Light at the end of a long tunnel for liner shipping

Alan Murphy of SeaIntel - Liner shipping recovery 2019/20, maybe

The liner shipping forum at this year’s Asia Logistics and Maritime Conference at the Hong Kong Convention Centre on 23 November, hedged its bets with the title “Liner Shipping: “Light at the End of the Tunnel?” As it happens some think there is some light. But shipping analyst Alan Murphy off SeaIntel reckons it is a way off yet, and it is not a certainty.

A loss of nine shipping lines between 2015 and 2017 has been a major contributor to the improved fortunes of the sector, which for those participants that have survived is at last showing a profit.

Although the liner sector as a whole is expected to make US$2.5bn in operating profit for 2017, Mr Murphy warned of massive pent-up capacity that would hit the water in 2018.

In the face of the upcoming capacity he predicted that the much-needed balance of demand and supply would only eventually be reached by 2019/20. Even that date would be correct only if certain conditions are met, including strict discipline in the sector in the form of a moratorium on the ordering of new vessels. Mr Murphy added that there must be a return to high scrapping levels, a clamp down on the race for market share. On the demand side he suggested that 4% to 6% growth would be needed on the major trades.

External factors that would have to be in the shipowners’ favour included no major increases in oil prices and a halt to the onslaught of new regulations that shipping has been subject to in recent years.

Jeremy Nixon, head of the newly established Ocean Network Express (ONE), said that the new line would bring advanced systems to the market capable of exchanging digital information through the fleet and onshore in 2018. ONE is a new container line combining the strengths of Japan’s top shipping operators, Mitsui OSK Line (MOL), Nippon Yusen Kaisha (NYK) and Kawasaki Kisen Kaisha (K Line).

Meanwhile Nissim Yochai, vice president of non-aligned Zim Integrated Shipping turned the current thinking on successful liner business, which dictates that size matters, on its head when he insisted that despite being a niche player specialising in Asia-India, Mediterranean and Asia- Pacific North West trade lanes, the shipping company was thriving.

 

 

 

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