OVERCAPACITY continues to plague the shipping sector, container shipping in particular, prompting industry leaders here to call for greater consolidation and collaboration among companies to help them cope with this trend.
Along with other issues such as talent shortage and environmental sustainability, industry leaders at a conference in Singapore said yesterday that consolidation and stronger alliances across public and private sector would help the industry overcome these challenges.
According to Lloyd's List, the world's container fleet stood at 5,043 vessels at the end of 2013, up from 5,010 at end-2012, with the problem of excess capacity amplified by the introduction of larger vessels. Such oversupply affects the profitability of the industry, forcing many liners to consider consolidation and collaboration as solutions.
"We will see further consolidation," predicted Teo Siong Seng, Pacific International Lines' managing director and Singapore Maritime Institute chairman, adding that it is not all about size and scale.
"It is a matter of bringing people together to realise the challenges and the opportunities, and look at how we can overcome them together . . . We are seeing ships continuing to get bigger and bigger and a lot of focus on scale. However we need to remain equally focused on the 'softer side' of shipping such as customer service and information technology."
Mr Teo was speaking at an industry insights briefing yesterday ahead of the launch of Sea Asia 2015. He was joined on the panel by Maritime and Port Authority (MPA) of Singapore assistant chief executive (development) Tan Beng Tee; Singapore Maritime Foundation chairman and Keppel Offshore & Marine managing director (marine & technology) Michael Chia and Seatrade chairman Chris Hayman.
Many of the biggest names in shipping are coming together through alliances to achieve cost efficiency and address the issue of overcapacity. Panellists at yesterday's event felt that there can be more collaboration, particularly to deal with the shortage of highly trained talent in the industry and environmental sustainability as these are issues that relate to the entire industry and are not unique to certain companies.
The world fleet is expanding at a rate of 2.3 per cent per annum, fast outstripping the supply of global maritime talent, according to the Singapore Shipping Association. A recent Bimco report also highlighted that the global supply of 624,000 officers was 13,000 short of demand, with 4,500 fewer workers employed in Singapore's maritime sector in 2012 compared with the previous year.
Ms Tan said MPA is focused on developing a "pipeline of strong Singaporean talent". Its Maritime Cluster Fund - Manpower Development (MCF-MD) was established to develop and attract talent. In 2013, MPA provided co-funding support to more than 4,400 participants of maritime training through the MCF-MD.
The development of new technology as well as the increased productivity of the existing workforce will help reduce the demand for personnel.
"We also need to work together to share ideas and technology to develop more environmentally friendly solutions," said Mr Teo.
"This is one focus area under the SMI Research and Development Roadmap. We are planning an R&D programme to pursue issues and opportunities related to ballast water and exhaust emission, among others," he said.
Mr Chia said that by working together to overcome these challenges, the maritime industry in Asia is set for future growth.
"The basic driving force behind shipping will be the growth of the Asian economies. We see China continuing to grow. Asean has a reasonable growth pace; India is coming up and Vietnam is a hidden tiger. These economies will continue to sustain shipping."
The challenges and opportunities facing the region's maritime industry will be the focus of next year's Sea Asia, and Mr Hayman claimed that "Sea Asia's importance in the global maritime calendar continues to grow".
"Last year's exhibition was attended by more than 13,000 participants from 68 countries, and featured 385 maritime businesses from 39 countries. Next year's event will be even bigger . . . The exhibition will grow by over 30 per cent to accommodate greater interests and showcase more services and new products," he added.