Sunday, June 21, 2009

Shipping Association of Malaysia sees demand fall

The Shipping Association Malaysia (SAM) expects a 20% contraction of throughput volume this year due to the fall in demand and overcapacity.

Chairman Ooi Lean Hin said the projection was in line with the current global containerised volume decrease.

“So far, we have seen similar percentage decrease at 20% year-to-date in Malaysia compared with the same period last year,” he told a press conference on its rebranding exercise that saw the association unveiled its new name, SAM, from the International Shipowners’ Association of Malaysia.

Ooi said the maritime landscape would see the survival of the fittest for shipping companies in the next 12 to 18 months where the issue of excess capacity was still a looming problem of the industry.

According to SAM vice-chairman Abdul Aziz Toha, the total number of idling ships as at early this month stood at 533 ships with an estimated total capacity of 1.3 million twenty-foot equivalent units.

“That also translates to about 10% excess of the global capacity,” he said. That would be further compounded with new deliveries that would be expected to flood the market this year.

Ooi said cancellations of shipbuilding orders would not be that easy but deferment of deliveries would be a likely solution.

AmResearch in its recent sector update said it remained sceptical of significant improvement in the container sector any time soon.

“Container vessel delivery is backloaded, with bulk of deliveries in the second half of this year continuing to next year, adding capacity by 27% over next two years.

“And globally such fleets are very young with limited scrapping potential – leaving little scope for supply-glut mitigation.”

On its rebranding objective, Ooi said it would allow SAM to reach a wider spectrum of the maritime industry while streamlining its focus to better represent its members in the prevailing operating environment.

Previously, the association membership had been restricted, under its constitution, to ship owners which are represented by either the shipowners’ local offices or their local agents.

“With the major revamp of the rules and objectives of the association, SAM expects to attract new members from local shipping agencies, domestic carriers, box operators and barge operators.

“It is the objective of SAM to eventually unite all organisations in the maritime sector under a single association rendering a much stronger and unified voice,” said Ooi.

He added that SAM expected to double its current membership of 25 members by year-end.

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