Page 6: of Maritime Reporter Magazine (July 1989)

$200 Billion Needed

Over Next Decade

For World Fleet Replacement

Shipowners, shipbuilders and bankers were told at a recent meet- ing in London that as much as $200 billion will be needed over the next decade to replace the world's aging shipping fleets. Rex Harrington, of the Royal Bank of Scotland, fore- cast that capital markets would play a much greater role in funding fleet replacement programs.

Addressing over 300 delegates at a seminar organized by City Univer- sity's International Center for Ship- ping, Trade and Finance, Mr. Har- rington said: "In order to raise the substantial amount of money re- quired, the industry will need to be able to assure serious long-term in- vestors that the returns will be less volatile than in the past. There will need to be a much greater collabora- tion between owners and charterers to achieve the right climate for the amount of investment required."

Shell International Marine man- aging director Juan Kelly warned the seminar that a "pressure cook- er" effect was in the making, with the price of newbuildings outstrip- ping the slower pace of increase in freight rates. This inhibited major ordering of new vessels and could lead to a tonnage shortage and, in turn, a dramatic rise in freight rates.

Mr. Kelly urged all concerned to exercise "universal self-constraint."

He said that an appropriate re- sponse would involve "building new ships to replace operationally un- suitable or unserviceable ones, in numbers and of a size which main-

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