The shipping year 2006

	Photo: Joachim Sjöström

The year of 2006 will go down in history as a peak year for shipping investment in Scandinavia.Total investment in new and secondhand ships amounted to USD 23.6 billion, quite dramatically up from the previous high of 15.2 in 2004. Orders for drillings rigs of USD 7.4 billion lifted the total to 31 billion.

Much of the Nordic appetite for maritime investment comes from the excessive oil prices fuelling an order boom for offshore support vessels. Barely a week has passed without reported orders – and not just by Norwegian owners – taking offshore ships to 37 per cent of the contracting value. The majority, thus, comes from tankers (32 per cent) and dry cargo vessels (24 per cent); the rest being passenger ferries and specialised units.

Whereas investment figures were lower in 2006 for Danish, Swedish and Finnish owners, it was all the much higher for the Norwegians. In fact, the volume of new orders and secondhand acquisitions almost doubled from 2005, giving the Norwegians a share of 73 per cent of the total new investment in our region.

The inclination to order at – presumably – a late stage in the cycle reflects the rekindling of the Norwegian ambitions in shipping. Compared to Danish or Greek owners, it is clearly apparent that the Norwegians lost out the beginning of the boom and have been trying to pick up as much as possible later.

A closer look at the Danish investment behaviour reveals a more active participation in the early phase of the up-swing, and also a stronger commercial focus backed by flexible financial organization with leasing arrangements and international partnerships.

Significant deals
The Norwegian scene has been dominated by players like John Fredriksen with tanker orders and the building-up of Golden Ocean to a large dry bulk operator. Camillo Eitzen & Co has continued its acquisition trail with Fouquet-Sacop, Lauritzen Kosan and Blystad Shipholding, whereas Arne Blystad has disposed of his chemical tanker fleet and acted in bulk and offshore.

The importance of maritime offshore has become paramount to the cluster. No less than 45 per cent of the newbuilding value comes from 100 offshore ships, at USD 5.5 billion. This has been particularly encouraging for Norwegian suppliers and given a fresh boost for national seafarers.

A number of transactions herald structural changes
One is the ambition of Eitzen Chemical to become the world’s third largest chemical carrier. With the acquisition of Belden Shipping, K G Jebsen stands out as the world’s largest cement shipping company. Jebsen’s Gearbulk has also bought Borgestad’s fleet of open hatch vessels and thus bolstered its position in the forest products market, too. BW Gas has taken on the gas carrier fleet of Yara International, and Green Reefers has expanded commercially by adding 12 medium-sized reefers from Seatrade Groningen. Nordic American Shipping has been built up to a substantial suezmax-operator with a fleet of nine vessels. Wallenius Wilhelmsen and Höegh Autoliners are both pressing on with expansion.

Making money
Most important, however, is the fact that shipowners have had another good year to fatten their income and balance sheets. The time has also been right to depart with ships at good values.

Pride of Place goes to Knutsen OAS Shipping for selling its shuttletanker Hanne Knutsen (built 2000) to Bluewater for USD 115 million for conversion to FPSO – about the same as the building price for this twin-engined vessel. A.P. Møller Maersk sold its VLCC Emilie Maersk (1999) to Venezuela for USD 114 million and Frontline its brand-new Front Beijing to Taiwan for USD 142.5 million. The anchorhandler Skandi Bergen (built 1987) went to Indian buyers at NOK 225 million, almost twice the building cost.

Despite the frequent reports of Greek owners in the contracting market, it is obvious that the Nordic market has been relatively more active in 2006, with new orders for 350 vessels at a total cost of USD 17.7 billion, compared to 316 vessels of 9.6 billion by Greek owners, according to TradeWinds.

The difference is reflected by the Greek preference for tankers and bulk carriers, as against more specialized units for Norwegian and Swedish owners. The Greek orders amount to 22 million DWT, whereas the 231 vessels ordered by the Norwegians had a tonnage of 8.1 million DWT and a cost of USD 12.1 billion: smaller and more expensive vessels.

//Dag Bakka Jr

Latest update 24-01-2007 8:45

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