Shipowners seem as blind as ever to the question of demand as they rush to order new vessels
Michael Grey
Thursday 3 November 2011
I DO not mean to be insulting, but it occasionally occurs to me that the leaders of the industry in which I have spent the past 55 years are not all that clever. While you would be entitled to suggest that if I was any more intelligent, I would have discovered this rather earlier and shifted my allegiance to something more worthwhile than the maritime industry, but I am probably rather beyond retraining now.
Why do shipowners find it so extraordinarily difficult to avoid buying new ships at the top of the market? Why don’t they just sit on their hands, or take up something more productive until there is a verifiable need for the ships that shipbuilders are pressing so enthusiastically on them?
They don’t really have a great deal of imagination either, as they insist on buying only three types of vessel — tankers, bulkers or containerships — and concentrate on only one of these classes when there are plenty of other ship types they could be blowing their bank balances on.
They never seem to give enough attention to the matter of demand. They are a bit like retailers who insist on opening their shop in between two other shops selling the same blooming goods, and then trying to kid the customers by offering discounts.
Then they realise that the trade can support only one or two of the shops, which means the newcomer’s intervention has been something of a disaster, and the “closing down” signs go up. Which, you might think is a pretty good present-day parable for the current capesize or containership market.
I recently attended the splendid dinner of the International Maritime Industries Forum, held under the practised hand of its long-standing chairman, Jim Davis.
Mr Davis has been described for years as the Cassandra of the industry, urging caution to shipowners in the midst of their buying sprees, and repentance upon those who have blown their inheritance or taken their shareholders for a ride over a very high cliff.
You can smile at Mr Davis, and laugh at his droll sense of humour, but if you are not as thick as a plank, you probably might stir uncomfortably in your seat at his homilies, which invariably have the wisdom that comes with great age within their familiar lines.
I don’t necessarily wish to be expunged from the IMIF guest list, but Mr Davis is one of the oldest practitioners in the business, and there is not a great deal that is new in anything that he sees coming round in the present frightful fix the industry has got itself into. Lloyd’s List recently gave him a lifetime award and he jolly well deserved it, but it is the consistency of the message he preaches which, in my opinion, qualified him for this, rather than his venerability.
Next year Mr Davis will have been 60 years in the maritime industry, which means his personal experience of its numerous foibles can be traced right back to 1952. He has a perspective not vouchsafed to many who are working with the various constituent parts of the IMIF, which, it may be recalled, was started in 1975, when everything was going pear-shaped — much the direction in which it is heading today.
You might ask why, as he has been issuing his messages urging restraint and caution for the past 30 years or so, why they seem, more often than not, to have fallen on deaf ears? I suppose the only answer is that his words largely cut across human nature, and it is hard indeed to change the habits of a lifetime.
Shipowners exist to own ships, just as bankers feel they are put on God’s earth to lend money on them, and shipbuilders to fashion them out of all their many components.
Investors are there to invest, so when some plausible shipowner with a winning smile plonks a prospectus in front of them, they fail to question the graphs showing endless growth and the rich rewards available at the stroke of a pen on a cheque book? How on earth could a few words from Mr Davis halt this natural and timeless process?
Maybe his cheerful smile and obvious charm have somehow blunted the prophetic voice. “Oh, that’s old Jim,” they will say to themselves. “Don’t take too much notice — he’s always on about overtonnage and banking collapse!”
Perhaps, instead of bonhomie and good nature, Mr Davis should approach his dinner like one of those Old Testament prophets, not necessarily growing a beard or substituting Savile Row for sackcloth, but certainly being a bit rougher on his audience.
No more Irish jokes — let us have some of the hard truths about people who drive their companies into oblivion because they are too thick to see that the light at the end of the tunnel is an oncoming train.
If Mr Davis insists on Irish to ornament his lessons, instead of cheery Paddy let him adopt the fierce mien of the Rev Ian Paisley in his declamations of hellfire and damnation. But, on second thoughts, he is a bit late. All the money has been spent, and the ships ordered. We’re all doomed.