Lessons Learnt But Not Forgotten

The world of ship owners, shipbuilders, financiers and, ultimately the investors, entered into an age of anxiety and confusion when the financial markets collapsed at the end of 2008. But then, is it the latter which led to the former, or the writings were clearly on the wall since the beginning of 2008 (or maybe even earlier)? Some analysts suggested that the industry was overwhelmed by the euphoria of the “unstoppable growth” of the BRIC nations, especially China, and the explosive supply of credits and spending power of the Developed nations. Therefore, is it excusable that the industry will be laden with excessive capacities for years to come, and it is no one’s fault since everyone has been misled? 

Recently, I have the chance of catching up on my readings, and particularly one by Mr. Kazuo Inamori, the founder of Kyocera and KDDI – both being world market leaders in their respective industry sectors. Whilst reading this book, it became clear to me that the issues we (the shipping industry) are facing are created not because the statistics were misleading, but due to two very basic human defects: Greed and Arrogance. In the book, it was quoted that “Life is an expression of our mind”.    Continue Reading

Changes at the Helm of PST Management

CEO and Executive Director of PST Management, Mr Alvin Cheng, has left the Singapore based shipping trust to pursue his personal aspirations. In a statement to the stock exchange, PST Management said its board has initiated a search for a new CEO but in the meantime Mr Teo Choo Wee, a non-executive director of PST Management will be acting CEO with effect from December 1, 2009.

Mr Teo, who has over seven years’ experience in the shipping industry, will be seconded from Pacific International Lines (Private) Limited where he is currently the Deputy General Manager responsible for fleet management and the sale and purchase of ships. Prior to joining PIL, he was with Maya Manufacturing & Trading Co Pte Ltd managing vast ranging businesses in the S.E. Asia region and China.

The Beginning or the End of the Shipping Investment Funds?

By Alvin Cheng, CEO of PST Management Pte. Ltd. (as trustee-manager of Pacific Shipping Trust)

No industry has been spared from the fallout from the collapse of the global financial markets, and the shipping industry is now feeling the head-on effects of the slowdown in world trade and the reduced demand for shipping services. Currently, there have already been a number of cases of newbuilding cancellations due to the adverse credit constraints and deteriorating market conditions. The trend is set to continue and, in fact, expected to increase in the months ahead.

The shipping industry faces problems created by the collapse of the global financial markets as well as the entry of many non-traditional investors in the past 2 years, which have led to the orderbooks for new ships reaching an all-time high and shipyard capacities have grown to an unprecedented level.

At the same time, the shipping boom has given birth to shipping investment funds (both private and listed) which have provided much of the capital required to supplement the traditional ship financing.  With the equity markets now virtually closed to any form of new fund raising, except for the few tier-1 names and at a significant cost to the issuers, most of these funding sources are expected to be unavailable for the near term.

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