Shipping firms urged to work around trade tariffs, restrictions

0

KUALA LUMPUR: Container shipping firms along with other players in the cabotage industry have been urged to persevere and find ways to work around trade tariffs, import restrictions and trade embargoes to sustain their business in an industry that is already in distress having to contend with numerous pre-existing challenges.

In making the call, Esben Poulsson, the president of the Singapore Shipping Association, told Bernama that the escalating trade tensions brought on by the United States after it imposed billions of dollars worth of tariffs on exports from China, could “potentially change the pattern of goods traded”.

If they find it expensive to export directly to the American market because of the tariffs, Chinese manufacturers and players in the maritime sector could use Malaysia or other Southeast Asian countries such as Vietnam to produce their goods in these markets domestically, slap on a different label and have their goods shipped to the US, he noted.

He lamented that the threat of a trade war would do no good for the shipping industry, and although its is relatively small and not noticeable, it has dampened sentiments, keeping investors on their toes especially when it comes to making investment plans.

Citing Russia, he said although the country had imposed various restrictions, companies and other countries managed to work with them and around them.

With the looming trade war, he said the market will be more judicious before making any decisions.

“We had better hold it (making investment plans) because we don’t know how this (trade war) is going to go and there are some indications that the threat – more than the reality at least thus far – of a trade war is having some impact,” he said.

In other words, the market sentiment is more skewed towards anticipating a trade war rather than tariffs actually translating into actual figures, he said.

Investors as well as global markets are cautious and jittery as they are constantly waking up to new announcements of additional tariffs by Washington and retaliatory measures by Beijing, he noted.

“The tit-for-tat measures to impose tariffs by the giant economies could impact global trade relations,” he said.

It all started when the US imposed tariffs on China’s solar panels, followed by additional tariffs on US$34 billion of imported goods from China.

China retaliated by imposing tariffs on US products.

This was further exacerbated with the US slapping an additional US$16 billion worth of tariffs on Chinese imports last month, with US$200 billion of tariffs expected to come into effect on September 24.

In turn, China announced on Tuesday that it would impose tariffs on US$60 billion worth of US goods.

China says it has not choice but to retaliate.

Against such a gloomy backdrop, Poulsson said “it goes without saying that a trade war or threat thereof is negative for shipping and we hope very much that a full- blown trade war can be avoided as history clearly shows there are no winners – only losers – in a trade war.

“Free trade has contributed tremendously to greater prosperity across the world and the shipping sector’s contribution as ‘the servant of world trade’ speaks for itself and is there for all to see,” he said.

Poulsson said shipping is fundamentally a global business, consisting of local, regional and coastal operators.

“All of the markets are quite challenging, including offshore supply vessels, which are facing an oversupply issue, excess tonnage and over-capacity which in the process has exerted additional pressure on charter rates,” he said.

Nevertheless, he said most markets are faring better than they were before, noting that in 2016 there was a drop in dry bulk containers.

Although the situation has improved quite a lot, it is not very exciting in terms of profitability and returns, he added.