ECONOMY

Shipowners in a rush to submit orders ahead of new regulations

Greek shipowners are back ordering new ships after a period of quiescence last year. In recent months most Greek companies have received the ships they had ordered during 2002-04, renewing their fleet considerably. Soon, though, shipyards in countries such as South Korea will have no launching cradles available even for ships to be delivered in 2009. This is forcing several shipowners to make decisions earlier and submit orders in order to avoid any future delays. Another reason leading many companies to place new orders is the rules that will apply as of April 1, following a five-year preparation under the auspices of the International Association of Classification Societies (IACS). The rules change the way ships are constructed, both tankers and dry bulkers, with the obligatory addition of 3-4 percent of weight in steel, mainly to improve safety. The new regulations will be valid for all shipbuilding contracts signed from April 1 for tankers at least 150 meters long and dry bulkers at least 90 meters in length. These changes will undoubtedly ramp up the already high costs of ship construction, although this increase cannot be calculated at the moment. As a result, a number of the deals that are under negotiation are expected to be completed by mid-March. Tsakos Energy Navigation (TEN) is one of the most active companies, being listed on the NASDAQ index in the USA. In all, the company is expecting the delivery of 13 new vessels by 2008. Recently, TEN announced the acquisition of four new ships costing $219 million. Two of them are ice-breaking oil-product carriers that are under construction. Their delivery is scheduled for the second and third quarter of 2007. The other two are used double-hulled vessels. They are a VLCC tanker of 298,800 deadweight tons built in 1993 and a product carrier of 37,532 dwt, built in 2004. TEN has also ordered two aframax tankers of 105,000 dwt at the Japanese shipyard of Sumitomo Heavy Industries. Contracts were about to be signed just a few days ago, with each vessel costing $60 million. Their delivery is set for the last quarter of 2008. The same shipyard will deliver another two aframax tankers to TEN in March and June 2007. In all, Tsakos’s company controls a fleet of 28 tankers with a combined capacity of 3.4 million dwt and an average age of 6.5 years, against a global average age of 11.7 years for tankers. Thenamaris of the Martinos family has also been active, confirming the order for two panamax tankers at the Chinese shipyards of New Century. They will be delivered within 2009 and analysts estimate their cost at about $46 million each. That is the only order by Thenamaris for the time being, as the company received eight new ships during 2005. In December it received the Seaexpress bulker which carries up to 53,000 dwt; that was the second in row from the New Century shipyard. Besides its two bulkers Thenamaris has received two VLCC tankers, two aframax tankers from Hyundai Heavy Industries and another two from Hyundai Samho. The company’s fleet now numbers 47 ships, 28 of which have been constructed after 2000. Chandris investment The $260-million investment by the Chandris family in the order of two aframax tankers was also made known recently. The 115,000-dwt ships were ordered at the Korean shipyards of Samsung Heavy Industries and will cost about $65 million. If the contract’s option is taken for two more ships then the amount invested will reach $260 million. These vessels will be delivered toward the end of 2008. Shipbrokers consider this price rather high and note, using data by Clarkson, that today a newly built tanker carrying crude oil costs about $58.5 million. The Chandris family owns today four modern product-carrying aframax tankers, constructed by Daewoo, and expects the delivery of another two such ships during this year. They were ordered in 2003 at $41 million each. Finally, the intentions of Petros Georgiopoulos of Genmar remain unknown, following the high cash flow the company has achieved in recent months after selling a big part of its fleet. Georgiopoulos stated recently that in March his company expects the first of the four suezmax ships ordered, while he will chase any opportunities available to add more vessels to its fleet.