OOCL md urges peers to stop fighting for market share in the downturn

Shenzhen: CL Ting, OOCL md, gave a grim outlook for the future of the container shipping industry, speaking on the second day of the TPM Asia Conference in Shenzhen.
Ting warned his liner peers to stop engaging in a fight for market share during the downturn. This fight only leads to lower freight rates, he said. The likes of Maersk, MSC and Evergreen have all made pronouncements to the media in the past months, saying they will look to increase market share in the downturn.
'One big mistake we make is going for market share in a down market,' Ting warned. 'In a downturn our industry, unlike any other industry is a zero sum game.' While hotels and airlines can reduce their prices to generate more custom, he explained, liners, if they reduce prices, are not going to get factories to produce more products, and get consumption going to fill their ships. By pursuing market shares in a downturn, something liners have done time and time again throughout many cycles, Ting said that this fight always leads to the same end result. 'The rates goes down precipitously to the abyss,' he said.
Ting cited two reasons not to expect any rebound soon. 'We see that the consumer index has really dropped since last year,' he said. 'Second, unemployment. In the US unemployment is inching towards 10%... If the consumer does not have money to spend and there is unemployment we in this industry do not see a rebound. Next year will not see a rebound. There will be growth though,' he said, predicting 2% growth in 2010, following negative growth this year of 12-15%, he estimated.
This drop in growth has not been experienced 'since containerisation was born' said Ting.
This year, OOCL estimates a global boxship oversupply of 16-20%. Ting suggested it would take 'four to five years' to handle all the excess capacity in the container trades.
On freight rates, Ting called for greater dialogue with shippers, as many liners faced financial oblivion. 'We need to get volatility to be less because supply chain is about predictability,' he said. [22/10/09]

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