Jutha looks to

Besides, the firm forecasts that the global economic situation will improve next year, with oil prices having dramatically dropped from their peak of US$147 (Bt5,148) per barrel mid this year.

President Chanet Phenjati yesterday said the marine transport business had declined due mainly to the worldwide economic crisis, which is why  many marine transport entrepreneurs put their ships to anchor.

Some have even decided to demolish vessels older than 25 years in exchange for cash.

Thirty-eight vessels with a combined capacity of 1.34 million dead-weight tonnes (dwt) were sold for demolition last month, 197 per cent higher than the 4.52 million dwt in the same month last year, according to a demolition market report from Pacific Maritime.

"There is currently oversupply in the marine transport market. From now on, I expect that vessels over 25 years will be sold for demolition, of roughly 1.3 million dwt per month," Chanet said.

He added that if such a situation lasted over the next three months, transport demand and marine vessel supply would end up balanced.

However, if global trade does not begin recover early next year and owners continue selling their old ships, there will be a shortage of  vessels.

In such a scenario, the Baltic Dry Index (BDI) - the freight rate indicator for the marine transport business - would rebound to a higher level.

The BDI this month stands at 827, a dramatic 92-per-cent drop from the record of 11,458 in the middle of the year.

Chanet said that though the firm's leasing service was not related to the BDI, the index had a psychological impact on that part of its business.

The BDI is calculated from marine vessels with a capacity of more than 40,000dwt, while Jutha's fleet comprises vessels with a capacity of between 8,000 and 12,000dwt.

Jutha's lease-for-liner service in the current quarter is expected to decrease by 30 per cent from the third quarter, he added. Another factor likely to boost the BDI in the future is that fewer new ships are seen entering the global market  next year due to the global crisis.

Amid the economic crisis, it is very difficult for banks to approve loans for new ships, which should mean there is no oversupply in the  future, he said.

Chanet said Jutha's business should be secure until mid 2009, as it has advance charter contracts. Second-half performance next year depends largely on the economic situation at the time.

Jutha expects to generate revenue of Bt660 million to Bt670 million this year.