Why doesn’t Asia influence world shipping more?

Why doesn’t Asia influence world shipping more?

Regular Splash contributor Santosh Patil questions why the world’s most important region for shipping is so quiet on the international stage when it comes to the key issues hitting the industry.

How much does Asia influence world shipping? By Asia I mean the whole of Asia including the Middle East and South Asia and not just Asia Pacific which is usually how most organisations define geographies. A Google search with any combination of the words ‘Asia’ ‘influence’ ‘technology’ ‘leadership’ doesn’t throw up any significant results in the maritime and shipping context.

The recently held Sea Asia exhibition in Singapore saw a flurry of conference topics ranging from decarbonisation, digitalisation, maritime workforce, upcoming regulations, future of fleet management and blockchain. It is amply clear that technology and regulation are the two most important drivers altering the maritime landscape.

Going by the decarbonisation, digitalisation debate, one cannot help noticing that much of the regulation and technological changes are driven mostly by western interests (technology, equipment and service providers) primarily led by European nations.

All the key maritime stakeholders and industry associations, be it IMO, ICS, BIMCO, Intercargo, Intertanko, underwriters, shipbrokers, financiers et al are based in Europe, many of them in London.

However, when one looks at the ownership of ships, it is distributed primarily in Europe and Asia. Clarksons data (shipowners by nationality) shows that Asian shipowners contribute about 54% of the world fleet by numbers, 47% by gt and 48% in dwt terms, ahead of Europe in all three parameters. With regards to shipbuilding, Asia continues to take more than a lion’s share of the global shipbuilding orderbook.

As an industry shipping has been heading east for two decades now reflecting the fact that global economic activity is heading in that direction.

Shipmanagement companies too are spread across several maritime hubs across the globe. The largest seafaring nations supplying officers to the global shipping fleet are primarily Asian – China, Philippines, India and Indonesia (ICS data). As per Alphaliner, six of the top 10 container shipping lines are Asian owned. Singapore and Hong Kong take top spots in the maritime hubs competing and even a notch ahead of London in some respects.

The Menon Economics and DNVGL report on ‘Leading Maritime Capitals of the World 2019’ lists Singapore at the top of overall rankings with Hong Kong at fourth. The recent VesselsValue Top 10 Ship Owning Nations 2019 report lists three Asian nations – Japan, China and Singapore – amongst the top five.

This, then begs the question – why are Asian shipping and maritime technology companies not seen to be leading the efforts towards reducing carbon footprint or leading technological innovations in an industry which is increasingly getting Asian by ownership and trade?

Why is it that Asia does not really appear to be at the forefront of all things maritime? Could this be due to a supply side push – most technology providers being European or American? Could it also have something to do with Asia not upping its game and not taking enough industry leading initiatives?

There are few examples like Singapore which is seen leading some technology initiatives, however one rarely sees any other significant Asian effort in either the technology or regulatory space. The agenda is set by western interests; be it digitalisation, regulations or new technology.

Is there a shift happening in this trend? Recently there was a news article about a gradual shift of maritime arbitration to Asia. While one can see reduced German ship finance, of late there has been a spurt of Chinese funding in global shipping markets, be it ship finance or owning port assets.

As Asian nations increasingly control the world fleet as well as the service industries that serve that fleet, it is likely their influence will grow in the future. Asia’s influence on shipping may not be significant now and it will be an uphill task to establish it so that a truly united Asian voice is heard over the next few decades.

However, it is only a matter of time before Asia, with so much maritime activity at stake, emerges as the dominant region within the global maritime industry.

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1 Comment

  1. Avatar
    Kapil Kekre
    April 24, 2019 at 2:51 pm

    Well thought of Santosh! …..it is only a matter of time before Asia, with so much maritime activity at stake, emerges as the dominant region …………. . Let’s hope it does….
    Cheers !