Fate of shipping in hands of Korea and China

Posted by Seafarer

November 23, 2009

cargo

According to Arlie G. Sterling, president of shipping consulting firm Marsoft, “South Korea and China will determine the destiny of global shipping industry. Newbuildings to be delivered from the two countries and China’s volume of trade will decide whether shipping market recovers or continues to struggle.” He went on to say that “At present, shipping market is recovering fast in a V-shaped development. Nevertheless, ‘bearish factors’ still remain.” Sterling visited South Korea before attending the Investment & Risk Management in Shipping Forum (IRMS) to be held in Singapore from 22 to 24 November.

Recently, global shipping market is suddenly making a rally, especially in the bulk carrier market. The Baltic Dry Index, which plummeted to 663 points in December 2008, compared to 11,793 points recorded in May last year, started to gain recently and broke 2009 high at 4,300 points mark. With BDI, a leading indicator, skyrocketing, some industry players expect a V-shaped recovery.

However, Sterling warned that the market could develop in a W-shaped movement, which means ‘Double Dip Recession’. He said, “The recovery in bulker market resulted mainly from shipowners delaying delivery of newbuildings. If newbuilding deliveries increase due to recent improvement, the market could dip into recession again.”

He also pointed to the possibility of China reducing imports of raw materials going forward. He said, “Unlike bulker sector, the containership and tanker markets are still facing downturn. The recession would persist for six months to twelve months.”

Particularly, he stressed that securing liquidity is most important in a period of slump. “Although many countries are providing supports for their shipping players, a considerable number will collapse. The phrase ‘crisis is opportunity’ is valid only for the survivors,” Sterling added.

Source : MotorShip

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