SHIPoWneRS


Intra-Asia developments A


EngAik Meng, president ofAPL, talks about challenges and opportunities in the intra-Asia market


ttending the annual results of Singapore’s largest shipping line, Neptune Orient Lines (NOL), in February this year was certainly a


more upbeat affair than a year earlier. The company reversed from a net loss of $741m in 2009 to a net profit of $461m last year. The turnaround was the result of a huge


change in fortunes for NOL’s container line business,APL.While there are some concerns the market has slowed in recent months Eng Aik Meng, president of APL, expects volumes to come back and this will help bring box rates up with it. “I see modest growth in demand,” he says. Eng is confident that the industry will not get


itself into a situation where lines drive down freight rates to unprofitable levels in an effort to retain market share as they have in the past. “This time there maybe some self correcting


mechanism, because although lines have made some money last year we see that many of the carriers still have obligations to either their bondholders or financiers,” he says. Financing also remains tight for many although this not an issue for APL itself. Headquartered in Singapore APL is at the


heart of a market that increasingly is exciting the world’s largest container lines: intra-Asia.As Asian economies develop not only as exporters but also importers of consumer goods this has driven strong demand growth for container shipping between countries in Asia. In the past this growth has been stronger in the


longer haul trades between Asia and the Middle East and the Indian sub-continent, but now rapid growth is being seen on shorter routes within the region. “What we see is more of an increase within the short sea area,” Eng says. He explains that 10 years ago movements on


these trades were mainly raw materials, and while these do continue to be a major part of the trade, there are now much higher volumes of finished goods moving as well. For example there are more household goods moving between Vietnam and South China or Malaysia and South Korea. In terms of ship sizes on trades such as say South China to Jakarta they have increased from 1,000 to 1,500 teu vessels to 2,000 to 2,500 teu capacity. The result of this has been some change in trade


patterns for boxshipping on intra-Asia.Whereas in the past goods would have been transhipped more direct calls are being seen, and ship sizes are getting


larger with more frequent services. “We see direct calls mainly from North Asia to


Southeat Asia or even to west Asia,” he says. Eng says the push to direct calls results from a


demand to move goods faster, and the fact that some lines had not performed that well in the past using transhipment and had experienced delays as a result.This has compounded a perception that transhipment is slower than direct calls. In terms of whereAPL is targeting in this market


Eng says:“I would say we have always been strong in long haul intra-Asia trades and we continue to believe that will still be a strong market.” In the shorter haul sectors APL is looking to


grow with international customers that move into the Asian market.“We feel we can offer better service and this plays into customers that are now more demanding.They tend to be global customers that say to us they are now going more into Asia,” he says. An issue for the intra-Asian market as it


continues to grow is likely to be supporting infrastructure such as ports, roads and railroads. Eng explains that with calls at second and third tier cities in countries in the region port and other infrastructure development has not kept pace with industry.“One of the characteristics is that shipments go direct to locations close to the cities which tend to be river ports, so if you do not develop these ports, or you do not have an alternative, then you have a problem being more efficient,” he says. As volumes continue to grow importers and


exporters will lobby authorities if they feel they are becoming uncompetitive, however this can prove to be a slow process against the rapid growth in trade.


Seatrade Singapore Report 2011 9 ‘


I would say we have always been strong in long haul intra-Asia trades and we continue to believe that will still be a strong market.


Eng Aik Meng, president, APL


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