China Merchants Energy Shipping: Assisting the People’s Republic’s raw materials needs

China Merchants Energy Shipping (CMES), China’s major state-run energy shipping giant, is looking to achieve great growth this year despite the volatilities in both tanker and bulker shipping markets.

Captain Xie Chunlin, managing director of CMES, admits the tanker market has been suffering from a decline in freight rates over the past two years, and the performance of the market in the first quarter of 2018 also doesn’t look promising.

“Tanker owners will face more pressure this year,” Xie says.

However, Xie has seen plenty of old tankers being sent to scrapyards in the first quarter, which could be a positive sign to the market, and he calls on fellow tanker owners to consider scrapping more older tonnage with the upcoming 2020 IMO regulations on ship emissions and ballast water management fast approaching.

Xie holds a cautiously optimistic view on the outlook of the tanker market from next year.

However, Xie reckons it is possible that the implementation of 2020 sulfur emission regulations could be postponed, as the industry is not ready.

“Some owners might have already made some preparations for it but in general the whole industry including upstream and downstream sectors are not ready to face this challenge,” Xie maintains.

Talking about the bulker market, Xie is of the view that the markets of smaller bulkers will be further squeezed by VLOCs in the next few years with plenty of VLOCs set to be delivered, including to his own company.

“The rebound of dry bulk shipping market has increased the confidence of owners and investors which has resulted in more capacity being added since last year, and it could lead to more fluctuation for the market,” Xie says.

As for the LNG shipping market, Xie is very optimistic that the market will see brighter days ahead despite a slight drop in rates recently.

For the year ahead, CMES will continue to make efforts on capital operations including both making investments and securing financing for major projects, and develop opportunities for COA deals with major clients.

The company, rapidly becoming one of the largest shipowners in the world tonnage-wise, has made a target to achieve a 78% growth in operating revenue to RMB10.8bn ($1.7bn) this year.

CMES currently operates a tanker fleet of 49 vessels including 44 VLCCs, a bulker fleet of 27 vessels including eight VLOCs as well as a fleet of 11 LNG carriers.