Better 2017 expected for shipping industry

HONG KONG • The bankruptcy of South Korea's Hanjin Shipping and a consolidation in the container shipping industry will pave the way for a better year for the industry, according to Mr Robbert van Trooijen, the Asia-Pacific chief of Maersk Line.

After years of overcapacity and excessive optimism about demand, the order backlog for vessels is falling and Maersk Line is seeing a more balanced supply-demand situation this year in its talks with customers, he said yesterday.

Maersk Line, the world's biggest box carrier, is owned by AP Moeller-Maersk.

"It's the growth side and the right-sizing of the industry, and the sanity that comes back in the negotiations," Mr van Trooijen said in a Bloomberg Television interview. "We do see now that the normalisation has come back to that."

Maersk Line, which expects to be profitable this year after a US$384 million (S$546 million) loss it booked last year, expects the global container market to grow 2 per cent to 4 per cent amid the consolidation wave.

A DECISIVE YEAR

It's been a decisive year for container shipping, not just because of the financial climate, but also because of the M&A activities and the regrettable bankruptcy of Hanjin. We see fewer orders for ships.

MR ROBBERT VAN TROOIJEN, on recent events and developments in the shipping industry.

Following Hanjin's collapse, Japan's three biggest shipping companies decided to merge their container operations, while Maersk agreed in December to buy Hamburg Sud.

The Shanghai Containerized Freight Index, a measure of shipping rates, has more than doubled from a record low in March last year.

"It's been a decisive year for container shipping, not just because of the financial climate, but also because of the M&A activities and the regrettable bankruptcy of Hanjin," Mr van Trooijen said, adding that the consolidation efforts will continue. "We see fewer orders for ships."

Growth in shipping demand this year is expected to outstrip an increase in supply for the first time since 2011, Changjiang Securities said in a note yesterday.

Asked about rising concerns over trade protectionism after Mr Donald Trump became the President of the United States, the Maersk executive said nations have a vested interest to grow trade rather than shrink it.

A "trade war has no winners", Mr van Trooijen said. "Growing global trade in a mutually beneficial way, that benefits the US consumers as well as the producing entities in China, is the only way forward."

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on February 11, 2017, with the headline 'Better 2017 expected for shipping industry'. Print Edition | Subscribe