One of the best known names in shipbroking has suggested the lifecycle of ships is set to get a whole lot shorter.
Tim Jones, chairman of BRS Group, writing the foreword to the company’s 122-page annual shipping and shipbuilding review, published yesterday, warned that the likely shorter life of merchant ships going forward will mean higher costs, albeit with the added bonus that shipping drops its speculative tendencies.
Jones, who this year celebrates 40 years with the French broking house, wrote: “The useable life of an asset can no longer be the standard 25 to 30 years which owners used to amortize their assets, as like technology and consumer goods, it will shorten significantly.”
Jones noted that financing already is generally limited to seven to 10 years with the leasing houses who are now responsible for the lion’s share of financing in the maritime world.
“Shorter shelf life, means less risk, but higher costs. Combine this with ‘sustainable lending’ and we should see a far less speculative industry and one that requires end users and financial leases or charters to guarantee a return on ever more expensive technologically advanced vessels,” Jones wrote.
Jones said owners will only undertake fleet upgrades going forward if there is a guaranteed payback or penalty for not adopting a certain technology.
This point of view was something brought up at last year’s Maritime CEO Forum in Hong Kong where tanker owners polled were adamant that the next swathe of newbuilds – likely LNG-fuelled at greater expense – would only be ordered with firm long term charters attached.
Nearly two-thirds of Splash readers in a recent poll suggested the proportion of the global fleet on long-term charter will increase as more expensive, alternatively fuelled ships are ordered.
Concluding his introduction to the BRS markets review, Jones, wrote: “We are starting to leave the boom and bust shipping cycle to concentrate on innovation, technology, data and financial tools where returns can be foreseen and anticipated. Accordingly, shipping and the environment will be better off as a result.”