[221012.EN.SEA] Container Shipping Must Focus On Cost Control, Efficiency: NOL Chairman

SINGAPORE's Neptune Orient Lines (NOL) chairman Kwa Chong Seng told the Singapore International Bunkering Conference that cost control rather than growth must be the focus of the container shipping industry in years to come.

Mr Kwa expected supply would significantly exceed demand for years, resulting in depressed container rates and higher capital expenditure.

"The current model is simply not sustainable. We need to change our focus, and efficiency has to be the watchword," said Mr Kwa, whose NOL's principal holding is APL, the group's container shipping line.

A new business model must emerge centred on cutting fuel demand per TEU, he said. The ship supply bulge had been "driven by over-ordering of large ships, and many are being delivered at the time the industry needs them least".

Nonetheless, he said, the trend towards larger and more efficient newbuildings was "irreversible".

Noting that NOL has ordered 34 newbuildings, Mr Kwa said: "This is not additional capacity, but replaces old and inefficient charters. This will help us reset our cost base."

He said NOL was now focusing on standardising operating procedures for masters and on closer collaboration with ports to achieve just-in-time service. Another area of concentration is slow steaming, down to 18 knots from 22 by maintaining efficiency through the use of the latest purpose-built engines and the application of lubricants.

Mr Kwa said financing for smaller container lines was an increasing challenge, though Chinese and South Korean lenders are ready to take positions if ships are built in their yards.

Source : HKSG.