London: Despite the downward spiral in the world markets, including shipping, Ronny Bjornadal, svp and global head of syndicated loans for Norway's Nordea Bank remains confident that the shipping industry will come out with flying colours. The fundamentals for the shipping industry look strong and it will weather this trend,' he said, speaking to SeatradeAsia-Online on the sidelines of the Norwegian Maritime press day in London yesterday. 'China and India will be the driving forces that will determine the direction the market goes in,' he added.
The past week has seen a slowdown in trade routes, particularly amongst dry bulk destined for US ports. The Baltic Dry Index plunged to 5,948 points yesterday; down by 298 points on the day before, with the Capesize index itself decreasing by 6.32% to 7,352 points.
However, Bjornadal was eager to remind naysayers that the shipping industry is famous for being cyclical and was due for a trough. 'The credit crunch has led to a correction in the market which was necessary to a large extent, and it had been kinder to the shipping industry than to other sectors like private equity.'
He feels that the market will adapt to the new situation, without too much fall out. 'Banks have been cautious with their lending and there are a large number of financial covenants in place to protect us, so I don't think we will be very affected,' he says.
Although he says that the market has seen short-term impacts such as the cancellation of contracts for large container vessels and anticipates a slowdown in exports from the Far East to the US, he believes there will be other countries that will import these goods changing trade routes and creating new opportunities ?" both for liner companies and banks.
'There is still scope for the market to absorb the new tonnage that will be realised in the next few years - congestion will be to our benefit in this case,' he claims, adding, 'The Chinese have low production costs which mean that they can tailor their production to meet demand and can change the nature of their exports to create items that will still be imported by the US. Similarly India is a growing economy and that will affect both production and imports. These are wild cards, making it difficult to predict the way the industry will go.'
"All one can be sure of,' he says, 'is that the Far East will continue to drive the industry.' [25/01/08]
Copyright © 2024. All rights reserved. Seatrade, a trading name of Informa Markets (UK) Limited. Add Seatrade Maritime News to your Google News feed.
