Review and Outlook for the Global Maritime Sector

By Nazery Khalid, Senior Fellow, Maritime Institute of Malaysia

Rough seas, turbulent times

Amid a sea of change brought by the global economic recession and credit crunch, the maritime sector has been subjected to intense forces and challenges that have altered its landscape dramatically. The sharp decline in world trade has wrought serious havoc not seen in the shipping industry for a long time. The shipping sector, which facilitates an estimated 80% of the global trade by volume, has gone on from the darling of investors to a dud in an astoundingly short time. From the heights of record breaking performances in almost all sectors of then industry only two years ago, the maritime industry went on a dramatic free fall that has seen players languishing in massive loss. Some have even failed to survive the economic downturn and financial crisis.

When the full impact of the global economic downturn hit, the maritime industry was among the first activities to feel the brunt.   This should not come as a surprise given its pivotal role in facilitating much of global trade. In the shipping sector, shipowners who were basking in the glory of historically high demand, freight rates and asset values, suddenly found themselves reeling from the slump in global trade and the demand for the cargos they carry. Banks cut back lending, leaving shipowners high and dry without access to financing to fulfill their obligations to pay for newbuildings and to come up with working capital to run their business. As a result, they had to cancel orders, leaving shipyards and a host of ancillary services providers high and dry. They were saddled with overcapacity and forced to lay up their vessels and send them to shipbreaking yards. The truly badly hit even exited the business altogether and filed for bankruptcy. Continue Reading

Look Beyond Current Gloom in Shipping, Banks Told

Amid challenges rise opportunities, and ship financing institutions ought to see beyond the current gloom in the sector to appreciate its long-term potential, participants at a ship financing seminar were told. 

Nazery Khalid, Senior Fellow at MIMA said that despite the devastating economic crisis, consumers and businesses need to use goods and materials, and nations need to continue to trade. 

“Shipping will always be at the forefront of trade transportation by carrying much of the world’s global trade”, he said.  “As such, the sector will be the first to benefit from the global economic turnaround, and financial institutions which continue to support the sector during these lean times will stand to capitalize on the sector’s recovery”, Nazery predicted. Continue Reading

Malaysia: Challenges and Opportunities

Marine Money Asia hits the road this week as we head to Kuala Lumpur to present at the Maritime Financing Seminar 2009 put together by our friend Nazery Khalid at the Maritime Institute of Malaysia (“MIMA”) with the sponsor OCBC Bank. More than any other cities in the country, Kuala Lumpur represents the focal point of Malaysia in many aspects and the same can be said for ship financing. The two day seminar gathered an impressive list of over 80 delegates to discuss the current state and the opportunities for the growing Malaysian shipping industry. In his opening address, Director General Dato Cheah Kong Wai from MIMA highlighted some of Malaysia’s achievements in the maritime sector. Today, Malaysia is ranked by UNCTAD as the 18^th most important nation in terms of its 1.2% contribution to the world’s merchant fleet in 2008. In addition to two world class container ports – Port Klang and Pelabuhan Tanjung Pelepas, Malaysia’s national carrier MISC is the world’s largest owner-operator of LNG tankers with a fleet of 27 vessels. The nation is also the world’s 13^th largest producer of natural gas and 24^th largest in crude oil production which explains the vibrancy of its domestic oil and gas sector.        Continue Reading