Colombo: The sheer length of the shipping downturn has brought many shipyards to the limits of their balance sheets and unless there is a dramatic pick up in fortunes soon a further swathe of yards are likely to go to the wall. That’s the view of Ranil Wijegunawardane, the managing director and ceo of Colombo Dockyard, a facility in Sri Lanka that has operated in joint collaboration with Japan’s Onomichi Dockyard since 1993. Colombo Dockyard is engaged in shipbuilding, repair and offshore engineering.
“We are experiencing one of the longest shipping recessions; we have geared our systems to operate a lean/mean strategy to counter this difficult period,” says Wijegunawardane, adding: “We do not see a market recovery immediately in the short term.”
The overcapacity of drydocks globally is an issue that has been looming for a long time, Wijegunawardane says, driven by heady expansion in the boom years especially from China, India and the Middle East.
Owners requirements directly reflect the recession market conditions, looking for extended credit facilities and tremendous pressure on pricing, notes Wijegunawardane. This price competition – so severe since the crash in late 2008 – has driven down margins for all yards, concludes the shipyard veteran.