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Are owners shooting themselves in the foot with eco-ship orders?

Are owners shooting themselves in the foot with eco-ship orders?
The finger pointing has been going on for sometime, but it has intensified of late, as Greek ship owners continue the rush to order new ships, most labeled ‘eco-friendly’ by their project leaders and many as simply being seen as adding to the oversupply of tonnage. Indeed, in May it was seen Greek ship owners put their moniker οn newbuilds projects involving over 50 ships, worth in excess of $2.25bn.

The flurry of orders led renowned maritime analyst and consultant [and shipowner], Ted Petropoulos to say the ordering of eco-design ships “is [an] epidemic” and that “we [Greeks] are possibly increasing the crisis” while hoping “we are not going to shoot ourselves in the foot”.

Petropoulos made his comments at the 10th Greek Shipping & Finance Conference, where he also declared confidence on the part of the banking community to lend to Greek owners is rising, but Greeks have their own funds and the "majority of new orders are not being financed, outside those being placed in China".

Well, the orders in May were widespread, going to China, Japan, Rumania, South Korea and Vietnam and involved VLCCs, aframax tankers, MR1 and MR2 product tankers, bulk carriers from 208,000 dwt down to handysize, container ships from 9,000 teu down to 2,200 teu and an LNG carrier.

This batch follows orders which were up 44% in the January to April period. According to Piraeus-based shipbroker Golden Destiny, during the first four months, 56 ships were ordered by Greek interests so the activity in May is quite remarkable. Further, the round of ordering involved 14 different ownerships, led by the Alafouzos, Angelicoussis, Bodouroglou, Embiricos, Hajioannou, Laskaridis, Marinakis, Palios, Pappas, Tsakos and Veniamis-controlled groups.

At the same time, Economou, Frangou and Vafias were talking to shipbuilders, and leading players were arguing over the level of NB prices and the merits of the eco-designs against retrofitting.

The Angelicoussis group’s leading technical man, Stavros Hatzigrigoris, who also happens to be the md of the ever-expanding Maran Tankers / Maran Gas – some 45 tankers, five LNGs and two large LPGs of 10.75m dwt – with three 318,000dwt VLs ordered in China last months, contends NB price are not rising while also arguing that when it comes to efficiency a 10% to 15% improvement can be gained for a 10-year-old VL by retrofitting at a cost of between $1m and $1.5m, with the fuel saving alone at around 7%.

The director of technology in Greece for French class BV, John Kokarakis warns the "obvious benefits of the eco-ship label might create a two-tiered market in the future, probably without a sound justification".

"It appears old and proven ideas and management methods need to be applied in the new era of rapid developments and new business ethic," says Kokarakis.

But back to obtaining finance. Angeliki Frangou adds weight to Petropoulos’ contention money is becoming available. It appears the NYSE-listed Navios Maritime Partners, of which she is ceo, is taking the traditional route and working with bankers on a deal to fund new acquisitions. The owner has reportedly engaged Morgan Stanley, JP Morgan Chase and Citigroup to secure around $250m.

Piraeus-based Navios is said to be prepared to pay interest at up to 4% per year above the Libor, with a 1% minimum on the lending benchmark, with the loan maturing in 2018. Some of the funds have apparently been earmarked to refinance existing loans.

TAGS: Greece