Singapore: Container shipping’s rush to order ever larger ships was likened to an arms race at yesterday’s Singapore Maritime Lecture. C C Tung, chairman of Orient Overseas (International) Limited, the parent of Hong Kong boxline Orient Overseas Container Line (OOCL), said: “You cannot get out of this arm race – it’s a nature of our business.”
Tung is not the first to make this comparison – UK analysts Drewry said the same thing a couple of months ago.
The race, he said, had started with Maersk’s series of orders for EEE vessels – and the pack behind the Danish line had simply followed suit to remain competitive.
“Chief executives in shipping, especially in container shipping, all have huge egos,” Tung said.
Easy access to cash, even in a downturn, has helped fuel the spectacular rise in the ultra large container vessel orderbook, Tung said.
Tung reckoned overcapacity in the container sector is now a “permanent problem”, as liners pursue ship size upgrades and fight for market share.
“Perpetual excess capacity,” Tung said, was brought about by the industry overordering newbuilds both in good and bad times.
The Singapore Maritime Lecture takes place every year with top names from around the world invited to give their take on the industry. The very first one was given by the republic of Singapore’s founder, Lee Kuan Yew, who passed away recently.