Companies seek less riskier routes to negotiate better rates
Shipping companies continue to bear the burden of increasing war-risk insurance premiums as their fleets pass through trouble spots, industry insiders said at the Gulf Maritime exhibition yesterday.
Amid escalating tensions with Iran over UN-imposed sanctions, shipping companies are seeking less risky routes such as Khor Fakkan that could allow them to negotiate cheaper insurance rates.
“It is a problem for shipping lines because they are responsible for shipping containers. If they import to the port of Khor Fakkan they won’t be charged too much because it is outside the Straits of Hormuz,” said Ali Al Fat’hi, senior commercial executive of Gulftainer.
Increased shipping costs may mean higher commodity prices for consumers in the region, given that about 90 per cent of the world’s cargo is moved by ships, said Dr Mohammad Abdul Rahim, Regional Manager of Europe and Africa at ClassNK, a ship classification company.
“Trade with the region keeps on growing, so they need more ships. Though they suffer, they have no choice. They have to pay premiums and pass them on to the end-consumer,” he said.
Electronic goods and basic commodity prices such as grains may see a slight increase in prices, he added.
To reduce their overall costs in the long term, shipping companies are investing in fuel-efficient vessels that could save them up to $30 million over the lifetime of the ship, said Abdul Rahim.
“Due to environmental pressure and increasing fuel costs, companies are opting for better energy efficient ships than cheaper ones. An average bulk carrier that is fuel efficient can cost $40 million, that’s $10 million more than a regular one. But in the long term they save $30 million (Dh110.16 million) over 25 years at current fuel prices,” he said.
In the wake of the Eur-opean debt crisis, many European maritime companies are looking towards the GCC to do business, said Ahmad Nabeel Al Sa’adi, sales manager at Dubai Shipbuilding and Engineering.
“Companies are coming from abroad to do business here: ship repair, marine equipment from Italy and Greece, it’s very competitive,” he said.
Challenge
Another challenge for the global shipping industry is the lack of qualified crew because of the increasing number of ships and lack of training, said Abdul Rahim.
GCC countries are planning to invest $15 billion into the expansion of their ports in the next five years.
According to a report by EC Harris, the GCC ranked the most attractive region overall for investment in ports – largely due to the important role it plays in helping to supply oil to the global economy.
“Rising trade with the emerging markets has thrown up massive business opportunities for GCC countries, encouraging them to invest heavily in their ports to raise capacity.
“Most of these ports are also well placed to benefit from a gradual shift in trade routes – being ideally located between Asia and the Far East on one hand and the West, Central Europe, and Africa on the other,” said Ahmad Mohammad Al Midfa,” Chairman of the Sharjah Chamber of Commerce and Industry, who opened the eight edition of the Gulf Maritime exhibition yesterday.
Mastech 2011, an international maritime conference on naval architecture and shipbuilding, was also held alongside the three-day exhibition.
Source: Gulf News
