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from straitstimes.com:
SINGAPORE - The war in Ukraine has already placed a greater strain on shipping with air and rail cargo delivery disrupted, but the "strong fundamentals" of the shipping industry means that its medium-term outlook is still good, Deputy Prime Minister Heng Swee Keat said.
This is despite the more than 100 ships now stuck in ports in the Black Sea due to the armed conflict, and potential manpower issues with Russia and Ukraine accounting for 15 per cent of the global seafaring workforce, he said.
Shipping remains the most cost and carbon efficient mode of transportation, and carried more than 80 per cent of global trade volume last year, reaching an all-time high.
"Although the global maritime industry is cyclical and facing challenges, we are approaching the future from a position of strength," he told participants at the opening ceremony of the Singapore Maritime Week at Sands Expo & Convention Centre on Monday (April 4).
"The fundamentals for growth in the medium term are strong, despite the short-term headwinds."
But Mr Heng also cautioned that the high global container shipping fees, which are now four times that of pre-Covid-19 levels, will not last.
"We should not expect it to. Persistently high rates will dampen trade and undermine the lifeblood of the global economy," Mr Heng said, adding that large swings in shipping fees also create uncertainty and stymie the growth of the sector.
"Shipping capacity is stretched now. New capacity is coming on stream over the next few years. Herein lies the risk - that excessive investment in shipbuilding now could eventually lead to another capacity glut, which we saw after the Global Financial Crisis."
He suggested that companies moderate the boom and bust shipping cycle through greater awareness of the risk and "measured and continuous investment". This will allow the industry to be more adaptive, he said.
During the opening ceremony, Mr Heng launched a revised Sea Transport Sector Industry Transformation Map for Singapore, which wants to grow the sector by $2 billion by 2025 and create 1,000 jobs.
It wants to better support small- and medium- enterprises and pursue growth in new areas, such as through the digitalisation of operations and green financing.
Mr Heng said under-investment during the previous down-cycle also had a part to play in the supply chain crisis last year.
A shortage of vessels, in addition to logistical and manpower disruptions caused by Covid-19, led to the reliability of vessels arriving at ports on time last year more than halving from 78 per cent before the pandemic to around 35 per cent.
To better track and optimise the flow of goods and increase efficiency, companies must tap technology, he said.
"There is an even greater impetus to do so as the maritime industry will need to adjust to the reconfiguration of global trade flows and supply chains. Going digital can also reduce the voluminous paperwork," Mr Heng said.
He said that on Monday, the Maritime and Port Authority of Singapore also began developing Oceans-X, a common marketplace for companies and app developers to help develop programmes that allow different systems to connect digitally.
This will allow the systems of port authorities, terminal operators, shipping lines, logistics service providers and government agencies to be more in sync.
In a later panel discussion on decarbonisation and talent attraction, industry leaders agreed that supply chains have become more fragmented, affecting growth prospects.
"A lot of improvements we have seen have been because of cheap energy, cheap money, free trade and global peace. Pax Americana, or whatever people call it. These are all reversing. Free trade is not as easy as it used to be," said Mr Andreas Sohmen-Pao, chairman of maritime company BW Group.
The panellists also said there must be more market incentives to scale up the production of green fuels and green ships, even in down-cycles.
Mr Jeremy Nixon, global chief executive officer of container shipping company Ocean Network Express, suggested that governments impose an initial conventional fuel levy of $30 a tonne, which should then be given as a rebate in some form to green ships to level the playing field.
Shipyards should also start building ships that can be easily retrofitted with engines compatible with future greener fuels like ammonia and hydrogen, he said.
The same ships can then be quickly converted before their operational lifespan of 25 years is up, and operators will be less wary about getting them built now.
The maritime sector has pledged to reduce absolute greenhouse gas emissions by 50 per cent by 2050. Mr Heng said this is just one ship generation away.
"With 100,000 merchant vessels plying our seas today, many will have to be replaced in the coming decades. Likewise, significant complementary exchanges on the port-side infrastructure will be needed," he said.
The industry accounts for between 2 and 3 per cent of global carbon emissions.
Mr Andreas said: "What scares me right now is the number of people who think we can just flick a switch and just turn this off and do this, and it's all going to be easy. What we have to say is we are going to solve this problem, but it's going to take really hard work and it's going to take incrementalism."
Ukraine crisis introduces uncertainties but medium-term outlook for shipping is good, says DPM Heng
SINGAPORE - The war in Ukraine has already placed a greater strain on shipping with air and rail cargo delivery disrupted, but the "strong fundamentals" of the shipping industry means that its medium-term outlook is still good, Deputy Prime Minister Heng Swee Keat said.
This is despite the more than 100 ships now stuck in ports in the Black Sea due to the armed conflict, and potential manpower issues with Russia and Ukraine accounting for 15 per cent of the global seafaring workforce, he said.
Shipping remains the most cost and carbon efficient mode of transportation, and carried more than 80 per cent of global trade volume last year, reaching an all-time high.
"Although the global maritime industry is cyclical and facing challenges, we are approaching the future from a position of strength," he told participants at the opening ceremony of the Singapore Maritime Week at Sands Expo & Convention Centre on Monday (April 4).
"The fundamentals for growth in the medium term are strong, despite the short-term headwinds."
But Mr Heng also cautioned that the high global container shipping fees, which are now four times that of pre-Covid-19 levels, will not last.
"We should not expect it to. Persistently high rates will dampen trade and undermine the lifeblood of the global economy," Mr Heng said, adding that large swings in shipping fees also create uncertainty and stymie the growth of the sector.
"Shipping capacity is stretched now. New capacity is coming on stream over the next few years. Herein lies the risk - that excessive investment in shipbuilding now could eventually lead to another capacity glut, which we saw after the Global Financial Crisis."
He suggested that companies moderate the boom and bust shipping cycle through greater awareness of the risk and "measured and continuous investment". This will allow the industry to be more adaptive, he said.
During the opening ceremony, Mr Heng launched a revised Sea Transport Sector Industry Transformation Map for Singapore, which wants to grow the sector by $2 billion by 2025 and create 1,000 jobs.
It wants to better support small- and medium- enterprises and pursue growth in new areas, such as through the digitalisation of operations and green financing.
Mr Heng said under-investment during the previous down-cycle also had a part to play in the supply chain crisis last year.
A shortage of vessels, in addition to logistical and manpower disruptions caused by Covid-19, led to the reliability of vessels arriving at ports on time last year more than halving from 78 per cent before the pandemic to around 35 per cent.
To better track and optimise the flow of goods and increase efficiency, companies must tap technology, he said.
"There is an even greater impetus to do so as the maritime industry will need to adjust to the reconfiguration of global trade flows and supply chains. Going digital can also reduce the voluminous paperwork," Mr Heng said.
He said that on Monday, the Maritime and Port Authority of Singapore also began developing Oceans-X, a common marketplace for companies and app developers to help develop programmes that allow different systems to connect digitally.
This will allow the systems of port authorities, terminal operators, shipping lines, logistics service providers and government agencies to be more in sync.
In a later panel discussion on decarbonisation and talent attraction, industry leaders agreed that supply chains have become more fragmented, affecting growth prospects.
"A lot of improvements we have seen have been because of cheap energy, cheap money, free trade and global peace. Pax Americana, or whatever people call it. These are all reversing. Free trade is not as easy as it used to be," said Mr Andreas Sohmen-Pao, chairman of maritime company BW Group.
The panellists also said there must be more market incentives to scale up the production of green fuels and green ships, even in down-cycles.
Mr Jeremy Nixon, global chief executive officer of container shipping company Ocean Network Express, suggested that governments impose an initial conventional fuel levy of $30 a tonne, which should then be given as a rebate in some form to green ships to level the playing field.
Shipyards should also start building ships that can be easily retrofitted with engines compatible with future greener fuels like ammonia and hydrogen, he said.
The same ships can then be quickly converted before their operational lifespan of 25 years is up, and operators will be less wary about getting them built now.
The maritime sector has pledged to reduce absolute greenhouse gas emissions by 50 per cent by 2050. Mr Heng said this is just one ship generation away.
"With 100,000 merchant vessels plying our seas today, many will have to be replaced in the coming decades. Likewise, significant complementary exchanges on the port-side infrastructure will be needed," he said.
The industry accounts for between 2 and 3 per cent of global carbon emissions.
Mr Andreas said: "What scares me right now is the number of people who think we can just flick a switch and just turn this off and do this, and it's all going to be easy. What we have to say is we are going to solve this problem, but it's going to take really hard work and it's going to take incrementalism."
