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With every major barometre
that measures the maritime industry weakening in
the last few months due to the sluggish global
growth, it will just be a matter of time before
the tsunami hits our shores.
Container freight rates for the Asia-Europe
route have fallen due to slower demand from the
US and Europe.
Transpacific Stabilization Agreement (TSA), a
research and discussion group of 15 major
container shipping lines, reported a 6.9%
year-to-date drop to 3.07 million 40-foot
containers in Asia-US cargo volumes over January
to June, compared to the same period a year
earlier. In July, the year-to-date gap widened
to 7.5%.
TSA forecast that this year cargo demand could
decline by as much as 8%.
This has affected many multinational shipping
companies’ bottom lines.
According to a recent Bloomberg report, China
Shipping Container Lines Co, China’s
second-biggest shipping line posted a
third-quarter loss as the credit crunch curbed
demand for Chinese-made furniture, toys and
other goods in the US and Europe.
It said the loss amounted to US$39.7mil.
But, declining cargo volumes did not greatly
impact TSA’s 15 carriers, which experienced a
1.8% decline in liftings during the first half
of 2008 due to efficient management in reducing
operational cost.
Even in July and August, when TSA carriers
reported an overall 7% drop in cargo volumes,
vessel utilization remained around 90% across
all trade segments.
The TSA group includes APL Ltd, China Shipping
Container Lines, CMA-CGM, COSCO Container Lines
Ltd, Evergreen Line, Hanjin Shipping Co Ltd,
Hapag Lloyd AG, Hyundai Merchant Marine Co Ltd,
Kawasaki Kisen, Kaisha Ltd, Mediterranean
Shipping Co, Mitsui O.S.K. Lines, Ltd, Nippon
Yusen Kaisha (N.Y.K. Line), Orient Overseas
Container Line Inc, Yangming Marine Transport
Corp and Zim Integrated Shipping Services.
“Clearly we’re in a slow down right now, but the
current freezing up of the global credit system
is unsustainable,” TSA chairman Ronald D Widdows
said in a recent statement.
He added that TSA expected to see an orderly
de-leveraging of the financial markets over the
next year that would begin to restore confidence
with year-on-year cargo demand growth resuming
in late 2009.
On bulk shipping, the Baltic Dry Index, a
measure of shipping cost for commodities,
continued to drop to 982 points on October 28,
the lowest it has ever been in six years. This
is a 91.7% drop from 11,793 points on May 20.
The crash is partly due to Chinese steel mills
having reduced production because of sluggish
economic growth with lower demand from
development and automotive industries.
The warmer winter in Europe also contributed to
the lower demand of coal.
The tanker market, particularly the cost of
shipping Middle East crude to Asia, the world’s
busiest route for supertankers, according to
Bloomberg, is also softening.
It said the rate for shipping Saudi Arabian
cargoes has fallen for the past 21 sessions,
sliding 4.1% to 76.63 Worldscale points on
October 27, according to data from the
London-based Baltic Exchange.
Local players with international exposure, such
as Malaysian Bulk Carriers Bhd (Maybulk),
Hubline Bhd and Halim Mazmin Bhd are also not
immune to the global trade slump.
Maybulk and Hubline, which operate bulk
carriers, are expected to be affected by low
freight rates, softer demand and looming
overcapacity. However, Maybulk’s diversification
into offshore oil and gas support services could
place the company in better prospects during
this especially “difficult” period.
MISC Bhd, on the other hand, would feel less of
an impact because of its transportation services
to the oil and gas industry, which is still at a
healthy level.
Major local ports namely Port Klang, Johor Port,
Penang Port and Bintulu Port would also be
affected when transhipment volume starts
declining.
This will then have a domino effect on our
logistics providers as well as domestic shipping
operators.
Currently, many terminal operators are still
optimistic in achieving their targeted volumes
this year as Malaysia’s total exports grew by
11% to RM60bil in August versus the same period
last year despite the drop of exports to the US. |
