THE world maritime industry faces an unprecedented crisis, with close to US$400 billion needed to revamp the critically over-age fleet and improve safety, according to a report prepared for the World Bank. Between this year and 2000, the report lists the fleet needs as: $330 billion to build ships totalling 330 million deadweight tonnes (dwt). Scrapping of 262 million dwt of vessels, calling for $10.48 billion cash-flow in the hard-pressed demolition industry. $51.7 billion to be spent on vessel repair and conversion. In the face of the enormous sums, the report says: ''No effective arrangements have been made to meet the industry's capital requirements, and doubts are more numerous than assurances in the industry.'' The solution is seen as opening a new era of co-operation between ship owner and cargo owner, and tougher enforcement of maritime safety. Hans Peters, the bank's principal maritime adviser, believes the industry has drifted into a serious situation, and in his report says: ''It is now just a question as to when the bubble will burst. ''At that point, a large portion of the international merchant fleet will be unfit for transport. The implication for world trade will be devastating.'' To prevent that, the ocean transport industry will have to undergo a major realignment. In order to gain access to the capital markets for both investment and long-term debt, the industry will need to establish more lasting relationships between owners, operators and cargo interests. Mr Peters urged ship operators and cargo owners to show willingness to form alliances, under which cargo volumes and transport capacities would be teamed for long periods under predictable conditions. Such arrangements might deprive cargo owners of the short-term benefits of the spot market, but they would gain in the longer run through reliable and safe ocean transport. After questionable tonnage was eliminated from the market and the risk of insuring and financing assets abated, the cost of ocean transport would decline again. Mr Peters recognises that cargo owners' hesitance to work with the owners for long-term stability is a result of many of them sustaining heavy losses in the 1980s on long-term charters, and speculative intervention by independent owners in the market. In addition, volatility in modern sea trade makes it difficult to project cargo flows. Tracing the origins of the crisis, the World Bank report says that too many adverse developments in the trade, financial and insurance markets and international legislation, materialised in recent years. Some of the developments were beyond the control of the industry, but much of the problem is self-inflicted. Mr Peters says: ''Because of reduced freight earnings, maintenance has been neglected, leading to frequent structural failure. Ship casualties - often with serious environmental damage - have reached alarming levels.'' Mr Peters says that bodies set up to enforce industry standards and safety regulations, like the International Maritime Organisation, are unsuccessful in fulfilling their mandates satisfactorily.
