Ships - our flexible friends

During the 25 years of the average vessel’s life, it is likely that the economic and even operational rationale which governed her owner’s decision to build her in the first place, will alter – sometimes quite dramatically. Whole industries which keep ships full with their products can vanish or be developed afresh in a far shorter timespan. It is a tribute to the resilience of shipowners and the flexibility of ships that these changes will probably not amount to a complete disaster for the owners, as they will probably be able to redeploy their vessels. By contrast, fixed plant ashore – factories, or even port installations, can become valued little more than scrap as a result of such changes in demand.
Some interesting changes under way in the United States amply illustrate this matter, with the mothballing of a number of LNG import facilities which were, just a few years ago, part of the government’s solutions to prevent the lights going out in a country where energy imports were soaring. Now, the “fracking” revolution and the development at astonishing speed of the internal shale gas industry has rendered all these plans for energy import increasingly redundant. The port facilities, may, in time be employed for export, rather than import, but the ships which were to be carrying the cargoes into them will be trading elsewhere as the international gas trade grows.
Shale gas, it has been suggested, could be similarly dramatic elsewhere in the world. In the UK the controversial process of “fracking” has been a major talking point all summer, with environmental campaigners and sundry anarchists besieging the modest exploratory works.
It is making those involved in the “renewable” energy nervous, with suggestions that cheap and locally sourced gas could reverse the onwards and upward march of energy prices. The opportunities have been seized with enthusiasm in a number of European countries, with Poland in particular intent on taking a European lead in this new energy bonanza.
Owners of LNG carriers might mind it a little harder to fix their ships for the delightfully long contracts once common in this sector. Life is far too complicated, energy politics impenetrable and far too many unknowns presently prevailing. The politics of the Middle East unravelling, the need for energy security, rather than necessarily cheap energy, all are issues that must occupy the minds of anyone involved in maritime transport.
History informs us that “events” have invariably shaped our commercial operations, almost as much as the ebb and flow of the economic tides. And “eventwise”, there is a great deal going on at present, which will sooner or later be reflected in the demand for ships. The flexibility of ships, stemming from their mobility, their potential for conversion to a new use in the event that events beget their redundancy in their current trade, will surely continue to make ships a good bet in an uncertain world.
Source: BIMCO