The international shipping industry may be still reeling from the major economic downturn a decade ago, but prospects will look better starting next year, according to a maritime school official.
Dr. Neopol Salvador, director of the School of Graduate Studies at the Asian Institute of Maritime Studies (AIMS), said the shipping market was still suffering from the impact of the global economic crisis of 2008 after experiencing its golden years five years before that.
According to him, the crisis besetting the global shipping was mainly due to the oversupply of tonnages ordered in the pre-crisis years; the widespread mistrust among banks; and the subsequent withdrawal from the financial letter of credit, where the cargo flow came to an abrupt halt that had an immediate impact on shipping. The slowdown of the world economy, particularly China’s, aggravated the crisis.
“The global shipping industry is quite dim at present, but this third quarter the freight rate is getting better now,” Salvador told The Manila Times. “I think in every cycle, when you go down to the lowest, there’s no way to go but up. I think it will be better soon.”
He said the industry had faced challenges, such as surging crude and bunker prices, environmental regulations and maritime piracy that impacted its income.
Revenues would still be lower because of the sluggish market and the many regulatory requirements that ship owners need to comply, so they need to spend more, he added.
“Revenues were in the low level for some time now. From a scale of one to 10, the margin will be lower than half, around four,” Salvador said.
As ship manager, he saw revenues decrease about 50 percent for all global shipping companies.Those affected were cargo vessel, tanker and container ships.
On the other hand, cruise shipping is having a good time, as people love to travel.
“People are financially better now and it’s becoming a trend that people travel,” the AIMS official said.
He also said international shipyards were not fully booked because of the economic downturn.
“Ship owners categorically told us there’s no ship order this year. If there were shipbuilding going on, that is still very low,” he added.
“Next year, it’s quite optimistic. Freight rates and charter hire are getting a bit higher now. Better than what happened in the past few years, although it’s not enough to recover the losses that ship owners had in the past years.”
Asia is driving the world economy, according to Salvador.
“The future of shipping is notoriously hard to predict, and a straight answer is far from easy to give. But shipping will continue to play an important part of the world economy for decades to come. But the industry itself—the vessels, the infrastructure and the systems that connect them— could change substantially,” he said.
“We can, of course, not ignore the current market situation and the structural effect this might have. But today is not [a time] for fear and pessimism, [but] for curiosity, innovation and opportunity,” he added.
Third-party ship managers handle a third of the world’s ships, mostly concentrated in Singapore, Hong Kong and Europe. Only a few are in the Philippines.
The country’s ship-managing industry has grown slowly, but steadily. In 2003, there were only 12 to 15 reputable ship-management companies in the Philippines that manage international vessels. This year, the number rose to between 35 and 40.
In terms of cost, it is reportedly more affordable to get ship managers in the Philippines than in Hong Kong and Singapore. But one of the biggest challenges in employing Filipino superintendents is visa applications.
“Filipinos have visa restrictions. We can go to Asean for a limited time. If you go to Europe or Japan, you need visa. Visas cannot be given immediately,” he said.
Source: The Manila Times
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