Ship Yards

Ship Owner “Zim” Needed “Forward Looking Business Radar” For New-Building Purchases

News Analysis: Vaunted Zim Integrated Shipping Services (Zim) in 2007 purchased FOUR New Ships for construction by Korean Shipyards. As the World Economic Collapse occurred JUST A FEW MONTHS LATER, it appears Management did Not See the Approaching “Economic Iceberg”. ‘Zim’ posted deposits for the four Vessels of $68+/- Million Dollars with the Ship Yards (Monies the Korean Ship Yards keep now).

The obligation to ‘Zim’ would have been $1.5 +/- Billion dollars if the Ship Keels had been laid (Vessels, Associated Costs, and Interest Charges). Fortunately, for ‘Zim’,  postponement of Keel Laying worked to its advantage.

The Ship Yards now charge $100 Million Dollars per Vessel for the $170 Million Dollars they had charged ‘Zim’ in 2007  (the Price Effects of “Supply and Demand” then and now).

“Zim” still has a “Sisyphus” set of Financial Debt Hurdles to overcome.

Over-Confident Ship-Line Owners can learn that “While Money is Important for Success in Shipping; Prescience is Better”.

Reality.

Reference: http://www.globes.co.il/en/article-zim-loses-68m-deposit-for-cancelled-ship-purchases-1000915292

Brazil’s Shipyards Expand Operations While Increasing New Builds

News Analysis: Brazil is presently fabricating 370 ships, including fourteen oil rigs and 28 drill ships for the Petroleum Industry. Although this number of fabrications is small (relative to world ship construction numbers) it will make Ship Purchasers attentive to the country’s building capabilities; this in turn could bring additional orders to Brazil.

New Builds will be necessary as Ship Owners look to replace polluting Aging Vessels that are more costly to operate. Power Plants are definitely more efficient than those built 20 to 30 years ago. To gain most from a ‘Time Charter’ or the “Spot market”, Fuel Consumption may make the difference between a Daily Profit or A Loss.  For example, as the “Baltic Dry Index” falls, as is happening NOW, Operating Efficiency is Imperative for  Ship Owners; they are being paid less for vessel use.

For the myriad of Ship Owners who are highly leveraged, if Interest Rates start to go up, which is likely, Debt Service will increase and many more Bankruptcies will commence. This, the Shipyards of Brazil will have to look out for so they do not gain overcapacity in a possible future market scenario.

For now, Brazil’s Shipyard activities look very bright.

Reality.

Reference: http://riotimesonline.com/brazil-news/rio-daily/new-brazilian-shipyards-to-generate-30000-jobs/