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Global maritime market to grow significantly during Q1 of 2017: Lloyd's Register Marine - Daily News Egypt

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Global maritime market to grow significantly during Q1 of 2017: Lloyd’s Register Marine

Ships transiting Suez Canal to reach 65 ships by beginning of 2017, says Mohamed Farid Rehab


Lloyd’s Register Marine, a leading provider of marine classification services around the world, is currently overseeing the construction of four new tugboats in the Alexandria Shipyard.

Lloyd’s Register Marine Operations Surveyor in Charge of Egypt Mohamed Farid Rehab told Daily News Egypt that the maritime market remains steady, but global events continue to affect maritime traffic and investment.

Lloyd’s Register Marine is the leading source for information on ships and oversees the construction of new ships starting from the design stage through implementation. It is one of 10 international accredited institutions in classifying ships.

How do you expect traffic through the Suez Canal to develop?

The number of ships transiting the Suez Canal in the beginning of 2017 should reach 65 ships per day. The canal’s capacity is about 100 ships per day.

Solutions to Egypt’s political problems and other conflicts in the region will push the Egyptian economy forward. Such solutions will also benefit the maritime sector as it has all the qualifications and capabilities to grow under good conditions.

How does Egypt compete with other transit points?

The Cape of Good Hope and other alternative maritime routes have existed for a long time but they cannot succeed in competition with the Suez Canal. The Suez Canal is the best in terms of economic value and safety measures.

Countries experiencing poor economic conditions resort to raising fees for its services, and the rise of Suez Canal traffic fees is subject to global maritime conditions and the number of ships passing through.

Egypt has the largest shipyard in the Middle East, specifically those in Alexandria and Port Said. North African countries do not have shipbuilding industries like Egypt, but they have some powerful fleets, like Algeria, which builds its ships in East Asia.

How does Egypt manage in terms of shipbuilding and its own fleet?

The vast majority of vessels flying the Egyptian flag are small ships, tugboats and barges. There are currently no investments in large ships.

Egypt achieved a breakthrough in the shipbuilding and shipyards industry in the past five years. The shipbuilding industry in Egypt advanced in the 1970s and 1980s, but declined suddenly due to the collapse of national shipyards’ quality compared to global shipyards.

Egypt must promote national shipyards to compete with their global counterparts. Even owners of Egyptian ships have lost their trust in the efficiency of national shipyards’ products.

What is the current state of investment in Egyptian maritime transport?

Egyptian businessmen have refrained from investing in maritime transport in light of the continuing global recession. The global market for maritime services has been unable to recover since the global financial crisis in 2008.

The inauguration of the Suez Canal expansion is not enough to double revenue. That would require the completion of the Suez Canal Area Development Project and other large projects in the works.

The Suez Canal area depends upon by many industries, especially feed industries and shipping services, due to the large number of ships transiting the channel.

How does management in Egyptian ports affect maritime transport?

The low capacity of shipyards in the Port Said area leads many ships to turn away in favour of other nearby ports.

The bureaucracy in Egypt affects its competitiveness in the field of repairing ships. Importing a few spare parts can take two to three months, while in other countries it only takes days.

What is the importance of the Egyptian national fleet?

The importance of Egypt’s national fleet should not be over looked. The country only has a few large ships, as only small ships are manufactured in Egypt.

Egypt has only one large container ship, which is the Wadi Rayan, but does not have any “mother ships” for containers or passengers.

A national fleet can help in times of political unrest and wars, as many other countries will stop their ships from docking in Egypt. A national fleet can also accommodate Egyptian labourers and sailors.

At least 100 variable ships are needed to act as the core of a strong national fleet.

Egypt sold it national fleet to Syria before the outbreak of the current crisis. Syria has maintained the ships and now has the largest commercial maritime fleet in the region.

Ten years ago, Egypt owned approximately 100 large ships that were ready to sail in international waters, but most of them have been sold.

Investors will not build new ships without contracts or signed projects.

What are some global trends affecting the shipping industry?

Global shipping activity has been in recession since 2008. Ship owners cancelled approximately 40% of new manufacturing orders, even though they had paid advances on the contracts.

The cost of ship rental should have gone down with the fall in oil prices, but the recession kept them up. All navigation companies are dealing with poor economic conditions, not only domestic ships.

What does this mean for future investment?

Investors now have to think a lot before investing in shipbuilding. One general cargo ship with a capacity of 10,000 tonnes costs $25m. Building a larger container ship that accommodates 2,500 containers costs about $40m.

The most profitable ships worldwide are container ships, followed by general cargo and bulk ships.

The private sector in Egypt is not offering to build new ships and naval units and prefers to buy used ones.

How is Lloyd’s Register Marine working to better maritime transport?

Lloyd’s Register Marine headquarters is conducting periodic studies on the navigation market and the movement of trade in the world, which indicates that the onset of the global maritime market growth will begin during the first quarter (Q1) of 2017.

Those expectations have been built on the basis of solving global political conflicts, such as the conflict between Iran and the West, which will return Iran’s fleet to international waters, especially oil tankers. Our studies also rely on the growth of the Chinese economy, as well as other East Asian economies.

What are some methods being used to solve current maritime problems?

Workshops that have been conducted in Egypt to find solutions to maritime problems have proven to be an unacceptable fruitless routine. The Egyptian maritime sector has not seen any improvements, save arsenals, in four years.

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