

South Korean Shipyards Orderbook & Market Share

million gt percentage
70 50
Orderbook
Source: Lloyd’s Register - BRS
Market share
60
40

50

30
40

30
20

20

10

10

0 0
end 1995

end 1996

end 1997

end 1998

end 1999

end 2000

end 2001

end 2002

Mar 2003

June 2003

Sep 2003

Dec 2003

Mar 2004

June 2004

Sep 2004

Dec 2004

The Shipbuilding Market in 2004 11

 grace, we can probably expect a steadier evolution the very top names in the shipping industry and by
than we saw in 2004. year-end 2004 could count 20 ships on order.
Others like 21st Century, Samho, Nokbong, Kwan-
South-Korea gyang have succeeded in selling extensive series of
product tankers of 5,500 dwt, 12,800 dwt, and
2004 was a new record year for Korea, which once
13,000 dwt to different owners. Daesun continues
again confirmed its role as world leader. The Korean
to be active in the construction of containerships of
orderbook went from 49 to 62 million gt between
900 to 1,100 teu.
the end of 2003 and year-end 2004. By contrast the
Korean orderbook stood at only 27 million gt at the How have the Korean shipyards been able to
end of 2002. increase their portfolio from 49 million to 62 million
All the yards are full until the first or second quarter gt without creating a single new berth?
of 2008, with only very limited exceptions. Within Above all, by spreading out over time their order-
some yards, certain berths are committed up until book, and by constantly improving their producti-
the end of 2008. vity, but also by opening new docks.
Korean shipbuilding remains very concentrated. The HHI has used its dry-land building facility, usually
Korean portfolio, which represents slightly over dedicated to offshore units, to build a series of 16
1,100 ships, is split up between 15 shipyards. Aframaxes. STX has recovered its old construction
The orderbook of the three largest Korean builders site in Busan (ex Daedong), now renamed STX-
Hyundai Heavy Industries (HHI), Daewoo Shipbuil- Busan, to build a series of 12 product tankers of
ding and Machinery Engineering (DSME) and Sam- 10,000 dwt for Clipper. DSME and SHI have inves-
sung Heavy Industries (SHI), are largely focused on ted heavily in floating docks. Recourse to sub-
the very large containerships, LNG carriers and tan- contracting, especially for steel blocks, has grown.
kers (VLCCs, Suezmax, Aframax). Hanjin exclusively SHI, which possesses a steel blocks factory at
builds very large containerships. Ningbo in China, intends to increase its production
Hyundai Mipo Dockyard and STX, who have pre- from 60,000 to 200,000 tons as of 2005 (corres-
viously concentrated on product tankers, have now ponding to the equivalent of 5 VLCCs or 8 LNG car-
considerable orders of containerships, of 2,800 teu riers). Hyundai Corporation has decided to invest in
for the former and from 2,700 to 3,500 teu for the a Chinese shipyard, Lingshan, near to Qingdao.
latter. Shin-A remains concentrated on building The Sun Dong shipyard, which specialises in the
Medium Range product-chemical carriers. building of blocks, has decided to launch itself into
The smaller Korean shipyards have been ambitious newbuildings and has signed contracts for a series
and have succeeded in making a remarkable pre- of Panamax bulkers which should become effective
sence on the international scene. INP has attracted upon receipt of bank refund guarantees.

Japanese Shipyards Orderbook & Market Share

million gt percentage
60 40

Source: Lloyd’s Register - BRS

35
50

30

40
25
Orderbook

Market share
30 20

15
20

10

10
5

0 0
end 1995

end 1996

end 1997

end 1998

end 1999

end 2000

end 2001

end 2002

Mar 2003

June 2003

Sep 2003

Dec 2003

Mar 2004

June 2004

Sep 2004

Dec 2004

12 Shipping and Shipbuilding Markets 2005

 Shipbuilding countries market shares evolution for bulk carriers
%
100
90
80
70
60
50
40
30
20
10
0
Mar 00 June 00 Sep 00 Dec 00 Mar 01 June 01 Sep 01 Dec 01 Mars 02 June 02 Sep 02 Dec 02 Mars 03 June 03 Sep 03 Dec 03 Mars 04 June 04 Sep 04 Dec 04
Some Korean shipyards (DSME, STX) have also
plans to expand in China which remain to be mate-
rialised. Others like HHI and HMD could give prio-
rity to new developments in North Korea when the
moment comes.
South-Korean shipyards are worried about having
filled their orderbooks too early and at too low
prices. By the end of 2004, it was obvious that seve-
ral Korean shipyards were facing difficulties in spite
of higher sale prices.
Japan
2004 was also a new record year for Japan, which
confirmed its second place among world leading
shipbuilding nations.
Japanese builders’ orderbooks went from 43 up to
54 million gt between end 2003 and year-end
2004. It was 24 million gt at year-end 2002.
All the yards are generally full until 2008, but cer-
tain are committed up to 2009. Contracts for such
late delivery dates might not be signed before ano-
ther year or two, but berths are already booked.
Even more than elsewhere, Japanese shipyards give
priority to their dynamic domestic owners and it has
become more and more difficult for a foreign
owner to place an order with them. It seems that
Japanese owners are also less demanding and even
more accommodating than their foreign counter-
parts, this has had a visible impact on the number
of hours spent on each ship and on the final net
result of each building contract.
Japanese shipbuilding industry is less concentrated
than in South Korea. The Japanese portfolio, which
Japan China
Korea Others
has practically an identical number with more than
1,100 ships, is spread out between fifty construc-
tion sites.
How have Japanese shipyards been able to increase
their portfolio from 43 million to 54 million gt?
Above all, this has been achieved through exten-
ding their orderbook over a longer period of time,
up until 2009 for some yards. Additionally, it has
been achieved by a constant improvement of their
productivity. For instance, at the beginning of
February 2004, Mitsubishi announced that they
were planning to reduce the construction time of a
VLCC between keel-laying and delivery from 7 to
5.5 months.
New production capacity has also been created.
Imabari opened a new site specialising in the
construction of bulkers. Naikai Zosen has absor-
bed its affiliate Nichizo IMC to improve producti-
vity. Murakami Hide has expanded one dock.
Other yards, such as Namura and Kyokuyo, have
decided to invest in new workshops and lifting
equipment to increase the size of the berths and
the number of ships they can handle.
Proximity with China, where Japanese owners like
NYK and K Line have already placed orders, could
represent a danger for Japanese builders. But it
has also been an opportunity as they can increase
their purchases of equipment and sub-contracting
there. Tsuneishi has created a production site for
steel blocks in the province of Zhejiang. The suc-
cess of NACKS shipyard, opened in 1998 in Nan-
tong (China) -a joint venture between the Japa-
nese builder Kawasaki Heavy Industries and the
The Shipbuilding Market in 2004 13
 Chinese Shipyards Orderbook & Market Share
million gt percentage
30 18

Orderbook Source: Lloyd’s Register - BRS

16
Market share
25
14

20 12

10

15
8

10 6

5
2

0 0
end 1995

end 1996

end 1997

end 1998

end 1999

end 2000

end 2001

end 2002

Mar 2003

June 2003

Sep 2003

Dec 2003

Mar 2004

June 2004

Sep 2004

Dec 2004
Chinese owner Cosco- is another example of co- Signing of newbuilding contracts in China generally
operation and possible development. takes a longer time than in Korea and Japan. Whilst
this was a handicap to Chinese yards in the middle
One has to admire the perseverance and dyna-
of the Asian crisis in 1998, when prices were falling,
mism of Japanese shipyards. They reflect the
it was rather to their advantage in 2004 with a rising
ambition of Japan, a developed country with a
market. They have been able to adjust their prices
well-paid workforce, not only to maintain but also
closer to the market. One should also be aware of
to develop shipbuilding in a highly industrialised
the arrival of a new generation of management in
country. Japan demonstrates that it is possible to
the shipyards, more internationally minded and
build ships at market prices with a more expensive
much better informed, thanks largely to the internet,
workforce than in Korea and China, thanks to a
who carry out a close monitoring of the markets.
remarkably high level of organisation and highly
automated production process. Nonetheless, this rapid development is not without
some hitches, and even some frustration with
China clients of certain provincial shipyards. Letters of
intent have in some cases not been transformed
2004 was also once again a record year for China,
into firm contracts at agreed prices, signed
which confirms its third place in the world ranking.
contracts have not been formalised, options have
The orderbook of Chinese builders went from 17 not been confirmed or at least not on agreed terms,
to 26 million gt between year-end 2003 and year- etc. Some yards have encountered real problems in
end 2004. In 2002, by comparison, the Chinese obtaining financial support from their bankers who
orderbook stood at 9 million gt. It is a remarkable criticise them for having signed at too low levels
performance when we remember that the order- which are insufficient to cover their costs. Some
book of Japanese builders was 24 million gt at the even had to renegotiate contracts with their clients,
end of 2002. facing rising costs and weak financial situations.
Contrary to their Japanese and Korean counter- Chinese shipyards work in a constantly changing
parts, Chinese yards still have some berths available environment and have to juggle with a number of
in 2008. difficulties. They have been affected by energy shor-
tages and steel or main equipment supplies, like
The strength of the Chinese orderbook is not only
engines, which they had to buy abroad at higher
explained by having been spread out over 3 years
prices.
but, above all, by the expansion of existing facilities
and the creation of new shipyards. There are about Chinese shipyards should pursue their efforts to
two hundred shipyards with merchant ship building produce quality ships. In the current market, they
capability in China and about fifty competing on have been able to benefit from the rise in prices
the international market. and, above all, to obtain terms and conditions on

14 Shipping and Shipbuilding Markets 2005

a par with their Korean and Japanese competitors.
The expectations of owners on the quality front are
high and it is important not to deceive them as the
reputation of Chinese yards is at stake. Quality is
the best way to reduce costs. To deliver a good ves-
sel, in order to avoid expensive surveys, repairs,
waste of materials or even problems that can com-
promise ship’s operations once in service, is the best
way to save money.
Expansion projects and creation of new shipyards
are continuing, but some ambitions have been
contained. The central government has put a hold
on credit access and some projects have not obtai-
ned the necessary government authorisations. The
ambitious project of Nantong Rongshen seems to
be one such casualty.
Restructuring is taking place. Shanghai Shipyard has
left the centre of Shanghai for the island of Chong
Ming. Chengxi and Shanghai Shipyard are now part
of the same group. Jiangdu shipyard has been
taken over by the private group Sinopacific, which
now controls three yards: Zhejiang, Dayang, and
Dadong. Dalian (old) and Dalian New have restruc-
tured their management.
As with the Japanese yards, Chinese shipyards have
also given priority to domestic owners who have
enormous needs.
Hudong Zhonghua has signed up this year for two
LNG carriers of 147,000 cbm for delivery in 2006
and 2007 in the context of the Guangdong project.
Negotiations are in process for two supplementary
ships linked with the Fujian project. Chantiers de
l’Atlantique (France) are undertaking the techno-
logy transfer.
Messidor
55,300 dwt, built
in 2004 by NACKS,
owned by Setaf-Saget
(Groupe Bourbon)
The yuan vs dollar fixed parity offers an undeniable
competitive advantage to Chinese builders, even if
they have to purchase a large share of equipment
in Europe, Korea, or in Japan. There were talks bet-
ween governments this year about adjusting this
parity, and even to float the Chinese currency. The
Chinese yards have even sometimes used this pos-
sibility as a sales pitch.
Chinese shipyards are in an enviable position, since
most investments are the result, directly or indirectly,
of the government. Shipyards in other countries,
particularly in Europe, would be delighted to be able
to benefit from such a support to modernise their
production base, without bearing the costs.
China is investing in some gigantic shipbuilding
sites, capable of competing in the future with the
biggest Japanese or Korean facilities. There are cur-
rently 8 docks for building a VLCC in China, com-
pared to 14 in Korea and 14 in Japan. By 2008 /
2009, China might have no less than 22 VLCC
docks. One can however fear that this expansion
plan will come to overturn the existing equilibrium

Shipbuilding countries market shares evolution for tankers

Japan China

Korea Others
%
100

90

80

70

60

50

40

30

20

10

0
Mar 00 June 00 Sep 00 Dec 00 Mar 01 June 01 Sep 01 Dec 01 Mar 02 June 02 Sep 02 Dec 02 Mar 03 June 03 Sep 03 Dec 03 Mar 04 June 04 Sep 04 Dec 04

The Shipbuilding Market in 2004 15

 Western Europe Shipyards Orderbook & Market Share (15 countries)
million gt percentage
10 20

Orderbook Source: Lloyd’s Register - BRS

18
Market share

8 16

14

6 12

10

4 8

2 4

0 0
end 1995

end 1996

end 1997

end 1998

end 1999

end 2000

end 2001

end 2002

Mar 2003

June 2003

Sep 2003

Dec 2003

Mar 2004

June 2004

Sep 2004

Dec 2004
and destabilise the industry in the coming years. In Europe
a short while, Chinese shipyards will be in direct
The search for construction sites with early delivery
competition with Japanese and Korean shipbuilders
dates has also brought owners towards European ship-
for the same types of ships (VLCC, LNG, very large
yards.
containerships).
The European shipyards have benefited from the
Taiwan overflow of a saturated Asia. They have been able
The orderbook of Taiwanese builders went from 1.9 to offer earlier deliveries: 2006 as against 2007 or
to 3.2 million gt between year-end 2003 and year- 2008, for which owners have been prepared to pay
end 2004. Taiwan thus occupies the 5th place in a premium. The mainstream of business for Asian
the world ranking. shipyards being standard ships, the recovery of
demand for specialised tonnage has certainly hel-
The state shipyard CSBC gave priority to domestic ped the European yards to regain some ground.
owners such as Yang Ming, Wan Hai and China
Steel Corporation. Their orderbook extends until It is worth stressing that the West European order-
end 2008 and comprises essentially containerships: book has progressed this year for the first time for
with a capacity of 1,800 teu in Keelung and of ages. They have moves up from 5.9 to 8.4 million
4,250, 5,250 and 6,000 teu in Kaohsiung, as well gt between end 2003 and end 2004.
as a few Capesize bulk carriers of 200,000 tons. It is of course a pleasure to see this recovery of busi-
ness. But the basic handicaps of West European ship-
Other countries in the Indo-Asian zone
yards in comparison with their Asian competitors still
The search for newbuilding sites has pushed owners remain: dispersed production, poor investment,
to less traditional destinations. ageing installations and workforce, unfavourable tax
regimes, high social security costs, too much bureau-
Ha Long and Nam Trieu shipyards of the Vinashin
cracy and too few effective working hours.
group in Vietnam signed up with Craig from the
UK, for an important series of Handymax dry bulk The drop of the dollar against the euro and the
carriers of 53,000 dwt. Danish owner Clipper pla- impending termination of subsidies of up to 6 % on
ced an order for several Handysize bulk carriers of March 31st 2005 will not help the European shi-
30,000 dwt with Cochin shipyard in India. pyards’ task.
Iranian shipyards have signed some noteworthy It is a pity to see that there is not a more efficient
orders with domestic accounts and are now looking European industrial policy. Too much public money is
for some international clients. Dubai Drydocks has spent to reduce workforce, to put employees on
booked its first order for bunkers vessels of early retirement or to close yards. It should be pos-
6,500 dwt. Others should follow. sible to conceive of a more proactive and wilful policy

16 Shipping and Shipbuilding Markets 2005

 Eastern Europe Shipyards Orderbook & Market Share
million gt percentage
8 14

Orderbook Source: Lloyd’s Register - BRS

Market share 12

6
10

4
2

0 0
end 1995

end 1996

end 1997

end 1998

end 1999

end 2000

end 2001

end 2002

Mar 2003

June 2003

Sep 2003

Dec 2003

Mar 2004

June 2004

Sep 2004

Dec 2004
aimed at using the inherent social funds to help the with a diesel-gas-electric propulsion, the power
industry to adapt, develop and prepare for the future being provided by gas engines. It is also the method
rather than liquidate the past. Japan has demonstra- of propulsion that AP Moller has adopted this year
ted that this option was not totally illusory. with its orders at the Korean shipyard Samsung.

France Chantiers de l’Atlantique have taken advantage of

the revival in the cruise market and signed up two
The orderbook of French shipbuilders has gone new ships of 90,000 gt and 3,000 passengers with
from 380,000 gt at year-end 2003 to 450,000 gt Mediterranean Shipping Cruises who, on their side,
year-end 2004. have taken delivery of the ‘MSC Opera’, a passen-
Gaz de France decided to entrust the building of ger liner of 59,058 gt, with 795 cabins.
another LNG carrier of 153,000 cbm to Chantiers de But Chantiers de l’Atlantique, faced with a decli-
l’Atlantique, which took their total backlog of such ning demand for cruiseships compared to the glory
ships to three. As with the two preceding ships, years of the late 1990s, need to adjust their buil-
signed in 2002 and 2003, this one will be equipped ding capacity, which should be reduced from 5.5 to

Breuil
600 dwt, self-propelled barge,
delivered in 2004 by De Hoop,
operated by Socatra,
dedicated to the carriage
of blocks of the A380 airplane
on the Gironde estuary

The Shipbuilding Market in 2004 17


“Catamaran rapide” 2.5 equivalent cruiseships. This reduction in capa-
Artist impression city should be accompanied by a reduction in the
of a 450 seats fast catamaran
ordered by Conseil Général workforce, a drive for further economies of scale
de la Vendée at the Norwegian with a more important reliance being placed on
shipyard Fjellstrand sub-contracting and Asian supplies.
for a service between
Fromentine and Ile d'Yeu The Piriou shipyards delivered two fishing vessels, a
tug boat and a PSV. They are building 5 trawlers,
3 tuna purse seiners -one of which is 83 m in length-
and 2 fast intervention aluminium crewboats.
In 2004, Constructions Méchaniques de Normandie
(CMN) have delivered a patrol boat to the French
Maritime Administration and have under construction
a corvette for the Emirates Navy within a programme
of six boats for the same client, and two motor yachts
of respectively 58 and 42,6 m in length.
Germany
There are some twenty shipyards in Germany of
which about fifteen build almost exclusively contai-
nerships between 800 and 4,000 teu. Meyer Werft,
reputed for its cruiseships, has even filled up its
orderbook with a series of four containerships of
1,500 teu. Amongst the major shipyards, only
Flensburger and Lindenau are specialising in other
types of ships such as Ro-ros and Ro-paxes on one
hand, product tankers on the other.
German builders have naturally benefited from the
enormous demand in the containership sector and,
above all, from the sustained interest for feeders, a
size which the three large South-Korean yards have
abandoned. They have also been able to offer
prompt delivery dates which are particularly sought
after by German investors (KG) whose proximity
helps business relationships.
The orderbook of German shipbuilders has gone
from 2.3 to 3.1 million gt between year-end 2003
and year-end 2004. Germany occupies the 2nd
position in Europe behind Poland and is ranked 6th
in the world.
18 Shipping and Shipbuilding Markets 2005
Italy
There are some fifteen shipyards or building sites in
Italy. Cruiseships, Ferries, Ro-ros and Car-carriers
form the core of Italian production (Fincantieri,
Visentini). But there are also some very good specia-
list shipyards such as De Poli or Di Pesaro for chemical
carriers, gas carriers and small bunker tankers.
Italian shipyards have been particularly successful in
obtaining over half of the new orders for Ro-ros,
Ro-paxes and Ferries. Fincantieri, for its part, suc-
ceeded in capturing 6 out of the 13 cruiseships
ordered in 2004 and has confirmed its place as the
European leader in the cruise sector.
The orderbook of Italian shipbuilders has gone from
1.25 to 1.8 million gt between year-end 2003 and
year-end 2004. Italy holds the 4th position in
Europe and the 8th position in the world shipbuil-
ding ranking.
Spain
There are still some twenty shipyards or sites in
Spain, but the question that has to be asked is for
how much longer?
Spanish shipbuilding is in a crisis and is going
through a drastic change, somewhat in the same
mould as in other European countries during the
1980s and 1990s.
European authorities have told Spanish authorities
to put an end to certain practices which they consi-
der to be contrary to EU regulations. In particular,
they have asked Izar to reimburse subsidies received
in 1999 and 2000. Under these circumstances, Izar,
who did not have any new order in 2003, has not
been authorised to take on any new business in
2004. The separation between military and com-
mercial sites should be done and be followed with
the privatisation of the latter.
The Spanish shipyards’ situation remains fragile on
the overall. It is a shame that Spain has not been
able to benefit from the revival in the newbuilding
market. However, this allow them to propose very
prompt delivery dates and would put them in a
position to take advantage from the healthy sales
prices in 2005.
The Spanish shipbuilding orderbook has gone from
500,000 to 135,000 gt between end 2003 and end
2004. It is one of the few countries in the world
with a shipbuilding tradition that has seen its port-
folio decline this year.
Finland
There are three construction sites in Finland, which
however work under the single banner of the Aker
Yards group. In September, the Aker group announ-
ced the merger between Kvaerner Masa and Aker
Finnyards, under the combined name of Aker Fin-
nyards Inc. This new entity will employ 4,500
people of which 1,000 on the Rauma site, 2,000 in
Turku and 1,250 in Helsinki.
Cruiseships, Ferries, and Ro-ros are the mainstay of
the Finnish production. The recovery in these sec-
tors has helped them and their orderbook has
moved from 400,000 to 550,000 gt between year-
end 2003 and year-end 2004.
The Turku site (ex Kvaerner-Masa) picked up in
2004 the order for a second ‘Ultra Voyager-type’
cruiseship, 160,000 gt and 3,600 passengers, for
RCCL. The Helsinki shipyard (ex Aker-Finnyards) was
awarded the order for an ice-breaking container-
ship for Russian account and has signed a letter of
intent to build a cruiseship for NCL. Finally the
Rauma site obtained the order for three carriers
specialised in the transport of forest products and a
2,800 passenger ferry.
Finnish shipyards have an uncontested know-how
in building ships for navigating in polar latitudes,
and should therefore benefit from the growth in
this traffic with the Russians.
Denmark
The last major Danish shipyard Odense Lindo keeps
on building series of over-Panamax containerships
for the account of its main shareholder, the AP Mol-
ler group, which has become the only client of this
yard. In the current context, to be the owner of a
shipyard when you are also ship owner is a clear
advantage.
Netherlands
There are still some fifteen Dutch shipyards, whose
production is mainly concentrated on building gene-
ral cargo ships, multi-purposes, small containerships,
small product tankers and offshore supply vessels.
The Dutch shipyards’ orderbook has gone from
280,000 to 490,000 gt between year-end 2003
and year-end 2004.
After a difficult year 2003, which saw the closure of
a number of sites, Dutch shipyard workers held
massive protest meetings at the beginning of 2004
to attract the attention of the authorities. The
government, in turn, conceded a form of tempo-
rary defence mechanism, while they also benefited
from the market upturn.
The Dutch shipyards operate largely by sub-contrac-
ting hulls to Romania, Ukraine, Poland and Turkey,
without which they could not be competitive today
with small yards in China, Korea, Turkey, Romania,
or Poland. Some shipyards even succeed in having
a full orderbook without doing any construction in
their own sites in the Netherlands, this of course,
creating other problems.
Norway
Norway has some fifteen shipyards. Their produc-
tion is largely concentrated on offshore units such
as PSV or AHTS. There was also the rare order at the
end of the year for an orange juice carrier of
40,000 dwt at Kleven Werft.
Norwegian shipyards also sub-contract a lot of hulls
in Eastern Europe and have succeeded in 2004 to
renew fruitful relationships with some Russian shi-
pyards. Thus, Fosen has become associated with
Baltiyskiy Zavod for building Ro-ros for the account
of Stena, while Kleven Maritime has joined up with
Sevmash for a series of coated chemical carriers for
the account of Odfjell.
Wisby Verity
7,600 dwt delivered in July
2004 by Ferus Smit, owned
by Wisby Tankers of Sweden
and on long term charter
to Preem Petroleum.
The Shipbuilding Market in 2004 19
 Portugal
The last large Portuguese shipyard, Viana do Cas-
telo, is currently building a product tanker of
19,000 dwt for the account of the French owner
Fouquet-Sacop and another of 14,000 dwt for the
Finnish owner Fortum, as well as two coastal pas-
senger vessels for a domestic account. They also
have an agreement to build a significant series of
vessels for the Portuguese Navy.
Poland
Poland has four main shipyards whose production
is largely geared to build containerships, open-
hatch bulk carriers, car-carriers and Ro-ros.
The orderbook of Polish yards has gone from 2.5 to
3.3 million gt between year-end 2003 and year-end
2004. Poland keeps its 1st place within Europe and
the 4th place in the world ranking.
Poland, now part of the European Union, has to
progressively abide by its regulations. In particular,
the shipyards in Gdynia and Gdansk, which have
benefited from state funding, will see their capacity
being limited to 390,000 cgt over the next ten years.
Polish yards, which have experienced serious finan-
cial difficulties, have given priority to their traditio-
nal clients and to build series of existing, proven
designs thus reducing their risks.
Croatia
There are five shipyards in Croatia whose orderbook
has gone from 1.5 to 2.7 million gt between year-
end 2003 and year-end 2004. Croatia occupies the
3rd place in Europe and the 7th place in the world.
Croatian yards have largely benefited from the
demand of product tankers and of car-carriers. The
orderbook of Treci-Maj and Uljanik are full until
mid-2008, Trogir and Split are full until early 2009.
Romania
Romania has six shipyards. The revival of Romanian
shipbuilding which was already firmly in place has
been consolidated by the strong demand throu-
ghout the year 2004, both for complete vessels as
well as sub-contracted hulls from West European
shipyards.
The orderbook of Romania yards has gone from
230,000 to 550,000 gt between year-end 2003
and year-end 2004.
Romanian production is diversified and consists of
offshore units (PSV), product tankers, Panamax tan-
kers, and containerships. German owner Gebab has
ordered six containerships of 4,800 teu at Daewoo
Mangalia.
This excellent performance is largely due to the stra-
tegic investments made by three foreign groups:
20 Shipping and Shipbuilding Markets 2005
Aker, Daewoo, and Damen. These Norwegian,
Korean, and Dutch companies have supplied their
own know-how and the benefit of their reputation
to the respective shipyards: Aker Tulcea, Aker Braila,
Daewoo Mangalia and Damen Galatz.
Russia
There are ten shipyards in Russia, whose orderbook
has doubled from 350,000 to 615,000 gt between
year-end 2003 and year-end 2004.
They have been able to benefit from considerable
domestic orders. Baltiyskiy Zavod has thus been
given the order for a tanker of 75,000 dwt for Ros-
neft. The foreseeable increase in oil exports from
this country and the need for ice-class ships capable
of navigating in polar latitudes should probably help
feed Russian shipyards with new orders.
Russian shipbuilding has also been able to take
advantage of the world demand and the pro-
grammes of cost-cutting by European yards in the
form of sub-contracting. Baltiyskiy Zavod is going to
build in co-operation with Fosen shipyard two Ro-
paxes for the account of the owner Stena. Sevmash
in conjunction with Kleven Maritime will build a
series of eight chemical carriers of 40,000 dwt for
the account of Odfjell.
Turkey
Apart from a few sites, Turkish shipbuilders are
mainly located in the bay of Tuzla, located some
thirty kilometres from the heart of Istanbul, in Ana-
tolia. There are about 35 shipyards next to each
other in a semi-circle with a radius of about
1,000 m. Currently it is brimming with activity.
Most of the ships under construction are less than
10,000 dwt. Between 2003 and 2004, the five big-
gest builders in the bay took on orders for ships bet-
ween 15,000 and 20,000 dwt. One of them, Celik
Tekne, is even building a sophisticated product-che-
mical tanker of 25,000 dwt for delivery in 2005.
These shipyards display a remarkable dynamism and
special ingenuity. They seek to increase their buil-
ding capacity by constructing new berths, new lif-
ting procedures, new workshops and study nume-
rous expansion projects.
Current production is mainly concentrated on
product tankers and chemical carriers (including
some stainless steel units), but there are also
cement carriers and containerships in the order-
book. A number of hulls bought in Romania or in
Bulgaria have been towed there in order to be fit-
ted out and finished.
Most of the Turkish shipyards’ clients are West Euro-
pean owners, but also West European shipyards
who sub-contract hulls. Some Turkish owners have
contributed in the form of orders for which they
basically act as shipbuilders: they build their own
ships using the yards’ facilities but supplying the
design, steel and equipment.
The orderbook of Turkish yards has gone from
250,000 to 365,000 gt between end-2003 and
end-2004
United States
The American shipbuilding industry is concentrated
on its national market. Despite a strong rise in
construction costs and a search for new capacities,
American shipyards remain too expensive and have
not been able to take advantage of the current
situation. As an example, Kvaerner Philadelphia
(Aker Yards) have only sold four containerships of
2,600 teu since 2002, at a unit price of roughly
$ 70 million, namely more than double the price
inked with Asian yards.
Avondale and National Steel (NASSCO) are the two
large commercial American shipyards where tankers
of 140,000 and 185,000 dwt are under construc-
tion. They belong to American shipping defence
companies, respectively Grumman and General
Dynamics, but have not registered any new mer-
chant ship orders this year.
New orders for merchant ships are scarce, except
for the offshore industry. Besides, a part of the
homeland security budget is dedicated to the buil-
ding of a number of ships for the account of the
U.S. Coast Guard, which should keep the civil shi-
pyards busy for several years.
Prospects
2004 has been an exceptional year on many
aspects. An unequalled growth, unprecedented
freight rates, unsurpassed second-hand ships’
values, a record world orderbook and raw materials
(oil, coal, steel) at historical highs.
Will the orders intake remain as high as over the
past two years? Will the price of ships continue to
climb? Are the markets able to absorb the capacity
of such an orderbook?
Numerous factors suggest a continuation of this
trend due to the enormous requirements of China,
to which can be added those of India and other
emerging countries. Some believe that the strength
of the freight market could last through 2005 or
even beyond into 2006. Others claim that the
engine of the Chinese economy will keep on run-
ning at full speed until the Olympics Games of
2008, or even the Universal Exhibition in Shanghai
of 2010. Finally, the most optimistic seems to
detect economic miracle signs in China of an iden-
tical cycle to that of the post World War II in the
Western world.
Whereas more than 110 million dwt of ships were
ordered in 2003 and builders’ portfolios were
already spread out for over three years, the conti-
nuation of this trend in 2004 was surprising.
With an economic development and a world trade
superseding the most optimistic forecasts, and as
a corollary an unprecedented rise of freight rates
and the improvement of owners’ financial stan-
Huntestern
37,179 dwt, built in
2004 by Jinling, owned
by Rigel Schiffahrts
The Shipbuilding Market in 2004 21
 World Orderbook vs Newbuilding Prices since 1991
m.gt/m.$
180
160
140
120
100
80
60
40
20
0
1991
1992
1993
1994
1995
1996
1997
ding, these are the underlining explanations for the
volumes ordered.
First, shipyards became euphoric with their commer-
cial success, but they progressively realised that the
increases in newbuilding prices obtained in 2003
were hardly sufficient to cover the rise in their own
costs. They discovered, with dismay, that they had
taken enormous risks and that in fulfilling existing
contracts they could jeopardise their financial results.
Builders could well exercise additional caution in
2005 by not agreeing to take on any new orders
except at substantially higher prices, especially as
they have time on their side. This could cause
owners to slow down as well, as they have taken on
commitments over the next three years themselves
(165 million gt on order).
Shipbuilding prices in 2004 reached new levels,
equalling and in some cases surpassing the records
obtained at the beginning of the 1990s (in actual
values). Owners can reasonably ask themselves, in
such heady time, if they might not soon encounter
a decline.
However, one should keep in mind that $ 100 mil-
lion in 2005 is worth considerably less than the
same $ 100 million in 1991 (in current values) and
meanwhile the price of steel has risen.
The analysis of the cycle that shipbuilding expe-
rienced in the 1980s is instructive. In 1985, a
VLCC of 250,000 dwt would have been contrac-
ted for around $ 35 million at the Asian shipyards.
The upward cycle then followed a six year trajec-
tory, into the beginning of the 1990s, to the point
22 Shipping and Shipbuilding Markets 2005
VLCC newbuilding price (m.$)
Capesize newbuilding (m.$)
World orderbook (m.gt)
1998
1999
2000
2001
2002
2003
2004
where the same single-hulled VLCC would have
cost around $ 90 million. At the same time, the
price of a 300,000 dwt double-hull VLCC reached
the $ 110 million region.
If we expect the current upward cycle to last as
long as the previous one, there is no doubt that
newbuilding prices still have some margin to go
up. Much will depend on the further development
and stability of the dollar exchange rate, which
remains a serious issue. We can also draw some
comfort in the extrapolation of most economists,
whose sentiments are that the dollar is not about
to appreciate substantially against the currencies of
the main shipbuilders.
Of course we would like to be able to predict new-
building prices evolution and we would like to
know if an eventual drop could send us again
towards the very low levels seen in mid 2002.
Given the size of shipyards’ orderbooks, the pres-
sure placed on an already strained raw materials
markets and world growth forecasts, it seems pro-
bable that newbuilding prices will continue to
climb during 2005 and 2006 as long as steel prices
do not drop.
There is nevertheless reasons to be careful about
the enormous building capacity that China will put
on the market as from 2008 / 2009. This, coupled
with the steady productivity improvement achie-
ved by the Chinese shipbuilding industry, may start
to break this delicate balance. The outcome will
then depend to a large degree on the capacity of
resistance offered by the Japanese and South-
Korean shipbuilders. ■
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has been successfully renewed in 2003
under the new ISO 9001:2000 rules.

[ This renewal reflects BRS constant

commitment to improve its services to
clients since it was founded in 1856.

23
 BRS Research and
Information Department

The Research and Information Department maintains

a large data basis and information library which covers all
sectors of activities handled by BRS, and is available for
consultation or advice of clients.

This Department handles the information reports, analyses,

studies and statistics covered on the company’s internet site.
It works in co-operation with the brokers in each departments
to meet the needs of clients.

The Research and Information Department also offers its

know-how and the companies’ international network and
expertise available to the shipping world to assist and answer
any queries.

You can reach this service directly

at the following address:

research@brs-paris.com

Or through your broker.

24 Shipping and Shipbuilding Markets 2004

2005
 THE
CRUISE INMARKET
2004
I f we were able to hand out “Oscars” in the cruise
market, we would indisputably have two big win-
ners this year: the Carnival Cruise Line group, on
one hand, and Fincantieri shipyards, on the other,
both having developed a fruitful co-operation.
The Carnival group closed its annual results with a
profit of nearly $ 2 billion for a turnover of roughly
$ 10 billion, namely a net margin of 20 %. This
result confirms both the success of the merger
between the P&O / Princess group and the Carni-
val group, as well as the growth of the cruise mar-
ket in the US and Europe in 2004.
Fincantieri ended the year with an orderbook of
ten cruise ships, all for the Carnival group, repre-
senting 60 % of the world orderbook and slightly
over $ 5 billion in value, guaranteeing full employ-
ment for their three cruiseship construction sites
until 2008.
The enthusiasm which these magnificent results
inspire should however be tempered in a global
outlook of the market. The cruise industry has just
experienced three difficult years since the attack of
September 11th, 2001 and began the year 2004
with a new challenge, that of absorbing ten ships
representing about 23,500 lower-berths, or 10 %
of the current capacity. Once again, demand was
able to match this new supply thanks to the
increase in the number of cruise passengers which
should surpass the 13 million mark in 2004.
At the beginning of 2004, there were only three
ships to be delivered in 2005 and four in 2006.
However, despite the continuing decline of the
dollar lifting the cost of construction in Europe,
owners could not resist the temptation to consoli-
date their commercial position by ordering new
ships, in this booming market.
Once again, the signal was given by Carnival who as
early as January ordered a ship, the ‘Costa Concor-
dia’, 112,000 gt, 1,900 cabins, for delivery in the
summer of 2006, at € 450 million, for its subsidiary
Costa. In October, two ships of 68,000 gt, 1,000
cabins, were ordered by another Carnival affiliate,
Aida, with Meyer Werft, for delivery in April 2007
The Cruise Market in 2004 25
 Cruiseships delivered in 2004 and scheduled firm to 2009
Lower berths
30,000
25,000
10 ships
20,000
6 ships
15,000
4 ships
10,000
5,000
0
delivered in 2004 2005 2006
and April 2008, for a unit cost of € 315 million. But
above all, the biggest order ever placed was made
with Fincantieri for a total figure of $ 2.6 billion for
four ships to be delivered in 2007-2008 and the
extension of the future ‘Queen Victoria’ by 11 meters
for Cunard, for a complementary cost of $ 95 mil-
lion. The four ships are broken down as follows:
◆ one for Carnival, 110,000 gt, at a price of $ 500
million,
◆ one for Princess Cruises, 107,000 gt, at a price
of $ 525 million,
◆ two similar ships for Europe, priced respectively
at € 475 and € 490 million, with the Carnival
group keeping the option to dedicate these two
ships to either of its brands during the year 2005.
This order is exceptional in both its size and the
fact that Fincantieri agreed to deal both in dollar
and in euro, with client and supplier sharing the
currency risk.
At the end of the year, Carnival thus has 12 ships
on order and in January 2005, this owner will add
a sistership of the ‘Concordia’ for its subsidiary
Costa, for delivery in 2007 at a price of € 475
million.
RCCL declared in September its option with Kvaer-
ner Masa Yard, which has become Aker Finnyards,
for a second ‘Ultra Voyager’ of 163,000 gt, 3,600
passengers, at a price of € 580 million. RCCL
continues to invest in these mega-ships with suc-
cess, but it is likely that Carnival will start to com-
pete in this market of very large carriers, since its
26 Shipping and Shipbuilding Markets 2005
Lloyd Werft
Meyer Werft
Aker Yards
9 ships Mitsubishi H.I.
Fincantieri
Ch. de l'Atlantique
2 ships
1 ship
2007 2008 2009
‘Pinnacle’ project of 180,000 gt is already on the
drawing boards.
RCCL has also opted this year for the extension of
the ship ‘Enchantment of the Seas’ which should
see its capacity increased by 150 cabins for a cost
in the region of $ 55 million. The new section will
be built at Aker Yards and installed in the Nether-
lands during the second quarter of 2005.
Norwegian Cruise Line (NCL) began the year
with some concerns due to the financial losses of
its mother company in Asia and the accident of
the ‘Pride of America’ under construction at
Lloyd Werft. Finally, the group has successfully
put in place a financial restructuring, which
allows it to raise $ 1 billion and to order two
ships in December:
◆ one of 92,000 gt, 1,200 cabins, for delivery in
February 2007 with Meyer Werft, at a price of
€ 370 million,
◆ the other of 89,000 gt, 1,000 cabins, with Aker
Finnyards, for delivery in the spring of 2007, with
an option for another unit to be lifted in August
2005 for delivery in the spring of 2008, at a price
of € 385 million per unit.
An agreement was finally signed with Lloyd Werft
to take delivery of the ‘Pride of America’ in June
2005, whilst the ‘Norway’ has definitively been
stopped, awaiting a sale.
NCL, under the NCL America banner, continues to
develop its cruise business in Hawaii under the
American flag, despite some teething problems
linked to restrictions with the American flag. Four
ships are still programmed for this market over the
next three years.
In Europe, the year began sadly with the demise of
Festival who should have celebrated ten years of
existence in 2004, but which allowed MSC to
expand its development policy by taking over the
‘European Vision’ and ‘European Stars’ at a price
of some € 215 million per unit.
Mediterranean Shipping Cruises (MSC) has
become a main competitor to Costa in Europe and
also plans to consolidate its position as European
cruise operator in the American market. Comfor-
ted by being the second largest owner of contai-
nerships in the world, MSC does not hide their
plans to become a prime player in the European
cruise scene. In September MSC completed six
months of negotiations with Chantiers de l’Atlan-
tique for the order of two 3,000 passenger ships,
for delivery in the summer of 2006 and in the
spring of 2007, at a price of € 400 million each,
with an option for an additional ship.
The European market should increase from 3.1
million lower-berths in 2004 to 3.7 million in 2007,
profiting from a potential steady growth and
should continue to absorb a quarter of the world
fleet. It is true that if we apply the American model
to Europe, there could be ten million cruise pas-
sengers in ten years time.
Finally 12 ships were ordered in 2004, represen-
ting 33,000 lower-berths, plus an additional three
on option.
The orderbook at the end of the year thus com-
prises 21 ships firmly booked, for a total of 56,000
lower-berths, or an average capacity per ship of
2,650 passengers, of which nine ships are of post-
panamax size.
Ten new ships representing 23,500 lower-berths
were delivered during the year, of which seven
went to the Carnival group. These deliveries were
broken down as follows:
For Carnival Cruise Line:
◆ ‘Carnival Miracle’, 85,700 gt, 2,124 lower-
berths, 1,057 cabins, delivery February 2004, built
by Aker Finnyards,
◆ ‘Carnival Valor’, 109,500 gt, 2,974 lower-
berths, 1,438 cabins, delivery November 2004,
built by Fincantieri.
For Princess Cruises:
◆ ‘Caribbean Princess’, 112,894 gt, 2,998 lower- Carnival Miracle
85,700 gt, delivered in 2004
berths, 1,557 cabins, delivery March 2004 built by by Aker Yards, operated
Fincantieri, by Carnival Cruise Line
The Cruise Market in 2004 27

Diamond Princess
115,875 gt, delivered in 2004
by Mitsubishi H.I., operated
by Princess Cruises
28 Shipping and Shipbuilding Markets 2005
◆ ‘Diamond Princess’, 115,875 gt, 2,674 lower-
berths, 1,337 cabins, delivery March 2004,
◆ ‘Sapphire Princess’, 115,875 gt, 2,674 lower-
berths, 1,337 cabins, delivery May 2004 built by
Mitsubishi.
For Costa:
◆ ‘Costa Magica’, 102,200 gt, 2,702 lower-
berths, 1,358 cabins, delivery November 2004
built by Fincantieri.
For Holland America Line:
◆ ‘Westerdam’, 81,769 gt, 1,848 lower-berths,
924 cabins, delivery April 2004 built by Fincantieri.
For Royal Caribbean Cruise Line:
◆ ‘Jewel of the Seas’, 90,090 gt, 2,100 lower-
berths, 1,055 cabins, delivery April 2004 built by
Meyer Werft.
For Mediterranean Shipping Cruises:
◆ ‘MSC Opera’, 59,058 gt, 1,526 lower-berths,
795 cabins, delivery in June 2004 built by Chan-
tiers de l’Atlantique.
For Birka Line:
◆ ‘Birka Paradise’, 33,000 gt, 1,800 lower-berths,
728 cabins, delivery November 2004 built by Aker
Finnyards.
The revival of the cruise market during the year
gave life to the second-hand market which was
enlivened by the auction sales of vessels owned by
companies in financial difficulties (notably ROC
and Festival), as well as the sale of ships from the
group My Travel (Sun Cruises) who decided to
shutdown their activity as shipowners.
These sales allowed one to gauge the relatively
firm prices which were established, partly due to
the rise in the cost of construction and to some
extent due to the weakness of the dollar.
Amongst the more notable sales were:
◆ ‘Carousel’, 23,000 gt, 1,000 lower-berths, built
1971, ‘Seawing’, 16,700 gt, 754 lower-berths,
built 1971 and ‘Sunbird’ 37,773 gt, 1 414 lower-
berths, 633 cabins, built in 1982 (chartered by
Thomson) to the owner Louis Cruises, at respecti-
vely $ 14, $ 9 and $ 71 million, whereas the ‘Sun
Dream’ 23,000 gt, 1,000 lower-berths, built 1970
was sold to Caspi Shipping.
◆ ‘European Vision’ renamed ‘MSC Harmonica’,
and ‘European Stars’ renamed ‘MSC Sinfonia’,
58,000 gt, 1,506 lower-berths, 783 cabins, built in
2001 and 2002, bought by Mediterranean Ship-
ping Cruises at the cost of € 215 million each.
◆ ‘Mistral’, 47,276 gt, 1,196 lower-berths, 598
cabins, built in 1999, sold to a Spanish tour opera-
tor Viajes Iberojet for a price of about € 130 million.
◆ Iberojet also bought the ‘Superstar Capricorn’,
23,400 gt, 755 lower-berths, built in 1972, rena-
med ‘Grand Latino’ at a price of $ 20 million.
◆ ‘Superstar Aries’, 37,000 gt, 611 lower-berths,
built in 1981, renamed ‘Holiday Dream’ was sold
to Pullmantur for a price of $ 44 million.
◆ ‘Bolero’, 15,800 gt, 761 lower-berths, built in
1968, renamed ‘Orient Queen’ was sold to Leba-
nese buyers at the price of $ 9.5 million, whilst the
‘Azur’, 9,200 gt, 694 lower-berths, built in 1971
was sold to the Israeli owner Mano Maritime
(renamed ‘Royal Iris’) at a price around $ 10 mil-
lion, and the ‘Flamenco’ bought by Ravenscroft for
$ 12.25 million at auction, has been charted by
Travelplan in Spain.
◆ The German financial organisation KfW, credi-
tor of Royal Olympic Cruise, who had bought the
‘Olympia Explorer’ and the ‘Olympia Voyager’,
built in 2000 and 2002, 24,500 gt, 840 lower-
berths, 27 knots, for respectively $ 82.7 million
and $ 97.2 million, resold the ‘Olympia Explorer’
for $ 85 million to a maritime university, whilst the
‘Olympia Voyager’ was chartered out for on a long
term period with a purchase option to the Spanish
Iberojet.
◆ ‘Paul Gauguin’ was sold by the financial owner
Centre Solution to the tour operator Grand
Circle/Vantage for a price in the region of $ 40 mil-
lion, but the ship should remain in service in Tahiti
for Radisson for the next two years, 2005 and
2006.
The project easyCruise, which caused a lot of
curiosity from all the professionals in the sector,
should start in the spring of 2005 following the
purchase and the transformation of ‘Renaissance
Two’ bought for $ 7 million and transformed in
Singapore, doubling its capacity to accommodate
180 passengers. This ship, renamed ‘easyCruise 1’
will serve as a test to the promoter, Stelios Haji-

Iouannou, to develop on a much larger scale the
ambitious project of easyCruise, which is planning
to expand the range of products offered in the
cruising industry in trying to capture a much youn-
ger clientele.
◆ The sister ship, ex ‘Renaissance One’ was sold
to Singaporeans at a price of $6 million to operate
casino cruises.
◆ Also to be noted was the purchase of the ‘Dis-
covery’, 20,186 gt, 472 lower-berths, built in 1972
by the tour operator All Leisure Group (Voyages of
Discovery) which chartered the ship for six months
of the year, thus becoming an owner.
These sales show the activity of some tour opera-
tors, especially Spanish, Spain having become the
fourth market in Europe within several years with
300,000 cruise passengers, after the United King-
dom with over 1 million, Germany with near to
600,000 and Italy with more than 350,000 cruise
clients.
We have not seen any new mergers within the
cruise companies this year, the sector being
already concentrated in the hands of a few big
groups, but there was one promising diversifying
operation with the entry of CMA CGM into 70 %
of the capital of the Compagnie des Iles du
Ponant, who exploit three small cruiseships under
French flag, and in the tour operator Tapis Rouge.
Let us hope that this major containership owner
will wish to develop rapidly in this new activity.
Whilst we might have imagined that the sector
would take a pause after the strong growth in the
fleet at the beginning of this decade, it appears
that cruise companies are looking to achieve a
MSC Opéra
59,058 gt, delivered in 2004
by Chantiers de l’Atlantique,
operated by MSC Cruises.
controlled growth of around 5 % per year, which
should result in some ten ships being ordered each
year.
Once again, the question is whether there are too
many shipyards in Europe to serve the needs,
which overall have become relatively moderate,
although owners have no interest in seeing redu-
ced competition amongst shipyards as this has hel-
ped boost their growth.
The decline in the dollar has of course been a
constraint on the ambitions of American compa-
nies, but the growth of the market and a wiser
decision-making process in the annual ordering of
ships should permit, as seen this year, an increase
in cruise prices compensating the rise in construc-
tion costs expressed in dollars, taking into consi-
deration that amortisation of the vessel can be
spread out over a very long period.
The cruise industry, which in twenty years has
become a well-known and appreciated leisure
activity, has no need to be under-priced to survive
and the sector should experience a much more
controlled development than in the past, particu-
larly as only ten ships will be coming out of the
yards over the next two years, four in 2005 and six
in 2006, which should allow a better occupancy
rate and price optimisation given a demand which
is continuously expanding. ■
The Cruise Market in 2004 29
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30 Shipping and Shipbuilding Markets 2005

 THE
TANKER
MARKET
IN
2004

Crude oil transport: a year of records

2003 was marked by a sharp difference

between the high freight rates of the
first and fourth quarters and a fairly significant
drop during the second and third quarters.
If 2004 was also characterised by an endemic vola-
tility of the markets, with signs of relative weak-
ness in the second and third quarters, the short-
lived dips never reached the lowest levels of the
preceding years. However, the record levels of
rates registered throughout the second half, with
the exception of the month of December, will
remain in the annals, even if one should moderate
this excess somewhat with a particularly unfavou-
rable dollar / euro exchange rate.
For more than 20 years and in all categories of
tankers, one has not seen freight at such levels
with daily returns surpassing $ 200,000 per day
for VLCC, flirting with $ 150,000 for the Suezmax
and exceeding the $ 100,000 level for the Afra-
max. At the same time, crude oil prices broke the
historic level of $ 50 per barrel for a brief period.
Such exceptional results, which few could have
predicted with such a sustained strength, require
a detailed analysis permitting on one hand to jus-
tify (or not) these record levels, and on the other
hand, to try to predict in the medium term a fore-
cast for a realistic evolution of our markets.
Objective factors
World oil consumption has been continuously
rising for the past four years. Thus in the fourth
quarter of 2004 world demand reached 82.5 mil-
lion barrels / day, its highest level for over 10 years.
Forecasts by the International Energy Agency pre-
dict a new probable increase in demand for 2005
of 700,000 barrels/day. OPEC production on its
own is nearly 30 million barrels/day, its highest
level since 1990.
Some countries have registered record increases in
their demand. Compared to 2003, China saw an
increase of over 20 % of its imports (rising from 90
to nearly 120 million tons), with Brazil nearly 15 %

The Tanker Market in 2004 31

 and India 11 %. By comparison, Europe saw its
needs increase by 6 % and the U.S. by over 3 %.
In the case of China and India, who played a minor
role in world oil traffic only a few years ago, it is
expected to see the rhythm of growth being main-
tained, which, given the size of these countries,
will give them a preponderant position in shipping
terms in the coming years.
The other objective factor explaining the steady
rise of freight rates during the past two years, has
been the selective quality of chartered tonnage. It
has become more and more rigorous and the pro-
gressive elimination of single-hulled tankers is now
a fairly standard generalisation. Parallel to this and,
as we shall see later, the situation of the shipyards
up until 2008 and the constantly rising price of
newbuildings, justifies the attitude of owners and
explains their optimism for at least two to three
years to come.
Subjective factors
Despite the various objective elements which have
just been cited, this certainly does not justify the
extent of the freight increases which we have wit-
nessed during the second half of 2004.
Some purely psychological factors, even specula-
tive, can only explain the mad rising spiral which
we have seen.
A fear of insufficient raw material helped foster
the speculative increase in oil prices, and this psy-
chosis pushed the level above $ 50 per barrel.
Some even forecast a price of over $ 60 per barrel
in the coming months.
While it is true that there is a problem of availabi-
lity of sweet crude in the longer term, world pro-
ven reserves remain healthy and do not in any way
justify the pronounced fears.
To illustrate this, the announced drop in American
stocks, which largely contributed to the rise in
crude prices, was only a very short term pheno-
menon. After the announcement at the beginning
of December of much less alarming figures, oil
prices rapidly plunged and went below $ 40 per
barrel in less than a week. However OPEC’s deci-
sion to reduce its production quota by 1 million
barrels/day, has meant that at the end of Decem-
ber crude prices were up around $ 45 per barrel.
If numerous psychological factors have had a signi-
ficant impact in these last months, one in particu-
lar seems important to us: the increasingly impor-
tant part played in the market by “derivatives”, in
connection with both the oil and shipping mar-
kets. Particularly speculative, this market has cer-
tainly had an unforeseen effect not only on crude
prices but also on freight levels.
After this general introduction, we shall try, as we
do each year, to analyse each sector by type of
tanker to enable us then to give a realistic synop-
sis of the past year and try to draw some conclu-
sions and predictions for the short and medium
terms.
VLCC
This sector of the fleet undeniably remains the dri-
ving force today in the freight market. If we revert

VLCC tanker freight rates

Average earnings
$/day
240,000

220,000 250,000 t MEG/Japan - TCE

275,000 t MEG/Continent - TCE

200,000
260,000 t Forcados/Loop - TCE

180,000

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0
Jan 02

Mar 02

June 02

Sep 02

Dec 02

Feb 03

May 03

Aug 03

Nov 03

Jan 04

April 04

July 04

Oct 04

Dec 04

32 Shipping and Shipbuilding Markets 2005


to the forecasts for growth and production over
the coming years, we note the following main ele-
ments: in 2010 the share of production from the
Arab-Persian Gulf will be about 42 million barrels
per day or 47 % of the estimated world produc-
tion of around 89.3 million barrels per day. In 2020
the world production will be 107.3 million barrels
per day and it is estimated that the Gulf countries
will contribute around 58 million barrels per day. It
is calculated that such a figure will require the pre-
sence of 27 VLCC per day to cover these exports,
equal to an increase in the fleet of nearly 170 units
in the next 16 years…
Even if these figures should be taken with some
caution, it is nonetheless indisputable that the pre-
dominance of this geographical zone and this size
of ship is here to stay.
As tangible proof : there was a monthly average of
91 ships fixed out of the Gulf in 2002, this figure
rose to nearly 120 in 2004 (+30 %). At the same
time the fleet only increased by 5 %. This simple
statistic explains already the strong surge in the
freight rates.
As we have already stated, the increasingly pre-
ponderant share of exports to China and India
plays an essential role in the evolution of these
rates. One has seen in the last two years that the
ratio East / West of exports has gone from 70 / 30
to about 75 / 25.
Parallel to this, one observes that in this category
of size the proportion of single-hulls is the highest
within crude tankers, namely some 40 % of the
current fleet in service (177 ships). With less than
Minerva Eleonora
104,875 dwt, delivered
in 2004 by Samsung HI,
operated by Minerva tankers.
110 VLCC currently on order and a progressive
and inevitable elimination of older ships, owners
have good reasons to remain optimistic even if a
large part of single-hull ships now in service were
built at the end of the ‘80s or beginning of the
‘90s and still have a number of years’ trading left.
With the main traffic bound to the East and Chi-
nese and Indian owners up till now being the prin-
cipal takers of single-hulls, the analysis of the evo-
lution of freight rates is all the more significant.
On the three main routes in our graph, the ave-
rage returns of a modern VLCC (on the basis of a
simple round-voyage) have not stopped rising,
going from $ 22,550 dollars per day in 2002 to
$ 52,500 in 2003 and over $ 95,000 in 2004.
Over the past 12 months, the minimum return for
a double-hulled VLCC was $ 41,000 per day in
April and the record was achieved in mid-Novem-
ber with $ 228,000 per day.
In such a climate it is clear that the number of tan-
kers being sent for demolition was low. At the same
time few owners of modern ships were willing to fix
their ships on long term charters. However, on the
basis of the few transactions concluded, we can
estimate a time-charter rate for one year at about
$ 80-85,000 per day, and at about $ 57,500 per
day on the basis of a three year charter.
Suezmax
Generally speaking, this category experienced
similar rate variations to those of VLCC, which is
hardly surprising given the direct influence that
one size has on the other.
The Tanker Market in 2004 33
 Suezmax tanker freight rates
Average earnings
$/day
180,000
130,000 t Sidi Kerir/Fos

130,000 t Forcados/Texas City

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0
Jan 02

Feb 02

Mar 02

May 02

June 02

July 02

Sep 02

Oct 02

Dec 02

Jan 03

Feb 03

Avr 03

May 03

June 03

Aug 03

Sep 03

Nov 03

Dec 03

Jan 04

Mar 04

Avr 04

June 04

July 04

Aug 04

Oct 04

Nov 04

Dec 04
As with VLCC, the average daily returns have been tions), units of one million barrels continue to find
constantly rising over the past three years. On the a stable market in this zone.
basis of the two routes West Africa / Gulf of Mexico
While Nigeria remains the main exporting country,
and cross-Mediterranean, these have moved from
there has been significant and confirmed export
$ 20,500 per day in 2002 to $ 42,900 in 2003 and
have slightly surpassed $ 70,000 in 2004. growth from other countries, notably Angola,
where deep-sea drilling is being pursued at a sus-
If the rate movements have often been erratic, the tained rhythm, justifiable in view of the current
returns have never been below $ 20,000 per day level of oil prices.
in 2004, the record being reached in mid-Novem-
ber with over $ 160,000 per day for a cross-Med One has also seen a growing number of fixtures out
movement. of the Arabian-Persian Gulf at record freight rates this
year, following the spectacular highs set by VLCC.
Even though the voyages are short, we can see yet
Thus on some spot business rates have gone up to
again that the driving force is the Mediterranean
over Worldscale (WS) 400 for voyages to China.
market and especially Russian exports out of the
Black Sea. It should also be observed that this new As with other sizes, the elimination of old units
improvement in freight rates has come about des- has been particularly quick since for the fleet in
pite exports of Iraqi crude from Ceyhan being par- service at the end of the year, there are only
ticularly weak and erratic following the successive slightly over 20 % of single-hull ships.
sabotage of the pipeline feeding the terminal.
Furthermore in line with the other categories, few
Exports of Russian crude have not stopped rising owners were inclined to place their modern ships
and the coming into service of the new pipeline out on time charter, but rates can be estimated
between the Caspian Sea and Ceyhan should help between $ 55-60,000 per day on the basis of a
reinforce the role of this zone as a barometer of one year contract.
the Suezmax market.
Record delays of over 20 days during the winter of Aframax
2003 in order to transit the Turkish straits have not This market has been particularly boosted since
been repeated. Thanks to new navigational rules the accidents of the ‘Erika’ and above all the
and milder weather, round trip voyages have scar- ‘Prestige’. Security measures adopted by the main
cely exceeded 10 days. players and the increase in trade movements has
Despite an increasing share of exports being taken allowed owners with renewed fleets to obtain
by VLCC out of West Africa (always with a pro- freight rates which give a rapid payback on their
portion of 70 / 30 between East / West destina- investment.

34 Shipping and Shipbuilding Markets 2005

 Aframax tanker freight rates
Average earnings
$/jour
140,000
80,000 t UK/Continent - TCE

80,000 t East Med/West Med - TCE

120,000

100,000

80,000

60,000

40,000

20,000

0
Jan 02

Feb 02

Mar 02

May 02

June 02

July 02

Sep 02

Oct 02

Dec 02

Jan 03

Feb 03

Apr 03

May 03

June 03

Aug 03

Sep 03

Nov 03

Dec 03

Jan 04

Mar 04

Apr 04

June 04

July 04

Aug 04

Oct 04

Nov 04

Dec 04
As an example and only on the European market, In the North Sea, freight variations and returns clo-
if the average returns were only $ 12,500 per day sely followed the trends in the Mediterranean with
in 1999, they jumped to $ 40,000 in 2000 and an average yearly rate working out at WS 189 on
then dropped to $ 21,500 in 2002, when the the short cross-North Sea voyages. In parallel there
‘Prestige’ accident in November 2002 totally over- was also a strong progression of Russian exports
turned the supply / demand balance. out of the Baltic and Murmansk. For such voyages,
even though ice-classed ships are now more nume-
This European traffic has been in continual growth
rous, rates continued to be extremely high since
since 2002, as between the Mediterranean and
the beginning of the winter season (up to WS 440).
the North Sea, the level has gone from 45 % to
50 % of all spot charters done world-wide. In the Caribbean market, with the rise in American
imports to help reconstitute inventories, we saw
Despite a more marked volatility compared to
an increase in local movements and the average
other sizes, the average daily returns have moved
annual rates were around WS 255 compared to
up from $ 42,500 per day in 2003 to about
WS 207 in 2003.
$ 58,000 per day over the last 12 months.
In such a situation, there were few time charter
Proof of the extreme volatility of this market are
transactions given that the spot market enjoyed a
the large variations in Mediterranean demand
steep rise. Nonetheless, there are a number of
which often put freight rates into a roller-coaster
owners who expect downward pressure in the
movement, difficult to foresee and to control, but
months to come, which would then be a justifica-
with a strong upward pressure. Returns on cross-
tion for some commitments to time charter
Med voyages jumped from about $ 17,000 per day
contracts.
in April up to $ 110,000 per day at end October!
It should be noted that the record levels reached Prospects
at the end of the year were the result of a higher
demand, without any particular influence of delays In face of the particularly erratic fluctuations in
due to bad weather, such as experienced in 2003 rates, any realistic prediction either for the medium
with the transit of the Turkish straits. or long term is a highly precarious exercise. The
slightest event of either macro-economic or geopo-
As to the structure of the fleet, today the propor-
litical nature will continue to have an impact on the
tion of modern double-hulled units is predominant.
freight markets.
The survival of some single-hulled ships is limited
to several Russian traders out of the Black Sea, but Nonetheless, as with our preceding report, we
their days are numbered… consider that owners can reasonably expect to see

The Tanker Market in 2004 35

 Major charterers "eligible" fleet evolution
& prospects to 2007
dwt
140,000,000

Aframax
120,000,000 Suezmax

VLCC

100,000,000

80,000,000

60,000,000

40,000,000

20,000,000

0
end 1998 end 2000 end 2002 end 2004 end 2005 end 2006 end 2007
(under 25 years) (under 15 years) (under 15 years) (double-hull) (double-hull) (double-hull) (double-hull)

freight rates remaining firm over the next two
years. Even if on the economic front, various ana-
lyses suggest that there will be lull in the growth
for a number of importing countries, the energy
needs of China and India alone will continue to
have a determining influence on the world tanker
traffic.
It is however unlikely that we will see in the next
12 to 24 months the exceptional levels of freight
rates experienced this year. We should witness a
steady decline in the average rates and reach a
level probably close to that of 2003, therefore still
considerably in favour of owners.
Tankers on order (number of ships)
Aframax Suezmax
2004 58 29
2005 67 29
2006 62 24
2007 50 29
Total 237 111
The arrival of new units into the fleet is obviously
a cause of concern, with such imposing numbers
as the table above indicates. On the other hand
we can expect that deletions will not be sufficient
to compensate for the number of new units. A
good number of Asian countries continue to use
old single-hull ships and probably do not respect
the letter of the law as laid down by international
organisations.
As we did in our previous report, the study of the
“eligible fleet” adds a clear indication to the fore-
casts, and gives an initial response which coun-
terbalances the pessimism of those who only look
at the massive tonnage arriving on the various
markets.
This time we only compare the global tonnage at
the end of 1998 (corresponding to the main crite-
ria used at this time by the main charterers namely
an age limit of 25 years) with what will be the
figures in the coming years but only taking into
account ships with double-hulls.
One observes that despite a constant increase in ton-
nage in each of the categories, none of the volumes
surpasses the level achieved at the end of 1998.
VLCC
31 The cost of new ships should continue to rise,
35 especially with the continuing increase in the cost
21
of raw materials from which they are built.
40 The organisation between owners leading to the
127 creation of commercial pools should help avoid
sudden drops in the market and allow freight rates
to continue for a prolonged period at levels we
have seen recently.
Finally, the drastic safety measures will continue to
be reinforced and the balance between supply and
demand, which determines the rates, will be more
and more linked to the quality of ships effectively
meeting the requirements imposed by the main
charterers and not just by simple comparing sup-
ply and demand figures. ■

36 Shipping and Shipbuilding Markets 2005

 The crude tanker second-hand market
“Quo non ascendent!”: how far up will it keep going!
T
his motto, which comes from a large French
noble family in the 17th century, seems to be
ideally suited to the family of tanker owners
if they were wise enough to follow the second-
hand market of their ships throughout the course
of the year.
If the price of tankers progressed overall by 20 to
35 % between the end of 2002 and the end of
2003, they experienced an increase in the order of
50 to 60 % between 2003 and 2004 for the more
modern double-hulled tankers and up to 100 %
for some of the single-hulls, aged between 15 and
20 years old. It has been the explosion in the daily
returns which quite logically has caused this phe-
nomenal appreciation. During the year, owners
were continuously on the horns of a dilemma bet-
ween the desire to profit from these colossal
returns and the desire to make some cash by sel-
ling off their assets. This dilemma only got worse
during the months: the more prices and returns
increased, the less opportunities there were to
seek out alternative investments. In fact, the eva-
luation of other types of ships followed the same
tendency, as was the case with bulk carriers and
containerships as well as gas carriers and, to a les-
ser extent, chemical product carriers.
The rocketing rise of daily returns was thus the
main cause for the increase in values but also
contributing was the demand forecast for China
and India which incited a good number of owners
from these countries to rush massively into the
second-hand tanker market. In fact, they were
quite aggressive and clearly contributed to the spi-
ralling prices. Their thirst for tonnage even allowed
some smart operators to buy and re-sell the same
ship in the course of the year, and realise very sub-
stantial gains. Chinese and Indian owners have
thus gained a foothold in this market and are sho-
wing to all that they have no intention to leave the
care and attention of transporting crude and oil
products, which the economic growth of their
countries requires, to third-party players.
Another factor determining the rise in the price of
second-hand tankers this year is the increase in the
newbuilding price of ships, combined with the late
delivery dates being proposed by shipyards (2007
and 2008). Consequently a number of modern
ships with prompt delivery dates have seen their
values increase substantially sometimes over the
contract price for a new vessel.
Two other elements have characterised the year
2004. First there has been a noticeable increase in
the number of en-bloc transactions comprising at
least three ships: with only seven transactions
some 32 units changed hands. Teekay and Gen-
mar were particularly active in this type of business
as they were involved in five of them. The compa-
nies mentioned were in this way able to respond
to their shareholders expectations, either by reali-
sing short term profits or else by showing their
strength and their desire to expand. The other
significant factor was the unexpected effect that
the explosion of spot freight rates had on German
KG buyers. The latter have been very active over
the past two years, but have had to abandon their
role as principal player to others this year due to
prices being too high in comparison to the long
term charter rates that the KGs could obtain on
the market. Whilst the spot rates went through
the ceiling, the long-term charterers (3 years and
more) did not follow the levels being asked by
owners. Without a safe charter back, numbers of
KGs were forced to abandon this sector.
The VLCC second-hand market
This segment of the market saw very sustained
activity, the volumes of transactions exploded as
from May and prices took off. The volume vir-
tually doubled compared to last year. We registe-
red no less than 82 sales (for further trading) of
second-hand VLCC, which actually only concern
76 ships as 6 of them changed hands twice
during the year. It should be noted that only
44 units were sold in 2003, 24 in 2002 and 37
in 2001.
Logically in view of their small number, very few
ships from the ‘70s changed hands. Only four VLCC
of this generation were sold for storage projects,
such as the t/t ‘Folk Sun’ of 323,100 dwt, built in
1979, for a price in the region of $ 19.5 million.
By contrast, we saw a real plethora of sales of
single-hull units built between 1980 and 1995, as
51 changed hands this year compared to 18
during the previous year. If the buyers of 2003
were mostly Greeks, they cleverly came out as dis-
crete sellers in the course of 2004, placing their
The Tanker Market in 2004 37
 Tankers - deletions
(demolition, conversion, total loss)
dwt
14,000,000

Aframax
12,000,000 Suezmax

VLCC

10,000,000

8,000,000

6,000,000

4,000,000

2,000,000

0
2001 2002 2003 2004

ships with Far Eastern buyers and showing once
again their astute sense of timing. As an example,
we can cite the sale of m/t ‘Progress’ of 238,898
dwt, built in 1987, going to buyers in Hong-Kong
for a price of $ 49.7 million in December 2004,
whilst its acquisition price in September 2003 was
around $ 16.5 million. Some operators succeeded
in buying such ships at the beginning of the year,
operating them very successfully for several
months on the spot market, to finally sell them
several months later with a considerable profit.
Such was the case of m/t ‘VL Venus‘ of 238,770
dwt, built in 1986, bought in January for $ 18.0
million and sold in June for $ 24.6 million. It
should be pointed out that buyers of VLCCs for
conversion are increasingly considering this age
category, given the virtual disappearance of the
previous generation of ships. It is the reason why
three units out of the 51 sales left the fleet to
become FSO or FPSO, such as m/t ‘Apollo’ of
257,882 dwt, built in 1981, sold for conversion at
a price of around $ 20 million.
The number of double-hull VLCCs built after 1993
sold this year was also higher, even though not quite
as dramatic, since we have registered 31 sales in
2004 as against 23 in 2003, only 5 in 2002 and 14
in 2001. We can easily understand that owners of
these ships have shown a greater resistance to the
temptation of selling, since the double-hull vessels
have a longer life expectancy, and furthermore the
hull configuration meets today’s norm to which the
most exposed charterers have to conform. We could
cite as an example the sale of m/t ‘Oriental Topaz’ of
319,430 dwt, built in 2002, for a price close to
$ 116 million (for prompt delivery), whereas the cost
of ordering a new ship at the same time is some
$ 10 to 15 million less. Amongst the 31 transac-
tions, there are 6 contract resales of which in June
the en-bloc one of the hulls 1,540 and 1,541 of only
260,000 dwt being built at Hyundai Heavy, for deli-
very at the end of the year for $ 92 million each.
This year, only 5 ULCC / VLCCs went for demolition
against 29 newbuildings coming into the fleet.
This figure is falling compared to the 27 and
36 units demolished respectively in 2003 and
2002. The rising freight rates as well as the very
small number of ships still in service and affected
by the phasing-out of single-hulls explains this
minimalist figure. It should be contrasted with the
105 units which are due for delivery between
2005 and 2009.
The second-hand Suezmax market
This size category, namely from 120,000 to
200,000 dwt, did not benefit from an increased
volume of transactions comparable to that of the
VLCCs. Nonetheless the price increases were simi-
lar since, in line with the VLCCs, single-hull units
saw their values virtually double while those of
double-hulls only went up by 55 to 60 %.
While we were able to count 53 sales of Suezmax
in 2003, the year 2004 only saw 43 units changing
hands; actually 45 transactions as two ships saw

38 Shipping and Shipbuilding Markets 2005

three different owners in the course of the year.
This sector of the market was particularly suscep-
tible to en-bloc transactions and was highly favou-
red by NYSE listed companies.
For the first time, and quite logically, no ship built
in the ‘70s changed hands (for further trading)
since these should be phased-out of the fleet next
year at the latest. They have not altogether disap-
peared however since some are waiting for sto-
rage projects.
As to the single-hulls built between 1988 and 1993,
we saw 15 transactions concluded in 2004 (for
13 ships) which was a similar figure to that of last
year. There was the noteworthy en-bloc sale of three
single-hulls, the ‘Genmar Transporter’, ‘Genmar
Traveller’ and ‘Genmar Centaur’ of 142,031 dwt,
built respectively in 1989, 1990, and 1990 for
around $ 66.3 million. In addition also significant
was the sale of the m/t ‘Sandra Tapias’ of
147,253 dwt, built in 1991, which formed part of
an initial en-bloc transaction in March and was then
resold in September for a price around $ 28 million.
Finally, as with the VLCCs, nearly all the sales of the
single-hulls were concentrated in the second half of
the year when the values were at their highest.
As was the case last year, the majority of the deals
concerned modern double-hull ships, namely 30
compared with 37 in 2003. The unusual aspect for
this type of Suezmax was the high proportion of
these sales, some 26 out of the 30 units, featuring
in en-bloc sales. Is this size category therefore
signalling profound changes in owners’ attitudes?
It is not certain, since the reason for this concentra-
tion is mainly due to the accessibility of funds with
the New York Stock Exchange rather than a real
desire on the part of owners. The next downward
cycle, which will inevitably arrive sooner or later,
could well herald an end to this type of operation.
As an example we can cite the sale of the m/t
‘Aegean Lady’ and ‘Aegean Eagle’ of 165,000 dwt
built in 2003 for a price of $ 70.3 million each.
The number of Suezmax sold for scrap this year
was identical to that of last year namely 10 units,
compared with 15 in 2002. Twenty-six new ships
entered the fleet in 2004, but 86 already figure in
the orderbooks of shipyards over the next 5 years!
The second-hand market
for Aframax tankers
The number of second-hand transactions for Afra-
max also was significantly higher this year since we
have registered 85 sales in 2004 as against 70
during the previous year (and only 35 in 2002).
Ships included in this category are vessels of
60,000 to 80,000 dwt with a beam of more than
32.2 metres.
As with the Suezmaxes, as we observe that for the
first time there have been no transactions (for fur-
ther trading) of Aframax built in the ‘70s.
The split between sales of single-hull Aframax built
between 1980 and 1993 and sales of double-hulls
built after 1990 were nearly identical. The first
registered 45 transactions, whilst the double-hulls
reached the figure of 39 sales, including 11 resales.
The single-hulls from the early ‘80s found buyers
in the Far and the Middle East, where regulations
do not require double-hulls for transporting dirty
products and crude oil yet. The sales of ships in
this generation were concentrated in the first part
of the year, even though the prospects of this mar-
ket were most encouraging. We can cite the sale
of the m/t ‘Montrose’ of 85,619 dwt built in 1981,
sold for $ 7.5 million, and the en-bloc sale of the
m/t ‘Spectrum’ and m/t ‘Solaris’, of 96,000 dwt,
built in 1985, for about $ 16.5 million each. The
huge difference in price between these two sales
(not double-hulls) despite a small age difference (4
years), can be explained by the fact that the 1981
ship, if the latter is not SBT (Category 1 OMI) or
SBT but does not conform to the IMO 13-G ter
norms, should be phased-out next year, whereas
the 1985 ship which is SBT (Category 2) can navi-
gate up until 2010.
The modern, double-hulled Aframax were again in
strong demand, since 39 of them changed hands.
This figure would have been higher, without
doubt, had owners not preferred to employ this
type of ship on the spot market rather than to sell
them, despite the exceptional prices being propo-
sed by buyers desperate for tonnage. We can note
the sale of the m/t ‘Seachem’ of 95,621 dwt built
in 1993 for about $ 30.5 million as well as the sale
of a ship under construction with Daewoo to be
delivered in January 2005 for a price of $ 62 million.
In addition this category of ship was the only one
which got the attention of the German KG
buyers, since they bought 11 of them of which
the hulls 1,467 and 1,468 deliverable at the end
of 2004 by Samsung, which were sold for a price
of $ 109 million en-bloc.
Thirty Aframaxes as were demolished this year, as
compared to 35 the previous year and only 20 in
2002. This is in contrast to the figure of 55 ships
delivered in 2004 and the current orderbook com-
The Tanker Market in 2004 39
 prising to date no less than 182 ships to be delive-
red from 2005 to 2008.
The second-hand market
for Panamax tankers
Panamax ships by comparison witnessed a far more
modest volume of business than larger tankers.
Twenty-nine units changed hands against 45 in
2003, 11 in 2002 and 22 in 2001. The breakdown
by age was about a third for single-hulls built bet-
ween 1981 and 1987 (9 sales) and two-thirds for
double-hulls built from 1985 to 2006 (20 ships of
which 8 were resales). The following significant sales
were done this year: the m/t ‘Nile’ 65,755 dwt built
in 1981 sold for $ 5.2 million, the m/t ‘United Will’
of 68,961 dwt double-hull, built in 1992, for
$ 25.3 million and the m/t ‘Tavropos’ of 70,000 dwt,
built in 2004, sold for $ 45 million (compared to a
similar Panamax built in 2003 and sold for $35 mil-
lion in 2003!). This category has remained the dar-
ling of the German KGs, who showed the same
appetite for this type of tonnage as they did last year.
The investment amount, the age of the ships concer-
ned and the charter party rates which can be obtai-
ned, make Panamax vessels attractive to investors.
With thirty-five ships of this category added to the
fleet in 2004 and an orderbook totalling 168 ships
at the end of the year, the market should see an
increase in demolitions in order to remain healthy.
Thirteen Panamax were sold for demolition, only
two less than the previous year despite the surge
in rates. It is difficult to predict whether we shall
see an increase in the Panamax going to the scrap-
yards in 2005, as a large number of existing ships
over 20 years are SBT.
The second-hand market of OBO ships.
This market continued its return to fortune started
in 2003 and again benefited from the interests of
both bulk and tanker owners. The reluctance of
certain charterers as to the OBO configuration was
gradually discarded with the progressive rise in
rates. Thus, the volume of transactions as well as
their values logically increased.
In line with last year’s figures, 23 ships changed
hands. We should recall that only 9 and 11 sales
were reported in 2002 and 2001. To illustrate this
revival, we can mention the sale of the OBO ‘Snap-
per’ 135,160 dwt, built in 1982, which changed
hands in 2003 at a price of $ 6.1 million and was
resold in 2004 for a price of $ 15 million, with a
charter attached for only one year at a rate of
around $ 27,000 per day.
40 Shipping and Shipbuilding Markets 2005
We must also mention a major transaction in this
market since the 10 OBOs, ‘SKS Tyne’, ‘SKS Tana’,
‘SKS Tweed’, SKS Tugela’, ‘SKS Tagus’, ‘SKS Trent’,
‘SKS Torrens’, ‘SKS Tanaro’, ‘SKS Tiete’ and ‘SKS
Trinity’, which belong to a joint venture composed
of two owners were taken over by one of them for
an en-bloc value of $ 150 million (basis 50 %).
These ships are 110,000 dwt and built between
1996 and 1999.
We have seen 4 OBO sold for demolition this year,
as against 5 in 2003. As of now, the orderbook is
non-existent.
Tomorrow’s market
Above all it should be remembered that in 2005
tankers, which come under the Category 1 OMI
(pre-Marpol and non-SBT) will leave the fleet as
well as those in the Category 2 (post-Marpol SBT)
built before 1978. Ships in this second category
built afterwards will leave the fleet progressively as
from 2010 and/or 2015 based on their classifica-
tions and flags.
The lack of demolition observed in 2004 and the
increase in the tanker fleet capacity, due to the mas-
sive deliveries of new tonnage, should most proba-
bly change the equation in the medium term. Values
should logically see the start of a decline during the
course of 2005, if demand for crude in general and
in China in particular does not match the levels of
2004. Nonetheless this weakening will take time, as
history shows us that owners have a capacity to
resist selling their assets at reduced levels. This capa-
city to resist will be sustained by the vivid memory of
peak prices obtained in 2004 and the large margin
that owners enjoy at the current spot rates. The
volatility and the instability of rates seem now to be
facts to which owners are getting accustomed and
their accumulated reserves will allow sellers to take
a more relaxed position. Perhaps in 2005 we shall
see some prudent or far-sighted owners disposing
of some first generation double-hulled ships thus
cashing in on their current valuation.
Europe is looking into the need of penalising more
severely certain forms of pollution, but a consensus
between the 25 member states seems a distant
prospect. We regret yet again that the discussion
on the concept of “place of refuge” is not clearly
written into the agenda and is not currently being
examined. At the expense of being simple and effi-
cient, it should remain a top priority for each state
and the E.U. if they really want to minimise the
consequences of the perpetual possible future acci-
dent of either single or double-hulled ships! ■
 The transport of refined oil products
2004 will remain a memorable year for
owners for the second year in a row,
since the market for product tankers registered an
increased level of average daily returns. There has
been a progress of over 20 % for all size of ships
both for spot and period business.
As in 2003, the exceptional rise in this market has
been due to the high level of growth in the US and
the Far East, even if the development of the
“paper” market, aided by some speculation parti-
cularly on the TC1 (75,000 mt naphtha Middle
East Gulf / Japan) and the TC2 (33,000 mt UMS
Continent / US Atlantic Coast) routes, helped
contribute to the strong performance of the
freight market.
The rise in rates, which began in December
2003, peaked in February, with daily returns
approaching $ 40,000 per day. The drop registe-
red in the months of March and April correspon-
ded to an easing in the fuel oil market, before
rates started to perk up again in May and June at
around $ 25,000 per day. The traditional low
point in the summer was around $ 20,000 per
day and the expected recovery came at the
beginning of October, which allowed the
Medium Range product carriers (MR) to enjoy
once again returns of $ 40,000 per day, whereas
the Long Range (LR) were flirting with the
$ 60,000 per day level.
Like last year, the rates paid for period charters
were largely lagging behind the spot market.
Nonetheless, if charterers were reticent about
committing themselves to long term business at
high levels, they accepted to pay record levels for
shorter periods and started using floating rates
agreements indexed on the spot market or linked
to a profit sharing scheme.
However, whilst the market was able to absorb the
some 130 MR ships, totalling 5.5 million dwt deli-
vered in 2004, there is some doubt as to the
chances of repeating this exploit in 2005, 2006,
and 2007…
The evolution of product tanker
freight rates in 2004
The Handysize (Handy product tankers)
of 30,000 to 39,999 dwt
Yields for Handysize ships surpassed those obtai-
ned in 2003 by more than 20 % at nearly
$ 25,000 per day, despite the “ice class” premium
being virtually non-existent due to the mild winter
season which started in 2004. Whilst these ships
were most frequently employed in the Atlantic
zone, some started to find employment around
the Far East, especially the “shallow draft” units
with a capacity of 45,000 cbm.
Within the European zone, both in North Europe
as well as in the Mediterranean - Black Sea area,
over half of the fleet was used once again in the
transport of fuel oil and crude, with owners not
hesitating to switch from clean to dirty and vice-
Bro Etienne
37,179 dwt, delivered
in 2004 by Jinling,
owned by Broström Tankers
The Tanker Market in 2004 41
 Product tanker freight rates
Average earnings
$/day
60,000
55,000 t MEG/Japan

35,000 t Rotterdam/New York

50,000 28,500 t Caribs/USAC

40,000

30,000

20,000

10,000

0
Jan 03 Mar 03 May 03 Juil 03 Sep 03 Nov 03 Jan 04 Mar 04 May 04 Juil 04 Sep 04 Dec 04

versa, based on the rates differentials that could
be obtained respectively in both sectors.
Charterers were not really keen to commit them-
selves to long period business due to the high
expectations of owners, but starting in October
and facing a strong surge in spot rates, they finally
had to accept paying levels above $ 20,000 per
day for periods of 12 to 18 months.
The Medium Range (MR product tankers)
of 40,000 to 49,999 dwt
Ships operating in the Atlantic benefited from the
sustained level of American demand for gasoline
and fuel oil. Daily returns for a 33,000 t voyage -
UMS - Continent / US, varied between $ 16,250,
at the bottom of the market during the summer,
to $ 40,000 per day in February and December,
with the annual average working out at $ 26,500
per day.
Garonne
37,178 dwt, delivered in 2004
by Hyundai Mipo,
operated by OMI Corp.
Parallel to this, a traffic of gas oil developed bet-
ween the US Gulf and Europe. In 2004 Europe
imported 11.5 million barrels of gas oil from the
US, which is the equivalent of 13 % of the Ameri-
can production.
As in 2003, ships operating in the East of Suez
took advantage of the economic strength of the
Far East zone, led by the growth in China, India,
and Japan. Despite a seasonal decline in the
spring, returns remained comfortably above
$ 20,000 per day, notably after the month of
October.
Long term period business was scarce, but traders
such as Vitol, Trafigura, and especially Glencore
were very active in the short period business (3 to
12 months) and did not hesitate to pay rates
above $ 30,000 per day to the extent that they
were able to hedge their positions on the “paper”
market.
The Long Range (LR product tankers)
from 50,000 to 90,000 dwt
The LR2 and the LR1 were also particularly helped
by the strong demand coming from throughout
the Far Eastern zone, notably China and Japan. As
from mid-September, daily returns went from
$ 30,000 to $ 60,000 per day for the LR1, whereas
the LR2 were over $ 70,000 per day.
In this sector of the market, the “paper” business
has an important role, but if the route TC1 (LR2 -
75,000 mt - Middle East Gulf / Japan) was heavily

42 Shipping and Shipbuilding Markets 2005

traded at the beginning of the year, it soon
became obvious that the market was far more
liquid on the TC5 route (55,000 mt - Middle East
Gulf / Japan).
The market was also well supported by the nume-
rous movements of kerosene from the Middle East
Gulf to Europe and by the European exports of dis-
tillate and gasoline to the US.
Some long term period business was concluded on
ice-class LR2 ships, but it was the LR1 size which
was being sought after for trading clean products,
fuel oil and crude. The majority of these fixtures
were done in the first half of the year, which
explains why the rates were around the $ 22,000
/ 23,000 per day for periods of 3 years.
Despite the large number of new ships being deli-
vered, 2005 should again be a year favourable to
owners of product tankers. Even with a conside-
rable increase in modern tonnage, the complete
renewal of the fleet will be far from being accom-
plished by the end of 2005.
Delivery of new ships should result in:
◆ ships from 30 to 40,000 dwt: 48 ships totalling
1.75 million dwt,
◆ ships from 40 to 55,000 dwt: 78 ships totalling
3.70 million dwt,
◆ ships from 55 to 90,000 dwt: 40 ships totalling
2.75 million dwt,
to which will be added some 20 coated Aframax
tankers totalling nearly 2.0 million dwt.
Supply of tonnage will therefore increase signifi-
cantly especially since the demolition level is low.
At current rates, even the simple decision to put a
vessel in technical lay-up is to be taken by the top
management of the company. Notwithstanding, at
the end of 2005, the Major’s eligible fleet will only
comprise some 650 ships for a little less than
30 million dwt against over 950 ships and
35.0 million dwt at the beginning of 1999.
The withdrawal of the older ships has been post-
poned due to the fact that certain niche business
continues to be very remunerative: gas oil move-
ments from the Black Sea, clean products for West
Africa or even the market for vegoils and molasses.
In addition, the high freight levels have convinced
several owners to undertake necessary refitting
work to obtain the mandatory certificates (C.A.S.(1) /
CAP 1 or 2), which will allow them to operate their
ships beyond their twentieth anniversary.
Nonetheless the international safety measures and
the vetting services of oil companies continue to put
pressure on owners of old vessels, whose days are
numbered. We predict therefore that demolition will
gradually increase throughout the coming year.
Demand for shipping of clean and dirty pro-
ducts bound to the American zone or the Far
East has been, like in 2003, the main factor
maintaining the healthy state of the freight
market.
(1) Condition Assessment Scheme

Eligible MR product tankers fleet to 2007

(30,000 to 53,000 dwt)
dwt
45,000,000

40,000,000

35,000,000

30,000,000

25,000,000

20,000,000

15,000,000

10,000,000

5,000,000

0
End 1998 End 2000 End 2002 End 2004 End 2005 End 2006 End 2007
(under 25 years) (under 15 years) (under 15 years) (double-hull) (double-hull) (double-hull) (double-hull)

The Tanker Market in 2004 43

 Cape Limboh
15,305 dwt, built in 2003
by Okean shipyards
for Petromarine
Once again, it was the fuel oil market in the Atlan-
tic zone which sparked off the rise in rates in mid-
September. At the end of November only, rates
obtained by the clean products have catched up
with the levels achieved by fuel oil and crude. The
clean products followed this trend a month later
and they were able to match and then overtake the
dirty product rates only by the end of November.
In the Far East, the increase in rates started at the
beginning of September, namely two months ear-
lier than usual. Then the very high levels tended to
tumble, as much due to lack of available tonnage
as due to technical shutdowns at several refineries
in the Middle East Gulf.
However, the fundamental explanation is the
continuing high level of imports, resulting from a
lack of local refineries able to meet domestic
demand in oil products. It is known that in the US
The product tankers second-hand market
T
he steady rise of product tankers freight rates
during the year 2004 also had an impact on
second-hand values. In a higher volume of
transactions (around 150 Medium Range and
Handy product tankers built since 1980 have chan-
ged hand in the course of the year) prices have
dramatically risen.
The value of a five year-old standard double-hull
45,000 tonner, which was around $28 million at
the end of 2003, progressed to $32 million by the
end of June and up to an average of $39 million in
December.
44 Shipping and Shipbuilding Markets 2005
ecological factors are curbing the expansion of
refinery capacity and that the increase in capaci-
ties are not keeping pace with the demand in the
Far East.
Under these conditions, the demand for transport
of refined oil products should continue to increase
in 2005, especially as the trend toward longer
trade routes is likely to continue. There are even
some projects being carried out to transport naph-
tha and condensate from the Mediterranean to
China!
As we stated last year, “it is unavoidable that the
large number of vessels being delivered in the next
2 to 3 years will affect the product tankers mar-
ket”. One can add that there has been some
doubt expressed recently as to the persistence of
the American growth and the reliability of the Chi-
nese expansion (at the current pace of 9.5 % per
year, the Chinese economy will double within 6
years)….and finally cannot exclude the risk of a
financial crisis in the Asian zone.
Nonetheless, except a major event, the year 2005
gives every sign of being propitious to product
tankers owners. The arrival of over a hundred new
ships should however dampen the volatility of the
market and cause a modest drop in the daily ave-
rage returns. ■
This rise also applied to the older units as, for ins-
tance, the value of a 20 year-old, single-hull,
45,000 dwt ship started at around $5 million in
January 2004, to reach $7 million at the end of
June and ended the year at around $9 million.
Lastly, a single-hull 40,000 dwt product tanker
built at the end of the 1980’s, for which one had
to spend $ 11.5 million at the end of 2003, ended
the year at around $16 million. ■
 FUTURES
L I M I T E D

BACKGROUND SERVICES PROVIDED

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and is a subsidiary of one of the to-principal freight derivative contracts.
most respected and long-established The company offers a broking service
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Barry Rogliano Salles of France. swaps and options, and aims to continue
developing its range of freight and ship value-
The parent company has more
based derivative products as appropriate.
than 150 years’ experience in providing
a range of services to clients The aim of BRS Futures Ltd is to provide
in the shipping industry. existing and prospective clients
with the opportunity to use standardised risk
The last few years have seen substantial
management tools for hedging and
growth in the use of derivatives
optimisation of shipping/freight portfolios.
to reduce and manage exposure to risk
in many markets. BRS Futures Ltd is a member of the Forward
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The international shipping market is no
and BRS is a panel-member contributor
exception, and in response to clients’
to market data co-ordinated and published
needs, BRS has added freight derivatives
by the London-based Baltic Exchange.
to the range of services it provides.

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10 Napier Place - London W14 8LG - Royaume Uni

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45
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46 Shipping and Shipbuilding Markets 2005

 THE
OFFSHORE
AND
SPECIALISED
SHIPS MARKETS
IN
2004
T he year 2004 will remain unique in the history
of the oil and gas industry for two reasons:
first, world oil demand (excluding gas) reached
its highest level ever and second, the price of oil also
registered a peak at around $ 50 per barrel.
The offshore sector at last is feeling the initial bene-
fits of the surge in prices and oil companies are again
targeting to increase their proven reserves of oil and
gas. About $ 125 billion was spent on exploration
and oil production in 2004. This level, comparable to
that achieved in 2001, should increase to $ 135 bil-
lion in 2005. This figure excludes Russian and Chi-
nese projects, but includes the Kashagan and Kaza-
khstan projects in the Caspian Sea. This drive will be
a stimulus in the first instance to the development of
traditional offshore equipment in shallow waters, but
also to very deep-sea offshore equipment, which
comprise a number of drilling units used at the limit
of their capacities. Geophysical offshore exploration
will see a certain stability, even with some expansion
in India. The increase in offshore drilling expenses in
2004 illustrates the upward trend and the best indi-
cator of this growth being the percentage of jack-up
rigs operating, which has gone from 75 % at the
beginning of the year to 90 % at the end.
Offshore Support Vessels
Most of the major companies in this branch of the
offshore market decided this year to order a large
number of Platform Supply Vessels (PSV) as well as
Anchor Handling Tug-Supply (AHTS). The order pat-
tern was mainly:
◆ at the beginning of the year, for PSVs in the size
range of 3 000 tons deadweight or more,
◆ for mid-size AHTS, with 60 to 120 t bollard pull,
dynamic positioning and equipped with fire-fighting
systems.
The majority of orders were placed with Far Eastern
shipyards, currently favoured for their cheap labour
The Offshore and Specialised Ships Markets in 2004 47
 Jack-ups utilisation rates
Utilisation %
100

90

80

70

60

50

40 North Sea - NW Europe

West Africa
30 North America

20

10

0
Jan 01

Apr 01

July 01

Oct 01

Jan 02

Apr 02

July 02

Oct 02

Jan 03

Apr 03

July 03

Oct 03

Jan 04

Apr 04

July 04

Oct 04

costs as well as the weakness of the dollar. The other
significant trend of this market is the halt on the ever-
growing size of PSVs and of the engine power of
AHTS.
Our explanation for these phenomena is triple: there
are few orders coming from Norwegian owners as the
North Sea market has remained flat for most part of
2004, oil companies’ needs have been concentrated
on production in deep waters and finally, owners are
following the general movement towards cost cutting.
Kaori
Port tug, delivered by It is worth noting an inversion of trend during the
President Shipyard in 2004,
operated by CMC Noumea course of the year for Norwegian shipyards, which
(New Caledonia). have filled their orderbooks, even though they were
Jan 05
limited by their Polish or Romanian sub-contractors
production capacities to build the hulls.
This general demand from charterers to reduce
“logistics” costs in the exploration/production pro-
cess, passed onto owners, has resulted in an effort to
standardise ships with more orders for series and the
research into more optimised designs coming also
from the Far East. In this respect, the diesel-electric
engine solutions mainly developed by Norwegian
manufacturers incorporate true advantages, particu-
larly in relationship with dynamic positioning equip-
ment compatibility, which is now a standard feature
on most new ships, for a reduced price.
The choice of diesel-electric propulsion, combined
with the installation of azimutal propulsion sets, has
also contributed to reduce construction costs by sim-
plifying the hull forms.
In 2004 both PSVs and AHTS delivered by the yards
found employment, even if charter rates were not
always at levels hoped for by the owners.
The North Sea market was the catalyst in the reco-
very of the offshore market. As an example, an AHTS
of 200 t bollard pull chartered out on the spot mar-
ket at the beginning of the year at 15,000 $ per day,
obtained 45,000 $ per day in December. It was the
same for the Gulf of Mexico where the employment
rates of vessels finally saw an increase after four very
poor years. Egypt, the Middle and Far East also saw
chartering rates on the rise by employing more
powerful AHTS.

48 Shipping and Shipbuilding Markets 2005

 Semi-Submersibles utilisation rates
Utilisation %
100

90

80

70

60

50

40
North Sea - NW Europe
30 West Africa

North America
20

10

0
Jan 01

Apr 01

July 01

Oct 01

Jan 02

Apr 02

July 02

Oct 02

Jan 03

Apr 03

July 03

Oct 03

Jan 04

Apr 04

July 04

Oct 04

At the end of 2004 several important owners no lon-
ger had any modern units to charter out, which leads
us to be relatively optimistic as to the market’s ability
to absorb the large number of PSVs and AHTS that
are due for delivery in 2005.
There has been a rapid increase in the already sub-
stantial fleets operated by Singapore owners. As an
example we can cite Jaya, which had 21 AHTS, 2 PSVs
and 6 other ships under construction at the end of
2004. Fleets that are in the hands of Middle East
owners have also seen a significant development with,
for instance, Maridive in Egypt which controls nearly
50 ships including 7 under construction in India.
Western owners have started or boosted their fleet
renewal programmes.
Groupe Bourbon has ordered 8 PSVs (GPA 670 type)
and 4 AHTS (Conan Wu type of 70 and 80 tons bol-
lard pull) in China. There are also 4 AHTS (120 t bol-
lard pull, Conan Wu design) with Keppel Singmarine
in Singapore, as well as 2 fast supply ships in alumi-
nium based on an innovative French concept (Mauric
design) with the Piriou shipyard. The Bourbon Group
is continuing to expand and hopes to conquer new
markets.
We can mention the example of Tidewater, which has
ordered 8 AHTS, 4 PSVs and half a dozen of smaller
units. They have ordered these ships with the intention
of replacing some older units and thus avoid impor-
tant expenses to keep them in proper running condi-
tion and getting them re-classified.
Jan 05
Edison Chouest Offshore has ordered 7 offshore ves-
sels and 4 fast supply ships.
In 2004, Seabulk Offshore contracted with Labroy
shipyard of Singapore 8 AHT/AHTS mainly for the
West African market.
Swire Pacific Offshore has 9 AHTS on order in the Far
East, of which 7 of the UT 780 type – 4,800 bhp with
Labroy.
Delivery of new units ordered in Asia are spread out
until 2006.
Beside these PSV and AHTS fleets, we have seen a
noticeable increase in the demand for fast craft, over
20 knots, built of aluminium, 40 metres long or
more, designed to carry dozens of passengers and
some cargo on deck. In the future, under deck bulk
capacities are also being envisaged. At last a new
market has emerged concerning small, specific units
aimed at providing security protection for offshore oil
fields capable of carrying armed men aboard.
In addition, several governments, particularly in
Europe, have launched programmes to renew or to
complete their fleets for assistance or intervention as
well as anti-pollution surveillance ships. These buil-
ding programmes are benefiting essentially European
shipyards.
Ice-breakers
The opening of the Russian market, giving access to
the Arctic, from the Barents Sea to the Bering Straits,
has stimulated orders for the offshore markets, but

The Offshore and Specialised Ships Markets in 2004 49

 also to serve the exports terminals of the “on-shore”
production.
Amongst these we can mention:
◆ Swire Pacific / Primorsk with an order for three UT
758 of 90 meters, ice-breaker, at Aker Yards for 500
million Norwegian kroner.
◆ Rieber Shipping / Primorsk with an order for a ice-
breaker / tug, at Aker Langsten for 351 million Nor-
wegian kroner.
◆ Sevmorneftegaz / Fesco with an order for two ice-
breakers at the Havyard Leirvik shipyard for 53 mil-
lion euros.
Underwater construction and
installation – IRM Market
(Inspection Repairs and Maintenance)
The year 2004 was characterised by a marked revival
in the underwater construction activity and also with
the happy resolution of financial crisis of Stolt Off-
shore, who managed to transform its debts into capi-
tal and was able to win contracts at more favourable
conditions. The Stolt Nielsen group sold its interests
in Stolt Offshore thus ending an historic participation
in the sector. McDermott has strengthened its pre-
sence with an expansion programme.
This industry has continued its consolidation of which
one of the stages was the repurchase by Siem Indus-
tries Inc. of the remaining 50 % share of Subsea 7
previously controlled by Halliburton. It appears also
that Torch Offshore is in a particularly precarious
Bourbon Helios
Platform supply vessel,
GPA design, 3,300 dwt,
to be delivered by Zhejiang
in 2005, will be operated
by Groupe Bourbon
Offshore division.
50 Shipping and Shipbuilding Markets 2005
situation and is likely to dispose of a number of ships
especially the ‘Midnight Express’.
European underwater contractors are in a better
shape than their American rivals, with the exception
of Cal Dive and Global Industries. The revival of so-
called traditional offshore activities in shallow water
in the Gulf of Mexico, should help contribute to their
improved situation.
The start of large installation projects in West Africa,
Egypt, and Brazil is helping to bolster activity, to the
point that some operators are announcing that they
have almost none of their main ships available until
2008. The Far East, traditionally in low profile, will
also absorb some ships in 2005. Subsea 7 has made
a remarkable break-through in West Africa, a market
up until now shared essentially between Technip Off-
shore, Saibos and Stolt Offshore.
The possibility to have the right vessel at the right
time is a key to success in the underwater construc-
tion market, but it should be appreciated that the
fleet is ageing. In practice, with the exception of
several units coming into service at the initiative of
owners of supply vessels, such as the ‘Boa Deep C 1’,
the ‘Normand Cutter’ (a converted cable-layer char-
tered to Sonsub) the barge-laying ‘Jascon 5’ and the
construction of the future ‘Normand Installer’ (a joint
project between SBM and Solstad), no major project
has been launched or realised in 2004.
 North Sea supply vessel market
Average reported day rates in £/day
25,000
20,000
15,000
10,000
5,000
0
Jan 01
Apr 01
July 01
Oct 01
Jan 02
Apr 02
July 02
Oct 02
Jan 03
Consequently 2005 should see the launching of seve-
ral significant projects by the Majors, namely large
laying and installation ships (150 m x 30 m or more)
capable of laying pipes of 16 to18 inches at a depth of
over 2,000 metres. The major concern will be the res-
ponse capability of the shipbuilding market, which has
never seen such a level of activity.
The recovery of the underwater construction market
both in the area of new developments and in the
area of the maintenance of new fields, has logically
helped sustain and stimulate the activity of supply
vessels such as the MPSV (Multi-Purpose Supply Ves-
sels) fitted with a strong lifting capacity (more than
100 tons at sea-level). They are also employed in light
construction works and more generally in the IRM
market of which the main players remain the owners
of supply ships mentioned in the previous chapter.
The seismic market
The four principal operators, WesternGeco, Veritas,
Petroleum Geo Service (PGS) and Compagnie Géné-
rale de Géophysique (CGG) have also benefited from
a surge in activity. Hardened pessimists have been
obliged to revise their opinion about the future of
this activity, which particularly suffered over the past
four years. CGG seems to have abandoned its ambi-
tion to merge with PGS after its offer was declined by
the latter’s shareholders. Nonetheless, a new conso-
lidation would benefit this sector. At the start of
2005, operators are working already on the pro-
gramme for 2006, which is exceptional given the
average duration of seismic acquisition contracts.
AHTS > 10,000 bhp
PSV > 2,000 dwt
Apr 03
July 03
Oct 03
Jan 04
Apr 04
July 04
Oct 04
Jan 05
Technologies continue to improve the quality, but also
the range of seismic work, since it is now possible to
detect oil or gas up to a depth of 6,000 meters. These
gains will incite operators to improve their marine
logistics globally and probably to charter more speci-
fic supply ships for longer periods.
Drilling market
The offshore drilling industry is undergoing a real
change in situation which began at the start of 2004,
with an increased level of utilisation of jack-up rigs to
drill in shallow waters.
At the end of 2004, few units of the 300 feet jack-
up rigs type remained available in the short term.
Freight rates for deep-water drilling rigs are heading
toward the $ 300,000 per day level. The second gene-
ration semi-submersibles, which drill at 1,500 /
2,000 feet depths, are benefiting from the rebound in
the North Sea market and obtain more than $ 100,000
per day for short term contracts.
The industry continues to gravitate around the fleets
controlled by the six American majors, Pride, Dia-
mond, Ensco, GlobalSantaFé (GSF), Noble, Transocean
and by four competitors of substantially smaller size
namely Stena Drilling, Maersk Drilling, Atwood and
Rowan. By and large, the drilling companies dedica-
ted 2004 to consolidating their balance sheets. Pride
should probably sell some supplementary assets, with
a view to be in a better position for new investments
over the coming 2005 / 2006 period. As to GSF, they
anticipated the change in the market and fixed four
The Offshore and Specialised Ships Markets in 2004 51

Goenisio Barroso
Anchor-handling tug supply,
delivered in 2004 by Fels Setal,
operated by Delba Maritima
(Brazil)
52 Shipping and Shipbuilding Markets 2005
units which are being completed in Singapore (2
semi-submersibles and 2 jack-ups).
Opportunities to convert, modernise and build new
drilling rigs will be possible as soon as the oil compa-
nies offer long term charter opportunities. It is worth
mentioning the order of three jack-up rigs in Singa-
pore on a speculative basis by a group of Norwegian
investors, as well as another unit ordered by the Nor-
wegian Odfjell.
In this sector, the Keppel Fels group plays a predomi-
nant part, which is based on its world-wide network
of yards for repairs and shipbuilding, on its capacity
to offer the market standard jack-up rigs, also adap-
table to specific needs for drilling, and finally on its
role as a speculative investor.
The Sembawang group for its part maintains a share
of the market due to the specific expertise of PPL
Shipyard. Finally Chinese builders, such as Dalian,
have emerged but remain principally concentrated
on their domestic market.
Production market (surface systems)
This year has seen Stolt Offshore shed itself of engi-
neering, construction projects and integrated pro-
duction systems by the sale of its affiliate Paragon.
The leaders, who are Saipem and Technip, obtained
some prestigious but high resource-consuming
contracts, linked to developments in West Africa but
also in the Persian Gulf (Qatar project) and the Cas-
pian Sea (Kashagan phase 1).
Despite the small number of contracts recently awar-
ded (of which SBM with Petrobras of Brazil and Ber-
gesen with Woodside in Mauritania), the number of
tenders open or due to come out in 2005 for leasing
FPSOs has considerably increased. These tenders are
primarily related to West Africa, Brazil, South East
Asia and Australia. These projects require storage
ship hulls of two million barrels, except for the last
two zones, which regularly require Suezmax size
units. In the second-hand market, which is some-
what overvalued, it is obvious that the number of
available ships has become considerably reduced. In
addition, oil companies are more and more reluctant
to accept hulls over 20 years old. As from now, char-
terers of FPSOs are proposing either to use modern
ships or to build new hulls to meet their standards, in
line with the order placed by Modec (Mitsui group)
and awarded to Samsung.
The dredging market
From the point of view of contractors, the sector has
continued to consolidate. 2004 saw the final absorp-
tion of Ballast-Ham by Van Oord. Despite a difficult
context due to the halt of the huge Singaporian pro-
jects, a revival in world demand in volume is expec-
ted for 2005. Current projects in the Persian Gulf,
China and the Sakhalin Islands have continued to
keep the contractors busy.
Jan de Nul is pursuing his modernisation programme
and the expansion of his fleet. It’s the only Major that
has built up his investments in an original and auda-
cious strategy, by ordering small sized dredgers in
China. These orders have demonstrated Jan de Nul’s
know-how in engineering and project management.
In France, DTM has confirmed the order of a 2,200
cbm sand-dredger with the Barkmeijer shipyard in the
Netherlands, for delivery in 2005. GIE Dragages-Ports
has concentrated on restructuring and rationalising its
fleet. It should confirm in 2005 an order for a 700
cbm grab hopper dredger fitted with a dredge pipe.
Finally, there has been the U-turn of the IHC group,
which has finally abandoned its shipyards, including
the famous IHC Holland, designer and builder of
dredgers. The expertise of Dutch dredging specialists
tends to be concentrated in the engineering work
and the manufacturing of dredging equipment.
Conclusion
A lot of uncertainty has been removed by the out-
come of the American elections. In addition the fore-
cast is for a new increase in world oil and gas
demand.
Oil companies today possess very important financial
capacities. Exploration has been considerably redu-
ced these last few years, whereas the increase in pro-
ven reserves is now a strategic target.
These circumstances augur well for the offshore
industry as a whole for the year 2005 and should
apply to all geographical zones. ■
 THE
CHEMICAL
CARRIERINMARKET
2004

H aving started in the second half of 2003,
the improvement in freight rates of che-
mical product carriers reached record
heights this year, which have not been seen since
the preceding periods of tensions in 1991 and
1995. This revival, which lasts for more than a
year, shows no signs of losing pace at the start of
2005. It was however paradoxical that the mar-
ket was one of the few not to follow the general
rise in the movement earlier, which was set by
the dry bulk shipping market, oil tankers and
containerships. Sooner or later the chemical pro-
ducts should follow this upward spiral of the
other shipping sectors.
It was high time for all participants that the mar-
ket found its balance, for the last ten years the sur-
plus of tonnage kept the level of freight rates
often below running costs, which resulted in
owners ending up with their balance sheets in the
red. In order not to slip further down or go under,
the market has seen all over the year the forma-
tion of pools or other partnership agreements.
This year again some changes have been carried
out, with the Vopak Essberger pool renamed
Broere Essberger Chempool, but with a single
shareholder. Ahrenkiel has left the UCT pool and
with Odfjell they have formed a new pool for
inter-European movements: Odfjell Ahrenkiel
Europe GmbH. In response, Schoeller, the other
partner in UCT, has associated with Seatrans to
form United Seatrans Chempool. Too much out
on a limb in this market, Naviera Quimica and la
Navale Francaise have been bought by Camillo
Eitzen, who, with his other ships coming out of
Copenhagen Tankers, will operate a fleet of
25 chemical carriers.

The Chemical Carrier Market in 2004 53

 Chemical carriers on order as at January 1st, 2005
(in deadweight)
dwt
500,000

3,500-6,000 dwt

6,000-10,000 dwt
400,000
10,000-20,000 dwt

over 20,000 dwt

300,000

200,000

100,000

0
delivered in 2004 2005 2006 2007+

Freight rates terranean. There are openings in this market for

European short sea
On all European routes, spot freight rates have
been continuously on the rise with an even more
significant increase between September and
December. The North European market has natu-
rally profited from this improvement, but very
often the majority of owners didn’t have the
opportunity to take an interest in the spot market
being largely covered with contracts.
With few offers, and therefore less competition,
freight rates increased by 20 to 30 % on average
over the year. The rise in bunkers costs should be
taken into account in the operational results, but
with virtually all transactions being in the Euro-
pean currency, this has allowed owners to stay in
line with the currency of their fixed costs.
Mediterranean movements are always split in
two, with on one hand the older “unapproved”
ships and on the other hand the modern ships.
But contrary to previous years all ships benefited
from the improved freight rates. Demand for
“unapproved” ships, but with stainless steel tanks
was very strong in Eastern Mediterranean and
notably in the Black Sea for acid movements.
Nonetheless a large number of ships disappeared
from the fleet, with owners not hesitating bet-
ween the high maintenance costs and the very
attractive rates being offered for scrap, but rene-
wal of these ships is not taking place in the Medi-
owners in search of new outlets, but rates should
rise further, or at least stabilise at current levels
which have followed the same hike as in Northern
Europe.
The strategy of owners for renewing contracts has
considerably evolved. Generally speaking, owners
who have until now not been able to benefit from
the rise in the spot market (being too committed
on their contracts) now ask for a minimum and a
maximum on the negotiated quantities, in order to
be able to participate in the spot market when it is
attractive. Open contracts are disappearing, as
they allow charterers to play on the spot market
when it drops and to take up the 100 % allo-
wance with their contractual partner when it rises.
Long haul movements
On movements from the U.S. to Europe, already
benefiting from a very strong hike in rates at the
end of 2003, the market continued to firm
through the first quarter and saw a minor slide
until the end of the summer. From the autumn,
activity suddenly rebounded to reach heights
which had not been attained since the spring of
2002 and in 1997.
In a market dominated by contracts, and apart
from regular movements of cumene and styrene,
we have witnessed a more sustained export of
ethanol, MTBE and benzene out of South America
and especially Brazil.

54 Shipping and Shipbuilding Markets 2005

 Chemical carriers on order as at January 1st 2005
number
30
25
20
15
10
0
delivered in 2004
On the eastbound leg, in a more contrasted man-
ner than on the westbound one, freight rates
continued to rise right until the end of the first
quarter then sharply dropped before settling out
during the summer period and finally increasing by
more than 30 % at the end of the year for lots of
2,000 tons. The firmness in the market was much
more evident in the size lots of 5,000 tons and
more. As in previous years, the main movements
seen coming out of Europe were with cargoes of
caustic soda, sulphuric acid, base oils, benzene
and pygas.
On average, freight rates increased from about
$ 45 per ton up to nearly $ 65 per ton for lots of
2,000 tons, and this rise of 40 % was also reflec-
ted in the renewal of contracts at the end of the
year.
Movements from Europe to Asia this year saw an
explosion in freight rates which has not been seen
for 25 years. Starting from an extremely firm mar-
ket in 2003, Chinese demand for chemical pro-
ducts contributed to a jump in rates of over 50 %
on average, with a spread of 100 % between the
lowest and the highest levels within the year 2004.
Rates very quickly took off, in particular for the
small lots of 1,000 to 2,000 tons and the latter
went from $ 60 to more than $ 100 per ton.
The rise in bunker prices, the lack of modern ton-
nage available and the optimisation of charterers’
nominations within their contracts, are part of the
explanation towards such a movement in the mar-
(in number of ships)
3,500-6,000 dwt
6,000-10,000 dwt
10,000-20,000 dwt
over 20,000 dwt
2005 2006 2007+
ket. This evolution has on the reverse side incited
some exporters on the spot market to postpone
their shipments, or else to undertake “swaps”
with Asian producers and even to export small lots
of 500 to 1,000 tons with ISO containers. This revi-
talising of the market should also give the four
main parcel tanker owners cause to reflect and to
review their strategy in reducing the proportion of
their fleet dedicated to contract business to take
better advantage of the very firm spot market and
offer more space to European exporters.
The fleet
Deliveries of new chemical carriers with stainless
steel tanks reached a record level in 2004 with
some fifty ships for a total of 800,000 dwt, which
brings the average age of the combined fleet to
11.7 years. Sizes of ships are also well distributed,
with 16 ships between 5,000 and 10,000 dwt, 15
ships between 10,000 and 20,000 dwt and a
dozen above 20,000 dwt. The orderbook is also
filled, with more than 60 ships to be delivered in
2005 of which half between 15,000 and 20,000
dwt. More than 80 % of the ships delivered this
year were built in Japan and in 2005 we will wit-
ness the first deliveries of newbuildings out of
China (5 units). Deliveries beyond 2005 are for the
moment far fewer, with 30 ships expected in 2006
and 15 ships in 2007.
Demolition of chemical carriers has doubled this
year with 21 ships sold for scrap for 220,000 dwt.
The Chemical Carrier Market in 2004 55
 Chemical tanker spot freight rates
2,000 t easy chemical
$/t
120

110

Rotterdam - WC Italy
100
Rotterdam - USG
90
Rotterdam - Taïwan

80

70

60

50

40

30

20

10

0
Jan 00

Mar 00

June 00

Sep 00

Nov 00

Mar 01

May 01

Aug 01

Nov 01

Feb 02

Avr 02

July 02

Oct 02

Jan 03

Avr 03

July 03

Sep 03

Dec 03

Mar 04

June 04

Sep 04

Dec 04
This trend should continue as 138 ships of more the IMO beginning in 2007 for the transport of
than 20 years are still in service, of which 70 are vegoils (imposing IMO III ships but with a double-
more than 25 years. hull) will mean that a number of large units will
disappear from the market. Modern ships will thus
2004 has thus been a good year for owners, but it
be greatly solicited. It should be added that shi-
will remain above all a year full of promises for the pyards are currently fully booked, plus the fact that
future – or at least the next two years. Starting the price of steel is prohibitive for orders of che-
from 2005, freight contracts renegotiated at mical carriers fitted with stainless steel tanks.
higher levels will begin to generate a supplemen-
tary revenue to owners. Delivery of newbuildings, In the past we have experienced peaks in the mar-
ket but generally over fairly short periods. The cur-
although significant, should only serve to replace
rent situation is new and seems to be solid,
the older ships leaving the fleet.
without any major accidents or a decline in eco-
In effect, the quality measures imposed by charte- nomic activity, this should continue to last quite
rers combined with the new directives set out by some time. ■

56 Shipping and Shipbuilding Markets 2005

 THE
LIQUEFIED
PETROLEUM GAS
SHIPPING MARKET
IN
2004

Out of the doldrums to a sharp and sustained recovery

Significant events The main evolutions, of which some have been in evi-
dence for several years, can be described as follows:

A
t the same time last year, we drew a com-
◆ Joint-ventures and pool agreements between
parison between the different shipping
owners and ship operators, leading to an optimi-
markets with the take-off of the oil and
sation of operations and a higher specialisation by
bulk sectors compared to the depressed state of
groups of operators within the various categories
the LPG sector over the recent years, marking a
of ship sizes and specific trade routes.
significant break in the respective evolution of
these markets. ◆ The cross-purchases of ships, or even whole
fleets, within the smaller sizes.
We also evoked the main readjustments, which
◆ A slow-down in newbuilding orders over the
were already taking place, susceptible of causing
last few years, given the poor returns on invest-
a reversal of this trend and bringing about a revi-
ments in the gas shipping sector. Even if we have
val in this specialised shipping segment.
seen a correction during the last six months within
All these factors became more pronounced throu- the liquefied gas sector, shipyards’ orderbooks are
ghout the course of 2004 and gave rise as from now sufficiently filled-up with orders of other ship
May / June to a sharp jump in freight rates, for all types from sectors which have been riding high
sizes, both on the spot as well as on time charter over the last two to three years (LNG, bulk carriers,
market. and tankers). As of now, the lack slots availability

The Liquefied Petroleum Gas Shipping Market in 2004 57

 in the yards does not allow any further deliveries rencies, resulting in the necessity to give more dol-
before end 2007 / beginning 2008, thus not lars for the same front values.
before another three years!
Most of these trends have been building up over
◆ Demolition remained at the same limited pace
some time, but the year 2004 saw the confirma-
as last year but with even higher values given the
tion of these expectations at such an accelerated
price of steel. The hurdle of $ 400 per lightweight
rhythm that even the most astute forecasters have
ton has been surpassed, putting the value of a
been confounded.
75,000 cbm VLGC of 25 years or more at nearly
$ 8 million apiece! Since the beginning of the year We shall not dwell in detail on the reasons for such a
some 19 units have been sold for demolition for a market correction, largely anticipated, but rather on
total capacity of nearly half a million cbm. the extent of this new situation and the consequences
◆ A sustained surge of imports to North America that might develop from such a change in situation.
linked to the constant appreciation of natural gas
prices, which have reached a level near to $ 8 per ◆◆◆
mmbtu* last November.
In line with the freight market, which saw a steady
◆ An expansion in LPG and ammonia production
rise, but more pronounced as from the third quar-
and the long-awaited revival in petrochemicals,
ter, product prices also underwent a very strong
after the depression of the last few years, linked to
appreciation right throughout the year. This
an increase in deep-sea trade affecting voyage
increase gathered pace particularly in the second
lengths and demand expressed in tonne-miles.
half, with highly volatile variations which allowed
◆ A burst of imports into developing countries,
arbitrage movements between East and West. The
such as China with its enormous population,
threshold of $ 500/t was crossed at the end of the
making it susceptible to an impressive growth of
year for LPG C&F sales into the Far East!
such magnitude that it should spill over in the short
and medium terms to a redistribution of major Our annual table showing the evolution of price
trades and economic movements in the world. levels for the main oil and gas related products
◆ A depreciation of the dollar against other cur- over the last three years shows:

Products Nov 2002 Nov 2003 Nov 2004 %

Crude oil, Middle East Gulf ($/bbl) 24 28 35.5 + 27 %
Brent crude, North Sea ($/bbl) 24 29.5 45.2 + 53 %
Naphtha CIF Rotterdam ($/mt) 235 285 365 + 28 %
Natural gas ($/mmbtu US Henry Hub) 4.25 (Dec.) 6.75 (Dec.) 7.80 (Dec.) + 15 %
Propane CP (contr. price FOB Saudi Arabia) ($/mt) 327 280 463 + 65 %
Butane CP (contr. price FOB Saudi Arabia) ($/mt) 327 280 473 + 69 %
Anhydrous ammonia (FOB Black Sea) ($/mt) 127 240 270 + 13 %
Ethylene (contr. price Europe) (€/mt) 400 512 700 + 37 %
Propylene poly gr (contr. price Europe) (€/mt) 470 425 620 + 46 %
Butadiene (Europe spot) (€/mt) 520 490 627 + 28 %
VCM (CIF Korea/Taiwan) ($/mt) 460 590 800 + 36 %

Shipping and freight levels in all sizes saw a mar- We would point out that these average freight
ked increase as from the middle of the year and rates (in time charter equivalent of spot voyages)
especially towards the end of the year. exclude any eventual ship’s idle time (awaiting

Ships by size/category (cbm) Nov 2002 Nov 2003 Nov 2004 %

VLGC 75/85,000 cbm spot MEG/Far East ($/mt) 28 30 42 + 40 %
VLGC 75/85,000 cbm 3-6 months t/c ($/mth) 600,000 650,000 1,050,000 + 62 %
LGC 52/59,000 cbm 2-6 months t/c ($/mth) 575,000 650,000 800,000 + 23 %
Mid-size 24/35,000 cbm equiv. t/c of spot voyage ($/mth) 575,000 575,000 775,000 + 35%
12/22,000 cbm equiv. t/c of spot voyage ($/mth) 405,000 425,000 650,000 + 53 %
6/11,000 cbm ethyl. equiv. t/c of spot voyage ($/mth) 300,000 340,000 575,000 + 69 %
4/8,000 cbm semi ref. 2-3 months t/c or equiv spot 225,000 240,000 425,000 + 77 %
4/8,000 cbm pressurised 2-3 months t/c or equiv. Spot 185,000 180,000 325,000 + 81 %
* Million British thermal units

58 Shipping and Shipbuilding Markets 2005


employment between voyages) and are neither
representative of net profit for owners operating
their ships on the spot market, nor of the long
term transactions (two years or more).
Situation by vessel size
VLGC (Very Large Gas Carriers)
from 70,000 to 80,000 cbm
A strong variation in spot freight rates characteri-
sed the first half of the year, leading to tighter and
more stable levels in the second half.
Starting around $ 30/t on the Middle East / Japan
route at the beginning of the year, rates went over
$ 40/t and then approached $ 48/t in October,
with a critical peak period between June and Sep-
tember. A slight easing was felt as from November,
but the level remained slightly above $ 40/t at the
end of December. These spot rates represent equi-
valent monthly time charter rates between
$ 700,000 and $ 1,200,000 with a year average of
about $ 850,000.
The firmness of the naphtha market was again a
determining factor throughout the whole year,
with the returns on naphtha voyages substantially
surpassing those of an LPG equivalent, thus provi-
ding 6 to 10 VLGCs being employed in this market.
Four units from the 1970’s were scrapped at twice
the price levels of the preceding year, thanks to
steel prices remaining high.
Gaschem Baltic
8,600 cbm, built in 2004
by Severnav,
operated by Gaschem
13 new orders were registered during the year for
delivery between end 2006 and 2008 at prices
over $ 70 million for the latter orders.
The entry of AP Moller into this sector was signal-
led with their order of four 82,000 cbm in Korea
for delivery in 2007 and their subsequent commit-
ment for a three-year charter of the VLCG ‘Oriental
Queen’ -82,000 cbm- delivered to Unique Shipping
in September 2004.
Market prospects in this size category remain posi-
tive for several years to come, but we cannot avoid
to signal the risk of seeing again an imbalance, if
the pace of new orders were to intensify or even
to remain steady at the same rate as the last few
months.
The big jump in newbuilding costs and the late
delivery dates might however limit such a deve-
lopment or at least give rise to some reconsidera-
tion of market assessments.
LGC (Large Gas Carriers)
from 52,000 to 60,000 cbm
This segment size which had already fared well last
year, improved strongly throughout 2004 to reach
occasionally monthly time charter rates of nearly
one million dollars on some voyages, with the ave-
rage being around $ 800,000 per month.
These units, mainly employed on the major ammo-
nia and LPG trade movements, benefited from the
strong revival of exports of these two products to
The Liquefied Petroleum Gas Shipping Market in 2004 59
 LPG carrier 24,000 - 85,000 cbm
Short-term T/C or T/C equivalent to spot voyages
US$ 1,000 pcm
1,600
1,400
1,200
1,000
800
600
400
200
0
Jan 98 July 98 Jan 99 July 99 Jan 00
North America: ammonia due to the steady and
sharp rise in the price of natural gas, from which it
is derived, with a consequent drop in local pro-
duction; and butane / propane due to the arbi-
trage which the price fluctuations within Europe,
the Middle East and the US allowed.
Four newbuildings of 59,000 cbm were delivered
respectively for Sonatrach, Solvang, and Yara,
whilst two more are due to be delivered to Sona-
trach and Yara in the course of 2005.
Bergesen sold two 53,000 cbm units, built in 1973
and 1979, for demolition.
Whereas the delivery of 10 newbuildings spread out
between 2003 and 2005 might have led one to
expect an occasional marginal overcapacity, it
seems that the scrapping of the older units combi-
ned with the recent recovery of the market has allo-
wed for a good balance, and even a slight impro-
vement in the demand for these ships. All of this
was supported by the firmness in the VLGC market
and the contribution from the naphtha market.
Midsize carriers 23,000 to 43,000 cbm
A good vintage for this category of vessel confir-
ming earlier expectations, with a steady progress
and satisfactory results for owners.
It is nonetheless worth underlining that the conse-
quences of the market’s recovery as from the sum-
60 Shipping and Shipbuilding Markets 2005
24-43,000 cbm
52-60,000 cbm
70-85,000 cbm
July 00 Jan 01 July 01 Jan 02 July 02 Jan 03 July 03 Jan 04 July 04 Jan 05
mer was less obvious in this size segment than in
the others. A particularity we can attribute to the
fact that this category had already registered far
better results comparatively to the others since
several years.
From a level of around $ 575,000 in November
2003, the monthly time charter rate (equivalent t/c
for spot voyages or short period t/c) for 24,000 to
35,000 cbm ships averaged at around $ 775 000
in 2004.
The main ammonia trade routes are highly deman-
ding this type of ship with a solid growth in trans-
atlantic movements, as well as the Black Sea and
the Middle East Gulf to Indian Ocean and inter Asia.
With only 30 %, the share of LPG in this segment
is declining. The average idle time due to non-
employment in this sector is now below 6 % whe-
reas it was still over 14 % in 2003.
Contrary to what we expected last year, the stabi-
lity of the market during the last few years and
increased production forecasts, have triggered a
mini-explosion in new orders for ships with a
35,000 to 38,000 cbm capacity for delivery bet-
ween 2006 and 2007 (for account of K Line,
Zodiac, Iino, Unique/Itochu, Bakri, and Sovcom-
flot). These eleven orders came on top of five
38,500 cbm ships ordered since last year for
delivery in 2005 and 2006, which makes a total
 LPG carrier 3,000 - 22,000 cbm
Medium-term T/C (6-18 months)
US$ 1,000 pcm
900

800

10-22,000 cbm
700 6-8,000 cbm Ethylene

3-6,000 cbm

600

500

400

300

200

100

0
Jan 98 July 98 Jan 99 July 99 Jan 00 July 00 Jan 01 July 01 Jan 02 July 02 Jan 03 July 03 Jan 04 July 04 Jan 05

of 16 units coming into service between end 2005
and 2007.
It should be noted that the last 35,000 cbm ships
were ordered at over $ 50 million per unit, whe-
reas the previous orders inked in 2003 were done
at just over $ 40 million, thus representing an
increase of 20 %. One should however remember
that the depreciation of the dollar since Septem-
ber 2003 has been of around 20 %, a detail which
should not be ignored in analysing price rise or
increase in freight rates.
Semi-pressurised/refrigerated
gas carriers 8,000 to 22,000 cbm
Among all the size segments, this category has
been the first to benefit from the market revival.
The chemical gas sector, and more particularly
ethylene and propylene, were the principal driving
force of this recovery. There were a few promising
indications at the end of 2003 which were confir-
med and then helped transform and amplify this
trend as from July.
Most ethylene carriers which previously were for-
ced to find alternative employment in LPG retur-
ned to their normal trade where the deep sea
voyages have multiplied, giving a substantial
increase in demand expressed in tonne-miles.
We have seen a lively recovery in exports of ethy-
lene and propylene out of the US into Europe and
Asia, an increase in movements from the Middle
East to Asia and more arbitrage positions being
taken out of Europe to Asia. Additional move-
ments from Asia to Europe have been motivated
by the pressure on product prices resulting from
shutdowns of crackers, planned or not, within the
different geographical areas.
All these simultaneous movements created a tre-
mendous pressure on demand, causing spot
freight rates to hit levels never seen before, with
increases of up to 70 %.
◆ about $ 300/t for propylene lots of 6,000 to
8,000 mt from the U.S. to Asia
◆ up to $ 180/t for ethylene in 2,000 to 4,000 mt
lots from the U.S. to Europe
◆ up to $ 250/t for ethylene in 4,000 to 5,000 mt
lots from S.E. Asia to Europe
◆ about $ 350/t for butadiene in 3,000 to 4,000
mt lots from Europe to Asia.
Jessie Maersk
35,559 cbm, built 1991
by Hyundai H.I.,
owned by A.P. Moller

The Liquefied Petroleum Gas Shipping Market in 2004 61

 Hermann Schulte
5,673 cbm, built in 1980
by Meyer Werft, operated
by Dorchester Marine

Most charters were renewed for 2005 at levels
ranging from 30 to 50 %, depending on the size
and trading route. Some owners or operators had
to refuse taking on new contracts due to a lack of
potential tonnage. A first for several years!
At the same time, the LPG activity was equally well
supported by the arbitrage movements between
Europe and the U.S. caused by the huge volatility
of LPG prices in turn affected by the variations in
oil prices.
Time charters were also greatly influenced by the
market’s recovery as from the middle of the sum-
mer and the majority of renewals for period busi-
ness saw somewhat less pronounced increases
ranging between 25 to 30 %.
On the newbuilding front, two orders of 22,000
cbm semi-ref were signed by Sonatrach / Hyproc
with Namura for delivery in 2007 / 2008, two
16,000 cbm ethylene carriers were ordered by the
Taiwanese Formosa Plastics with Jiangnan in China
for delivery in 2006, whilst Lauritzen Kosan deci-
ded at the end of the year to order four 8,000 cbm
ethylene carriers with INP in Korea for delivery in
2007.
A vessel of 15,000 cbm built in 1976 was sold for
scrap at the beginning of 2004.

LPG freight rates (spot voyages)

VLGC and 2,500/5,000 cbm
US$/ton
80

VLGC: MEG/Japan

70 Small vessels 2,500-5,000 cbm

European coasting

60

50

40

30

20

10

0
Jan 98 July 98 Jan 99 July 99 Jan 00 July 00 Jan 01 July 01 Jan 02 July 02 Jan 03 July 03 Jan 04 July 04 Jan 05

62 Shipping and Shipbuilding Markets 2005

 LPG carriers deliveries shedule of ships on order - end 2004
number of ships
18
16
14
12
10
0
FH 2005 SH 2005 FH 2006 SH 2006
In the same period, Sigloo (with a majority control
by Camillo Eitzen) purchased seven 8,000 to
12,000 cbm ethylene carriers built in the 1980’s,
which Bergesen was looking to dispose of for quite
some time, for a total value of around $ 75 million.
Given the general optimism prevalent in the petro-
chemical sector (new productions, increase in
consumption and demand in Asia) and the little
addition of newbuildings tonnage over the next
two to three years, the market for this size sector
should remain very sustained in the coming years.
Gas carriers of 8,000 cbm and less
(pressurised and semi-pressurised)
Same causes, same results! Except that the market
level for this size range was extremely weak over
the previous two to three years, so that the reco-
very has been even more significant, compared to
the other segment.
The increase in demand was felt right at the start
of the year and then gradually developed during
the first half. It was even more noticeable in the
second half, both for semi-pressurised as well as
pressurised ships.
A 3,500 cbm pressurised carrier was being traded
at an equivalent time charter monthly rate of
$ 130,000 to $ 140,000 at the beginning of the
year, whereas the same vessel was trading at a level
of $ 250,000 to $ 275,000 at the end of the year.
A 6,000 cbm semi-refigerated vessel would fetch
in the same periods a level of $ 250,000 rising up
3-11 000 cbm
20-60 000 cbm
> 75 000 cbm
FH 2007 SH 2007 FH 2008 SH 2008
to nearly $ 450,000 monthly t/c or equivalent spot
rate, with an even more pronounced variation for
ethylene carriers where a 6,000 cbm rose from
$ 275,000 up to $ 550,000.
It should also be noted that there has been a cor-
rection in the traditional differentials between the
levels of semi-refrigerated and pressurised carriers,
with the latter catching up and nearly obtaining
the same returns as the former. Another sign of
the market’s tendency!
As far as the time charter business is concerned,
several contracts spanning up to 5 years, were
principally undertaken by some owners-traders
deciding to fix their position for the future.
A substantial rise in new orders, in particular for
pressurised vessels between 3,500 and 9,000 cbm,
was registered with Japanese shipyards for domes-
tic owners-operators’ account, placing these new
units under long term contracts with Eastern and
Western majors. We have counted currently some
fifteen orders placed in 2004 for ships with a capa-
city between 3,500 and 9,000 cbm, of which two
8,600 cbm semi-refrigerated, for delivery between
2006 and 2008, as well as new orders which
should be confirmed imminently for units of 4,000
to 9,000 cbm in Italy.
These past twelve months have also witnessed
new merger transactions and fleet purchases bet-
ween owners, which were anticipated for several
years given the poor levels of past results…
The Liquefied Petroleum Gas Shipping Market in 2004 63
 During the second quarter, the Exmar Kosan pool
took control of 12 pressurised carriers of 3,500 to
5,000 cbm from Far East Shipping, thus taking an
additional grip on this inter Asian market. Several
months later five 3,000 to 6,500 cbm semi-refri-
gerated carriers of Gibson Gas Tankers were acqui-
red by Camillo Eitzen.
A Greek owner, Stealth Maritime, already well esta-
blished in other types of ships, made a noteworthy
entry into the gas sector with the acquisition of
some ten small gas carriers of 3,000 to 5,000 cbm
at prices well above those obtained last year.
Prospects
Conditions for a very firm freight market seem to
be in place for the next few years. Although it was
already fairly clear, all the ingredients are now
solidly anchored for the trend to pursue in the
same direction.
Arrival of new tonnage over the next two years
remains very limited and will probably not satisfy
even a marginal growth in demand, whilst nume-
rous factors tend to suggest that this is on an
upward path, led by the ineluctable advance of
energy demands from China and the developing
countries. Even if this is likely to slow down one
day, the tendency is still quite sustained.
Despite the high steel prices, which have allowed
scrap values to double or even triple, owners will
be tempted to extend the life of their ships in a
market which pays well. But the new safety regu-
lations and chartering practices of the Majors, are
applying to more and more geographical areas
and can no longer be much too “elastic”. Units
LPG second-hand market
Ships over 50,000 cbm
Once again the second-hand market has not pro-
vided the opportunity to allow the rejuvenation of
fleets or to invest into new ones, making owners
who are looking to buy LPG carriers of less than
15 years to turn towards the newbuilding market,
even if the prices proposed seem apparently
higher and higher.
64 Shipping and Shipbuilding Markets 2005
which are over 30 years, or even 28 years, might
hardly find employment and will probably be for-
ced to retire in the coming years.
Recent orders for newbuildings have achieved
prices which are some 20 to 30 % higher than in
2003 and the trend remains on the rise. Even
taking into account the depreciation of the dollar,
owners will have to find revenues allowing them
to pay back their investment made at higher prices
and over a shorter period.
Intra-Asia trade is to increase with the start up of
new petrochemical production units at the end of
2005, thus absorbing a growing number of ships
with a capacity of 4,000 to 8,000 cbm, which until
now has been employed on deep-sea routes.
The horizon therefore seems fairly clear and relati-
vely predictable for the two or three coming years,
excepting a major crisis which would undermine
all the fundamentals!
Taking long term shipping decisions has up to now
often been limited by the important differential
between spot freight market levels and the floor
price below which an owner couldn’t commit over
a certain period of time.
The current improvement should allow this dispa-
rity to be corrected and favour longer term com-
mitments by each contract party, be it charterer or
owner, for a better control and appreciation of his
shipping needs.
Let us hope however that the market players will
remain reasonable and do not go into an over-
investing circle with the risk of creating new imba-
lances. ■
Only Bergesen, by means of a purchase option
attached to long term charter, was able to acquire
the ‘Sunny Hope’, 78,000 cbm, built in 1990, for
about $ 33 million.
Elsewhere we have registered prices close to those
of scrapping, in the case of the sale of ‘Yuyo’,
83,000 cbm, built in 1979, or substantially more
for the ‘Gaz Concord’ built in 1978.
While awaiting to take delivery of their newbuil-
dings, Sonatrach has combined the sale of the
‘Nemja’, 56,000 cbm, built in 1983, at a reported
price close to $ 15 million, with a one year time
charter of a much more modern carrier.

Ships between 20,000 and 50,000 cbm

Indian buyers, such as Varun, have once more
shown their ability to offer to Bergesen and Exmar
attractive prices for carriers of less than 25 years,
conditioning the sale to a period charter of at least
two or three years back to the sellers’ pool. The
two oldest carriers, ‘Hektor’ and ‘Hermion’,
24,000 cbm, built in 1982 and 1984, were sold for
about $ 17 million each, whilst the ‘Libin’, 43,000
cbm built in 1982, was sold for about $ 20 million.

Ships between 10,000 and 20,000 cbm

At the start of the year, Geogas sold the ‘Victoire’,
17,500 cbm, built in 1990, for a price above
$ 20 million, while retaining control over the ship for
the next 5 years. Thereafter, the sale by Exmar of her
three ethylene carriers of 10,500 cbm, built at the
end of the 1980s and beginning of the 1990s, for a
price above $ 40 million against a 5 year time char-
ter, was the only one who livened up the sector.
Ships below 10,000 cbm
It is in this sector that there has been the largest
number of transactions this year. The rise in freight
rates finally allowed sellers to find buyers for their
fleets, and for buyers to be able to justify such invest-
ments thanks to the better economic environment.
The strong increase in newbuilding costs for this
type of carrier also played its part in reactivating
interest in second-hands, but for the moment
buyers can only count on the older units, which
then logically will push potential buyers of more
modern carriers to newbuildings.
Camillo Eitzen, who took over the Kil fleet several
years ago, has bought the fleet of his Norwegian
compatriot Igloo for about $ 75 million (7 ethy-
lene carriers of 8,000 to 10,000 cbm, built bet-
ween 1982 and 1989). This same owner then
bought the Gibson Tankers fleet (3 carriers of
6,000 cbm built in 1982 and 2 carriers of 3,500
cbm built in 1991).
In the pressurised sector, the sale of the Japanese
owner’s Far East Shipping fleet (9 carriers of 3,500
cbm built between 1996 and 2003 and two car-
riers of 5,000 cbm built in 1994 and 1995) to Gas Sriracha
3,514 cbm, built in 1996
Exmar Kosan, for about $ 85 million, caused quite by Uzuki Zosencho, sold
a sensation at the end of the first quarter. The to Centaurus Transport Ltd
reported values revealed a price varying from and now renamed ‘Grampian’
$ 6 million for a carrier of 3,500 cbm built in 1996
to $ 9,5 million for one delivered in 2003 on one
hand, and on the other hand a price of around
$ 7 million for carriers of 5,000 cbm. These values
show an increase of 20 % over the lowest levels
achieved for comparable ships in 2002 and 2003.
During the third quarter with freight rates rea-
ching more encouraging levels, the market saw
the entrance of a new name in the LPG sector, the
Greek Vafias, buyer of 9 pressurised and semi-ref
LPG carriers of 1,500 to 6,500 cbm. The level of
prices paid put the value for 10 year old pressuri-
sed carriers of 5,000 cbm and 3,500 cbm at res-
pectively around $ 12 and $ 8,5 million. In the
same way, the purchase of two semi-refs of 3,500
cbm built at the beginning of the 1990s, allowed
these ships to obtain in 2004, prices above those
reached in 2000 and above all a 70 % increase
over the prices they got in 2003. As an illustration,
it is worth recalling that freight rates for a 12-
month period has been following a similar evolu-
tion: $ 220,000 in 2000, $ 170,000 in 2003, and
about $ 320,000 at the end of 2004.
If it maintains, the improvement in freight rates
should encourage a revival of newbuilding orders
although construction costs are higher and since
the second-hand market offers too few opportu-
nities for the renewal of fleets. ■

The Liquefied Petroleum Gas Shipping Market in 2004 65

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66 Shipping and Shipbuilding Markets 2005

 THE
LIQUEFIED
NATURAL GAS
SHIPPING MARKET
IN
2004
LNG Shipping has become one of the most
active sectors in shipping with unpa-
ralleled new orders, forecast growth expected to
continue, at least 19 speculative orders, new
owners entering the “Club” along with increased
sizes and the possible demise of the steam turbine.
And all of this has occurred in 2004!
The fleet
At the end of 2003 there were 152 LNG vessels in
service with a further 34 on order, the largest of
which was 153,500 cbm capacity. RasGas II had a
tender for up to 8 ships with market talk of about
another 47 ships needed with the likelihood that
we would see 200,000 cbm and larger vessels
ordered.
At the end of 2004 there were 174 ships in service
with 113 ships on order, but let us look at these
figures in more detail:
◆ Korean shipyards control over 75 % of the new
orders,
◆ GTT membrane designs account for 82 % of
the orderbook,
◆ 16 ships on order are not steam turbine and 2
of them are purely speculative,
◆ 8 ships are over 209,000 cbm fitted with re-
liquefaction plants,
◆ China finally signed their long awaited order for
2 new ships,
◆ 1 new Korean yard (Samho) has gained an
order just a few weeks after a new Japanese yard
(Imabari) enters the Club,
◆ One recent LNG entrant has been bought out
by an even newer entrant,
◆ Two new Russian LNG owners have joined,
◆ 4 newcomers have won the sought after (but
non lucrative?) Qatar orders,
◆ Yard prices have risen as steel prices have
increased and yard slots have disappeared,
The Liquefied Natural Gas Shipping Market in 2004 67
 LNG carrier fleet as at January 1, 2005
Number of ships
160
140
120
100
80
60
40
20
0
Under 120,000 cbm
◆ Greek shipowners have 8 ships on order, 4 of
which are unfixed,
◆ Charter rates and periods are falling: 2 new
orders fixed against 10 year charters,
◆ 2 new orders have been placed at Universal for
75,000 cbm ships for Mediterranean trade.
However we must stress that, among all types of
ships, LNG carriers are the ones that have recorded
the smallest rise in newbuilding prices, due to a
fierce competition among shipyards in this sector.
Shipyard’s strategy has also diverged among the
LNG builders: Daewoo and Samsung have inves-
ted in the construction of series of ships, Hanjin
has decided not to take LNG orders any more and
Hyundai has chosen to concentrate on “standard”
ships as prices for the latter have risen more shar-
ply and account for less cgt (compensated gross
tons) than their LNG counterparts.
Of the 113 ships on order at end 2004, 69 have
been placed this year which in some respects fol-
lows the old school of LNG (circa early 1980’s)
where projects and Japanese buyers prefer to
order rather than charter ships that are available or
are already on speculative order – 19 ships on
order are unfixed with 4 existing new ships sitting
idle.
Technical Developments
Ever since the company has been involved in LNG
shipping, the standard line used by banks and pro-
jects has been “No new or unproven technology
68 Shipping and Shipbuilding Markets 2005
Existing
On order
120,000 - 163,000 cbm 163,000 m3 and over
and we will not be first of a class”: this probably
accounts for no new developments in nearly 40
years! However, in the space of 12 months we
have seen the size rise from 145,000 cbm in
January to 154,000 cbm in August and to 216,000
cbm in November.
Likewise, the need for the reliable steam turbine
engine was an absolute must, with much scepti-
cism voiced at the innovative French companies of
Gaz de France and Chantiers de l’Atlantique for
building dual fuelled diesel electric (hereafter
DFDE) vessels, but that was until November when
it would seem that several parties threw caution to
the wind when first BP ordered 4 DFDE ships,
swiftly followed by AP Moller ordering 2 similar
vessels. However, these owners were clearly out-
done by Qatar, aided by ExxonMobil, who confir-
med their long awaited selection by allocating 8
new 200,000 cbm plus vessels with slow speed
diesel engines equipped with re-liquefaction
plants
Commercial Developments
The year started with almost historically low LNG
shipyard prices, but it closed with prices having
risen by over $ 30 million per unit.
Twenty years charter hire period was the usual
duration for the shipping contracts, twenty years
matching the SPA (sales and purchase agree-
ment). However, the long term would appear to
be stretching out to 25 years with short term
settling around 3-5 years, with the exception of
the occasional spot fixture of which the year’s
low was reported to be $ 25,000 per day. This is
a strange phenomenon when VLCC’s were fixing
at $ 260,000 per day, yet there is a rush of tan-
ker owners wanting to get into LNG. Does the
new world LNG need some explanation to the
new entrants?
The tonne-miles demand for LNG is increasing as
the Atlantic Basin and West Coast US source the
gas from further afield. The increased distance
inflates the transportation costs that would natu-
rally reduce the net revenue for the LNG producer
if the end market could not absorb a higher price
for the transportation. The transport costs can be
reduced by increasing the amount of cargo car-
ried, and hence delivered, on each ship, reducing
the fuel costs and keeping the daily hire rate as
low as possible.
The Qatar projects of RasGas II and Qatargas II
have clearly been the most successful projects in
reducing transport costs, as they have managed
to combine all three of the above elements. New
entrants would appear to have been the most co-
operative with the Qatar shareholders, as they
have secured 15 of the 16 contracts awarded in
2004. So, was there a price to enter the hallowed
“Club”?
And what is there for 2005?
2004 has been a phenomenal year for LNG ship-
ping and it would be impossible to repeat this in
2005. However the Qatari projects will continue to
expand, likewise Nigeria. New projects will be
agreed in Brass River, Angola, Yemen, Iran, Libya
and Australia that should produce in total a requi-
rement for about a further 70 ships. If the fashion
for non steam turbine continues, there could be
some obsolescence of the older, smaller, thirsty
tonnage that could promote some more orders
but only if there are the slots available.
No doubt ever more new entrants will arrive, even
though Qatar and ExxonMobil continue with their
selection criteria – cheapest wins.
Ship prices may peak but stability in steel prices
and exchange rates will be needed.
Technological innovations have apparently been
accepted so there may be a new containment sys-
tem developed to compete with the membrane
design and perhaps another new propulsion sys-
tem will be ordered: Shell is rumoured to be
seriously looking at a gas turbine design. The stan-
dard ships design should rise to 163,000 cbm as
this is the optimal size to access most of the exis-
ting terminals, as opposed to the dedicated termi-
nals required for the 216,000 cbm size. ■
The Liquefied Natural Gas Shipping Market in 2004 69
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70 Shipping and Shipbuilding Markets 2005

 THE
DRY BULK
MARKET
IN
2004

T
ogether with all the other sectors of the
shipping market, 2004 was an exceptional
year in the dry bulk. On the back of a very
strong surge at the end of 2003, rates peaked in
March before taking a plunge until the end of
June. Then, they rebounded until December to
reach and sometimes surpass previously establi-
shed records. One only has to look at the figures
of the following daily returns: $ 35,000 per day for
a Handymax, $ 50,000 per day for a Panamax, and
over $ 100,000 per day for a Capesize.
World demand for industrial dry bulk commodities
increased sharply and exerted a strong pressure on
charterers. All raw materials were affected.
Demand took off, notably in the coal and ore sec-
tors, which represent over half of the total
volumes. Tonnage transported for iron ore went
from roughly 520 million tons in 2003 to about
570 million tons in 2004. Coking coal increased
from about 185 million tons to nearly 200 million
and steam coal from over 420 million tons to 440,
an overall rise of 7 %.
Depending on sources, the growth in volume in
2005 is expected to be around 5.5 to 6 %. Such
figures make people fill dizzy and cannot be com-
pared with what was experienced during the last
fifteen years where we usually saw an average
growth of 2 to 4 % depending on the years.
There is one key player who emerges from any
analysis of the market: namely China. Having
shown its potential over recent years, the rise in
strength of the country has never been as clearly
defined as in 2004.
The press has largely been following and reporting
this phenomenon. Carried along by strong
growth, Chinese demand for steel grew by more
than 13 % in 2004 over the year. According to the

The Dry Bulk Market in 2004 71

 Dry bulk carriers fleet over 43,000 dwt by age class end 2004

dwt
80,000,000

Handymax
70,000,000
Panamax

Capesize
60,000,000

50,000,000

40,000,000

30,000,000

20,000,000

10,000,000

0
25 years and over 20 to 24 years 15 to 19 years 10 to 14 years 5 to 9 years Under 5 years On order

Chinese Association for Ore and Steel (CSIA), affected the global supply of available tonnage.
domestic production went from 225 million tons This situation improved as from March when the
in 2003 to 270 in 2004, with the aim of reaching Chinese authorities became aware of the extent of
300 million tons in 2005. the problem and decided to implement de-stoc-
king measures in the ports. Once begun, freight
At the same time, imports of iron ore went from
rates started to drop significantly.
110 million tons in 2002 to nearly 200 million tons
in 2004 (of which 80 million tons originating from During the month of June demand took off again,
Australia and from Brazil). As a result, there was thus indicating that the efforts by the Chinese
heavy congestion in loading and discharging ports government to slow down economic growth were
at the beginning of the year, which inevitably insufficient, precipitating another sharp rise in

Dry cargo freight rates - Capesize

US$/ton
30

Capesize Coal Puerto Bolivar / Rotterdam 150,000 t

Capesize Iron ore Tubarao / Fos 145,000 t

25

20

15

10

0
Jan 02

Mar 02

June 02

Sep 02

Dec 02

Mar 03

Mai 03

Aug 03

Nov 03

Feb 04

Mai 04

July 04

Oct 04

Dec 04

Source : Baltic Exchange - BRS

72 Shipping and Shipbuilding Markets 2005

 Ingrid Oldendorff
75,000 dwt, built in 2005
by Jiangnan, operated by
Oldendorff Carriers

rates. Swept along by the dynamics of the market
and the anticipation of high freight levels, this in
turn provoked a surge in time-charter activity.
At the same time, operators became actively enga-
ged on the freight futures market. Encouraged by
the volatility of the physical market, a number of
players found an answer to their needs of getting
forward cover with derivatives. In many respects,
it could be said that 2004 paved the way towards
a maturing of these markets. It is worth noting
that their influence in the decision making process
for both owners and charterers, especially on
contracts of affreightment and period charters, is
growing.
Simultaneously, and also to reduce their exposure
to an increasing volatility of the market, the main
charterers and owners have been putting an
emphasis on concluding long term partnerships,
giving a long term business flow to the latter and
a guarantee of regularity and stability in supply
costs to the former.
However in this euphoric context, there are some
signs that suggest a certain caution, starting with
the rising supply of tonnage.

Dry cargo freight rates - Panamax

US$/ton
80

Panamax Grain US Gulf / Japan - 54,000 t

70 Panamax Coal Richards Bay / Le Havre - 70,000 t

60

50

40

30

20

10

0
Jan 02

Mar 02

June 02

Sep 02

Dec 02

Mar 03

May 03

Aug 03

Nov 03

Feb 04

May 04

July 04

Oct 04

Dec 04

Source : Baltic Exchange - BRS

The Dry Bulk Market in 2004 73

 Average time-charter rates for bulk carriers
$/day
70,000

Modern Handymax - 3/5 months t/c (del./redel. Pacific)

64,000
Modern Panamax - 3/5 months t/c
58,000 Modern Capesize - 12 months t/c

52,000

46,000

40,000

34,000

28,000

22,000

16,000

10,000

4,000
Jan 02 June 02 Nov 02 Apr 03 Sept 03 Feb 04 July 04 Dec 04

Numerous orders placed in 2003 and 2004 will
start to be handed over to the market in 2005 and
2006. This historically high level of deliveries com-
bined with a virtually non-existent volume of
demolition should eventually start to have conse-
quences on the market balance during the next
few years.
Thus for Capesize, 8 million dwt were delivered in
2004, 8.7 are due in 2005 and 9.5 in 2006. For
Panamax, 6 million dwt were delivered in 2004,
and in 2005 the figure should be 6.8 million dwt.
And for the Handymax, after 4.5 million dwt
added in 2004, 6.2 million dwt can be expected in
2005!
Some factors could act in the favour of reducing
the pace of delivery, for instance, the price of
steel and the difficulties shipyards have in buying
engines. There is a high probability that we shall
see numerous delays in deliveries. On the
demand side, the slightest change in the econo-
mic policy of the Chinese government, with
implications on imports and exports, will be mea-
sured in the light of the strategic role played by
China today on the international scene. Based on
CISA forecasts, the level of ore imports should
reach 240 million tons in 2005, an increase of
around 20 % compared to the 40 % witnessed
in 2004.
Finally, a serious question mark remains as to the
capacity of the main Australian and Brazilian ports
to be able to handle the increase in demand as, at
the same time, their productivity seems to be
unable to improve in the short term. If this conges-
tion phenomenon lasts, this will prevent a further
growth of the trade flow and consequently new
tonnage that will be introduced on the market
would generate a surplus. Some old ships could
then find their way to the scrapyards.
2004 will therefore be classified as an outstanding
vintage, a historic year that is only seen once in a
lifetime. This year has signalled the break with the
long decades of cheap or even undervalued trans-
port. The importance that China has acquired in
world trade and her appetite for raw materials,
has been and will remain the determining factor
within the market evolution. The imbalance bet-
ween supply and demand has led freight rates to
levels never achieved before.
However, one should not underestimate the
impact that the massive deliveries of new ships
will have and although it is difficult to measure
precisely, it will logically push owners to sell some
older ships for scrap. In addition, even if demand
is strong, the logistical difficulties encountered
either with the distribution network or with port
infrastructures, as well as a possible slowing down
of China’s imports, could cast a shadow on the
market. ■

74 Shipping and Shipbuilding Markets 2005

 The dry bulk second-hand market
The second-hand market for Capesize
Unbelievable! Swallowed up like so many others
by the ferocious appetite of China for raw mate-
rials, freight rates took off to levels that nobody
would have imagined and even less hoped for. The
scarcity of berths for newbuildings helped feed
this frenzy to purchase second-hand ships or new-
building contracts with prompt delivery, the latter
being able to be quickly repaid given the rates they
can obtain on the market.
When in December 2003, a 5 years old 170,000
dwt ship, built in a good shipyard was worth
about $ 48 to 49 million, its value was close to
$ 62 million in March 2004!
At the end of June or early July, after a rather
severe correction in the market, brought about by
statements from the Chinese Prime Minister
concerning necessary measures which were nee-
ded to slow down the economy that had become
overheated, this same type of ship saw its value
drop back to a level of around $ 45 million.
However the market did not cool off for long and
the year ended with prices rising again to $ 65 to
66 million.
We have been able to record some fifty transac-
tions in the course of this extremely active year.
It is surprising to see that the rise in values has
affected all ships irrespective of age and that a
number of new buyers have emerged, principally
Chinese, for whom purchasing has rapidly become
an alternative to chartering at prohibitive rates.
In order to stay in the competition, some transac-
tions have often been made without any inspec-
tion being carried out on the ship.
At the end of the year a distinct bullish trend was
still clearly perceptible.
The second-hand market for Panamax,
Handymax and Handysize bulk carriers
For all of us in shipping, 2004 will be the year we
shall remember for a very long time. We thought
that 2003 was THE year but 2004 surpassed all
expectations. We had concluded last year’s review
by stating: “If the world economic data and indi-
cators available can be considered as reliable then
we would expect the dry bulk freight market to
remain at levels considered as very firm and we
would not therefore expect bulk carrier prices to
ease off any time soon. In fact we would expect
prices to firm further, so, for those contemplating
an investment in dry bulk tonnage the sooner this
is undertaken the better it will be” and we added
“Today’s extremely firm price becomes tomorrow’s
normal market price and a few weeks later it is
considered as cheap”.
This was exactly what happened and even more,
much more…
Prices for second-hand tonnage followed the
freight market increases without a miss. On some
occasions the increase in values was much more
important than the equivalent freight rate
increase, as buyers and sellers alike were anticipa-
ting further increases.
Comparing second-hand values, for the various
sizes under consideration, at the end of 2004
against those at the end of 2003 we’ve noted:
◆ an average of 45 % to 65 % increase in the
Panamax size,
◆ an average of 50 % to 60 % increase in the
Handymax size,
◆ an average of 40 % to 50 % increase in the
Handy size.
Demolition sales remained at an all time low and
of course prices achieved by dry bulk tonnage sold
for demolition remained extremely high. They
moved from $ 270-275 per ldt at the end of 2003
to the “astronomical” levels of $ 370-380 for ves-
sels sold for demolition to India, whereas the Chi-
Eric LD
169,900 dwt, built in 1999
by Daewoo HI,
sold at the end of the year
by Louis Dreyfus Armateurs
to Diana Shipping Agencies
The Dry Bulk Market in 2004 75
 nese were paying about $ 320 per ldt at the end
of 2004 compared to about $ 290 about 12
months earlier.
2004 was the year of the large “en-bloc” deals, it
was also the year when traditional tanker owners
diversified in the dry bulk sector, the year during
which a 15 to 20 year-old bulk unit was worth
more than ever before, prompting several owners
(e.g. Oceanbulk Maritime) to sell a large number
of such vintage ladies and at last the year of some
successful Initial Public Offerings (IPO’s) shipping
companies (mostly Greek controlled) managing
and involved in dry bulk vessels, in the U.S. public
equity markets.
Among these “en-bloc” transactions it is worth
noting:
◆ The Restis group acquisition for $ 740 million of
the whole MISC dry bulk fleet consisting of 32
bulk carriers (9 Panamaxes, 9 Handymaxes and 14
Handies)
◆ The General Maritime Group (Peter Georgio-
poulos), acquisition for $ 420 million of the Top
Glory fleet consisting of 16 bulk carriers (5 Pana-
maxes, 6 Handymaxes and 5 Handies)
◆ Precious Shipping concluded a number of en-
bloc acquisitions in the Handysize segment (all
mid/early 1980’s built): 9 Handies from PNSL
(Malaysia) in March, 6 Handies from Pacific Basin
in February and in addition, there were linked to
another 10 to 12 purchases of Handies over the
year.
Some of the traditional tanker owners have been
actively participating in the dry bulk carriers
second-hand market, like General Maritime (men-
tioned earlier), Frontline (John Fredriksen), and
others.
Ship’s values evolution
At the end of the year a 10 year-old Panamax bulk
carrier was worth about $ 32 to 33 million, repre-
senting an increase of about 65 % over the past
12 months, a 5 year-old Panamax bulk carrier was
76 Shipping and Shipbuilding Markets 2005
worth about $ 40 million, which represents about
48 % appreciation when compared to the value
recorded one year earlier.
A 10 year-old Handymax bulk carrier was worth
about $ 25 million, representing an increase of
about 55 % over a period of 12 months, a 5 year-
old Handymax bulk carrier was worth about
$ 31 million, which represents a 55 % apprecia-
tion when compared to the same period one year
earlier in December 2003.
A 10 year-old Handy bulk carrier was worth about
$ 16 million, representing an increase of about
45 % over a period of 12 months, a 5 year-old
Handy bulk carrier was worth about $ 21.5 mil-
lion, which represents a 48 % appreciation when
compared to how much it was worth one year ear-
lier in December 2003.
Prospects
Concluding this year’s review of the second-hand
dry bulk carrier markets, the eternal and unavoi-
dable question is still on everyone’s mind “How
long will this freight market and consequently the
second-hand market last?” There is no clear ans-
wer and as always all involved in shipping will be
trying to analyse the world economic data, the
supply and demand situation which is fundamen-
tal in all markets, but, more importantly, every-
body will be looking closely to the Chinese eco-
nomy and the availability or rather the
non-availability of building berths for dry bulk car-
riers (in the sizes we have been referring to).
We may therefore witness the second-hand prices
for Panamax, Handymax and Handy bulkers beha-
ving in a much more volatile style than during the
past 12 to 24 months and as such any investment
in this sector should be pursued cautiously. The
other face of the coin, would of course be to capi-
talise on the present very high values and sell any
tonnage, purchased at much lower levels. ■
 FUTURES
L I M I T E D

BACKGROUND SERVICES PROVIDED

BRS Futures Ltd was set up in 2003 BRS Futures Ltd acts as a broker in principal-
and is a subsidiary of one of the to-principal freight derivative contracts.
most respected and long-established The company offers a broking service
international shipbroking firms, in existing tried and tested contracts for freight
Barry Rogliano Salles of France. swaps and options, and aims to continue
developing its range of freight and ship value-
The parent company has more
based derivative products as appropriate.
than 150 years’ experience in providing
a range of services to clients The aim of BRS Futures Ltd is to provide
in the shipping industry. existing and prospective clients
with the opportunity to use standardised risk
The last few years have seen substantial
management tools for hedging and
growth in the use of derivatives
optimisation of shipping/freight portfolios.
to reduce and manage exposure to risk
in many markets. BRS Futures Ltd is a member of the Forward
Freight Agreement Brokers Association (FFABA),
The international shipping market is no
and BRS is a panel-member contributor
exception, and in response to clients’
to market data co-ordinated and published
needs, BRS has added freight derivatives
by the London-based Baltic Exchange.
to the range of services it provides.

BRS FUTURES LIMITED

10 Napier Place - London W14 8LG - Royaume Uni

Contacts
Chris Reilly or Ramon Muga Tel.: +44 20 7602 5670 Email : trade@brs-futures.com
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François Walon Tel.: +33 1 41 92 12 34 Email : tanker@brs-paris.com

BRS Futures Ltd is a wholly-owned subsidiary of Barry Rogliano Salles, registered in

the UK (company registration number: 04565913) and is authorised and regulated
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77
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78 Shipping and Shipbuilding Markets 2005

 THE
CONTAINERSHIP
MARKET
IN
2004
A
fter the 2001 traumas, the year 2002 was
a year of convalescence and the full health
was restored in 2003. As for 2004, it has
been the year of the superlatives. It has witnessed
a shipping boom unseen since the early 1970s oil-
based boom.
This time, the international trade is sitting on a
much larger base than 35 years ago, both in com-
modity variety and in geographical pattern. One
country has however become an essential wheel:
China. It is estimated that it is at the origin of one
third of the world trade growth last year.
With its economy growing at some 9 % a year and
containerised exports reaching a 30 % annual
increase, China is itself at the origin of the contai-
nership shortage and the concomitant unprece-
dented levels of charter rates. But China is not
alone to fuel the shipping frenzy. First, and it is
important, it is inseparable from the purchasing
power of the USA and of Europe. Second, there
are other countries which are also witnessing high
levels of exports, such as India, Thailand, Vietnam
and Chile.
The rise of the Euro against the US Dollar and
Asian currencies has also implications on the
containership demand. It makes Asian products
and especially Chinese ones cheaper for Europe.
All along the year, volumes have soared on the
Far East-Europe route, which needs more ships
than the Asia-US route because of the longer
distances.
Shipowners, liner operators and port operators
have been taken by surprise by this surge. They
can hardly cope with the volumes. Ships are full
to capacity out of Asia and there are not enough
of them to scoop up all the boxes that flow out
from this continent. The congestion of termi-
nals, especially in Europe and the US, com-
pounds the problem, as they cause delays to
busy ships and disrupt the tight schedules of
The Containership Market in 2004 79
 usually well oiled weekly loops. This is a chal- Huge orderbook matches
lenge for 2005. strong trade growth

In order to save ships, liner operators have rear- In early 2005, the cellular ships orderbook stood at
ranged loops and have cut capacity on the com- 3.9 million teu, representing 53 % of the existing
paratively stagnant transatlantic trade in order to fleet. As big as it is, it does not seem excessive,
although it looks like somewhat on the high side,
send ships on busiest routes. The optimisation of
especially for the year 2007. The huge influx of
a number of services has also led to a better ove-
capacity could reasonably be absorbed by the bul-
rall filling ratio, especially at each end of the loops
lish international trade, itself supported by a
(even if it means filling with empty boxes, which
strong world economic growth.
cannot be discounted as they have to be reposi-
tioned in one way or another). The world GNP growth has reached around 4-
4.5 % in 2004 (against 2-3 % for the long term
Owners of hired container tonnage are rewarded historical average). Although a slight softening is
above all expectations, with charter rates which expected in 2005, the GNP growth should remain
are 50 % higher than the historical peaks. Leading above the historical average, and this performance
liner operators have anticipated a further rise in could be repeated in 2006, in the absence of
demand for 2005 and beyond by chartering ships for unpredictable events.
periods much longer than usual and have committed
As for the international trade, it is estimated to
themselves in huge newbuilding programmes.
have grown by 7 % in US$ terms during 2004
During the second half 2004, there has been (against 4-5 % for the long term average). Alas no
intense chartering activity for ships to be delivered figures are available in volumes, as it is difficult to
in 2005 so that the pool of ships left available has assess because of the wide variety of goods.
shrunken fast, which could in turn lead to a fur- The observation of long term trends shows that
ther round of charter rate rises once the Chinese the cellular fleet has grown, roughly, twice as fast
New Year festivities (February) end. as the trade growth. It means that if the bullish
trade growth of 7 % recorded for 2004 is to be
Evolution of the cellular fleet 1988 - 2008 prolonged during the next two or three years,
Year Number Teu Progr. then it will generate containerised volumes nee-
1988 1,165 1,498,286 ding to be moved by a fleet growing at 14 % per
1989 1,198 1,604,192 7.1% annum. This is precisely the rate at which the fleet
1990 1,248 1,710,233 6.6% is expected to grow during the next three years,
according to BRS-Alphaliner forecast.
1991 1,320 1,848,223 8.1%
1992 1,407 2,005,566 8.5% Even in case of a softening, the supply-demand
1993 1,498 2,201,172 9.8% ratio of containerships is to remain on the owners
1994 1,596 2,378,918 8.1% side, at least in 2005 and 2006, because of the
1995 1,743 2,642,853 11.1% catch up effect: the shortage which has developed
1996 1,918 2,970,868 12.4% in 2004 must be compensated by deliveries higher
1997 2,113 3,347,946 12.7% than the natural growth.
1998 2,343 3,853,767 15.1% Given this, the capacity coming on stream should
1999 2,524 4,274,538 10.9% be swiftly absorbed by the transportation demand
2000 2,623 4,503,004 5.3% during the coming months, while a return to a
2001 2,746 4,912,346 9.1% balanced supply-demand ratio could occur in
2002 2,905 5,515,713 12.3% 2006. This should mark a turning point in box
2003 3,046 6,097,445 10.5% rates and charter rates.
2004 3,187 6,639,276 8.9% The situation in 2007 and beyond is another mat-
2005 3,362 7,290,305 9.8% ter. Some forecasters say that the world economic
2006 3,672 8,257,000 13.3% and trade growths are to remain sustained for the
2007 3,970 9,350,000 13.2% remaining years of the decade, although not at
2008 4,252 10,684,000 14.3% 2004 levels as a softening is expected. The ques-
• Figures are given at 1st January of each year. tion is: what amplitude will take this softening ?
• Figures for 2006 to 2008 are derived from the orderbook The supply-demand balance for 2007 is thus diffi-

80 Shipping and Shipbuilding Markets 2005

 Evolution of charter rates - 1998-2004
(12 months tc rates)
USD/day (Source : BRS-Alphaliner)
50,000

45,000 4,000 teu

2 500 teu
40,000
1 700 teu

35,000 1,000 teu

30,000

25,000

20,000

15,000

10,000

5,000

0
Jan 98

May 98

Sept 98

Jan 99

May 99

Sept 99

Jan 00

May 00

Sept 00

Jan 01

May 01

Sept 01

Jan 02

May 02

Sept 02

Jan 03

May 03

Sept 03

Jan 04

May 04

Sept 04

Jan 05
cult to assess. Trade growth should remain howe- three or four years, without knowing what the
ver higher than the historical average and it is a future has in store. Actually, the charter market is
reasonable bet. not led by demand alone as far as long term
expectations are concerned. It is also propelled by
As for 2008-2009, the orderbook has yet to be filled
skilled operators who play the shortage game, loc-
in. So, orders of containerships for these two years
king up charterers for years against discounts on
may flow in the coming months. Assuming that a
rates. These discounts remain somewhat limited
6 % growth in trade is maintained, almost 1.3 mil-
when one considers the progression of charter
lion teu should be delivered in 2008 and 1.45 mil-
rates over the past two years.
lion teu in 2009 only to maintain the equilibrium.
With ships sometimes hired at twice their total
If the omens for the second half of the decade are
operating costs (including repayment of capital),
good, a number of worries must not be overloo-
owners enjoy an unprecedented situation since
ked, which could affect the container shipping
container ships started to be offered for charter,
market. They are :
some 35 years ago.
◆ the weakness of the US dollar and uncertainties
on exchange rates, Owners of containerships derive profits which are
◆ a possible hard landing of the Chinese eco- reminiscent of those accumulated by oil tanker
nomy, owners in the early 1970s (Onassis, Niarchos, YK
Pao, CY Tung and a crowd of other more or less
◆ a slowdown in the US consumption of imported
products due to a weak dollar combined with pos- known names).
sible interest rate increases. Indeed, a B-170 locked for three years at $ 27,000
More immediate and foreseeable, problems will per day will raise enough profit to order a brand
affect container shipping in 2005 : new ship of the same size!
◆ the shortage of cellular ships, With this in mind, it is not surprising that charte-
◆ congestion in ports, leading to delays, accen- rers look at buying ships. But with exceptional
tuating the ship shortage, returns expected on hires, sellers’ conditions defy
◆ strain on inland transportation networks. gravity and buyers think twice before taking the
plunge. Over the last 12 months, prices of second-
Charter fortunes hand ships have roughly doubled!
Operators are living a strange paradox as they are Only a few operators have taken steps in order to
rivalling to fix ships at peak rates for periods of be less dependent on chartered ships. It concerned

The Containership Market in 2004 81

 mostly MSC and, to lesser extent, CMA CGM.
Both have bought second-hand ships as well as
existing newbuilding contracts. Far behind, PIL and
Simatech have also bought second-hand tonnage.
In another deal, Zodiac Maritime has bought eight
Panamax containership contracts for assignment
to the associated company Zim (which has sold
ships as well).
Although there is a trend among operators to
order tonnage in their name, they still rely heavily
upon non operating owners, which have relent-
lessly continued to book ships all along the year.
There has been indeed a significant regular drop in
the share of chartered ships in the cellular ship
orderbook, from 63 % in January 2004 to 52 %
January 2005. The lion’s share of this reduction
concerns the VLCS orderbook: their chartered
component has shrunk from 58 % to 36 %
(thanks, for a great part, to MSC buying or exerci-
sing purchase options on chartered units).
Conversely, existing ships have been sold to non
operating owners. P&O Nedlloyd has sold en bloc
14 Panamax, while Zim has sold five 3,000 teu
units and Hanjin five 4,000 teu ones. All these
ships were sold with charters back to the sellers.
However, these deals have more to do with finan-
cial engineering than with market play.
These diverging moves led actually to a slight
increase in the chartered component of the exis-
ting cellular fleet, which stands at 47.4 %, against
47.0 % one year ago. German owners continues
to dominate the charter scene, as they control
63 % of the chartered fleet, dwarfing Greek
owners (11.5 %) and Japanese owners (7.2 %).
A few operators are however taking advantage of
peak charter rates. As strange as it seems, they
have been accepting, if not actually welcoming,
ever increasing rates for longer and longer periods
throughout the year. Maersk Sealand, MSC and
CMA CGM have been keen rivals in this race to
land as many possible ships, at the expense of
others, who are either hesitant or simply do not
have a sufficiently strong financial base to follow.
These three carriers have swooped on as much
ships as they could (not to mention their uncea-
sing order waves of newbuildings) and are thus in
a position to strongly improve their market share.
Actually, with these peak charter rates, we are on
the eve of a new era of precipitating the concen-
tration of the fleet in a few hands with a new sort
of natural selection. This may explain why there
has been no hurry in attempts to take control of
other operators last year.
The charter market
We had speculated in our last annual report that
the highest rates observed in 2003 could well
represent the average rate for 2004. Not only did
they, but they went much higher!
With ships as rare as ever, charter rates have explo-
ded to levels which are 50-60 % above the histo-
rical highs observed during the summer 2000.
Besides record rates, the year 2004 has been cha-
racterised by a lengthening of charter periods and
by fixing ships six or twelve months in advance.
These two latter trends have dried up the pool of
large ships (both existing and newbuildings) avai-
lable in 2005. Charterers are now eating into the
2006 available fleet, and a market for sublets has
started to emerge.
The rally on the charter market continues and
owners are reaping the benefits of the shortage of

Availability of ships for charter (as at 1st January 2005)

2005 2005
Size 2005 2005 2006 2006 2007 2007 Existing Charter
Exp Nbdg Exp Nbdg Exp Nbdg 01/01/05 01/01/05
4,000-5,000 teu 1 0 7 4 12 7 268 111
3,000-4,000 teu 23 2 20 10 26 20 265 107
2,500-3,000 teu 14 5 26 26 n/a n/a 249 145
2,000-2,500 teu 29 2 33 2 n/a n/a 300 172
1,500-2,000 teu 65 6 81 6 n/a n/a 425 281
Exp: number of ships for which the charter expires in the reference year (and no options attached)
Nbdg: newbuildings believed free of charter in the reference year
Existing: total existing fleet as at 1st January 2005
Charter: indicates the number of ships on charter from non-operating owners
Note: As the duration of charters decreases with size, indication of the number of charters due to expire in 2006 for the small sizes is not
relevant and is therefore not indicated.

82 Shipping and Shipbuilding Markets 2005

tonnage. The lack of adequate tonnage to launch
new intercontinental loops has thwarted the plans
of several carriers.
In December 2004-January 2005, 4,000 teu ships
were hired at $ 40-45,000 per day for 12 months
period while 2,500 teu ships were valued at $ 35-
37,000. Ships of 1,700 teu peaked at $ 27,000 for
4 years periods. 1,000 teu ships were negotiated
at $ 18,000 for 6-12 months.
The tonnage scarcity and the high demand on
regional and feeder trades have sent rates soaring
for smaller ships as well. Cellular ships of 800-850
teu are not cheap, as they reach now the $ 15,000
Slot charters follow the trend
A little spoken aspect of the container trades
concern slot charter rates. As ship charter rates
have soared, so have slot charters. Some slot
chartering agreements are referring to charter
market conditions, and the slot charter rates
are reviewed at regular intervals. Other ones
are fixed for the duration of the agreement
which is usually not more than two years.
Slot charter rates can be indexed on ship char-
ter rates as well as other operational costs,
such as voyage costs, including cost of bun-
kers, canal tolls or port dues. As the ship char-
ter rates item is the heaviest one, it is then not
surprising that slot charter hires have risen
strongly, leading even to the non-renewal of
some agreements.
In this period of tonnage scarcity, those who
run the ships may find quite profitable to fill
them at full capacity and may not wish to offer
their precious earning space to others (which
Long term charters dominate the market
Periods of four years and more for 4,000-5,000
teu ships accounted for 86 % of the reported
fixtures in 2004, against 49 % in 2003 and
17 % in 2002, according to a BRS-Alphaliner
analysis. Smaller ships have also been fixed for
much longer periods than the usual 12
mark for 12 months (against $ 8,000 end 2003).
Modern ships of 500 teu ended the year at
$ 9,000 for 12 months (against $ 4,400-4,800
during the three years pre-2004, and for periods
of 3 to 6 months).
If top rates are good news for owners, carriers
relying only upon chartered tonnage do not share
the same enthusiasm. Among them are several
niche regional carriers and feeder operators. They
use small ships (under 1,500 teu), which until early
2004 could still be hired at fair rates, but have
since reached such levels that services will have to
be reviewed or cut.
are after all rivals), unless they pay the price.
Operators are now very careful when it comes
to enter slot exchange agreements with other
lines, as they evaluate risks of failure of part-
ners, especially in the case of small operators
whose financial standing may not be strong
enough to survive the high charter hires.
There has been during the past year a number
of changes in partnerships and slot buyer par-
ticipation, which may have been caused by ten-
sions created by space shortage on a back-
ground of ship shortage and of peak charter
rates. On the other side, several operators are
teaming up to launch new services with char-
tered ships, thus sharing the burden of expen-
sive charter hires while being able to offer the
needed weekly frequency. Such a way of doing
business is of course not new, but it is exacer-
bated by current market conditions.
months. Periods of 24 to 40 months for 1,500-
2,000 teu ships accounted for 46 % of the
reported fixtures in 2004, against 7 % in 2003
and only 2 % in 2002. The accompanying table
details how the duration of charter periods
evolved from 2002 to 2004.
The Containership Market in 2004 83
 Duration of charter periods in relation to year of charter contract
Number of fixtures reported in 2002 and 2003 and share of total number of fixtures for each size range

Nb. % Nb. % Nb. % Nb. % Total

Duration < 8 months 9-18 months 24-40 months > 40 months
Size 4,000 - 5,000 teu
2002 8 27% 11 37% 6 20% 5 17% 30
2003 5 12% 4 9% 13 30% 21 49% 43
2004 8 11% 0 0% 2 3% 61 86% 71
Size 3,000 - 4,000 teu
2002 40 44% 38 42% 7 8% 5 6% 90
2003 15 17% 25 29% 41 48% 5 6% 86
2004 6 15% 0 0% 10 25% 24 60% 40
Size 2,400 - 3,000 teu
2002 42 48% 40 46% 0 0% 5 6% 87
2003 25 19% 35 27% 58 44% 14 11% 132
2004 11 8% 6 4% 35 25% 88 63% 140
Size 1,500 - 1,750 teu
2002 285 77% 80 22% 7 2% 0 0% 372
2003 190 55% 130 37% 24 7% 4 1% 348
2004 52 21% 63 26% 112 46% 16 7% 243
Size 1,000 - 1,250 teu
2002 257 81% 86 18% 5 2% 0 0% 318
2003 208 66% 95 30% 6 2% 4 1% 313
2004 54 22% 67 27% 108 43% 20 8% 249
Size B-170
2002 45 71% 18 29% 0 0% 0 0% 63
2003 36 54% 26 39% 5 7% 0 0% 67
2004 2 5% 10 27% 23 62% 2 5% 37
Source : BRS-Alphaliner

Average charter rates for 12 months charters

Size 4,000 teu 2,500 teu 1,700 teu 1,000 teu 500 teu
Average 1998 ns 14,438 10,353 7,476 5,171
Average 1999 24,781 12,342 8,534 5,908 4,423
Average 2000 26,511 18,617 12,731 7,995 4,429
Average 2001 19,259 15,092 9,413 7,365 4,536
Average 2002 18,415 10,600 7,722 6,029 4,181
Average 2003 28,792 20,417 13,311 8,237 4,599
Average 2004 41,994 33,231 22,975 13,574 7,288
Lowest 2004 37,477 27,375 19,653 9,596 5,814
Highest 2004 43,519 37,000 26,379 16,732 8,721
Rise 2003-2004 46% 63% 73% 65% 58%
Average 5 years 26,994 19,591 13,230 8,640 5,006
2004 vs 5 years 56% 70% 74% 57% 46%
ns: not significant (absence of market for large ships)
Average 5 years: average rates on last 5 years (2000-2004)
2004 vs 5 years: performance of 2004 compared to 5 years average
500 teu: charters of 6 months considered
Note : in order to avoid distorsion in the calculations of average rates, only representative modern ships have been selected, as far as pos-
sible (old ships, slow ships and ships with unusual characteristics have been excluded).

84 Shipping and Shipbuilding Markets 2005


The fleet
At 1st January 2005, the cellular fleet reached
3,362 ships for 7.29 million teu, in progression of
9.8 % on 12 months, a relatively modest increase
as the average annual progression during the past
10 years has reached 10.7 %. The cellular fleet
accounts for 89 % of the total fleet deployed on
liner trades in teu terms.
The containership fleet counts 49 units of more
than 7,500 teu and there are 165 more of these
giants on order, some of them reaching the
10,000 teu mark. By the end of 2007, there will be
enough of these leviathans to run 15 Asia-Europe
and 15 Asia-US loops.
2004 deliveries stood at 175 ships for 645,000 teu
(against 177 ships for 575,000 teu in 2003).
Orders stood at 464 ships for 1,692,000 teu,
which is significantly less than the record 520 ships
for 2,123,000 teu ordered in 2003.
The total value of cellular ships ordered in 2004
reached almost $ 22.2 billion (using conversion
rates at time of order), a figure similar to 2003,
reflecting the steep rise in newbuilding prices
($ 13,150 per teu instead of $ 10,350 per teu in
2003 – raw figures unadjusted for capacity).
The total orderbook reaches 3.9 million teu in early
2005, representing 53 % of the existing fleet. It is
dominated by large ships, with ships over 4,000
teu accounting for 74 % of the total orderbook. As
CMA CGM Hugo
100,400 dwt, delivered in
2004 by Hyundai, owned
by Conti Reederei, operated
by CMA CGM (copyright
CMA CGM)
for deletions, only five ships for 2,450 teu were
sold for scrap last year.
The teu capacity which will enter the market during
the three years 2005, 2006 and 2007 corresponds
to 47 % of the existing fleet. In other terms, the
fleet is to rise by almost 14 % per year, well above
the 10 % average observed during the past 15
years. The cellular fleet is expected to reach 10.8 mil-
lion teu in January 2008 (assuming no scrapping).
The operators
From 1st January 2004 to 1st January 2005, the
combined fleet of the Top 25 carriers has grown
from 5,955,000 teu to 6,640,000 teu (+11.5 %).
Its share of the world fleet deployed on liner trades
has risen from 79.6 % to 81.3 % in teu terms,
confirming the concentration trend.
The five largest carriers alone operate 36 % of the
capacity effectively deployed on liner trades.
The total teu capacity deployed on liner trades has
grown by 9.1 % in 2004, reaching 8,168,000 teu
as at 1st January 2005, against 7,485,000 teu one
year earlier. In deadweight terms, the figure stands
at 7.5 %, with 120 million dwt at 1st January
2005 against 111.5 million dwt one year earlier.
These figures take into account all the types of
ships deployed on liner trades (cellular, multipur-
pose, ro-ro). The cellular fleet itself amounts to
7,290,000 teu (it represents 89.2 % of the total
teu figure deployed on liner trades).
The Containership Market in 2004 85
 Cellular ships - Deliveries and orders
teu quarterly - Source - BRS Alphaliner USD/day
900,000 30,000

Deliveries
800,000 Orders
Daily rate (1,700 teu)
700,000

600,000 20,000

500,000

400,000

300,000 10,000

200,000

100,000

0 0
1997-1

1997-3

1998-1

1998-3

1999-1

1999-3

2000-1

2000-3

2001-1

2001-3

2002-1

2002-3

2003-1

2003-3

2004-1

2004-3

2005-1

2005-3

2006-1

2006-3

2007-1

2007-3
The two largest carriers, APM-Maersk and MSC January 2005. APM-Maersk controls Maersk Sea-
contributed to 29 % of the fleet growth in teu land, Safmarine, Norfolkline and APMSS-MCC. MSC
terms, with 197,000 teu out of the 683,000 teu comes at the second position with 637,000 teu.
added (+101,000 teu for MSC and + 96,000 teu
These two leaders are however not among the top
for APM-Maersk).
teu gainers in relative terms. MSC grew by 18.9 %
APM-Maersk became last December the first teu mil- and APM-Maersk by 10.4 %. They are distanced by
lionaire, as its fleet reached 1,016,000 teu on 1st four carriers (within the Top 25) which have logged

Cellular ships: Deliveries & Orders - Year 2004

DELIVERIES ORDERS
Size range nb teu USD M nb teu USD M
> 7,500 teu 20 161,009 1,462 49 438,136 4,955
6,000 / 7,499 teu 5 33,214 320 32 201,666 2,541
5,500 / 5,999 teu 22 124,542 1,199 4 23,552 280
5,000 / 5,499 teu 20 100,742 897 30 151,964 1,820
4,500 / 4,999 teu 8 37,932 370 29 138,210 1,831
4,000 / 4,499 teu 9 38,002 378 54 228,346 2,862
3,500 / 3,999 teu 2 7,060 80 14 49,204 626
3,000 / 3,499 teu 3 9,273 99 16 51,378 724
2,500 / 2,999 teu 19 49,662 636 63 172,888 2,587
2,000 / 2,499 teu 11 26,978 372 15 35,418 530
1,750 / 1,999 teu 5 9,270 123 19 34,436 520
1,500 / 1,749 teu 5 8,532 120 21 41,730 678
1,250 / 1,499 teu 1 1,406 20 16 21,758 382
1,000 / 1,249 teu 10 11,442 173 63 70,753 1,285
750 / 999 teu 22 18,182 343 29 25,937 510
500 / 749 teu 12 8,049 160 10 6,940 136
350 / 499 teu
200 / 349 teu 1 240 5
100 / 199 teu
TOTAL 175 645,535 6,757 464 1,692,316 22,267
Prices shown at delivery correspond to contractual prices at the time of order

86 Shipping and Shipbuilding Markets 2004

 Operators : transactions and significant moves in 2004
Straight sales & mergers
◆ Temasek Holdings (Singapore) has taken full
control of NOL, parent company of APL.
◆ Royal Nedlloyd B.V. (Netherlands) has taken
100 % control of P&O Nedlloyd Containers Ltd (UK)
through the purchase of the 50 % stake held by
the Peninsular and Oriental Steam Navigation Co
(i.e. P&O Group). The resulting company, Royal P&O
Nedlloyd Ltd, is listed on the Amsterdam Stock
Exchange.
◆ The Ofer Group (Israel) has taken control of Zim
Navigation, since renamed Zim Integrated Shipping
Services Ltd.
◆ Costa Container Line took over the deep sea
liner trades of Gilnavi srl di Navigazione, the liner
arm of the Grimaldi-Genoa branch.
◆ The Carlyle Group has sold Horizon Lines to pri-
vate equity firm Castle Harlan.
◆ STX Corp. (Korea) has bought 67 % of Pan
Ocean Shipping Co (Korea).
◆ Neptune Orient Lines (NOL - APL parent com-
pany), Singapore, agreed to sell its 28.7 % stake in
Lorenzo Shipping Corp to National Marine Corp.
(both Philippines).
◆ Neptune Orient Lines Ltd (NOL) has sold Neptune
Associated Shipping Pte Ltd (NAS) (tankers & bun-
kering).
◆ Eimskip (Iceland) and Faroe Ship (Faeroe Islands)
have merged.
◆ Euro Container Line AS (ECL) (Norwegian com-
pany co-owned by Eimskip and Wilson Line) took
over Norwegian operator CoNor Line.
◆ Rickmers Reederei GmbH & Cie KG (Bertram
Rickmers Group), has taken over all of the shares in
CCNI GmbH (Deutschland) from Compañía Chilena
de Navegación Interoceánica SA (Santiago).
◆ Egyptian company MISR Shipping has been
absorbed by its compatriot National Navigation Co
(NNC).
◆ Trailer Bridge Inc. (USA) bought 100 % of
Kadampanattu Corp. (K. Corp.) from the Estate of
Malcom P. McLean (USA)
Transfers and moves within operating
groups
◆ NYK and its affiliate TSK have decided to spin off
their respective domestic liner service operations
and related businesses, to set up NYK Line Japan
Ltd (effective April 2005).
◆ China Shipping Container Lines (CSCL) boosted
its share in the Shanghai Puhai Shipping Co, Ltd
(SPS) from 50 % to 90 % held by other China Ship-
ping units.
◆ Hamburg-Süd abandoned its trade name Eller-
man Line.
New operators of liner services
◆ Manson Shipping (Taiwan) – services Taiwan-
Hong Kong-Vietnam-Philippines.
◆ Winland Shipping Co, Ltd (China) – services Wei-
hai-Japan.
◆ Dalian Beiliang Logistics Containers (China) - ser-
vice Dalian-Weihai-Japan.
◆ HAL Shipping (Halship) (Canada) – service Hali-
fax-USEC.
◆ Delphis NV (Belgium) is incorporated (intra
Europe services).
◆ AC Forwarding (ACF) and Hudig Veder & Dam-
mers (HVD) form AC Ireland Line.
◆ Black Sea Container Shipping Co launches intra
Black Sea service.
Cessations of activity in liner shipping
◆ CT Navigation (Taiwan) closed its services (Tai-
wan-Hong Kong-Vietnam-Philippines).
◆ Hong Kong Ming Wah (HKMW) has closed its
only service (Hong Kong-North China), marketed
under the Chiu Lun Transportation name.
◆ SPM Shipping (St Pierre & Miquelon) ceased its
activity – service Halifax-USEC.
◆ Armada Line closes its North Europe-Med ser-
vice.
◆ Blue Container Line (Greece) closed its services
(Intra Med and Black Sea).
Significant other moves
◆ China Shipping Container Lines (CSCL) has been
listed on Hong Kong Stock Exchange.
◆ Norwegian shipowner John Fredriksen has
bought stakes of 3 to 10 % in Hanjin Shipping,
Hyundai Merchant Marine, Royal P&O Nedlloyd and
NOL.
◆ EOX Group Bhd has been renamed HubLine
Berhad.
◆ The liner division of Unicorn Lines has been rena-
med Ocean Africa Container Line (OACL).
◆ TECO Lines is created by Samskip and Estonian
Shipping Co.
◆ DAL left the West Africa trades.
◆ Steamers Maritime (Singapore - Keppel Group)
has sold its whole fleet of ten containerships.
The Containership Market in 2004 87
 Liner operators ‘Top 25’ - at 1st January 2005
(Source : BRS-Alphaliner)
Maersk-SL + Safmarine
Mediterranean Shg Co
Evergreen Group
P & O Nedlloyd
CMA CGM Group
APL
Hanjin / Senator
NYK
COSCO Container Lines
China Shg. C.L. (CSCL)

www.alphaliner.com
OOCL
K Line Operated fleets
Zim Based on existing fleet at January 01 2005
Mitsui-OSK Lines (MOL)
teu capacity available on board operated ships
CSAV Group
CP Ships Group - All subsidiaries are consolidated -
Hapag-Lloyd
Yang Ming Line
Hamburg-Süd Group
Hyundai M. M.
Pacific Int'l Lines (PIL)
Wan Hai Lines
UASC
Delmas Group
IRIS Lines in '000 teu
0 200 400 600 800 1,000 1,200

growths of 28-33 %: CSAV, CSCL, Yang Ming and
CMA CGM. Outside the Top 25, the emergence of
two Chinese regional companies is worth noting:
SYMS (+24.4 %) and SITC (+20.2 %).
On the mergers & acquisition side, no large mer-
gers or takeovers occurred between rival carriers.
The most significant one has been the buying by
Costa Container Line of its compatriot Gilnavi. It
appears that aggressive carriers (read: potential
buyers) have found ways to increase market share
in securing as many ships as they can, leaving
conservative ones with what is left, i.e. not much
choice and pricey.
On the other side, some potential targets have
protected themselves from raiders, such as NOL-
APL or TUI-Hapag-Lloyd, in steering clear of mar-
ket listing. Despite this, there is still a choice of first
class carriers which remain potential targets: CP
Ships, Royal P&O Nedlloyd, Hanjin-Senator and
Hyundai M.M.
There has been however important initiatives on the
corporate side, such as Temasek Holdings, the Sin-
gapore state investment vehicle, taking control of
NOL, parent company of APL, in what can be seen
as a move to keep at home the Singapore historical
carrier, until then listed on the local Stock Exchange.
Other large deals concerned the purchase by Royal
Nedlloyd of the whole stock of P&O Nedlloyd and
the takeover of Zim by the Ofer Group.
CSCL made the news with its listing on the Hong
Kong Stock Exchange in June, while intentions to
list Hapag-Lloyd faded away as parent company
TUI changed its mind and preferred to keep the
full control of its Hamburg jewel.
There has been numerous smaller deals, which are
summed up in the accompanying table. ■

The containership second-hand market in 2003

2004 an exceptional vintage! This is cer-

tainly true for almost all shipping
markets. The year 2004, with no less than 265
sales of pure containerships (of which 44 resales of
ships under construction or ordered) and 126
other ro-ro and multipurpose ships, compared to
respectively 181 and 104 ships last year. Nonethe-
less this leaves a feeling of frustration for a num-
ber of buyers who were not able to achieve all
their intended investments.
This frustration is caused by the evident lack of
tonnage for sale, even at very high prices. Many
owners, due to lack of prompt yard slot availabi-
lity, preferred to go on the charter market for per-

88 Shipping and Shipbuilding Markets 2005

iods sometimes as much as 3, 4 or 5 years, but
who can blame them…
A simple example illustrates the mood that reigned
throughout the second half of the year: the owner
of the m/v ‘Lissy Schulte’ (B170 – 1,730 teu, built in
1995) refused an offer of no less than $ 30 million
and has finally been fixed firm to P&O for 48
months at level of $ 26,500 per day! According to
our calculations the result of this charter is equiva-
lent to about $ 35 million. We now understand why
this ship has not been sold even at such a price level.
The other specificity of the second-hand market
for containerships in 2004 is, without any doubt,
the number of sales in the 500 to 2,000 teu size
range, and more precisely from 800 to 1,200 teu.
There were no less than 15 to 20 potential buyers
who found themselves chasing the rare units
being put on the market. There was again this year
an outright winner in the person of Mr Aponte
(MSC, Geneva), with a total of some thirty ships
bought in 2004, to which should be added the
purchase of some ten newbuilding contracts ini-
tially ordered by German owners.
German owners bought some sixty ships. It is
interesting to note in this respect that it is virtually
impossible to compete with a German buyer on a
modern ship offered on the market when it is
controlled by German interests. A good lesson in
self-protection!
Also, whilst in the past ships already under long-
term charter were gaining popularity amongst
buyers, this year ships that were “time-charter free”
were by far the most sought after. In the absence of
charter free tonnage in 2004, a large number of
buyers went after containerships still employed up
until the end of 2005.
Despite the high prices paid, buyers had to be
patient for several months before they were able
to benefit from a chartering market for which they
hope it will stay at least as good as today’s levels.
As to liner operators, purchases of this kind proved
to be essential once they had to ensure operating
the necessary tonnage on their regular services.
The principal “en-bloc” sales which can be repor-
ted this year are:
◆ 5 x 3,500 teu and 9 x 4,200 teu (14 ships) built
in 1991, 92, 93, 94 and 95 from P&O Nedlloyd to
MPC Capital for a total of $ 660 million.
◆ 4 x 2,824 teu Hyundai contracts for delivery bet-
ween 2005 and 2006 resold by Erck Rickers to
CMA CGM for $ 44 million each.
◆ 8 x 4,250 teu Dalian New contracts for delivery
between 2006 and 2007 resold by Bertram Rick-
mers to Zodiac.
◆ 7 x 1,538 / 1,658 teu built between 1998 and
2000 by Jiangnan and HDW, from clients of Silver
Line (who bought the entire fleet in 2001 for $ 100
million) to MSC for $ 130 million.
◆ 10 ships of 369 to 1,012 teu, sold by Keppel
Group (Steamers) to Interorient for $ 91 million.
◆ 4 x 5,050 teu, Hanjin shipyard contracts for deli-
very in 2006, resold by Rickmers to MSC for $ 63.5
million each.
◆ 5 x 3,039 teu built between 1990 and 1992 by
HDW, sold by Zim to Torvald Klaveness and Icon
Capital for $ 35 to $ 38 million each, with a bare-
boat charter back to Zim.
◆ 4 x 2,394 teu (20 knots) built in 1994 in Spain,
sold by Zodiac Maritime to MSC for just over $ 30
million each.
◆ 4 x 2,524 teu built by Kvaerner in 2003 and
2004, sold by an Andreas Ugland-associated com-
pany to the bare-boat charterer of the ships, Ham-
burg-Sud, for $ 35 million each.
Number of pure containerships sold by size
Less than 900 teu 82
From 900 to 2,000 teu 83
From 2,000 to 3,000 teu 42
Over 3,000 teu 58 *
Total number of ships
265
sold in 2004
Total capacity of ships
500,145 teu
sold in 2004
* of which 28 contract resales
Containerships under 900 teu
Together with the normal flow of activity this year,
we have seen a search by certain buyers for ships
smaller than what they originally needed. Prices
for some ships have occasionally doubled between
mid-2003 and end 2004. Even ships that can
hardly been classified as “suitable” on this market,
such as a slow-speed vessels or those with gears
unable to perform a standard loading/unloading
rate, have found buyers at more than favourable
conditions for their owners.
Buyers based in the Far East, Germany and Greece
were, in this order, the most active within this size
category.
Interorient’s deal of buying the feeder fleet of the
Keppel Group for $ 91 million fairly well reflects
the mood of the market this year. A fleet which
has been on the market throughout the whole
The Containership Market in 2004 89
 year 2003 and which was finally sold at the begin-
ning of 2004. Since then, one can estimate the
theoretical gain in the value of each ship to be at
about 50 to 60 %.
Containerships of 900 to 2,000 teu
This has been by far the most active sector of the
second-hand containership market! A cascade of
sales, dozens of buyers, ships sometimes for sale,
sometimes withdrawn, escalating negotiations
with the seller rising his price at each stage of the
negotiation….. in short a happy shambles within
the context of euphoric freight rates and second-
hand prices.
This situation is particularly true since the summer
of 2004. At that time buyers were struggling with
the steady disappearance of charter-free ships. The
few units still available in 2004 and 2005 will
become targets for owners such as MSC, Zim or
CMA CGM…
Containerships of 2,000 to 3,000 teu
This sector saw only a small progression this year
with some fifteen more ships sold compared to
last year. At the end of the year owners of new-
building contracts for delivery in 2005 did not
hesitate to ask for € 45 million ($ 60 million) for a
gearless ship of 2,700 teu. In short, the lack of
tonnage explains some excess in ship’s valuations.
Containerships of 3,000 teu and more
Fifty percent of the 58 deals done this year were
newbuilding contract resales. This segment of the
market was dominated by Zodiac, MSC and above
all the German KGs, always very keen about ships
of this size, which combine several favourable fac-
tors to investors:
◆ a market predominately stable and secure,
◆ a popular size and already well-known in Ger-
many, thus a relatively good market knowledge by
investors,
◆ a satisfactory “liquidity” of the assets and
reliable charterers.
90 Shipping and Shipbuilding Markets 2005
One of the rare pure second-hand operation done
this year was the one involving the 3 ships of
3,187 teu controlled by Talcar, Israel, built respec-
tively in 1986, 1986, and 1988 at a price of $ 80
million en-bloc with delivery in 2005 to MSC.
Demolition
Out of the 52 ships demolished in this category,
only 5 were pure containerships, the latter total-
ling a mere 2,450 teu. The others were either mul-
tipurpose or conventional cargo ships. This low
scrapping level is a direct consequence of the firm-
ness in the freight market. Scrap metal price levels
have been hovering in the region of $ 400 per
lightweight ton.
Conclusion
The world cellular fleet has increased this year by
9.8 % to reach 3,362 ships (7,290,000 teu). This
evolution is in line with the annual average
growth of the past 15 years. However we already
know by now that the shipyards will deliver a
capacity of 47 % of the existing fleet in the course
of the next 3 years. This represents a growth of
about 14 % per year!
The demolition market usually hits ships of 27
years or more on average, which in the best case
will only shrink the world fleet by 3.2 % of its cur-
rent capacity.
The question is therefore: will Asia, and espe-
cially China whose strong export industry has
continued to expand, be able to absorb this
additional tonnage? A large number of players,
both on the industrial as well as the shipping
side, believe that it will. It is however a very com-
plex exercise to predict the strength of such a
market. As we all know, to simply maintain it at
its present levels, it depends upon China and its
neighbours, whose growth in turn seems to be
in their own hands. ■
 THE
RO-RO
MARKET
IN
2004
What is really new?
A
fter the continuous ups and downs of
2003 due to numerous military fixtures,
the year 2004 has seen the market going
back to more basic economic factors, without the
previous excesses caused by military emergencies.
A quick look at the fleet evolution shows that the
“pure Ro-Ro” concept is still in fashion in some
areas, but by all accounts limited in its capacity to
spread further afield. The Ro-Pax concept today
seems to be a more promising direction in terms of
fleet renewal. Thus there were 6 pure Ro-Ro and
18 Ro-Pax ships ordered in 2004, of which none
unfortunately were dedicated to tramping. These
figures should be compared with the 78 PCTC
ships ordered in the same period to emphasize the
huge gap between these two categories of ships,
but which could perhaps promote a closer synergy
in the not too distant future. This distortion within
the fleet evolution of the deep sea and the short
sea fleets was already largely apparent before, par-
ticularly in 2003. In addition we have seen 17 ships
sold for scrap whose average age was 33 years for
an average capacity of 900 lane meters. At the
same time, 6 new Ro-Ro units were delivered lar-
gely compensating the demolitions taking into
account the much larger average size of modern
ships (between 2,000 and 4,000 lane meters).
Thanks to good fundamentals in an admittedly very
restricted market, freight rates firmed up in a heal-
thy and steady trend throughout the year without
any noticeable seasonal effect. It should be noted
that nearly all business is transacted in euros, which
is fairly unique in shipping circles being the result
of a market concentrated around Europe and fur-
ther supported by a strong currency. We are still a
long way from the rocketing rates which have been
The Ro-Ro Market in 2004 91
 experienced by containerships, bulk carriers or
even tankers -all directly dependent on the Chinese
economic boom- but the freight levels achieved
finally allowed the few owners who ordered ships
during the last 5 years to obtain good return on
their investments, and for those who bought
second-hand ships 3 to 5 years ago to enjoy today
excellent profits.
Second-hand activity has been very sustained
throughout the year 2004 with over thirty pure
Ro-Ros changing hands as well as a dozen Ro-
Paxes. With the majority of ships bought or orde-
red having been financed in dollars, owners have
often been able to appreciate that market values
in euros were considerably higher than those in
dollars in their books. In the same way as for new-
buildings, the philosophy of second-hand buyers
is rarely speculative, they most frequently are ope-
rators of lines, or else, owners whose investment
is backed by a decent time charter commitment (3
to 5 years). We have seen in particular transactions
of modern units such as the purchase of two ships
from the Turkish owner UND (2,700 lane meters,
21.5 knots) by Norfolkline, but also 3 ships from
compatriot EGE (2,500 lane meters, 20 knots) by
Grimaldi (Naples). These sales go together with a
rationalisation of the fleet employed between the
Adriatic and Turkey since three of these ships will
be replaced by two bigger units (3,700 lane
meters, 22,5 knots) on order for UND at Flensbur-
ger shipyard.
Ville de Bordeaux
5,200 dwt, built in 2004
by Jinling, owned by
Louis Dreyfus / Hoegh,
dedicated to the carriage of
blocks of the A380 airplane
92 Shipping and Shipbuilding Markets 2005
Second-hand car transport and its limits
in supporting the market
The seaborne trade of second-hand cars bound to
West Africa and the Middle East continued on the
spurt of the second half of 2003, absorbing almost
all ships equipped with at least one car-deck, but
also the smaller car-carriers. During the autumn,
Iraq decided to limit car imports to 4 year old units
with effect from January 2005. If this regulation is
to be applied for a long period of time, ships
employed on this traffic might go through a diffi-
cult period and see their rates severely corrected
downwards, since few of these units are able to
find employment in standard short sea trade, as
the majority have deck heights or speeds which
make them incompatible with the requirements of
liner operators. Consequently, we anticipate a pos-
sible two-tiered market with firmer rates for the
more modern units employed on mix trailers /
containers trade routes and a waker rates for ships
of proven low specifications but to whom the
shortage of car-carrying tonnage has given in
2004 a second lease of life.
As far as intra-EU seaborne transportation of new
cars is concerned, we have seen a reshuffling of
the game, with Suardiaz, the long-standing privi-
leged operator for Gefco, being pushed out of
their contracts, principally to the benefit of Tras-
med and UECC on the Atlantic runs, but also of
Grimaldi Naples and LD Lines in the Mediterra-
nean.
 The future of short sea trade
For several years, projects for “highways of the
seas” have been proliferating in the hopes of
obtaining subsidies from the EU, but as of now
none have really seen the light. We are rather
afraid that these “subsidy hunters” will shortly be
seeing the doors to this treasure closing, as the rise
in freight rates makes these projects even less eco-
nomically viable. A very strong rise in oil prices and
therefore bunker prices could proportionally give
back a little competitiveness to the maritime
option over the road, but the business world by
and large is unlikely to get too keen about such a
scenario.
It is very likely that the European short sea market
will see its next boost based on the logistics model
proper to containership trade. In other words,
faced with the tremendous growth in the PCTC
fleet, the major owners of this sector are seriously
contemplating a hub and spokes concept, which
will allow the giant PCTCs (nearly 8,000 cars for
the largest units) to reduce their rotation times,
and thereby limiting costly port calls, by being lin-
ked to smaller ships which would manage the
cargo distribution in combination with other exis-
ting trades.
KESS, the short sea trade arm of K-Line has long-
term chartered 4 ships of 2,100 cars with collap-
sible decks ordered by Ray Shipping in Poland. It is
likely that this concept will be repeated in the
future, possibly with even larger ships. In addition,
the outsourcing of production units of the major
car manufacturers towards Eastern Europe will
very probably transform the Adriatic into a main
crossroads of car trade.
Prospects
We anticipate that hire rates will continue their fir-
mer trend for quite a time. This is in fact indispen-
sable to enable the few tramp owners to make a
step towards ordering new tonnage. However as
newbuilding prices have shot up both in Asia as
well as in Europe, it will be necessary to wait for
prices to calm down before we can see this pro-
cess getting off the ground. Meanwhile, it is highly
probable that in the next 2 to 3 years, the rare
orders for pure Ro-Ros of even Ro-Paxes will be
exclusively limited to owners who will operate the
ships themselves. On the other hand, a further
important depreciation of the dollar against the
euro is quite likely to be a factor which would set
off speculative orders for newbuildings in shi-
pyards outside the euro zone. ■
The Ro-Ro Market in 2004 93
 Cap-Marine
Assurances & Réassurances S.A.
Shipping and transport insurance and re-insurance broker

Headquarter
4/12, Bd des Belges - BP n° 10 - 76001 Rouen Cedex - France
Tel : + 33 (0)2 35 98 26 46 - Fax : + 33 (0)2 35 98 32 58 - E.mail : rouen@cap-marine.com
Neuilly office
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Tél : + 33 (0)1 41 92 54 00 - Fax : + 33 (0)1 41 92 54 10 - E.mail : paris@cap-marine.com
Nantes office
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Tél : + 33 (0)2 40 69 31 96 - Fax : + 33 (0)2 40 69 29 55 - E.mail : nantes@cap-marine.com

94 Shipping and Shipbuilding Markets 2005

 THE
MARINE
INSURANCE
MARKETS
IN
2004
2004, a mixed year for marine insurers
2005, a year full of dangers!
T he reduction in the number of major casual-
ties, which characterised 2003, did not
repeat itself in 2004, which saw a significant
increase in the frequency and the average cost of
the latter. The very healthy standing of the freight
market and shipping in general led to a conside-
rable increase in shipping activity, but also of the
accidents linked to navigation.
A fragile marine insurance market and
more and more concentrated
In this market, particularly favourable to the insu-
red parties of the shipping world, the insurers
seem forever subject to the erosion of their profit
margins. Apparently the marine insurance market
seems profit averse, since over the last ten years it
has caused a number of large bankruptcies. The
number of “run off” companies has become so
important that we can now speak of a real “run
off market”.
The proportion of companies which have stopped
underwriting between 1997 and 2003 are:
◆ 42 % of the marine syndicates of Lloyds,
◆ 38 % of companies on the London market,
◆ 60 % of companies on the European market,
◆ 67 % of insurers of the American marine market.
However the capacity of the international market
has never been as high as in 2004. Lloyds of Lon-
don registered for 2004 a record underwriting
capacity. Nonetheless it should be emphasised that,
in an attempt to help stabilise a maritime and ship-
The Marine Insurance Markets in 2004 95
 ping insurance market, still looking for a good With a world Hull and Machinery premium volume
balance and in order to “correct” it, Lloyds is pro- in 2003 of around $3 billion, the main markets are
posing to lower the capacity in 2005 by some 9 %. the following ($1 000):

Hull and Machinery: Japan 377,080 USA 298,987

a steadying of the increases UK (Lloyds) 348,140 Italy 258,681
Norway 337,400 UK (IUA) 194,700
In our 2003 report, we mentioned a slowing down
France 333,192 Spain 166,743
at the end of the year of the rate increases that
have been prevalent since 2000. In fact, 2004
Ship’s hulls under construction
would probably have only allowed insurers to
maintain an upward pressure on their clients who In general, newbuilding and repair yards have
were showing negative statistical results. been heavily penalised as a result of fires, produ-
cing severe losses in this sector: the comparison of
In 2004 competition increased considerably,
claims/premiums has resulted in nearly 250 % over
encouraged by the new capacities notably coming
the last three years. The ‘Pride of America’
from Russia, South Korea, and Poland. A strong
casualty, which occurred on January 13 th 2004
flow of new investors, particularly in London and
while under construction in the Bremenhaven shi-
in Scandinavia, combined with these new capaci-
pyard, has been the most important: the claim is
ties, helped stabilise the level of premiums.
estimated at $ 228 million.
The insured and their brokers can be pleased with
In conjunction with the premium increases, pre-
the stabilisation of premiums for performing
vention measures are now imposed systematically
owners, but it would be dangerous for the quality of
by insurers.
the Hull and Machinery market to see it drop again
to lower levels, which would discourage some insu- Cargo market insurance
rers who are still trying to balance their results!
Competition has remained fierce on the main
For a lot of insurers who have voiced their opinion domestic markets for the coverage of goods car-
in the specialised press, as well as at the IUMI in ried for the own account of producers. This is also
2004, the increases of the last 4 years are still the case for large industrial projects. Nonetheless
considered inadequate and some see the end of this sector produces positive results and the mar-
the upward cycle as being a critical turning point. ket has kept its tariffs stable.
The rate increases have been very patchy accor-
In this type of risk there has been a diversification
ding to the companies and despite some impres-
in the insurance offered, with on one hand the
sive percentages, the increase in premiums has
disappearance of traditional players due to effects
been restrained and leaves no room for comfort.
of concentration, and on the other hand the arri-
The arrival of new capacities could be explained by val of new solid participants proposing top level
the desire of certain re-insurers to push the “regio- financial capacities and technical skills.
nal” insurers and/or the less specialised towards
With the most speculative risks notably that invol-
underwriting international hulls, in order to avoid
ving trading, the cargo insurance market is beco-
a too strong concentration of capital in the hands
ming more internationalised and some Dutch
of the “leading underwriters”, who are becoming
companies are taking a preponderant part of it.
stronger and less numerous. Specialised insurer
brokers are thus having to question as to which Protection and Indemnity Clubs
line of action to follow :
Taken altogether, results have been in the red over
◆ to encourage additional supply by proposing
the last 6 years and, as a consequence, renewals
the new capacities to the detriment or in addition
on February 20th 2004 have been on the increase.
to traditional insurers (the current leading under-
As a whole, Clubs have achieved an average rise
writers could then get discouraged and abandon
of about 10 %.
this sector which is sometimes considered too
cyclical) Only five Clubs (American Club, Britannia, the
◆ to concentrate their placings with the traditio- Japan Club, the Shipowners’ Club, and Skuld)
nal markets or insurers taking the risk of losing have been able to produce a profit in their techni-
their client who naturally is looking for the most cal results (before investments) and none of them
competitive option! were able to achieve anything substantial.

96 Shipping and Shipbuilding Markets 2005

The pressure to increase premiums continues in
2005 but to a lesser extent, especially as a number
of insured parties who have posted profits for their
Club no longer accept the systematic increases
(General Increase), even if this is in line with the
basics principles of the P&I Clubs which is to be a
“mutual”.
War risks – Political risks
The shipping industry is having to face a growing
threat: piracy. This is developing by 20 % per year
and prospers in under-surveyed territorial waters,
where both dangerous as well as high added value
goods are transported.
However, this threat comes not only from pirates
attacking merchant ships, but also from the out-
come of a real maritime terrorism whose aims and
intentions are far more sinister and whose poten-
tial to disrupt and disorganise the flow of interna-
tional economic trade seems to have been largely
underestimated.
Market organisations
The main market places involved in international
risks are organising themselves to increase their
productivity.
In this respect Lloyds has launched the BPR (Busi-
ness Process Reform), in order to optimise its out-
put (delay and quality of issued papers), claims
procedures and financial systems.
Through the implementation of “Optiflux”, the
French marine insurance market is more modestly
seeking to optimise its financial circuits, with the
set up of new electronic procedures for co-insu-
rance management.
Legal developments
The 1996 protocol has come into force in May
2004. Based on this protocol, levels of responsibi-
lity have substantially increased, by about 150 %,
although for small ships up to 500 tons the figure
is close to 500 %. For the moment these limits
only apply to the ten states that ratified the proto-
col in 1996, namely Australia, Denmark, Finland,
Germany, Malta, Norway, Russia, Sierra Leone,
Tonga and Great Britain.
In June 2004 during the closing session of the
Vancouver Conference, the Maritime International
Committee (CMI) adopted several amendments to
the York and Antwerp Rules concerning General
Average: salvage costs, crew wages and mainte-
nance, for the period when the ship is in a port of
refuge, will no longer be included under General
Average balance.
With increased liabilities (in value, quantity and in
legislation) will 2005 mark a new turning point in
the maritime insurance market cycle? This is a
great concern and there are already some signs of
reducing premiums while specialised marine insu-
rers and P&I Clubs continue to produce weak tech-
nical results. ■
The Marine Insurance Markets in 2004 97
 PORT&SHIPPING
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TYPES OF MISSIONS
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Financial, commercial and operational audit KNOW HOW
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Opportunity and feasibility studies Inland logistics
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Organisation and staff training Waterways and sea river shipping
Databases, modelling, forecasting Cruise

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98 Shipping and Shipbuilding Markets 2005

 FRENCH SHIPYARDS
DELIVERIES AND ORDERBOOK
IN 2004

Chantiers de l’Atlantique

Ships delivered in 2004

I 32 Mistral (front part) 2004 DCN
Deployment and command vessel 199 m x 32 m on 6.20 m
Diesel electric - 15,000 kW 19 K.

L 32 MSC Opera 2004 MSC

Cruise vessel 59,058 gt – 795 cabins 251 m x 28.80 m on 6.60 m
1,526 lower berths 2 x 10,000 kW 21.7 K.

Ships on order as at 1/1/2005

J 32 Tonnerre 2005 DCN
Deployment and command vessel 199 m x 32 m on 6.20 m
Diesel electric - 15,000 kW 19 K.

M 32 Gaz de France energY 2005 Gaz de France

LNG tanker 74,130 cbm 219.50 m x 34.95 m on 9.93 m
Diesel gas electric - 18,560 kW 18.2 K.

N 32 Provalis 2005 Gaz de France

LNG tanker 153,500 cbm 290 m x 43.35 m on 11.75 m
Diesel gas electric - 28,000 kW 19.5 K.

O 32 Sea France Berlioz 2005 Sea France

Ferry 33,796 gt - 1,900 passengers 186 m x 28 m on 6.50 m
700 cars - 2,000 lm 39,000 kW 25 K.

830 Pourquoi Pas ? 2005 Ifremer

Research vessel Accomodations : 40 pers. 107 m x 20 m on 6.80 m
14.5 K.

P 32 Gaselys 2006 Gaz de France

LNG tanker 153,500 cbm 290 m x 43.35 m on 11.75 m
Diesel gas electric - 28,000 kW 19.5 K.

Q 32 MSC Musica 2006 MSC

R 32 MSC Orchestra 2007 -
Cruise vessels 90,000 gt - 2,550 lower berths 294 m x 32.20 m on 7.85 m
Diesel electric - 2 x 17,000 kW 23 K.

Alstom Leroux Naval

Ships on order as at 1/1/2005

829 - 2005 -
Yacht 71.71 m x 13.5 m on 3.75 m
Diesel electric - 2 x 1,500 kW 16 K.

- - 2006 Conseil Général du Morbihan

Ferry 450 passengers 46 m x 12 m on 2.75 m
32 cars 2 x 1,000 kW 12.5 K.

French Shipyards Deliveries and Orderbook 99

 Constructions Mécaniques de Normandie

Ship delivered in 2004

PM 41 Thémis 2004 Affaires Maritimes
Patrol boat 52.50 m x 9 m on 2.27 m
400 CL 52 Diesel 2 x MTU 16V 4000M 70 21 K.

Ships on order as at 1/1/2005

- - 2005 United Arab Emirates
Corvette 68 m x 11 m
BR 70 35 K.

- - 2006 -
Yacht 58 m x 11.20 m
15.5 K.

- - 2005 -
Yacht 42.60 m x 8.60 m
13.8 K.

Chantiers Piriou

Ships delivered in 2005

C 256 Luzolo 2004 Bourbon Maritime
AHTS UT 721 1,500 dwt 69.70 m x 17.20 m on 6.1 m
DP 2 FIFI 1 4 x 3,600 bhp - Bergen BMH8 16 K.

C 257 Saint Antoine Marie II 2004 Thon du Roussillon - Perez

Tuna boat 43.41 m x 9.50 m
2 x 400 kW - Wartsila

C 258 Capall Oir 2004 O' Malley

Longliner 36 m x 9.80 m
650 kW - ABC

C 261 Le Croisic 2004 Les Abeilles

Tug 30.30 m x 10.40 m on 4.35 m
2 x 1,800 kW - ABC 12.5 K.

C 262 Mariette Le Roch II 2004 Armement Petrel

Trawler 45.80 m x 11.80 m
1,850 kW

C 269 Arundel 2004 Acav - Les Sables d'Olonnes

Trawler 18 m

Ships on order as at 1/1/2005

C 254 Bourbon Express 2005 Bourbon Maritime
C 255 Bourbon Oceane 2005 -
FSIV 263 dwt 53.55 m x 10.80 m on 4.4 m
50 passengers 5,296 kW 4 KTA 50 20 K.

C 263 Jean Claude Coulon II 2005 Armement Petrel

C 264 Jack Abry II 2005 -
Trawlers 45.80 m x 11.80 m
1,850 kW

C 267 Roger Christian IV 2005 Delponte Sète

Tuna boat 36 m

C 268 Eric Marin 2005 Armement Cisberlande / Marin Sète

Tuna boat 38 m

C 270 Glenan 2005 Cobrecaf

Tuna boat 83.20 m x 13.80 m on 6.7 m
4,000 kW 17 K.

C 271 Renaissance II 2005 Acav - Les Sables d'Olonnes

Trawler 18 m

100 Shipping and Shipbuilding Markets 2005

 FRENCH ORDERS
TO FOREIGN SHIPYARDS
IN 2004
Ships delivered in 2004
Meyer Werft (Germany)
650 Pont-Aven 2004 Brittany Ferries
Passenger ferry 41,748 gt – 652 cabins 184.30 m x 30.90 m on 6.60 m
2,400 pass. - 650 cars 43,200 kW - MAK 27 K.

Peene Werft (Germany)

514 Marfret Douce France 2004 Marfret
Container vessel 17,250 dwt 155 m x 24.50 m
1,200 teu 11,060 kW - B&W 19 K.

De Hoop International Lobith (Netherlands)

402 Brion
403 Breuil 2004 Socatra
Coastal roro vessels 1,300 dwt 75 m x 13.80 m on 2.60 m
2 x 735 kW - Caterpillar 11 K.

- Vissolela -
Multi functional support vessel 3,320 dwt 77.30 m x 18 m on 6.10 m
4 x 1,800 kW 12 K.

Aker Brattvaag (Norway)

104 Antenor 2004 Bourbon Maritime
105 Asterie 2004 -
PSV UT 755 L 3,119 dwt 72 m x 16 m on 5.91 m
2 x 2,500 kW - Rolls Royce

Yardimci (Turkey)
32 FS Clara 2004 Fouquet Sacop
Product and chemical tanker IMO II 5,961 dwt 105.50 m x 16.80 m on 8.22 m
2,270 kW - B&W 14 K.

Jinling (China)
JLZ020503 Bro Etienne 2004 Broström S.A.S
Product and chemical tanker IMO II 37,179 dwt 185 m x 31m on 10.50 m
8,580 kW - B&W 15.2 K.

JLZ020401 Ville de Bordeaux 2004 Louis Dreyfus / Hoegh

Roro carrier 5,200 dwt 154.26 m x 24 m on 6.50 m
2 x 8,400 kW - MAK 21 K.

Nacks (China)
026 Messidor 2004 Setaf Saget (Bourbon Maritime)
Bulk carrier 55,300 dwt 189.90 m x 32.26 m on 11.10 m
11,149 kW - B&W 15.9 K.

Hyundai Mipo (South Korea)

0378 Kerlaz 2004 Socatra
0379 Kermaria 2004 -
Product and chemical tankers IMO II 36,770 dwt 182.55 m x 27.34 m on 11.20 m
12,900 kW - B&W 15.2 K.

1532 CMA CGM Hugo 2004 CMA CGM (Conti)

1534 Pacific Link 2004 -
1535 CMA CGM Vivaldi 2004 -
Container carriers 100,400 dwt - 8,189 teu 335 m x 42.80 m on 14.50 m
70,306 kW - B&W 25.5 K.

French Shipyards Deliveries and Orderbook 101

 Niestern Sander (Netherlands)
816 Dupuy de Lome 2004 CNN / Thales
Research vessel Accomodations 110 pers. 101.75 m x 15.88 m
2 x 2,970 kW 16 K.

Samsung (South Korea)

1457 CMA CGM Bellini 2004 CMA CGM
1458 CMA CGM Chopin 2004 -
1459 CMA CGM Mozart 2004 -
1460 CMA CGM Puccini 2004 -
1461 CMA CGM Rossini 2004 -
1462 CMA CGM Strauss 2004 -
1463 CMA CGM Verdi 2004 -
1464 CMA CGM Wagner 2004 -
Container carriers 65,792 dwt - 5,770 teu 277.30 m x 40.20 m on 14.50 m
57,891 kW - B&W 26 K.

STX (South Korea)

1131 Nizon 2004 Socatra
Product and chemical tanker IMO II 45,779 dwt 183 m x 32.20 m on 12.20 m
12,900 kW - B&W 14.5 K.

Austal Ships (Australia)

- Aremiti 5 2004 Aremiti Pacific Cruises
Catamaran 700 passengers 56.6 m x 14.5 m
30 cars 4 x MTU - 2,320 kW at 2,000 rpm 35 K.

Ships on order as at 1/1/2004

Fjellstrand (Norway)
1673 - 2005 Compagnie Yeu Continent
- - 2006 -
Catamarans 442 passengers 45.5 m x 11.6 m
32 K.

Myklebust Verft AS (Norway)

39 Abeille Bourbon 2005 Bourbon Maritime S.A.S
40 Abeille Liberté 2005 -
Multi purpose salvage tugs UT 515 80 m x 16.50 m on 5 m
4 x 4,000 kW - MAK 8M32C 19.5 K.

E. N. Viana do Castelo (Portugal)

227 FS Philippine 2005 Fouquet Sacop
Product and chemical tanker IMO II 19,000 dwt 140 m x 23 m on 8.30 m
6,300 kW - MAK 14 K.

H.J. Barreras (Spain)

1629 Guyenne 2005 Petromarine
Product and chemical tanker IMO II 11,000 dwt 119.90 m x 18.80 m on 8.10 m
4,320 kW 13.5 K.

RMK Marine (Turkey)

65 Chantaco 2006 Petromarine
66 Chiberta 2006 -
Product and chemical tankers IMO II 19,000 dwt 143 m x 23 m on 8.90 m
Ice class 1A 2 x 4,000 kW 14 K.

Torgem (Turkey)
83 Minorque 2005 Petromarine
Product tanker 1,500 dwt 59.20 m x 10.80 m on 4.50 m
1,000 kW - Caterpillar 9 K.

84 Majorque 2005 Petromarine

Product tanker 3,300 dwt 79.90 m x 14.25 m on 5 m
2,560 bhp 12 K.

102 Shipping and Shipbuilding Markets 2005

Yardimci (Turkey)
35 - 2005 Fouquet Sacop
Product tanker 5,961 dwt 105.50 m x 16.80 m

40 FS Charlotte 2005 Fouquet Sacop

Sulphur and bitumen carrier 11,000 dwt 118.37 m

Jinling (China)
JLZ020504 Bro Edward 2005 Broström S.A.S
JLZ020506 Bro Elliot 2005 -
Product and chemical tankers IMO II 37,300 dwt 185 m x 31m on 10.50 m
8,580 kW - B&W 6S 50ML 15.2 K.

Nacks (China)
027 Dalior 2005 Setaf Saget (Bourbon Maritime)
Fructidor 2005 -
Bulk carriers 53,500 dwt 189.90 m x 32.26 m on 12.49 m
11,149 kW - B&W 15.9 K.

Daewoo Shipbuilding & Marine Engineering (South Korea)

1159 - 2005 Louis Dreyfus Armateurs
1160 - 2005 -
Double hull bulk carriers 173,000 dwt 289 m x 45 m on 17.80 m
22,920 bhp - B&W

Hyundai Mipo (South Korea)

0302 Faouet 2005 Socatra
Product tanker 37,340 dwt 183 m x 27.34 m on 11.20 m
Ice class 1A 12,900 bhp - B&W

0420 CMA CGM Lilac 2005 CMA CGM

0421 CMA CGM Violet 2006 -
0422 CMA CGM Camellia 2006 -
0423 CMA CGM Dahlia 2006 -
Container carriers 38,200 dwt - 2,824 teu 222 m x 30 m
34,300 bhp

Hyundai Samho (South Korea)

S-253 CMA CGM Tosca 2006 CMA CGM
S-254 CMA CGM Traviata 2006 -
Container carriers 100,400 dwt - 8,189 teu 334 m x 42.80 m on 14.50 m
70,306 kW - B&W 25.4 K.

S-255 CMA CGM Medea 2006 CMA CGM

S-256 CMA CGM Norma 2006 -
Container carriers 118,740 dwt - 9,163 teu 350 m x 42.80 m on 14.50 m
70,306 kW - B&W 25.4 K.

S-279 CMA CGM Orca 2007 CMA CGM

S-280 CMA CGM Dolphin 2007 -
Container carriers 65,890 dwt - 5,100 teu 294.1 m x 32.20 m on 13.50 m
77,600 bhp - B&W 25.1 K.

Hyundai Ulsan (South Korea)

1646 CMA CGM Fidelio 2005 CMA CGM
1647 CMA CGM Nabucco 2006 -
Container carriers 100,400 dwt - 8,189 teu 334 m x 42.80 m on 14.50 m
70,306 kW - B&W 25.4 K.

1648 CMA CGM Othello 2006 CMA CGM

1649 CMA CGM Rigoletto 2006 -
Container carriers 118,740 dwt - 9,163 teu 350 m x 42.80 m on 14.50 m
70,306 kW - B&W 25.4 K.

1710 CMA CGM Blue Whale 2007 CMA CGM

1711 CMA CGM White Shark 2007 -
1768 - 2007 -
1769 - 2007 -
1770 - 2007 -
1771 - 2008 -
Container carriers 65,890 dwt - 5,060 teu 294.1 m x 32.2 m on 13.50 m
77,600 bhp - B&W 25.1 K.

French Orders to Foreign Shipyards 103

 Keppel (Singapore)
279 Bourbon Aladin 2005 Bourbon Maritime
280 Bourbon Apsara 2005 -
281 Bourbon Alexandre 2005 -
282 Bourbon Artemis 2006 -
AHTS 2,000 dwt 67 m x 15.40 m on 6.10 m
8,120 kW - Caterpillar 14 K.

Zhejiang (China)
ZJB03114 Bourbon Helios 2005 Bourbon Maritime
ZJB03115 Bourbon Hermes 2005 -
ZJB03116 Bourbon Hera 2005 -
ZJB03117 Bourbon Hector 2005 -
PSV - GPA 670 3,300 dwt 73.20 m x 16.50 m on 5.50 m
4,002 kW - Cummings 13 K.

ZJB03118 Bourbon Hestia 2006 Bourbon Maritime

ZJB03119 Bourbon Harmonie 2006 -
ZJB03120 Bourbon Hemera 2006 -
ZJB03121 Bourbon Helene 2006 -
PSV - GPA 670 3,230 dwt 73.20 m x 16.50 m on 5.50 m
5,475 kW - Cummings 13 K.

Austal Ships (Australia)

- - 2005 L'Express des Iles
- - 2006 -
Ferries 45 m
4 x MTU 16 V 396 TE74L 38 K.

104 Shipping and Shipbuilding Markets 2005

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