Asia/Pacific News
Bunker Prices Have Changed Shipping Economies
The dramatic rise in the price of marine fuel since the early 1990s has changed the economic dynamics of the industry and forced carriers to scrap older vessels, Ooi Lean Hin, vice-chairman of Evergreen Marine Corp. Sdn Bhd and chairman of the Shipping Association of Malaysia, told Malaysian news site the Edge.
"Today, because the bunker price has climbed up so much, the economics of ship design has changed to slow speeds and slow steaming," he said.
"So if you have a ship that is designed for speed you are in trouble because your operating cost is high.
"That is why a lot of ships are ending up in the scrapyard well before their time."
Ooi said decisions by some carriers to build the largest-ever containerships force competitors to follow suit.
"There is this rat race right now to order mega container ships, and it is not driven by demand or growth in volume, but by competitive elements," he said.
He said the "cascading" effect of adding larger ships to major trade routes pushes each class of ship into smaller markets, but some routes such as those between east and west Malaysia are protected because their ports do not have room for large ships.
"Smaller vessels have a role to play servicing shallower ports, but it is not a very lucrative business as the trade is heavily imbalanced with only 20 percent return traffic from Sabah and Sarawak to Peninsular Malaysia," he said.
Earlier this year, Evergreen Marine Corp. joined COSCO, K Line, Yangming, and Hanjin in a new shipping alliance called CKYHE in an effort to compete on Asia-Europe routes.
