Hard times persist for China's shipping industry

Difficult market conditions for the Chinese shipping industry are expected to continue for the next four to five years thanks to an oversupply of vessels and surging oil prices, industry analysts said on May 30.

A slew of factors - weak demand, financial risks and the impact from the eurozone debt crisis - have compounded the problem for Chinese shipping companies, Liang Jianwei, director of the Guangdong Maritime Safety Administration, said at an industry forum held in South China's Guangdong province.

The industry saw good times over a five-year period starting in 2003 when companies placed a large number of orders at shipyards across the world.

However, from 2006 to 2010, too many ships were built leading to global oversupply, industry data showed.

For the global industry, the outlook remains gloomy for the next 12 to 18 months, according to a report released by Moody's Investors Service on May 31.

"We anticipate that the aggregate EBITDA (earnings before interest, taxes, depreciation, and amortization) of the global shipping industry will decline by 5 percent to 10 percent in 2012," said Marco Vetulli, a Moody's vice-president, who is also senior credit officer and author of the report.

"Uncertainty about the depth and duration of the recession in the euro area and resurfacing geopolitical tensions in the Persian Gulf pose further downside risks to the industry," he added.