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.”