LUMPUR: The shipping industry in Malaysia, which witnessed severe
downturn and financial losses last year, will continue to face
uncertain times due to weak market conditions and rising vessel
operating costs going forward.
Shipowners’ Association (Masa) chairman Nordin Mat Yusoff said
that 2011 was a short-lived joy as several shipping, companies
reported unprecedented losses and hefty decline in profits last
saw history repeating itself in 2011 since barely had the industry
recovered from one of the worst downturns in 2008 it was hit by yet
another ‘tsunami’ or downturn,” said Nordin in a statement.
shipping companies, including Masa members, reported poor
performance and financial difficulties due to the macro economic
conditions or fundamentals.
concerns us is that there are no firm indications that the past is
behind us because the industry continues to be affected by unstable
freight and charter-hire rates as well as declines in ship
prices,” he said.
uncertain market condition has been brought about largely by the
shifting fortunes in the performance of global trade that has
impacted on the demand for shipping services.
Malaysia’s external trade grew by about 8% last year to RM1.3
trillion, this was largely on account of the strong performance of
bulk commodities like palm oil, liquefied natural gas and petroleum.
performance of the electrical and electronic sector, which accounted
for a third of the country exports, actually fell by 5.4% in 2011,
thus weakening demand for shipping services, especially
consequent effect of these macro economic developments was the
slower growth in global trade, thus affecting the demand for
prevailing uncertain market condition was also placing pressure on
financial management of shipping companies which were exposed to
loans taken out to acquire ships.
spiral in values of ships, pledged as collateral on the loans, had
been prompting financial institutions that have funded vessel
acquisitions to review financing terms as well as putting off
financing potential purchases of ships that come up for sale.
is worrying is that although the demand may pick up, the shipping
industry could continue to deteriorate primarily because of
continuing oversupply of ships over two to three years,” he said.