According to the former chairman of shipping companies Evergreen and Yang Minh, the trade war between the US and China will reduce demand for large container ships.
Instead, small and medium-sized ships will come to the fore, said Bronson Hsieh. The reason for this is that manufacturers are shifting their supply chains to Southeast Asia and South America to avoid the tariffs.
Hsieh was speaking at a seminar organized by the International Ocean Freight Forwarders & Logistics Association, Taiwan, on February 17. He said: “I personally believe that ultra-large container ships no longer need to be built. The full loading of ultra-large ships by docking at Chinese ports is now history. Many ports in Southeast Asia can now only handle ships of up to 8,000 TEU.”
Trade war creates uncertainty
Whether the US can still import large volumes of consumer goods from China is now uncertain, and therefore liner shipping companies should be flexible when negotiating annual contracts.
“Some carriers think they can’t negotiate flexible terms unless they handle tens of thousands of containers a year,” Hsieh said of the US-China trade war. “Forwarders should look to liner operators who have significantly expanded their fleets in recent years as they have more room to negotiate.”
Last year, Singapore-based Pacific International Lines recorded the largest capacity increase of almost 30%, followed by ZIM Line (26%), Hapag-Lloyd (18.7%), Korea Shipping (14.3%), MSC (12.3%), Wan Hai (9.3%), Ocean Network Express (9%), COSCO Shipping Lines (8.6%), Maersk (7.3%), CMA CGM (7%), Evergreen (6.9%) and Yang Ming (-0.3%).
Hsieh said that liner shipping companies value shippers that maintain mutually beneficial relationships and honor contracts.
“These customers will not charge more than the contract just because freight rates have fallen. Shipping lines will also take special care of these loyal customers when freight rates rise or there is a shortage of cargo space. For this reason, lines should be more flexible with conventional transpacific contracts as freight volumes are under pressure.” (PL)
