Still making headway

Rough seas are battering the Singapore shipping industry as it sails against the forces of poor trading conditions in both main and feeder trades. It?s no secret that both the transpacific and the Asia/Europe trades have taken a beating over the past ten months, and Singapore shipping lines have not been spared. The sudden and steep slide has taken many industry veterans by surprise. Flemming Jacobs, president and chief executive officer of Neptune Orient Lines, says: “I think that everybody has been a bit surprised and unpleasantly so with the depth of the downturn we have seen in the US and to some extent in Europe and we are feeling that as well.” Says another veteran, Kaw Jit Kee, executive director of feeder operator New Econ Line: “Nobody anticipated the downturn, which came so suddenly.” For the main trades, Jacobs notes: “Rates have been under considerable pressure basically since autumn 2000 to summer this year. They have stabilised at a lower level. All the operators are feeling the consequences of this.” Over-capacity and a slowdown of the global economy have pummeled rates down in both trades by up to 30%, though Jacobs believes the decline has bottomed out. Still building Despite the downturn, NOL is going ahead with its plans to renew its fleet and expand capacity. It is taking delivery of ten chartered-in newbuilds over the next three years and purchasing another four. The newbuilds range in size from a nominal capacity of 2,500 TEUs to 5,500 TEUs. NOL?s goal is to rejuvenate the fleet and meet future demand and opportunities. Among the newbuildings is APL Holland (see attached item headed ,?Complete with shaft generator?), which was added to the transpacific route in August. Jacobs says the transpacific route is an important trade for APL, NOL?s container shipping arm. He points out APL has not added any capacity in the past three years, even as its customers? businesses have continued to grow. “Now it?s our turn to take the step that all owners must take to rejuvenate the fleet.” In adding capacity now, he says, NOL is taking the long-term view. “When is the right time? The right time has to do with the newbuilding prices and the expectations that you have of the market in the longer term.” While the timing of the addition is less than ideal, he quips: “If I can always time that perfectly right then I would be in the stock market, not the shipping market.” Volume is there So what lies ahead for the Singapore shipping companies? Says Chan: “Singapore will remain a global hub. Of course, the rate of business growth will not be like it was before since the base is now so large. But there will be growth and the volume is there. So our challenge is to how to secure a share of that volume. n