Local orders cushion shipbuilders against European crisis

Builders of export-oriented vessels are focusing on domestic demand as export orders are on the decline in the face of a debt crisis and economic turmoil in Europe, a key market for local shipbuilders.
Since the beginning of 2012, no orders to make vessels came from foreign buyers, said industry insiders.
"We are paying attention to making vessels for local buyers as the orders from foreign buyers have slowed down," said Md Sakhawat Hossain, managing director of Western Marine Shipyard Ltd.
After making eight vessels for a German buyer, Western Marine, in October last year, inked a deal with the same buyer to make four more vessels.
In line with the previous practices, work on those four vessels was expected to begin from March when the last of the first eight vessels was delivered.
But due to global recession, the buyer has shifted financing for the vessels from March to September, said Hossain.
However, the government's move to allow more oil tankers to carry petroleum, and establish an inland container terminal at Pangaon to carry goods from Chittagong Port through waterways has created scope for the export-oriented shipbuilders to sustain the fall in the global demand.
Hossain said Western Marine has so far got contracts to make a total of 18 vessels for both private and public sectors in Bangladesh. The vessels include six tankers and nine fishing trawlers, he said.
"Confidence of the local buyers has gone up after we built ships for the Germans. Previously, many fishing trawlers were imported from abroad," said the Western Marine executive.
He said the government should make all its vessels locally to help the shipbuilders overcome the downturn in the global demand. "There should also be provisions so that the private sector makes vessels domestically," he said.
He hoped that the shipbuilding demand might pick up after the year 2012.
This is the second time that the shipbuilders of Bangladesh, relatively new to the smaller vessels segment of world shipbuilding market, face shrinking orders from abroad. During the global recession in 2008-09, the flow of orders to Bangladesh fell considerably.
Abdullahel Bari, chairman of Ananda Shipyard & Slipways Ltd, said the company got many contracts prior to the immediate past global financial meltdown. Of those, a big number of orders did not become effective, he said.
The current turmoil in Europe has also dried up funds of the buyers.
"Banks are not interested to finance shipbuilding. That's why, buyers are unable to get delivery," he said but added that the current situation is temporary.
The sluggish trend in the global shipbuilding market coincides the time when another builder, Khan Brothers Shipyard Ltd, joins Western Marine and Ananda Shipyard in exporting ships.
Tofayel Kabir Khan, managing director of the newly launched Khan Brothers Shipbuilders Ltd, hoped that orders to make vessels will start coming towards the third quarter of the current year.
The company, which opened its shipyard at Meghnaghat in March this year, is working on 24 oil tankers for domestic buyers. "We will deliver six tankers by June," he said.
"We will overcome the interim period by building vessels for the local market," said Khan.
Masud Karim, managing director of Germanischer Lloyd (GL) in Bangladesh, said the frequency of queries from foreign buyers has reduced.
"The global shipbuilding market has reached the bottom of the downturn. And now, it is time to turn around. But we have to wait till 2013 for that," said Karim of GL, a ship classification and technical advisory firm.
In the meantime, the local shipbuilders should get support from the domestic market, he said.
The shipbuilders improved earnings by 14 percent to more than $46 million during July-April of the current fiscal year from $40.5 million in the same period a year ago, according to Export Promotion Bureau.