Big shipping lines remain upbeat on hopes of US turnaround

Hopes of a turnaround in the US economy have led big shipping lines to turn optimistic on their market prospects.
They have even started to order huge container vessels on expectations that container shipping volumes will be on the rise.
However, the smaller shippers are not too upbeat on the market and are holding back from making new investments.
Container shipping capacity is expected to increase 11 per cent this year on the back of more new vessel deliveries.
However, experts said demand growth for container shipping is expected to remain at about 3 per cent this year.
This compared to growth of between 6 to 10 per cent previously when the market was buoyant in 2007-2008.
Still, it did not stop the world's largest container shipping line, Maersk, from building a mega vessel that can carry some 18,000 boxes.
But for the smaller and medium-sized ship owners, they are not following the crowd yet.
Managing director of Pacific International Lines S. S. Teo said: "We are a medium-sized company, so we don't have the financial resources to be involved with the big boys' game investing in such big ships. So, I think for the time being, we have to avoid those big number game. As for the rate hike, I think rate has been fluctuating and this round, the big boys are trying to add what we called rate resurrection - RR for April."
Container ship owners said that for their services to remain sustainable, current shipping rates should move higher than current levels.
The current trans pacific container shipping rate, for example between Hong Kong and Los Angeles stands at US$2,400 to US$2,500 per box.
The Shanghai Containerized Freight Index, a measure of box rates out of China, rose 13 per cent last week as container lines had planned US$600 to US$775 per box rate increases on Asia-Europe routes.
But, fear of oversupply of tonnage saw the weekly index fell close to 5 per cent on Friday.
However, it is not all doom and gloom for the shipping sector.
The nuclear disaster in Japan has raised demand for liquefied natural gas (LNG) and in turn LNG tankers.
With the expected opening of Singapore's LNG terminal in the second quarter of this year, experts said this will help boost the shipping sector.
Chairman of Singapore Maritime Foundation Michael Chia said: "LNG vessels get to offload here, it means some opportunities to repair the LNG vessels and I think with the terminal available, it also means we can cool down the vessels after repair."
Another challenge for the industry is getting finance for new ships.
The Eurozone crisis has led some banks to re-assess their shipping portfolios.
This comes amid plummeting charter rates and low vessel prices in the used market.
Head of Asia of DNB Bank Asia Erik Borgen said: "Before, there used to be one-on-one loan. Today, a lot of the loans are being syndicated and that you see the banks taking smaller share in each loan and so actually, you need more banks to make up for one loan."
But, shipowners are enticed with cheap financing from Chinese yards.
These Chinese shipbuilders only require as low as 1 per cent deposit for new building orders with a bulk of the payment to be made upon delivery of the vessels.
Source: CNA