2010 Review and Outlook
January 8, 2010
Andre Grikitis
President and Chief Executive
Intermarine, LLC
Skipping Along a Crowded Bottom
Forecasting 2010 into 2011 in the project and heavylift sector is neither difficult nor terribly encouraging. Our sector typically lags the rest of the shipping industry by some 12-18 months, and the overall signs of a recovery are not yet strong.
Projected cargo volumes will generally be insufficient to overcome the large number of newbuildings scheduled for delivery in 2010-2011. The excessive number of vessels ordered with 200+ ton lifting capacity - many of which were ordered without regard to marketplace demands — will impact all aspects of the project/heavylift sector for years to come. While the excess of new heavylift vessels may not be as dramatic as the glut of vessels in the container and bulker industries, the resulting overcapacity will continue to drive rates down in our sector.
There has never been such a disproportionate gap between high and low rates given in any market on a sustained basis as we see today. The chaotic nature of the current freight market is exacerbated by new entrants with scant experience and by others inadequately staffed to meet the complexities of our changing industry. Our industry is no different than most others: experience and expertise count. I can buy golf clubs, maybe even at a discount, but I’ll never be Tiger Woods.
The management cost of doing business in our sector is increasing as the requirements of shippers and their clients become more exacting. Heightened technical expectations and enhanced environmental, health and safety requirements both require in-house staffing that further pressures bottom line results. With eroding margins, not all carriers will have the financial resources to provide staffing to meet the ever-increasing demands of the marketplace.
What we can expect in 2010 is a very complex and demanding marketplace where only the well-experienced and well-financed will be able to ultimately satisfy the requirements of shippers.