Braemar warns of orderbook cancellations

alan-marsh.jpg

Up to 10% or 15% of the world ship orderbook is at risk of not being built because contracts will fail to achieve refund guarantees, according to one of the industry’s largest shipbroking groups.

The situation is worst in China, where it is harder and takes longer for smaller yards to obtain refund guarantees from their banks and will mean handysize bulkers bear the brunt of cancellations.

Speaking to TradeWinds, Braemar Shipping Services Chief Executive Alan Marsh said questions remain about the future of between 10% and 15% of the orderbook but cancellations will help shipping markets long term.

“I would rather have freight markets hold up strongly, even if we lose 10% of our orderbook,” said Marsh of a situation where reduced deliveries will mean less likelihood of ship oversupply in the future. “It could be better news for the industry.”

Marsh was talking after revealing strong profit-growth numbers for Braemar in the year up to the end of February 2008. He stressed that he does not see imminent market problems for some time to come.