Dalian: Will the Year of the Snake see the shipping industry slither through another dire year, as expected, or will it have a vicious bite to it? Our sister site SinoShip News has canvassed some of our star writers for their thoughts. With China central to shipping’s fortunes, these views are carried below.
Economist Paul French said: “Beijing must look to control inflation and stabilise the rising cost of living.”
This can be done, he said, through more efficient agriculture and sensible local taxation.
“One crucial thing to remember in this period of steeply rising costs in China’s manufacturing sector,” he said, citing wages, land rents and distribution, “is that this upturn will naturally drive up already heavily rising oil prices hitting margins. Benchmark oil prices for March 2013 are up nearly 50% already and with manufacturing wage rises running at upwards of 20% per annum in some provinces this is squeezing the manufacturers just as they recover capacity.”
SinoShip magazine columnist Bei Hong said: “Stock markets in the West kicking off 2013 with record gains suggest that the disconnect between shipping and the rest of the world looks set to continue.”
Hong added: “There will certainly be a few casualties across the industry this year, although unlike the mid-’80s when recently de-regulated banks were boosting their investment banking divisions, there is unlikely to be an exodus of people from shipping exchanges to stock exchanges.”
Shanghai-based columnist Max Hong warned that the plight of shipbuilders in China where the rate of ordering has collapsed would continue. “Hundreds of shipyards that were born in the boom are now gasping their last,” he said, adding: “They will not be missed by the state-owned yards, which are struggling also but they know that at the end of the day the state will make sure they are not too idle.”
Max Hong said he was able to see light at the end of the tunnel for shipowners.
“2013 overcapacity will mean more low rates,” he said, “but 2014 and 2015 are already inspiring confidence in those feeling fit enough to think they may live to see it.”
Quite so, agreed his counterpart in Hong Kong, Bei Hong. “With values at a fraction of what they were,” Bei Hong’s advice was, “keep an eye open for the new players who emerge from a slump, capitalising on their experience.”
We wish all our readers a prosperous as possible Year of the Water Snake. [11/02/13]