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Ship industry tries to navigate rough seas
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ASIA’S largest maritime exhibition fair, held in Shanghai earlier this month, highlighted the slump in the seafaring industry and tried to pinpoint trends that may lead to a rebound.
The usual focus on the latest technologies in oceanic equipment took a back seat.
One bright spot for participants was China’s “Belt and Road” initiative, which seeks development of a 21st century Maritime Silk Road.
“By tapping the opportunities of the Maritime Silk Road, Shanghai can connect the development of its Free Trade Zone with other free trade ports along the route,” said Fang Huaijin, vice president at Shanghai International Port Co, which is planning to open a container-shipping route to include nations along the route.
The All China Maritime Conference and Exhibition, also called Marintec China, has been held biennially since 1981. The fair was sponsored by the Shanghai government and the national ministries of transport and industry and information.
Maritime officials who attended a forum during the fair said the global shipping industry is undergoing difficult times due to overcapacity, slack demand and lower prices.
Jiang Zhuoqing, vice mayor of Shanghai, also noted the emergence of new ship owners and the declining oil price as factors in the slump.
Experts in the sector warned that the industry will have to enlarge the size of cargo vessels and ally with other companies in an effort to reduce cost and win market share. They estimate added capacity in the next five years would equal existing capacity.
A weak shipping industry invariably hurts shipbuilding. Wu Qiang, head of China State Shipbuilding Corp, said the financial crisis of 2008 has had a lasting effect on the global industry.
In the first 10 months of 2015, new orders received by Chinese shipbuilders dropped 62 percent from a year earlier, according to the China Association of the National Shipbuilding Industry.
The decline reflects continuing hardship for companies also plagued by lower prices and financing difficulties, the association said.
China is not alone in its suffering. In the first nine months of 2015, new shipbuilding orders globally slumped 24 percent from a year earlier, according to the China Shipbuilding Industry Research Center.
The production of liquefied natural gas vessels led the decline in pace with dropping crude oil prices. Only 31 of the vessels were contracted to be built in the first 10 months of 2015, a 29 percent decrease, the center said.
Huai Jinpeng, vice minister at the Ministry of Industry and Information Technology, said the negative global market amplifies problems in China’s inefficient maritime sector, where innovation and quality are generally ranked low.
Sun Bo, manager of China Shipbuilding Industry Corp, told the forum that his industry needs to improve its innovation in areas such as cleaner energy vessels.
More environmentally friendly shipping could be pivotal in the future of shipping companies, agreed Ding Nong, vice president at China Shipping Co.
Other maritime countries are taking steps to address the industry slump.
Singapore shipping firms, for example, are expanding connections with Europe. Dubai is shifting its focus to Europe and Africa. Ports in the Mediterranean are increasing the anchoring volume for large vessels.
Offshore alliances
China’s Maritime Silk Road policy is aimed at keeping this nation competitive. It envisions stronger links among ports stretching from China to South Asia, to Africa and to Europe.
Huang Youfang, dean of the Shanghai Maritime University, told the forum that Chinese companies need to invest more in building offshore alliances.
Other nations expressed support for the maritime road. Paolo Costa, president of the Venice Port Authority, told the forum that the policy will greatly improve cargo volumes for Mediterranean ports.
The conference also focused on the “Made in China 2025” policy, which includes oceanic equipment and high-technology vessels among its 10 priorities. Vice Minister Huai said the next five to 10 years will be a key period for China’s maritime industry in terms of structural reform and innovation promotion.
Shanghai, according to Vice Mayor Jiang, is committed to improving its maritime infrastructure and related financial services.
China Shipbuilding Industry’s Bo said the market is undergoing rapid restructuring and Chinese companies must speed up research in high-tech ships and oceanic equipment to enlarge the scale of smart digital shipbuilding.
One promising sector is luxury cruise liners. Industry capacity there is relatively low and shipbuilders are expected to be swamped with orders by the end of 2021.
Cruise travel is becoming a popular among Chinese tourists, and the nation is aiming to develop its own giant luxury liners.
China State Shipbuilding, the country’s top state-owned shipmaker, has signed a deal with Carnival Cruise Lines, the world’s largest cruise company, and Italian shipbuilding heavyweight Fincantieri to develop China’s first big cruise ships.
Fincantieri currently accounts for 46.5 percent of the global luxury cruise shipbuilding industry.
Maurizio Cergol, a top official at Fincantieri, said the China market is a booming one for cruises. The partners said in October that an estimated than 10 million Chinese tourists would be taking cruises in the next 20 years, requiring about 100 ships.
Carnival said some 500,000 Chinese tourists have cruised on its ships this year, a 43 percent increase from a year earlier.
The partnership between State Shipbuilding Corp, Carnival and Fincantieri will see work carried out by Shanghai Waigaoqiao Shipbuilding Co, a wholly owned subsidiary of State Shipbuilding.
Chen Jun, vice manager at Waigaoqiao Shipbuilding, said first Chinese-built luxury cruise ship is expected to be finished by 2020.
China Investment Corp has agreed to help finance construction of the ships.
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