SHIPPING COSTS

Evening Post, Volume CXXIV, Issue 74, 24 September 1937, Page 4

SHIPPING COSTS

A STEEP RISE

DAMPENING SPEECH

STEEL PRICES CHIEF FACTOR

(From "The Post's" Representative.) LONDON, August 28.

The warning of Lord Craigmyle, chairman of the P. and O. Steam Navigation Co., in his speech at Leith against exaggerated views of the prospects of the shipping industry put' an immefliate damper upon the market in shipping securities. One effect was •■ to cause realisations of P. and. O. deferred, which left off Is 6d at 31s. Other shares were not affected to the same extent, although Clan Lin«;s yielded J to 9 5-8. In other cases re* cessions ranged from 3d to 6d per share. Building costs have risen for all classes of ships. It is significant that the new Orient liner Orcades (23,500 tons) would now cost 40 per cent, or 50 per cent, more than her price of about £1,000,000. The contract for this vessel was made before the enlarged naval programme1 had been announced. Steel accounted for about two-thirds of the tonnage. ■ ' Lord Crafgmyle's remark that liner companies' freights did not rise and fall automatically with market levels, as in the case of tramp .shipping, was carefully pondered in the City. It was pointed out that whereas the Chamber of Shipping index number of tramp freights is 65.6 per cent, higher than that of a year ago, liner freights, government by long-term agreements, have risen much less steeply. Many rates' still remain unaltered, while very few have been raised by more than 10 per cent At the same time, there was general support for the view that liner companies will benefit shortly from further upward revision of freights. VIEWS ON CLTCDE AND TYNE. Mr. Henry Robb, of Henry Robb, Ltd., of Leith, pointed out that the large volume of new business that had taken place during the past two years— although it must be remembered that one-third of the berths were still idle —had brought with it various difficulties for the shipbuilder. Particularly since the re-armament programme had got into its stride, the cost of every item in a ship had risen considerably. Apart from the price of steel, with the attendant difficulty of obtaining supplies, some classes of timber, particularly teak, had advanced as much as 100 per cent. Prices of forgings and electrical equipment had also increased by approximately the same amount, and in some cases more. AH the other materials had advanced more or less. The cost of labour had also increased. Added to all this was the difficulty of getting the right material at the right time. This hindered the progress of work and increased the actual cost of construction. Mr. George Barrie, a director of Barclay, Curie, and Co., holdsUhe view that shipbuilders are just an anxious as ship owners to see the cost of ships come down. . .- Mr. J. Denham Christie, chairman of Swan, Hunter, and Wigtiaro- Richardson, said to the "Financial. Times :— "I agree, and I have already §aid that the time has come to call" a halt "In any,further increases in the cost of labour and material for shipbuilding. I think you will find that Lord Craigmyle's speech, emphasised that point strongly." COAL AND OIL. Best bunker small coal is also dearer. Cardiff quotations over three years January* 13s 9d per ton; July, 131936.-^January. 13s 9cVper ton; July, 14s 6d per ton. , , 1937 >r -January, 15s 3d per ton; July, 19s 9d'per ton. , ■ Prices of oil for bunker vary considerably according to the, contracts made between the oil and shipping companies. In general it may be said that the oil, though still cheaper than during August, 1928, costs 25 per cent, more than during August. 1932.