International Journal on Criminology Volume 6, Number 2, Winter 2018/Spring 2019 | Page 71

International Journal on Criminology
particular year. In 2017, for example, when the segment was less successful due to
international rates and the lifting of the embargo on Iran, almost ten years of overcapacity
accumulated, along with ships resulting from three waves of construction
due to the peaks in 2005, 2009, and 2012.
Finally, for bulk carriers, the situation is radically different. They are still in
a phase of uncontrolled fleet growth that outweighs freight growth. The discrepancy
between these two growth rates was only rectified in 2016, despite cumulative
overcapacity having begun with the 2008 financial crisis. However, new construction
once again spiraled out of control in the second half of 2017. It is a typical
sector of dispersed investors where the slightest short-term improvements, particularly
in freight rates, lead to surges in investment. The overcapacity situation
resulting from the difference between freight quantities and naval construction
accumulated with the successive peaks in investment surges between 2009 and
2015. 16 For bulk carriers, a massive wave has been growing since the beginning of
the 2010s, one unlike any mechanism ever before encountered in maritime history.
The international professional sector has little awareness of this loss of control,
with the exception of a few voices, such as French businessman Philippe Louis-Dreyfus.
17 In addition, the wave has been sustained by growth prospects in the
demand for infrastructure initiated by the agreements between BRICS countries 18
and the new maritime and land silk roads. These announcements tend to strengthen
hopes of increases in bulk-related freight, although these increases have not
materialized.
For tankers and bulk carriers, these mechanisms of overcapacity are even
more worrying given that the oldest fleet segments have already been greatly reduced.
In other words, this overcapacity concerns newer ships that still have a
significant trade-in value and cannot be sold at a loss. The classic method of managing
overcapacity by dismantling the oldest ships has almost no effect anymore. 19
The issue now involves ships that are less than twenty years old, which have a resale
value that is necessarily an important factor for the owner. Ships are not incentivized
to sail to the shipyards for dismantling, turning instead to shady, third-hand
operators who still only offer a low price, albeit more than the shipyards. Public or
collective action cannot be taken, as the amount needed to finance the dismantling
16 The growth rates had been higher than +20 % each year as opposed to +5 % to +7% in previous
years.
17 See “Entretien avec Philippe Louis-Dreyfus, president du BIMCO.” Mer et Marine (November 10,
2016), an interview with Philippe Louis-Dreyfus, President of BIMCO. Available here: https://
www.meretmarine.com/fr/content/entretien-avec-philippe-louis-dreyfus-president-du-bimco.
18 Brazil, Russia, India, China, and South Africa, which may soon be joined by Indonesia, Pakistan,
and Iran, and then countries in central Asia thanks to the China-Europe freight train service.
19 In 2002, ships that were more than twenty years old accounted for a third of the world’s tanker
transportation capacity. In 2017, they represented less than 5 percent. The situation was identical in
the dry bulk sector.
68