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Bennett identifies shipping woes


By: Alethia Tiang, Singapore
Published: Mar 05, 2012


Regional - The shipping industry has been forecasted to face a difficult year in 2012, with the Eurozone crisis and its possible impact on shipping services from major players like China.

Though Intra-Asia trades remain strong for now, with many Asian players protected from the current economic situation because of China's growth, this shouldn't be taken for granted. It's key that the shipping industry remain vigilant in identifying the issues it may face, taking steps to make sure they are protected.

Simon Bennett, director of external relations at the International Chamber of Shipping (ICS), noted that many shipping problems arise because shipowners have placed orders for too many ships, yet having too few cargoes to carry.

"Current markets would appear to be demonstrating just how seriously damaging the oversupply of ships has been to shipowners' revenues, with many now struggling to meet operating costs," he said, adding the bulk carrier rates are only 30% of what they cost a few months ago.

What's more, there is some modal shift from cargo shipping to aviation, with shipping being less fuel efficient, though it's thankfully not a substitute for aviation services.

"About 90% of world trade is already being carried by sea, but this may be 90% of a decreasing pie," Bennett told ProcurementAsia.

To add on to shipping woes, piracy remains an issue. However, Bennett believes it isn't an issue that can't be solved, adding the ICS believes effective compliance with best management practices and sustained military intervention has reduced pirates' success rates.

"The ICS Board has therefore identified three specific immediate objectives. We need to persuade governments to task the military to take the attack directly to the pirates, while at the same time continuing to defend merchant ships in the best way possible," he said.

"Second, every apprehended pirate should be arrested, taken to a court of law and, if found guilty, imprisoned. Thirdly, governments must break the financial chain through legal action against criminal financiers investing in piracy wherever in the world they are identified."

Finally, the shipping industry also needs to commit to going green, as society gets increasingly environmentally conscious.

"Industry regulator, the International Maritime Organisation adopted a new package of global rules for the reduction of CO2 emissions through technical and operation measures, which the industry fully supports, and the industry's target is to reduce emissions per tonne of cargo moved on kilometre by 20% by 2020," Bennett said.

Yet, he acknowledges that shipping is not a cash cow, and eventually, additional cost would be inevitably be passed on to customers and might reasonably be seen as tax on trade.


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