Thursday 31 January marked the start of the year of the horse, and will almost certainly see a slew of puns about galloping into the New Year in speeches made maritime events in Asia over the next two weeks. Indeed given the difficult times that shipping has faced over the last few years the industry will be hoping the year of the horse brings with it winning ways for the shipping markets.
Getting in early with the year of the horse references was Mitsui OSK Lines (MOL) chief Koichi Muto in his New Year message in early January. “2014 is the Year of the Horse in the Japanese zodiac. Just as Pegasus soars into the sky, I want to make 2014 a year in which the MOL Group sails across the rough waters of the seven seas to attain new growth,” Muto said.
Over the Lunar New Year the Japanese “big three” MOL plus Nippon Yusen Kaisha (NYK) and Kawasaki Kisen Kaisha (K Line) reported their nine month financial figures for the year ending 31 March 2013, and ironically given Muto’s upbeat tone on the year of the horse at the start of his New Year message only MOL did not fair better than it had done year earlier.
As some of the world’s largest shipowners, diversified across almost all sectors the financial results of Japan’s big three are always worthy of note. NYK reported an eight-fold increase in net profit for the nine-month period to bring in JPY28.3bn ($276.7m). The Japanese shipowner noted that while that while uncertainty continued to reign, positive signs had started to emerge. K Line reported a 67% boost in profit for the period compared to the same period a year earlier. MOL meanwhile reported that its nine months profits had been halved.
There have been a number of other signs suggest the year of the horse will be a more positive one for many in shipping. Large tanker and bulker markets enjoyed a much better end to last year than they had in some time, while as is traditional markets have weakened in the run up to the Lunar New Year there is more confidence going forward. Arrow Shipbroking recently reported a bullish outlook for the capesize sector over the next 18 months. Meanwhile in large tankers ICAP Shipping sees a “window of opportunity” for the VLCC sector over the next two years.
In the container sector ahead of the new year the Transpacific Stabilisation Agreement (TSA) said it members reported a $300 per feu increase in rates from the 15 January general rate increase. Importantly it expected rates to hold across the traditional slack period over the Lunar New Year, and has more increases planned for March. That increases hold up is important for lines as they head into annual contract negotiations on the trade.
Even China’s much written about ailing shipyard sector overall had a better year in 2013 in terms of new orders, even if it was very much biased towards the country’s major yards. Last year, the shipbuilding industry received new orders with tonnage amounting to 70m dwt, a jump of 242% year-on-year, according to figures from China's ministry of information and technology. However, 80% of the orders were placed at the top 20 largest yards. Meanwhile China Association of National Shipbuilding Industry recently warned that yard capacity is likely to last for another five years.
For some the turnaround that is slowly being seen could prove too little, to late. For example Chinese owner Nanjing Tanker is expecting to report a higher loss for 2013 as it faces delisting from the Shanghai Stock Exchange, and it is not alone in its struggles.
Overall the year of the horse looks likely to bring better fortune for shipping than some recent years, but only some will emerge winners as markets slowly improve.
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