ABS chief expresses confidence amid downturn
American Bureau of shipping Chairman and Chief Executive Officer Robert D. Somerville said Friday there is growing industry concern that the size of the world order book for new ships may have reached a 'distorted and possibly unsustainable level.'
However, Somerville expressed confidence that 'a substantial proportion of those orders to ABS class will be built, particularly those contracted for delivery within the next 12 months.'
Continued conversion of pending orders into firm requests for class through the first part of this year contributed to that confidence, he told the classification society’s annual members meeting in New York.
The society had undertaken a comprehensive risk analysis to assess every newbuilding order it holds, he said. 'As a consequence, we feel that we have as good an insight, as current economic and market conditions allow, into the impact the downturn will have on our order book and we are adjusting our operations and staffing accordingly.'
ABS closed the books on 2008 with a fleet of more than 10,600 vessels exceeding 144 million gross tons, the largest ever. It is the third largest classification society in the world based on the gross tonnage of its fleet.
The growth continued through the first quarter of 2009 with the classed fleet reaching 148 million gross tons at the end of March.
The past year also saw the order book of new vessels contracted to ABS class increase by more than 13 million gross tons to a record 51 million gross tons. An additional 21 million tons of orders were pending to ABS class.
While current level of activity at ABS remains 'very high,' Somerville predicted the wider market downturn would begin to translate in a slow down in 2010 lasting until possibly 2012. Reminding the ABS members of the last period of massive overbuilding in the 1970s he predicted that 'it is reasonable to expect a similar period of supply-demand realignment that will leave us with a much more modest order book for some years to come.'
“There is also a silver lining to this gathering cloud,' he said. 'We see this as an opportunity to chart a new course, one that will be even more closely aligned to the provision of integrated life cycle services that help our clients to operate more safely and efficiently and that also dovetail more closely with our engineering and survey responsibilities,' he said.
ABS chief expresses confidence amid downturn
