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Yards in Japan accept price cuts for additional ship orders

Yards in Japan accept price cuts for additional ship orders

Singapore: Shipping's malaise, caused by the excessive orderbook, is not being helped by the Jpanese yards, some of whom are willing to renegotiate contracts downwards in return for an extra vessel order.

"Some owners in Japan are going back to the yard to renegotiate. Some of the Japanese yards are open to reducing the order price in return for another order," Keith Denholm, director of Pacific Carriers told the Sea Asia conference in Singapore yesterday morning.

"The yards have got room to negotiate as obviously their building costs have been reduced from when they signed the contracts, and the owners are coming to renegotiate the contract price.

"A little give and take on the shipyard side and they're basically maintaining the continuity of workforce long term by saying fine we'll drop the price if you order another ship," he explained.

Another panelist at the conference session, Khalid Hashim, managing director of Precious Shipping, chimed in, saying, "It is quite frightening that people are willing to discount prices to get another order."

"We need that like a hole in the head, we're not solving the problem," concluded Denholm.  [24/04/09]