That was the sombre assessment of Mr Jacques de Chateauvieux, chairman and chief executive of maritime group Jaccar Holdings, as he delivered this year's Singapore Maritime Lecture yesterday afternoon.
Mr de Chateauvieux argued that the main kinds of freight ships all operate in an environment where innovation does not help for long and where firms do not have much of an advantage by growing bigger. This applies to bulk carriers, oil and gas tankers, container ships and roll-on/ roll-off (Ro-ro) vessels, he said.
Bulk carriers cart commodities, tankers carry liquids and gases, Ro-ro ships move vehicles and container carriers ferry finished products such as furniture and instant noodles. They should aim to make money by keeping operational costs low - minimising wages, being efficient with fuel and keeping overheads lean.
Another way to make a dollar is to keep a lid on capital expenditure by ordering ships from reputable yards in low-cost countries.
"If you can buy the asset at a low price, you'll make money not only from the operations of the vessel, you will also make money from the trading of the vessel when the cycle is right," said Mr de Chateauvieux, who was speaking to more than 300 industry professionals at the Fullerton Hotel.
He noted that companies in shipping need to have a permanent reserve of cash.
"You should not think that your bright idea of innovation is going to protect you from being a commodity product," he said.
Commodity products refer to goods and services that have very little differences no matter who supplies them, and so compete largely on price.
Whenever a firm innovates with a new design for a ship, rivals manage to copy it within two to three years, he said, adding: "Innovation gives a hedge that does not last."
The one type of freight carrier with a slightly better outlook is the low-volume commodity ship that serves smaller ports.
There is still no value from differentiating from other companies, but firms here can benefit from being larger, as the market is geographically segmented.
Firms operate within specific regions and margins will be higher for leaders rather than followers, he said. Larger firms can invest in a standardised and modern fleet.
The various segments of the offshore oil and gas sector also operate in environments where they will benefit from differentiation or size, or both, said Mr de Chateauvieux. Differentiation can be via innovative business models or more advanced vessels.
The Singapore Maritime Lecture was organised as part of Singapore Maritime Week.