News
Recognising potential in ro-ros
Pacific Basin Shipping recently announced it had acquired options to buy two ro-ro newbuildings, lifting the number of car carriers in its orderbook to six. Once again, the company appears to have got the pulse of the market just right, says Michael Hales
Growing demand for freight transport in Europe is increasingly in conflict with social and environmental factors that oppose further expansion of road traffic and land-based infrastructure. The European Union’s drive to develop a ‘motorways of the sea’ project has consequently been focused on diverting an increasing proportion of longer-haul regional freight away from road networks and on to the sea.
With pressure to reduce levels of pollution, ro-ro services are now making a direct contribution to reducing harmful emissions by taking large numbers of vehicles off the roads. Soaring fuel prices have added an economic advantage for sea trade over long-haul road transport and this is expected to boost demand for efficient ro-ro tonnage.
In addition, the location of the developing economies of Eastern Europe and the Mediterranean rim are increasing the distances over which freight trailers travel, thereby expanding ro-ro services beyond their traditional western European and Baltic routes.
In Asia, economic growth and increasing integration of neighbouring national economies suggest further growth. The environmental factors that are driving ro-ro demand in Europe are expected to influence demand in Asia in the longer term, and cross-sea routes between other fast-growing Asian nations and the long coastlines of China and Vietnam are potentially well suited to the development of ro-ro services.
Despite favourable long-term prospects for the ro-ro sector, almost half of the world’s ro-ro vessels are more than 25 years old and newbuildings account for only 20% of the existing world fleet. Pacific Basin Shipping chief executive Richard Hext says the sector shows the “same characteristics that originally attracted Pacific Basin to the handysize sector”.
The Hong Kong-listed handysize bulk carrier specialist entered the ro-ro market in February when it acquired four 3,663 lane m vessels, costing $405m, to be built by AP Moller-Maersk’s Odense shipyard in Denmark. The four ships will be delivered between the third quarter of 2009 and the first quarter of 2011.
Demonstrating further confidence in the market, Pacific Basin announced the acquisition of purchase options on two new vessels from the Italian Grimaldi Group in July.
The deal for these two slightly larger 3,810 lane m vessels will be worth $174m if the options are exercised, the company says. The ships are due to be delivered by South Korea’s Hyundai Mipo in the second and fourth quarters 2010. Pacific Basin believe these six ships are especially well suited to the European and Mediterranean trades.
The four 3,663 lane m vessels have exceptionally good fuel consumption due to an efficient hull design, Costa bulb rudders and auxiliary power from shaft alternators. The design provides a good vehicle deck and ramp layout for fast and efficient cargo operations and the twin propellers, complemented by two 1,400 kW bow thrusters, will provide a high degree of manoeuvrability and minimise tug costs.
The two Hyundai Mipo vessels are also fuel efficient compared with older tonnage currently in use. Both have wide internal ramps that facilitate simultaneous loading and discharging with hoistable car decks to provide flexibility of cargo mix. The power of the bow and stern thrusters are to be upgraded, which combined with the Becker-type high-lift rudder will aid manoeuvrability.
Pacific Basin has not ruled out further expansion in this area. “Our intention is to be a provider of high-quality tonnage to leading operators in this sector, and the size and make-up of our fleet will develop in response to their needs,” the company says.
The demand for premium service levels in the ro-ro sector is another reason why Pacific Basin feels it is well placed to capitalise on market growth. It enjoys a highly experienced and well-respected capability in the management of this type of vessel through its ship management company, Meridian Marine Management – part of Pacific Basin’s maritime services division based in Liverpool.
When the current newbuildings are delivered, Meridian will manage a total of 18 ro-pax and ro-ro vessels. Meridian will build on its existing expertise to create a centre of excellence focused on delivering high-quality management services to its roll-on roll-off clients and their charterers.
Mr Hext says the company “expects this to prove a significant source of competitive advantage in a sector where the need for competent operations and high service levels create real barriers to entry”. While Pacific Basin’s main revenue source will continue to be from dry bulk shipping in the short term, the delivery of ro-ro vessels in mid-2009 could expect to significantly boost long-term growth for the company.