Order ships more rationally: Ma Zehua

Shenzhen: Supply and demand in the container sector is still a long way from finding equilibrium, warned Ma Zehua, president of Cosco Group today. As keynote speaker at the sixth TPM Asia conference in Shenzhen, Ma reckoned overcapacity would last another two to three years.

“Next year the market will still have to handle the overcapacity problems,” he said, adding: “Longstanding structural problems cannot be solved overnight.”

He slammed the container shipping industry as a whole for focusing for too long on chasing market share, while also bemoaning the fact that some carriers are taking advantage of low newbuild prices at the moment to order further prolonging the box downturn.

International trade is not growing fast enough to match all the new ships hitting the water at the moment, Ma said.

“Excessive capacity will take a long time to digest,” Ma said. “Ship orders should be placed on actual demand, not forecast demand.”

“We need to change our pattern of development,” Ma said, saying the industry needed to “think more rationally” about further ship orders.

Ma urged fellow carriers to change their “mode of competition”.

“Liners should change the traditional pattern of development and focus on service,” he said, noting how over the last three decades service quality has not been stable during the ups and downs of this cyclical industry.

“These problems hurt shippers and carriers and it is a big problem that inhibits the industry,” he said, adding: “Carriers are spending too much attention on their assets and not enough on service quality.”

Reliability, convenience and service extension were cited by Ma as the three most important features for carriers to focus on.

On the current state of the box markets, Ma was relatively upbeat, saying that the market had gradually shaken off the worst features of last year.

“This industry has enjoyed some slow and gradual recovery and the liners have already improved their economic returns. The industry is becoming more optimistic,” he said, and predicted 2013 would be better than this year.  [17/10/12]

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