There is a worldwide glut of merchant ships, yet over the past few months some of the biggest names in the industry have been committing billions of dollars to building even more.
The reason? Fuel efficiency - and the result could, in a few years time, be a two-tier industry, with all the cargoes going to the ships that are cheaper and cleaner to run, with the rest, laid up and rusting away.
Welcome to the age of the eco ship.
Last month, one of the world's richest shipping investors, Norwegian John Fredriksen, set aside US$2.6 billion (Dh9.54bn) to build the biggest fleet of fuel-efficient ships in history for his company Frontline 2012.
This month, Teekay Tankers announced a $188 million order for four new 113,000 tonne product tankers from South Korea's STX shipbuilders. The order includes an option for a dozen more which may be exercised over the next 18 months at a unit cost per ship of $47.
"With their fuel-efficient design, which is estimated to result in 20 to 30 per cent fuel savings compared to current vessels in the existing fleet, we believe these new buildings will be very attractive to our customers," said Bruce Chan, Teekay Tankers' chief executive.
This is in the teeth of figures from Clarkson, the world's biggest shipbroker, that the capacity of the world's merchant fleet is about 20 per cent greater than demand - the largest glut since the early 1980s.
However, Mr Fredriksen sees this as an opportunity. By taking advantage of the "historically low" cost of building a ship, he is betting that record energy costs and a global capacity glut will not ease any time soon - and leave the seas clear for his new eco ships.
These ships will be more competitive because fuel now represents about 75 per cent of an average ship's running costs, double the proportion a decade ago. To get an idea what that means, take a 40,000 tonne merchant ship, build it to the right eco-specs and you cut fuel use by almost 30 per cent, equal to a saving of $7,000 a day, based on a ship burning 25 tonnes of bunker fuel, at $700 a tonne. For the cargo shipper, that means it costs less to move his product.
The ships will be built by STX Jinhae in South Korea and at the Longxue and Jinhaiwan yards in China, and the orders will take the number of Frontline 2012's eco-friendly ships on the stocks to 53.
Simpson, Spence & Young, the world's second-largest shipbroker agrees with Mr Fredriksen's market assessment. According to its data, a new bulk carrier, built in China, the world's largest shipbuilding nation, currently costs $42m, the lowest price since 2003, and a supertanker ordered today in South Korea will cost $90m, the cheapest in at least nine years.
"Fuel-efficient ships will give Frontline 2012 a very strong competitive advantage," said Erik Folkeson, an analyst at Swedbank First Securities. "Fuel-efficient ships will be more competitive and could trigger increased scrapping of older and uneconomical vessels."
Mr Fredriksen's company says its new vessels will be profitable at charter rates that wouldn't cover operating expenses for existing carriers. And the market agrees.
"Betting on Frontline 2012 is like betting on the future of shipping," said Erik Nikolai Stavseth, an analyst at Arctic Securities. "Even if there is only a moderate recovery over the next five years or so, Frontline 2012's earnings potential is substantial."
When Mr Fredriksen announced the order, Bloomberg surveyed the averages of 24 analyst estimates of the company's outlook. "Frontline 2012's net loss of $3.94m this year will rebound to profit of $32.3m in 2014 and $151.4m in 2015," Bloomberg reported.
"Its shares climbed 56 per cent ... this year."
Carlyle Group and Tiger Group Investments' GCI Group announced in December it was to invest $5bn in fuel-efficient container ships and had opened talks with five container lines including United Arab Shipping Company. Higher fuel prices meant greater demand for larger and more efficient ships, GCI said.
"We are actively pursuing new investments. The focus is heavily on either new eco-ships or looking at opportunities in the distressed market," the Tiger chairman Graham Porter said at the time.
Scorpio Tankers, a shipping line based in Monaco, and AP Moeller-Maersk, which has the largest container-shipping fleet, also put themselves in the new orders camp. Last month Scorpio said it had agreed to construct six additional eco-friendly, product tankers for a total cost of $300m, bringing its closely watched eco buying spree to 33 vessels.
Maersk has 10 of the largest, most efficient container ships ever built on order from yards in Korea, with an option for 20 more of the 'Triple-E' class ships.
The data supports the building of these new vessels, Albrecht Grell, senior executive vice president of maritime solutions at the classification company, Germanischer Lloyd told the Connecticut Maritime Association 2013 conference.
"In container shipping, we see enough benefits of eco-ships to justify orders beyond what would be introduced due to supply and demand," he said.
And the shift seems set to change the entire design of ships.
Japan's ECO Marine Group has just unveiled an innovative concept that promises increased fuel efficiency and lower harmful emissions by harnessing both wind and solar power. Eco Marine's Aquarius MRE System incorporates a variety of eco-friendly technologies including solar panels, energy storage modules and an advanced rigid sail design that could lead to greater fuel savings while drastically reducing harmful emissions.
The system could potentially include enough solar panels and energy storage to power the vessel while in port without the use of auxiliary diesel generators. While at sea, the rigid sail design would be used to supplement propulsion, further boosting fuel savings and reducing harmful emissions.
The system can fit a variety of ship types and sizes including bulk carriers, oil tankers and passenger ferries. Eco Marine estimates that combination of technologies could lead to fuel savings of 40 per cent and also dramatically reduce the emission of noxious gases such as sulphur oxides and nitrogen oxides.
Other technology advances include a new Mitsubishi Heavy Industries system to reduce fuel costs by using bubbles.
The Mitsubishi Air Lubrication system, to be included in the design of three grain 95,000 tonne carriers for a US line, pumps the bubbles along the ship's hull reducing friction with the water.
Already fearful of being left behind, shipping lines with conventional ships are resorting to a variety of measures to cut costs. Tankers from the huge European line, Euronav have already cut their fuel consumption by up to 20 per cent by sailing slower and fitting modifications to their propellers and engines.
And in one incident last month, the tanker Nord Integrity owned by Norden, Europe's biggest commodity-shipping company, stopped its main engine for four days allowing itself to drift on wind and current alone on its way to load at a terminal in Algeria, according to the company newsletter. It drifted 518km, saving 27 tonnes of fuel valued at $17,064, according to the report. The ship arrived on time.
Norden spent $65m on fuel last year, equal to 67 per cent of its voyage costs, the newsletter said.
"Owners are trying everything because one tonne saved a day is $600 on your bottom line," Truls Dahl, a shipbroker at Fearnleys in Oslo told Bloomberg at the time.
"It's adventurous and interesting and a very good idea," adding he had never heard of [drifting] done before.
The story maybe amusing, but the facts facing shipping lines are not. Daily earnings for bulk carriers have dropped 32 per cent since the start of February, according to the Baltic Exchange, and the largest tankers are earning $14,709 a day, 84 per cent less than a year ago. Supertankers need $24,200 a day to break even.
"For owners who find themselves with less efficient ships than their competitors, innovation will be the key to prosperity," said Rob Almeida, of the US maritime website, gCaptain.com. "Because at the end of the day, a two-tier market with eco and non-eco-ships appears inevitable."