Dry-bulk shipping outlook still fragile

The outlook for dry-bulk shipping remains fragile as new deliveries of vessels are expected to flood the industry next year.

ABC News reported recently the global fleet of dry-bulk carriers was expected to outpace economic demand in 2011. It said this was the result of an industry buying spree two years ago before the financial crisis severely slashed sea trade.

The Baltic Dry Index (BDI), the barometer of commodity shipping, reached an historical high of 11,793 points on May 20, 2008 but six months later – on Dec 5 – it fell 94% to 663 points.

Year to date, the performance of the BDI has been satisfactory, averaging 2,823 points. It hit a high of 4,209 points on May 26 and a low of 1,700 on July 15. On Friday, the BDI was at 2,200 points.

According to a Bloomberg report, Capesize vessels, the largest of commodity ships, would drive the overall fleet expansion, estimated at 21%, while on average the global dry fleet is forecast to grow 15% this year, which might pull down the index.

Unless shipowners delay some of their new deliveries next year, the market outlook is seen uncertain.

Locally, the country’s largest dry-bulk shipping company, Malaysian Bulk Carriers Bhd (Maybulk), recently reported positive results for its third quarter ended Sept 30.

Shippers add surcharge at Johor Port

JOHOR BARU: Several shipping companies have this month started imposing surcharge on manufacturers using Johor Port to export their finished products due to severe congestion at the port.

Johor Port Shipping and Forwarding Association secretary Michael Cheah said shipping companies had no choice but to impose the surcharge because of the unsolved delays at the port.

He said most shipping companies would start imposing the surcharge on users if congestion at a port was beyond control and it was up to individual companies whether to impose the surcharge or not.

Inefficiency is said to be one of the main reasons that contributed to the congestion at Johor Port.

Cheah said the surcharge was to recover or mitigate tremendous losses suffered by vessel operators in running costs for chartered hired, bunker burn and misconnections to mother vessels.

How logistics players can help to meet NEM targets

They have to re-orientate the way they think of business, ops and processes

MALAYSIA is at a crossroad. It has done well to boost economic growth, thanks to sound economic strategies and management.

From being a developing nation dependent upon commodities and agriculture to power its economic growth, Malaysia is now one of the top 20 trading nations. However, it has fallen into ‘middle income trap’.

The economy, while more diversified today compared with three decades ago, is still reliant upon labour-intensive activities.

Malaysia’s vulnerability to external shocks, as seen during the recent global recession, underscores the urgent needs for the economic transformation to be more robust by climbing up the value chain.

Maritime players must boost efficiency in the production of goods and the provision of services.

The New Economic Model (NEM) provides the compass with which Malaysia can refer to in deciding which way to go from this crossroads.

Penang Port aims to handle more cargo

Penang Port Sdn Bhd aims to double the volume of cargo handled from the one million 20-foot equivalent units (TEUs) it looks on course to achieve this year.

Managing director Datuk Ahmad Ibnihajar said the company was in the process of formulating a new five-year plan.

Speaking after handing out excellent service and long service awards to 59 employees in Penang last week, Ahmad said the port handled 958,476 TEUs last year and was confident of reaching one million TEUs this year.

On another development, he said that works to deepen the North Channel to 14.5 metres, from 11 metres, was expected to begin next year.

"The deepening needs to be done to accommodate demand that will arise from the Northern Corridor Economic Region (NCER) initiatives.

"A deeper channel will enable goods from Kedah and Perlis to be brought here to Penang and then transported out," Ahmad said, adding that the deepening was likely to take more than a year.

It was reported last month that Penang Port had hoped that the federal government would speed up the channelling of funds for the project, as announced under the 10th Malaysia Plan.

Source: Business Times