Su Xin'gang, vice president and general counsel of China Merchants Group, pointed out that 13 listed container shipping companies in China are facing rising debts, with their debt-equity ratio expected to continue increasing.
“Industry players need to take the appropriate steps to mitigate the risks of rising debts. This can be done through controlling asset expansion and operating costs, and focus on providing value-added services instead,” Su told delegates at the World Shipping (China) Summit 2013 held in Ningbo on Thursday.
Su noted that ongoing deliveries of new boxship capacity will prolong the market's supply glut, and the start of an upturn for the global container shipping industry is likely to come only in 2016. Up until the end of September, the existing orderbook capacity at the shipyards is 3.67m teu, representing 22% of the capacity currently in operation.
Apart from high bunker fuel prices, which are forecast to keep rising as crude oil prices remain firm, the shortage of seafarers is also putting pressures on labour costs for owners, according to Su.
“I would like to urge owners to focus on broadening and widening cooperation during this downturn. Cooperation should extend to governments and conservation groups, while owners themselves can look at slot sharing, mergers and acquisitions and establishing joint ventures to streamline the industry,” he said.
“Some owners have entered the newbuilding market to take advantage of low prices and go after larger and more efficient ships. Though there is a business sense to this, it will only worsen the overcapacity problem. The market would be better off if owners start demolishing their older vessels, reuse secondhand vessels and focus on customer service,” he commented.
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