Four-fifths of China’s exports travel by sea. “In the container vessel segment, a major stream is from China to the East and West Coasts of the USA, and to Europe. Then within the region, there’s major traffic along the coast, down to Korea and to South Asia,” says Allan.
But the country’s manufacturing prowess means it’s also hungry to import raw materials. “Everybody knows China is the world’s biggest importer of iron ore,” Allan tells us. Vast inbound vessels from mineral-rich countries like Australia, Brazil and countries in Africa feed iron ore to China’s steel mills, oil ships from the Middle East and gas carriers from Australia and Russia feed the refineries, and other raw materials arrive continually to keep China’s manufacturing and construction industries at work. This means there’s an even mix between Chinese and international ships at the country’s key ports.
Despite all this activity, though, Allan tells us industry members are uneasy. “If I had to choose one word to describe the industry right now, it would be ‘uncertainty’,” he says.
This uncertainty has several causes. “There’s still an imbalance between supply and demand. There are more ships than there are cargos,” Allan explains, saying it’s not clear whether that imbalance will correct itself without casualties. The second is increasing regulation on emissions. “This comes from both international and local sources,” says Allan. “The International Maritime Organisation is imposing increasingly stringent targets, on one hand. On the other hand, our own government is pushing ahead with green economy measures.” These targets and regulations mean many existing vessels will require refits or replacement, squeezing investment on other areas.
Other economic changes are also creating wariness: the US-China trade uncertainty has particularly hit the manufacturing industry. “Ship owners just don’t know how that will end and so it makes it really hard to make decisions,” says Allan.