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| UASC orders nine 13,000-TEU ships to meet expected demand |
| Source：schednet Author： Date：2008-08-20 |
UNITED ARAB Shipping Company (UASC), jointly owned by Bahrain, Iraq, Kuwait, Qatar, Saudi Arabia and the UAE, has announced a recent US$1.5-billion order for nine 13,000-TEU containerships.
The vessels, which form the largest containership order ever made by a Middle Eastern shipping line, are scheduled for delivery between 2010 and 2011.
UASC president and CEO Ken Bloch Soerensen told Gulf News that the order for new ships was the result of a long strategic review that the company embarked on almost four years ago to strengthen its position in the Middle East.
"We were considering this order for quite a while. The ships that we have ordered were priced below the levels of ships that were ordered about the same time last year. So we were taking the opportunity to strike at a time when the markets were slow. Ship orders have been slowing down, and we felt that the opportunity was there," said Mr Soerensen.
"There will be a period of downturn next year, but ship prices are unlikely to get back to the levels of 2002 and 2003," he said.
This comes on top of a 2005 order worth about $100 million for each of the 7,000-TEU ships that are being delivered to the shipping company this year. Today, the price of this kind of ship is about $120 million, according to Mr Soerensen, who said the price was about $75 million in 2002 for a similar ship.
"When you build a ship, she will probably sail for 30 years and will be going through a lot of [economic] cycles in her lifetime. We are going through a soft cycle now. The years 2008 and 2009 could be relatively soft years for the industry because of the slowdown in the economies of US and Europe... We are impacted, but the Middle East is still growing, although not as fast as before."
Mr Soerensen said his company experienced growth rates of 25 per cent on the trade from Asia to the Middle East in the last seven to eight years. He is forecasting a growth rate this year of about 15 per cent, compared to flat growth expected this year in the US, with analysts' forecasts ranging between minus two and plus two per cent growth. He said UASC saw about 20 per cent growth in container volumes from Asia to Europe last year.
"The increasing number of ships [in the world fleet] will reduce utilisation and that has an impact on profitability. There is an estimated oversupply for the second half of this year and for 2009. The estimation is that in 2010 the market will go back to a more healthy state," he said.
Looking ahead, Mr Soerensen said the container business is the focus of his company's current investments. "We see a lot of growth in the liquid products market. A lot of refineries and petrochemical plants are being built in the region. These will bring 50 per cent of refined and liquid chemical products production from the developed world into this part of the world."
He added, "We are expecting that the petrochemical industry will go further downstream to start production of plastic-related products that could also lead to growth in exports on the container side."
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