Concentration of so many vessels along Singapore coast raises accident fears

Ships tread water, waiting for cargo
Business Times 14 May 09;

(SINGAPORE) To go out in a small boat along Singapore's coast now is to feel like a mouse tiptoeing through an endless herd of slumbering elephants.

One of the largest fleets of ships ever gathered idles here just outside one of the world's busiest ports, marooned by the receding tide of global trade. There may be tentative signs of economic recovery in spots around the globe, but few here.

Hundreds of cargo ships - 100,000 to 300,000 tonnes each - seem to perch on top of the water rather than in it.

So many ships have congregated here - 735, according to AIS Live tracking service of Lloyd's Register-Fairplay Research - that shipping lines are becoming concerned about near misses and collisions in one of the world's most congested waterways.

The root of the problem lies in an unusually steep slump in global trade, a problem confirmed by trade statistics announced on Tuesday.

China said that its exports nosedived 22.6 per cent in April from a year earlier, while the Philippines said that its exports in March were down 30.9 per cent from a year earlier. The United States announced on Tuesday that its exports had declined 2.4 per cent in March.

'The March 2009 trade data reiterates the current challenges in our global economy,' said Ron Kirk, the US Trade Representative.

Even more worrisome is that the current level of trade does not suggest a recovery soon.

'A lot of the orders for the retail season are being placed now, and compared to recent years, they are weak,' said Chris Woodward, vice-president for container services at Ryder System, the big logistics company.

So badly battered is the shipping industry that the daily rate to charter a large bulk freighter suitable for carrying, say, iron ore, plummeted from close to US$300,000 last summer to a low of US$10,000 early this year, according to H. Clarkson & Co, a London ship brokerage.

The rate has rebounded to nearly US$25,000 in the last several weeks, and some bulk carriers have left Singapore. But shipowners say this recovery may be shortlived because it mostly reflects a rush by Chinese steel makers to import iron ore before a possible price increase next month.

Container shipping is also showing faint signs of revival, but remains deeply depressed. And more empty tankers are showing up here.

The cost of shipping a 40-foot steel container full of merchandise from southern China to northern Europe tumbled from US$1,400 plus fuel charges a year ago to as little as US$150 early this year, before rebounding to around US$300, which is still below the cost of providing the service, said Neil Dekker, a container industry forecaster at Drewry Shipping Consultants in London.

Eight small companies in the industry have gone bankrupt in the last year and at least one of the major carriers is likely to fail this year, he said.

Vessels have flocked to Singapore because it has few storms, excellent ship repair teams, cheap fuel from its own refinery and, most important, proximity to Asian ports that might eventually have cargo to ship.

Investment trusts have poured billions of dollars over the last five years into buying ships and leasing them for a year at a time to shipping lines. As the leases expire and many of these vessels are returned, losses will be heavy at these trusts and the mainly European banks that lent to them, said Stephen Fletcher, commercial director for AXS Marine, a consulting firm based in Paris.

As idle ships flock to warmer anchorages, there are security concerns. Plants grow much faster on the undersides of vessels in warm water. 'You end up with the hanging gardens of Babylon on the bottom and that affects your speed,' said Tim Huxley, the chief executive of Wah Kwong Maritime Transport, a shipping line based in Hong Kong.

One of the company's freighters became so overgrown that it was barely able to outrun pirates off Somalia recently, Mr Huxley said. The freighter escaped with 91 bullet holes in it.

M Segar, group director for Singapore's port, said in a written reply to questions that many vessels were staying just outside the port's limits, where they do not have to pay port fees.

Singapore has complained to the countries of registry about 10 to 15 ships that have anchored in sea lanes in violation of international rules in the last two weeks, Capt Segar said.

'It is a sign of the times,' said Martin Stopford, managing director of Clarkson Research Service in London, 'that Asia is the place you want to hang around this time in case things turn around.' - NYT