New regulations pose problems for shipowners

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Compliance with waves of new regulations is forcing ship-owners into a series of unforeseen capital expenditure, Ahmad Al Falahi, CEO of Dubai-based Gulf Energy Maritime (GEM), said.

Speaking on the fringes of Seatrade Maritime Middle East, at Dubai World Trade Centre, Al Falahi said the state of the market was bad, but not very bad.

That stood in some contrast to his comments on the panel looking into the crude oil market and product tanker trading, where he had warned: “There are two things not to become nowadays — a shipyard and a shipowner.”

The problem with new regulations, he said in a subsequent interview, was the frequency of capital outlay.

“One of the most important things that we are facing nowadays is the age of ships,” he said. “Every regulation requires capex, and every capex requires time to recover that capex.

“Therefore with every new regulation coming in place, you always have to review and see the viability of continuing that operation. Is it sufficient to leave it on water, trading for another one or two years? Should you make the investment? Should you simply walk away and scrap the ship? These are the dilemmas that most of the owners are facing nowadays.”

Following a detailed analysis of market trends by Stavroula Betsakou, head of tanker research at Howe Robinson Partners, Al Falahi pointed out she had listed at least 10 factors impacting the tanker industry, making it extremely difficult to calculate risks and plan investments.

“It is becoming almost impossible for the ship owners to define the areas of growth,” he said, later adding, “We are living in one of the most difficult markets.”

But despite the difficulties, Al Falahi said GEM had continued to make sufficient profits to pay dividends to shareholders — and continuing to pay dividends remained his top priority.
Source: Gulf News