Recession will help industry to regulate demand and supply of tonnage – MOL

The shipping industry needs
to brace for the impact of
the economic downturn, but
Mitsui OSK Lines president
Akimitsu Ashida believes that
it’s not all bad news.
While he estimates the
market will take at least two
years to recover, he believes
it’s a good time to remember
the words of Konosuke
Matsushita, the founder of
Panasonic Group: “Boom is
welcome. Recession is more
welcome.”
For the shipping industry it
will provide a period of respite
where demand and supply of
tonnage can be adjusted in the
right direction, says Ashida.
He points to out that
Chinese and Korean
shipbuilding facilities, which
had been planning for rapid
expansion, have now been
squeezed by the financial
crisis and credit crunch and
that many of the vessels on
order have been and will be
cancelled before their delivery.
“If the market had dropped
one or two years later, the
massive volume of new
vessels would have been
delivered. It is not too much
to say that this is an act of
providence.”
In addition, he says the
scrapping of aged vessels,
which have been kept in
service for longer because of
the very strong market, will be
accelerated due to the market
deterioration. These moves, he
believes, will help to adjust the
demand and supply balance.
“What’s more, we will
have greater opportunity to
reduce overall costs especially
in maintenance and repairs,
bunkers and lubricants, where
prices increased significantly
due to the hike in material
and crude oil prices over a
protracted period. We can also
expect other issues such as
shortage of seafarers and
repair docks to be eased in line
with the adjustment of the
shipping market.”