Rough weather ahead for shipping industry

The shipping industry is set to experience a slowdown this year due to several factors, including the oversupply of vessels.

''There is so much uncertainty in this business,'' said Ahmed Essa Hareb Al Falahi, Chief Executive Officer of Gulf Energy Maritime. ''The shipping industry will slow down in the near future. ''There is uncertainty in the market, those who say there is none either have no idea or they are a publicly listed company but we are a private company and we are experiencing it,'' he added. Most analysts say tanker oversupply is forecast to outnumber demand. Supply of tankers has increased by six to eight per cent for 2007 and 2008, while demand for oil trade is expected to grow by just four per cent. Tanker rates are expected to stay low until mid-2009 when substantial scrapping of single-hull tankers in relation to environmental regulations eases the oversupply situation. Banks are also finding it increasingly hard to finance shipping projects, a clear impact of the sub-prime crisis hurting the banking industry. In addition, costs have increased significantly, pushing credit margins up, Simon Deefholts, director of shipping at HSBC Bank, said. Shipowners are worried over what is happening in the global economy. The shipping industry should be alarmed because many companies make their decisions based on asset appreciation.
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