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 22 Apr 2009

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PSA warns of overcapacity after shipping slump

Ports operator PSA said on Tuesday a slump in container shipping trade has hit bottom but many ports are likely to face overcapacity and increasing competition before global volumes rebound, reported Reuters.

"I'm quietly confident that physical trade in terms of containers has actually bottomed... and the trend moving ahead is likely to be positive," said Kuah Boon Wee, Southeast Asia chief executive of PSA International, which operates ports around the world.

But Kuah, speaking at a shipping conference in Singapore, warned that some ports in the region, including those in Indonesia, southern China, the Straits of Malacca and North Asia, serving trans Pacific routes, are in "structural overcapacity".

The fall in world trade resulting from the global financial crisis has hammered shipping companies and port operators, forcing shippers such as Singapore's Neptune Orient Lines to cut capacity and jobs.

"Competition is likely to increase in the short-term. The drop in ports is across the board -- it's endemic -- it will take time to improve," Kuah said. "Global trade will rebound, and I think it will probably rebound with more Asian characteristics -- we are going to have to rely more on Asian-centric demand."

Jesper Praestensgaard, the Asia Pacific chief executive of Maersk Line, a unit of A.P. Moller-Maersk , told the conference the current recession would drive consolidation in the industry, but he did not see it happening right now as companies focus on their own financial health.






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