An industry divided: divergent sentiments for box and bulk

 

Singapore: It has been a busy week both for financial announcements and shipping social functions for SeaShip News. The consensus emerging is of a sharply divided shipping industry, one where the container sector is showing signs of optimism, whereas dry bulk and tankers are set for another torrid 12 months in 2013. 

Yasumi Kudo, president of Japan’s Nippon Yusen Kaisha (NYK), summed up the mood when delivering his firm’s interim results this week. 

“Although global cargo shipping volume continues to grow, the pace of growth has slowed,” Kudo noted. 

“In the liner trade segment, revenues are expected to stay lower than we forecast as downward pressure on freight rates is increasing during the slack season,” the executive pointed out. 

“In the dry bulk carrier and tanker divisions, we expect a temporary recovery as seasonal demand builds into the winter months. Overall, however, we estimate that the recovery will fall short of a full-fledged rebound as a result of the growing supply-demand imbalance. We will continue slow steaming, laying-up and scrapping vessels to minimize cost and rectify the supply-demand balance,” Kudo concluded. 

Kudo’s counterpart at Kawasaki Kisen Kaisha (K Line), Jiro Asakura, was able to note some promise for transpacific container trades in his interim announcement as there were “signs of the US housing market hitting bottom".

Growth in global containership capacity during 2012 is estimated at 6.6% with global trade growth expected for the year at 4.9%, according to Singapore-headquartered Rickmers Trust Maritime (RTM). Commenting on the outlook for the international container shipping industry, RTM’s ceo Thomas Preben Hansen, said in a quarterly statement this week, “Liner companies will attempt to push through new rate increases from November 2012 which will require a heightened level of freight rate discipline among the main liners. Their earnings for FY2012 should also be better than the significant losses that they suffered in FY2011."

The split between containers and poor performing dry bulk was best illustrated this week with China’s two dominant shipping lines and their Hong Kong listed vehicles. While China Shipping Container Lines was able to post a profit the losses continued to rack up for China COSCO Holdings. A third quarter net loss of RMB1.53bn yuan ($245 m) compares with a 2.07bn yuan loss a year earlier and brings the Hong Kong-listed bulker/containership operator a whopping RMB5.25bn ($841m) loss for the first nine months of the year.

"We will be a money-losing company for the whole of 2012 due to overcapacity in the shipping industry and the slumping freight price of dry bulk cargoes," the company's financial statement noted.

Dr Helmut Sohmen, chairman of Singapore’s BW Group, told SeaShip News earlier this week that overcapacity remains a huge issue and while traditional banking outlets have dried up, the largesse of Chinese financiers was a real concern. “We are far from out of this,” Sohmen said of shipping’s downturn.

Echoing this sentiment was the boss of Hong Kong’s Tai Chong Cheang Steamship (TCC) Kenneth Koo who warned SeaShip News readers that however severe the downturn has been so far, owners need to prepare for the hardest time yet in 2013. Koo said: “You know that expression ‘darkest before dawn’ – well that darkness is next year.” Koo is hoping recovery for the bulker and tanker trades will then come true in 2014.  [02/11/12]

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