Singapore: The mood was mixed among panellists at the Sea Asia Global Forum this morning. The lead start to the Singapore exhibition and conference featured shipowners covering most sectors. Most agreed the immediate outlook was grim, while medium term prospects were promising.
Andreas Sohmen-Pao, chairman of BW Group, warned: “I think we have to imagine a world where there is excess shipbuilding capacity forever… so any sector that does well for five minutes will struggle… so there is no corner to hide.”
“Some sectors look quite bleak at the moment,” conceded Lloyd’s Register’s marine director, Tom Boardley.
Khalid Hashim, managing director of Thai dry bulk shipowner, Precious Shipping, said it will be a question of survival for many over the next few years. His advice for owners was fourfold: scrap older tonnage, get rid of non-core assets, raise finance and cut costs.
Hashim said the China slowdown had been “really bad news in terms of the dry bulk market” but he felt moves by Beijing in the past month to prime the economy would work.
SS Teo, managing director of Pacific International Lines, urged fellow owners “to make sure there is more responsibility in newbuilds”.
“There is too much newbuilding still,” Teo said.
Claus Hemmingsen, who heads up Maersk Drilling, said overcapacity in the offshore market was the worst it had been for more than 20 years, especially in the drillrig sector. The problem had manifested before the oil price drop, he contended, as the offshore industry urgently needs to control its costs.
“The offshore industry is tremendously challenged,” Hemmingsen said, adding: “The drilling sector in particular will face trouble for two to three years.” The only way to bring down costs, he said, was by reducing capex – and this was only likely to happen by companies folding, which was inevitable, he said.
Christian Clausen, president of Nordea bank, concurred with Hemmingsen, saying: “Cost levels have to come down for many sectors including offshore.”
All panellists were, however, positive about longer term prospects, driven by demographics. BW’s Sohmen-Pao, for instance, said he was “super optimistic in the medium term” citing the rise of the middle classes especially in Asia.
