From December 22 to 24, 2011, the “2012 Economy, Trade and Shipping Market Outlook Forum”, organized jointly by China Ocean Shipping Intelligence Network and Shanghai International Shipping Institute (SISI), was successfully held in SISI.

At the opening ceremony, Li Gang, Secretary and Deputy Secretary-General of SISI delivered a welcome speech. Director Yu Siqin of the General Office of China Ocean Shipping Intelligence Network reported the work in 2011 to member organizations and put forward the plan for 2012. He pointed out that the Intelligence Network will continue to pursue practical work and development, providing all members with satisfying services.

2012 Economy, Trade and Shipping Market Outlook Forum

Director Liang Yanfen of World Trade Department, Chinese Academy of International Trade and Economic Cooperation analyzed the status quo of current world economy and trade, as well the trade relations between China and other emerging economies. As identified by Director Liang, the current global economy features increasing risks of economic downturn, gradually narrower space for policy instruments in developed countries, new variables added to the European sovereign debt crisis, and intensified trade protectionism. International trade will rise by an estimated 5.8% in 2012, lower than the 7.5% in 2011. In the post-crisis era, China shall maintain a steady trade growth with EU, the US and Japan, three major trading partners, and realize soaring trades with other emerging economies and developing countries. The latter is expected to become a new growth point in China’s foreign trade, and serve as an important way for China to reduce its dependence on the U.S. and European markets and avoid the risk of declining exports. However, the conspicuous homogenization in industrial structures between emerging markets and China may lead to vast direct competition and increasingly serious trade frictions.

The Forum brought together renowned experts and scholars in aspects of economy, trade and shipping, as well as numerous professionals in the industry. All participants exchanged in-depth analysis on global economy and trade patterns, the trend of international shipping market, and the development of ship financing market in 2012.

Director Liang Yanfen of World Trade Department, Chinese Academy of International Trade and Economic Cooperation

Chen Yi, former Senior Economist of the Economic Operation Division of the Department of Water Transport, the Ministry of Transport and current Consultant of Shipping Department of Shanghai Time Shipping Co., Ltd., analyzed coastal shipping market in 2011. According to him, plagued by the global adversity, the market has been drifting downward for three consecutive years and is approaching the most difficult period of the shipping industry since the breakout of the financial crisis. Looking into 2012, no optimism is allowed in general; the gradual release of capacity orders during the previous years will result in overcapacity in 2012. However, the national policy of “limiting coal prices and picking up electricity prices” helps improve the enthusiasm of power plants to purchase domestic coals, adding a welcome fillip to coastal shipping market. Having hit a record low in freight rates of coastal market, an industry-wide reshuffle is inevitable. Coastal freight rates are expected to usher in a rebound in 2H12, climbing out of the depression.

Chen Yi, former Senior Economist of the Economic Operation Division of the Department of Water Transport, the Ministry of Transport and current Consultant of Shipping Department of Shanghai Time Shipping Co., Ltd

Xue Hanbing, Manager of China Research Department of STX Pan Ocean Co., Ltd., delivered a report entitled “Forecast and Analysis of China’s Dry Bulk Demand in 2012”. As estimated by him, in 2012, China’s iron ore production will keep ascending to inhibit imports; steel exports will continue to fall to 42 million tons; coal imports will grow to 190-200 million tons; bean imports will reach 54 million tons. In a nutshell, the upward trend in China’s demand will be carried forward into 2012, in spite of weaker supports for international shipping market.

Xue Hanbing, Manager of China Research Department of STX Pan Ocean Co., Ltd.

Deputy Secretary-General Mao Boke of SISI analyzed the hot spots of international shipping market. He pointed out that the international shipping market is facing a more difficult situation than in 2008 and 2009. Maersk’s expansion strategy has led to a major revolution and upheaval in the container shipping market.

Professor and Deputy Secretary-General Zhang Jieshu of SISI held that, after a brief recovery of international shipping market in 2010, the international container market slid again into a slump in 2011. China Export Container Freight Index fell below the threshold of 1,000 points, and the shipping market has ushered in a long term restructuring. The reason is closely related to the weak recovery of global economy, imbalance between route volume and capacity, and rapid rally in corporate operating costs, etc. The long-term low growth and uncertainty of the world’s economy, coupled with the trend of larger and new ships as well as intensified competition among shipping enterprises, the international container shipping market doesn’t promise well in 2012.

Professor Gan Aiping, Executive Deputy Director of SISI Shipping Finance Institute, introduced the status quo of global ship financing market and the outlook for Asian ship financial development. At present, ship financing still relies heavily on bank loans. European banks have revived ship financing business since the 2008 financial crisis, while Asian banks initiated in recent years. The volume of global shipping syndicated loans basically restored to the pre-crisis level in 1H11, but there are still promising potentials for Asian banks to be involved in ship financing. However, in view of the predicated slump in 2012 shipping market, ship financing will still face keen challenges. LNG ship and marine engineering equipment markets become the odds-on favorite of the industry, where China will invest RMB 250-300 billion in marine engineering equipment over the next five years. In the near future, due attentions are encouraged to be paid to the R & D of low-carbon ship technology, the development of marine engineering equipment market, ship-related industry and ship repair sector.

Deputy Director Zhou Dequan of SISI Market Analysis Department analyzed the development of shipping industry on the basis of China Shipping Prosperity Index (CSPI). According to the CSPI of 4Q11, the CSPI and CSFI (China Shipping Confidence Index) continued to slide over the previous quarter into a quite depressing interval, showing a continued deterioration in the macro environment and overall performance of China’s shipping industry. To be specific, the Confidence Index of shipping transport enterprises recorded only 15.41 points, plummeting basically to the bottom; the Port Enterprise Prosperity Index recorded 100.08 points, staying at the demarcation line with risks of depression.

Deputy Director Zhang Yongfeng of SISI Market Analysis Department explored future path of the shipping market based on the major trends of the shipping industry. In view of the overall downturn in global economy and rising risks of recession, it is estimated that the world’s economy will continue to slow down in 2012. With the continuous release of market capacity, it is unlikely to improve the supply-demand ratio in the immediate future. The prevalence of larger and new ships will further extend the time to digest the capacity. With intensified competition among enterprises, the shipping market will enter a new round of reshuffle.
Through active interaction between guests and audiences, the Forum was successfully concluded in warm applauses. Participants generally found the Forum rewarding as they obtained deeper understanding of the trends and strategies for global shipping market in 2012.