Wan Hai Lines (America)

Wan Hai Lines (America)

Last year was a challenging one for the container shipping industry. The eurozone debt crisis has triggered the prospects for a double-dip recession in the major economies. Despite this uncertainty, oil prices remain high, creating a serve burden for the industry, particularly when coupled with the more prevalent congestion at key ports throughout the region. In addition, the delivery of large vessels and the slowdown in cargo growth in the east-west trade lanes have upset the balance in supply and demand side.

Because of the unfavorable conditions clouding the industry, we expect cooperation and collaboration among liners to take place in the near future, especially as more super post-Panamax vessels are delivered. A clear example of this is the plan among two major long-haul carriers to form an operational partnership. Through service cooperation and integration, carriers are able to achieve significant savings in operating costs as well as reduce risk exposure amid the uncertain outlook.

In intra-Asia, despite the increased competition, we see relatively stable cargo growth, compared with Asia-to-Europe and trans-Pacific trade lanes. The free trade agreement between the ASEAN economies and China that came into effect in 2010 did yield more shipment volume for the region and will only continue to be a positive influence for the future. However, the increase in regional trade will provide more opportunities for the liner companies with resources and tonnage to capitalize on this niche market.

Looking to year 2012, we believe there will still be some growth opportunities in the emerging economies vis-a-vis developed economies. For the container shipping industry, the most critical challenges are managing the massive influx of new ships and mitigating the effects of high oil prices, which will remain key variables for carrier fiscal results this year.

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