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i-maritime News Letter

Shipping industry to grow in Asia, say experts - 2013-04-01

Shipping industry in Asia will continue to grow in the long term fuelled by economic growth in countries like China and India, said regional industry leaders at a CEO round table held here on Thursday.

However, global shipping markets would continue to face fundamental problems such as vessel over-supply and uncertainty in the United States and European economies, said the panellists. Panel speaker S S Teo, Managing Director of Pacific International Lines (PIL), said volume would grow on the intra-Asia trades, in particular from China and India. “The signs are encouraging from China and there is a real recovery in exports,” he said.

“Quantitative Easing III and the availability of cheap money also encouraged the set-up of some shipping funds looking to build ships in this depressed market. This would create a further glut in ship capacity,” he added. Khalid Hashim, Managing Director of Precious Shipping, said China had underpinned the global market in the past few years in the dry bulk business segment.

He said: “For the next two years (2013 and 2014), the excess supply is finally being absorbed. I think 2013 will be challenging, 2014 will offer some relief, especially at the end of the year, 2015 will be smiles for owners.” However, Khalid said 2016 could see the return of excessive vessel orders and so the cycle would continue. Giving a finance perspective, Erik Borgen, Head of Asia at DNB Bank, said the biggest concern among bankers was the continuing oversupply of vessels.

“We hope vessels which are not needed are not ordered, but there is still ordering going on...There are some bright spots — offshore [oil development] is an interesting area where the banks are active and so too is the gas market. “The banking sector is also under severe pressure from regulators and their owners; they have to meet new rules by increasing their equity base and gain more liquidity — so each time there is a crisis, when the banks are supposed to be there for their clients, they are under pressure from regulators to change,” he said.

Borgen added that banks will stick with those companies that are able to come up with a good business case and shall support them. “It is important that banks are patient — they have to be patient and not panic,” he said. The round table was held as a preview to Sea Asia, an industry conference and exhibition to be held April 9-11, 2013 here. Singapore Deputy Prime Minister and Minister of Finance, Tharman Shanmugaratnam would open Sea Asia, co-organised by Sea-trade and the Singapore Maritime Foundation.

Source : Hindu Business Line