Views on future mixed at Hong Kong Shipowners panel

Views were mixed with bulkers cheerful and representatives of container shipping companies less optimistic until that day when US and European consumer confidence revives and fills ships.

"Ships are fuller now, but that is because there is so much capacity being taken out of service," CMA CGM vice president Hans Meurs told the Hong Kong Shipowners Association luncheon at the Island Shangri-la Hotel in Admiralty.

"We are still 25 per cent down. We have not recovered. We are looking at a bleak horizon," said Mr Meurs, speaking for the container shipping sector rather than his Marseilles-based company.
More cheerful was bulker sector spokesman Harry Banga, vice chairman of Noble Group, which manages the flow of raw materials from source to destination, who saw the demand for raw materials in China holding steady, and driving domestic production.

"Social instability worries the government of China, more so than profits and the state of banks. We [Asians] have de-coupled from the recession elsewhere," he said, sounding more cheerful than most other panellists.

Mr Banga said China was working hard in to secure markets and resources in Africa and in South America to ensure a supply of raw materials. Steel production had only declined a little, he said.

Lawyer Andrew Brown, of the law firm Richard Butler, told the association members there had there had been a "triumph of Keynesian economics", and industry could now expect more government involvement henceforth.

"The crisis in shipping is a microcosm of what has happened globally," he said, adding that state response with stimulus packages had done good work. "We shall never know how close we came to disaster."

But with the government - hence the taxpayer - taking an ever larger stake in the private sector, there would be more regulation, adding that most active areas of legal specialty in his profession was now in the regulatory field.

Ship finance - or its lack - was taken up by Calyon Asia Shipfinance managing director Kenneth Lam who said order book cancellations and renegotiations with shipyards and bankers could spell trouble.

This crisis has been marked by a lack of enforcement [calling in loans] thus far," he said. "As long as bankers can do better re-negotiating loans rather than calling them in, they will continue to do that."

But Mr Lam said the crisis would undoubtedly put some lenders and borrowers in serious trouble, but he felt that long-time operators in ship finance and in ship operation would survive to do business once the downturn had passed.

Mr Lam said that the shipping sector was less affected than others in the crisis because it had always prepared for downturns because it was a cyclical industry. "As an industry it will do better than many others," he said.

Jack Sun, managing director of Tiger Group Investments, speaking for private equity, whose business is buying assets low and selling them high, was the other optimist on the panel, as there appeared to be many rock bottom-priced assets coming on the market for his industry to acquire, re-jig and sell. "We can afford to wait," he said.

(Source: News and Date)