The country’s major shipping companies have claimed that they are still unswayed by pressure from a global economic slowdown that sent one of the world’s biggest players into bankruptcy, thanks to a relatively stable demand from the domestic market.
The Hanjin Shipping Co., South Korea’s biggest container line, filed on Aug. 31 for bankruptcy protection in the US to protect its assets from being seized by creditors. The company, which operates more than 60 vessels, reported that it had debts of US$5.5 billion as of June.
Since then the company’s fleet has been stranded at dozens of ports, disrupting global supply chains ahead of the year-end shopping season. Hanjin, once the world’s seventh largest shipping line, managed about 5 percent of Indonesia’s exports and imports, including of consumer goods, chemicals and industrial components, according to data from the Indonesian Logistics and Forwarders Association (ALFI).
Commenting on the matter, publicly listed shipping and logistics company Samudera Indonesia, which provides international container shipping services to countries like Thailand and South Korea, maintained that their global container shipping volumes had remained relatively stable, especially for the Asian region.
“It’s just the freight costs that go down, about 15 to 20 percent, because of the oversupply. That’s what decreases revenues,” Samudera Indonesia managing director Bani M. Mulia told The Jakarta Post over the phone recently.
The company’s first half report showed that its revenues had nose dived by 9.7 percent to $208.7 million this year compared to in the corresponding period last year. However, the company still recorded $13.1 million in profits in the first six months of the year, an increase from $8.5 million in the same period last year.
Bani stated the company was also exploring opportunities to expand services to and from South Korea, a major export destination for Indonesia.
The company claimed that it makes less than 10 monthly shipments from Indonesia to South Korea and currently controls up to 40 percent of the market share among Indonesian exporters.
“The figure might increase with more opportunities provided by the absence of Hanjin. We might add some bigger vessels for South Korea,” he said, adding that the company was currently allocating $6 million to buy a vessel 1,800 total equivalent units (TEUs) in size.
The World Trade Organization (WTO) forecast that the growth in the volume of world trade would remain sluggish this year at 2.8 percent, unchanged from a similar figure in 2015. It also noted that trade growth remained below 3 percent for the past five consecutive years.
It stated that while the volume of global trade is growing, its value had fallen because of shifting exchange rates and falls in commodity prices.
However, it also made a positive forecast for next year with an expected rise to 3.6 percent.
Similarly, a report by global rating agency Moody’s Investors Service said that the companies operating in the container shipping segment had indeed been affected by very weak freight rates since 2015. It projected that supply growth will outpace demand growth by more than 2 percent this year and keep freight rates low.
Publicly listed Pelayaran Tempuran Emas (Temas) managing director Faty Khusumo stated that domestic shipping had been left unperturbed by the global situation with the current economic growth and flow of goods within the country that was still deemed healthy because of infrastructure construction in various areas.
The company still recorded revenue growth to $833.9 million during the first six months of the year, up by 5 percent year-on-year from $791.6 million.
However, it stated that its margins had been lowered as freight costs had decreased to less than 30 percent because of the government’s flagship maritime highway program. The program involves state shipping operator Pelni, which runs a subsidized freighter that brings staple goods from major ports to remote areas.
“In the end, each company just has to stay efficient to keep up with the competition,” she said.
The 2008 Shipping Law stipulates the implementation of the cabotage principle, which requires all vessels operating in Indonesian waters to be domestically owned.
Separately, Indonesian National Shipowners Association chairperson Carmelita Hartoto warned that the country’s small shipping companies would be the first to take a hit from a prolonged economic slowdown.
“It will snowball to the domestic container [segment]. Some small and medium-sized shipping companies have also recently collapsed,” she said.
Source: http://www.thejakartapost.com/news/2016/09/27/ri-logistics-players-stay-optimistic-despite-hanjin-collapse.html
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