ANOTHER
bankruptcy of a major container shipping line following Hanjin Shipping's demise
is unlikely in the near future according to Alphaliner, which
believes industry stakeholders will learn to stave off a similarly disastrous
result.
Speaking
at the recent Asian Logistics and Maritime Conference (ALMC), Tan Hua Joo,
executive consultant at Alphaliner, blamed governmental blunders for Hanjin's
fall, while opining that state intervention would only "serve to
prolong" the market downturn, according to Container Management.
Hanjin's
collapse "gave a very good lesson on how not to handle a debt
restructuring exercise," said MrTan. "I think there was also a
complete misunderstanding on the part of the foreign creditors on what is
driving the Korean domestic and political situation.
"All
of the stakeholders involved will end up suffering more than if an agreement
had been reached to save Hanjin," he added.
The
recent announcement of the Japanese carrier tie-up has created a gulf between
the top seven lines and the remaining large firms, leaving Hamburg Süd, Orient Overseas
Container Line (OOCL), Yang Ming, Hyundai Merchant Marine (HMM) and Zim
vulnerable, Tan stated.
"Something
will have to give," he claimed, and more consolidation is the likely
outcome.
In
Mr Tan's opinion, Hanjin's bankruptcy "was clearly the case of political
blundering taking precedence over economic common sense."
"It
is becoming increasingly clear by now to any neutral observer that it was a
strategic mistake for the Koreans to save HMM but allow Hanjin shipping to
fail," he added.
Mr
Tan also pointed out that the merger between COSCO and China
Shipping would not have occurred if not for political interests getting
involved.
The
lack of "weaker players exiting the business" is preventing the
industry from making a fast recovery, he added, as mass over-supply still
plagues the sector.
According
to Alphaliner data, the overall capacity of the container shipping market has
grown six-fold in the last 20 years at an annual average of 10 per cent.
Although
capacity did not increase hugely in 2016, an array of vessels ordered in the
previous few years is set to enter the market.
Statistics
from Alphaliner indicate that more than 110 container ships with a capacity of
more than 9,000 TEU, comprising 1.5 million TEU in total, will enter the sector
between the final quarter of this year and the end of 2017.
This
represents 7 per cent capacity growth although after scrapping, a 5 per cent
increase is expected according to Mr Tan.
Speaking
at the same event, Steve Saxon, partner at McKinsey & Company, suggested that
capacity additions, although undesired, could become inevitable as the Korean
shipbuilding industry would be forced to offer favourable deals to shipowners
in order to sustain itself.
Source
: HKSG.
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