ECONOMY

900 ships scrapped by 2010

At least 900 «old ladies» of the shipping market, totaling 76 million deadweight tons, must be withdrawn by 2010 according to International Maritime Regulations as they are single-hulled, even though roughly one-third of them are relatively young vessels. This is the first time that the shipping industry has had to face a specific and irrevocable date, which is an interesting as well as pioneering experiment for global shipping. Within just two-and-a-half years, a considerable number of vessels will have to go the scrapyard, although practically speaking there is a way for such vessels to be used up to 2015. In the Atlantic, single-hull ships are no longer accepted, barring a few exceptions, while in the Pacific their demand remains strong. In the last 18 months, 92 percent of single-hull very large crude carriers (VLCCs) were chartered from the Arab Gulf, destined for Korea (22 percent), China (13 percent), India (13 percent), Singapore (10 percent), Thailand (9 percent), Taiwan (9 percent) and Japan (8 percent). Their use in the Pacific raises questions about their current value, which remains high at around $40 million, regardless of their age. After all, what does it matter if a vessel is 14 or 20 years old if we know it will be withdrawn within 2.5 years? At a scrapping price of $9 million, a ship needs the very feasible daily rate of $44,000 to amortize the capital of $40 million.