More Money for Shipping!

Late in 2013, the Chinese government instituted a program whereas Chinese shipowners were provided certain compensation in order to demolish existing Chinese-flagged tonnage at Chinese demolition yards. The program was for relatively new tonnage of vessels newer than twenty years of age for a subsidy worth the equivalent of US$ 125 per gross ton. For (Chinese) shipowners wishing to replace such tonnage with new tonnage, always built at a Chinese shipbuilding yards and flying the Chinese flag, there was an additional compensation of the equivalent of US$ 125 per gross ton.

Please read here our full commentary on the program at the time by clicking here.

Just last week, the maritime and offshore news website gCaptain re-published a Reuters article that four Chinese ship-owning companies received 1.8 billion Yuan (approximately $293.3 million) in subsidies to renew their fleets; the companies were China Cosco, Cosco Shipping, China Shipping Development Co., and China Shipping Container Lines.

The Reuters article on gCaptain can be read by clicking here.

MV COSCO YANTIAN 9

Not built in China: 9,500-teu Containership MV ‘Cosco Yantian’ docking in the Port of Hamburg earlier this year.  Image source: basil-karatzas.com

As delighted as we are at seeing government people hard at work, one cannot miss the point of $300 million ‘free’ money just entering the shipping cycle. Quite a few of the attention-getting private equity funds active in shipping have kept their equity commitments to shipping well below such ceiling.


© 2013 – 2014 Basil M Karatzas & Karatzas Marine Advisors & Co.  All Rights Reserved.

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