“Reflections” by Torben Skaanild

Former BIMCO chief calls for return to box shipping conferences

Wednesday 9th October 2013, 12:30-14:30

Venue: The Baltic Exchange, 38 St Mary Axe, London. EC3A 8BH

Host: Dr Abdul Rahim, ClassNK

Speaker: Torben Skaanild, Former Secretary General, BIMCO

Subject: “Reflections”

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Unity would restore much-needed balance, says Skaanild

CONTAINER shipping would benefit from the return of the conference system, creating a more controlled and co-ordinated industry, says outgoing BIMCO secretary-general Torben Skaanild.

Speaking in a personal capacity at an International Maritime Industries Forum meeting in London, Mr Skaanild was asked what his wish for the shipping industry would be.

He said that conferences, which were outlawed in Europe exactly five years ago, permitted shipping lines to set freight rates collectivelyand discuss capacity management, providing a stable trading environment — both for carriers and their customers — that no longer existed.

Brussels removed liner companies’ antitrust immunity in October, 2008 after many years of campaigning by shippers and stiff resistance from shipping lines.

However, other major jurisdictions have been slow to follow suit. Lines still have an exemption from competition rules in the US, Japan and Singapore, for example.

Although shippers had hoped that ending legal price fixing would reduce freight rates, it has proved almost impossible to assess the impact on the European trades of the regulatory overhaul, since the change in the law coincided with the global banking crisis hitting world trade.

That caused cargo volumes to fall year on year for the first time since containerisation was introduced.

The world’s top container lines suffered huge financial losses in 2009 as the major economies fell into recession and consumer spending collapsed.

Although the Federal Maritime Commission in Washington published an extensive analysis, it came to no firm conclusions.

Nevertheless, Mr Skaanild said it was not possible solely to blame the banks for the shipping crisis and that the industry had to accept that it had “bought too many ships”.

He said the fault lay in part with asset players, typically the German KG investors, that focused on pre-2008 returns, selling newbuilding berths regardless of whether the ships were actually needed.

Mr Skaanild said traditional shipowners were right to stay cautious and had survived by staying off the band wagon.

“Shipping is a cashflow business and banks need to understand this. A ship not trading is a liability,” he said.

Mr Skaanild said that the system today allowed newbuildings to continue to be added to the world fleet, begging the question when can they now be scrapped?

Looking at the exponential increase in vessel size over the last five years, from 8,000 teu to 18,000 teu, he warned that 1,700 teu-2,000 teu containerships would soon become redundant.

He also warned that the expanded Panama Canal would make more ship types redundant from 2015 when the new locks were due to be completed. “Capesizes will be scrapped earlier and banks will have to get used to that,” he said.

He also said the cost of complying with environmental regulation was “mind-boggling” and that shipping’s impact on the environment needed further assessment.

He added that environmentalists lobbying governments needed to appreciate that the situation was not black and white.

Turning to low-sulphur fuel, he said the relationship between CO2 and sulphur needed to be better understood.

Mr Skaanild announced his retirement from BIMCO in March, after a five-year tenure.

Since then, he has worked to support incoming secretary-general Angus Frew, former president of the UK Chamber of Shipping,

Published: Friday 11 October 2013

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