ANALYSTS said Malaysia's shipping sector will face a more difficult environment this year, as transport volumes shrink given the tight credit conditions and weak demand.
HwangDBS Vickers Research Sdn Bhd said it expects the correction in petroleum tanker rates to persist as the supply of new vessels should continue to pressure rates until 2010 when the mandatory scrapping of single hull vessels deadline approaches as well as softer oil demand on expected global economic slowdown.
The Baltic Dirty Tanker Index had corrected by 44 per cent since it peaked on July 23 2008.
It maintains its "underweight" call on the logistics sector, but said a key risk to its call is significant scrapping of single hull vessels ahead of 2010.
"The outlook for container shipping remains challenging as transport volumes could shrink given the tight credit conditions and weak demand," HwangDBS Vickers Research wrote in a report last week.
For MISC Bhd, it expects the group's expanding heavy engineering and offshore divisions to partly cushion the weakness in petroleum tanker rates.
"The recent termination of the proposed reverse-takeover of Ramunia Holdings do not have material impact on MISC though it would need to seek for other available yards in an effort to expand its heavy engineering capacity. The group is a key beneficiary of Petronas' increased focus on deepwater projects," it added.
Sharing the same sentiments, OSK Research Sdn Bhd said the local shipping industry will face a difficult year in 2009, as it expects demand for new ships to reduce, which may avert the current oversupply of vessels.
"Overcapacity in container shipping has led to extremely low rates for all major trade routes, and major shipping lines are reducing capacity across the board," it said.
Source: NST Online