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China’s slowing economic growth remains a key driving factor for container shipping

China’s economic growth, which is slowing down, will continue to be a driving factor for the global container trade market, shipping players were heard saying at an industry conference.

Lee Hong Liang, Asia Correspondent

April 20, 2016

2 Min Read
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The Chinese economy is projected to expand by 6.5-7% in 2016, which is still considered a healthy growth even if it has slowed down from the double-digit percentage increases in previous years.

“I have no doubt in my mind that China will continue to be a very important export market, and I find it hard to believe that the Chinese won’t be looking for ways to stimulate their economy,” Soeren Andersen, ceo of Rickmers Maritime, said at the TOC Asia conference held in Singapore on Wednesday.

He further observed that other Asian countries like Vietnam is still a strong export market after China, while Southeast Asia and South Asia are increasingly becoming important export markets as well.

Robbert van Trooijen, chief executive, Asia Pacific region, Maersk Line, noted that the Chinese container trade is projected to grow only moderately. Chinese container exports are expected to grow in line with global GDP of about 2.5% as outsourcing to China decreases.

The Chinese container imports are also anticipated to decline as China shifts away from being a production hub due to its lesser need for raw materials and industrial input. In view of an overall softer support for shipping due to China’s slowing economic growth, the global container shipping market will see the ripple effect of freight rates continuing to stay deflated and suppressed industry profits, according to van Trooijen.

But the widely acknowledged problem for container shipping, regardless of economic growth, is the excessive tonnage that is limiting any strong rise in freight rates. Rickmers Maritime’s Andersen said scrapping has picked up pace over the past year, a development that is important to reversing the ailing state of the container market.

Jonathan Beardm vice president, global lead ports and logistics, ICF International, reiterated that the industry should also address the oversupply issue by continuing to look at mergers and rationalisation, as attested by the acquisition of Neptune Orient Lines (NOL) by CMA CGM and the merger of China Cosco Group and China Shipping Group.

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About the Author

Lee Hong Liang

Asia Correspondent

Singapore-based Lee Hong Liang provides a significant boost to daily coverage of the Asian shipping markets, as well as bringing with him an in-depth specialist knowledge of the bunkering markets.

Throughout Hong Liang’s 14-year career as a maritime journalist, he has reported ‘live’ news from conferences, conducted one-on-one interviews with top officials, and had the ability to write hard news and featured stories.

 

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