Malaysia’s shipping industry in troubled waters

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Malaysia shipyardMalaysia’s shipping industry is in need for a capital injection of at least 3 billion ringgit ($930 million) to sustain its business, Malaysian Shipowners Association (MASA) chairman Nordin Mat Yusoff said.

The industry has amassed losses and needs to restructure and refinance loans taken for building ships during the peak period, he said.

He even noted that the industry is “near collapse” because of “prolonged depressed freight rates for dry bulk carrier, oversupply of vessels, rising fuel costs; and threatening geopolitical risks.

Nordin said there would be “a lot of sick shipowners” if they don’t see “the light at the end of the tunnel.”

Previously, Malaysian shipping companies were sailing on high waters. They went on a buying spree of ships, funded by easy credit that was partly the result of liberalisation measures of the government at the time. The tremendous growth of shipping activities in Malaysia over the years underlined how important the maritime sector was to the country’s economic wellbeing.

Since 2000, Malaysia had emerged as a leading maritime nation in terms of merchant shipping capacity, and reached a zenith when it became a maritime nation contributing 1.05 per cent to the global merchant fleet capacity by 2009.

However, overcapacity crept in and the industry suffered. Now shippers are eliminating excess vessels in the market. From January to July this year, 256 ships were torn down globally and in the last five years 2,100 ships were broken up.

Big names like Global Carriers Bhd, Swee Jo Bhd and Halim Mazmin Bhd were badly bruised and at least 18 Malaysian companies are in financial quagmire.

Nordin said he was worried that Malaysia may lose its status if the government does not step in to help the industry like South Korea and China do.

In its heyday, ship building yards’ order books fattened in the 2000s. Demand for new vessels averaged 300 annually in Malaysia, with total value of nearly $2.2 billion in 2010 alone, and 40 per cent of ships were built in Malaysian dockyards. By 2010, there were far too many ships, but demand for their services dried up.

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Reading Time: 2 minutes

Malaysia’s shipping industry is in need for a capital injection of at least 3 billion ringgit ($930 million) to sustain its business, Malaysian Shipowners Association (MASA) chairman Nordin Mat Yusoff said.

Reading Time: 2 minutes

Malaysia shipyardMalaysia’s shipping industry is in need for a capital injection of at least 3 billion ringgit ($930 million) to sustain its business, Malaysian Shipowners Association (MASA) chairman Nordin Mat Yusoff said.

The industry has amassed losses and needs to restructure and refinance loans taken for building ships during the peak period, he said.

He even noted that the industry is “near collapse” because of “prolonged depressed freight rates for dry bulk carrier, oversupply of vessels, rising fuel costs; and threatening geopolitical risks.

Nordin said there would be “a lot of sick shipowners” if they don’t see “the light at the end of the tunnel.”

Previously, Malaysian shipping companies were sailing on high waters. They went on a buying spree of ships, funded by easy credit that was partly the result of liberalisation measures of the government at the time. The tremendous growth of shipping activities in Malaysia over the years underlined how important the maritime sector was to the country’s economic wellbeing.

Since 2000, Malaysia had emerged as a leading maritime nation in terms of merchant shipping capacity, and reached a zenith when it became a maritime nation contributing 1.05 per cent to the global merchant fleet capacity by 2009.

However, overcapacity crept in and the industry suffered. Now shippers are eliminating excess vessels in the market. From January to July this year, 256 ships were torn down globally and in the last five years 2,100 ships were broken up.

Big names like Global Carriers Bhd, Swee Jo Bhd and Halim Mazmin Bhd were badly bruised and at least 18 Malaysian companies are in financial quagmire.

Nordin said he was worried that Malaysia may lose its status if the government does not step in to help the industry like South Korea and China do.

In its heyday, ship building yards’ order books fattened in the 2000s. Demand for new vessels averaged 300 annually in Malaysia, with total value of nearly $2.2 billion in 2010 alone, and 40 per cent of ships were built in Malaysian dockyards. By 2010, there were far too many ships, but demand for their services dried up.

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