Expecting higher scrap prices in future, small Indian and Chinese shipping companies are acquiring old dry bulk carriers of Great Eastern Shipping Co. (GE Shipping), the country’s largest private sector shipping company.
According to Exim News Service, GE Shipping has sold three old ships—a 31-year-old vessel and two 24-year-old carriers—to small shippers and traders during the last three weeks. "We do not deal with shipbreakers. Buyers of these ships want to use it for a year or two," a GE Shipping spokesman said.
The global financial crisis has led to a decline in demand for ships, forcing several shipping companies globally to lay off ships and sell the old ones.
Scrap prices now rule at $ 270 Light Displacement Tonne (LDT).
A Mumbai-based shipping company, which bought one of the GE Shipping vessels, expects the scrap prices to touch $ 350-400 LDT in a year when the ship will be due for dry docking. Dry docking is the repair and maintenance work that is required after a certain period of use. It costs $1-2 million.
Besides, the company claims to have cargo for the next one year, for which it would use the ship.
GE Shipping plans to sell two more of its old ships and is looking for the right buyers. The company sold each of these ships for less than $10 million.