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Stormy seas ahead for shipping industry

Monday, February 22, 2016 - 01:18

A dearth of cargo as China's economy grows at its slowest pace in 25 years means business for bulk ships, which cost about $4,000 a day to operate, has ground to a halt. As Tara Joseph reports at least ten dry bulk carriers are lying idle off the coast of Hong Kong on one of the world's busiest shipping routes.

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Parked and idle on one of the busiest sea routes in the world. Over the hazy horizon of the South China Sea, at least a dozen mammoth bulk carriers sit still with nowhere to go. Business on these big boats once boomed thanks to a roaring commodities trade carrying staples like Iron Ore across the world to China. But demand is drying up rapidly as the economy slows. Five years ago, these ships could each bring in up to 300-thousand dollars a day... Now, they're barely making enough to pay the crew -- and experts say the industry could lose up to 20-billion dollars this year. Adding to industry woes - many new ships were built during the height of the China boom. And as Wah Kwong shipping CEO Tim Huxley explains, they're now worth a fraction of their original value: (SOUNDBITE) (English) WAH KWONG SHIPPING, CEO, TIM HUXLEY, SAYING: "For the bulk carrier owners it's a very very depressing picture. People are now contemplating laying up ships because at the moment your earnings are significantly below your daily operating costs." Ships from commodity carriers to oil tankers are a constant in the South China Sea, which sees trillions of dollars worth of goods pass through every year. But unless China' s trade revs up again, the view of idle ships could become a permanent part of the landscape.

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Stormy seas ahead for shipping industry

Monday, February 22, 2016 - 01:18