Rough waters lie ahead for global shipping sector

08:42, November 10, 2010      

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World trade is recovering at a faster-than-expected rate but the shipping sector will experience more fluctuation and volatility ahead, according to industry leaders.

"Given the sophisticated global economic environment, cyclical turbulence will become more obvious, while volatility will grow more dramatically," said Wei Jiafu, president of China Ocean Shipping (Group) Company (COSCO Group), the second-largest shipping company in the world, at the World Shipping (China) Summit on Tuesday.

The market will also face challenges from clients' increasing concern over clean and green transportation, and enterprises will have to be more flexible, Wei said.

According to the World Trade Organization, global trade growth will increase 13.5 percent this year, the biggest year-on-year increase since 1950, following a faster-than-expected recovery in trade flows.

Still, the development of the shipping industry will be restricted by excess freight capacity as newly built ships are delivered to owners, Wei said.

"New deliveries and over-capacity are hurting the recovery of shipping," he said.

Robert Meyer, board president and chairman of the Baltic and International Maritime Council (BIMCO), agreed that there will be more volatility in global shipping.

"The temperature will still fluctuate for the next couple of months and even years," he said.

The rebound in bulk cargo and container shipping has already hit high levels, but tankers have to take a longer time to recover, Meyer said.

Torben Skaanild, secretary-general and CEO of BIMCO, said too many orders to build ships in China and postponed deliveries will lead to dramatic over-capacity in 2013 and bring risks to the market.

"The country's shipping capacity will climb from 51 to 55 million tons in 2011," he said.

Skaanild said China's shipping industry will see some growth in 2011 along with the pickup in the global market, but it is difficult to predict the rise of freight rates, which is affected by mutual action between warming markets and increasing freight capacity.

Amid these challenges, China's economy, defined by its structural transformations, will help generate new momentum, Wei said.

"In the future, China's domestic consumption will contribute more than ever as it imports more finished products, maintains strong demand for energy and resources, and creates more opportunities for the green economy," he said.

Boosted by regional free trade development and strong growth, the intra-Asia sector will also become the new focal point of the shipping market, said Bronson Hsieh, vice group chairman of Evergreen Group and chairman of Evergreen Marine Corporation.

In 2009, intra-Asia cargo volume decreased 2.6 percent year-on-year. During the first half of this year, cargo volume increased 16.9 percent from the same period last year. The performance of both periods outstrips the long-haul markets from Asia to the United States and Europe.

Source:China Daily


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