Recession 'an act of providence'

'Boom is welcome. Recession is more welcome.'

Mitsui OSK Lines (MOL) president Akimitsu Ashida says that although the current downturn in the shipping industry could go on for another two years aspects of it will be beneficial.
“We need to be ready for the difficult time(s) for about two years before the recovery of a healthy market level,” said Ashida in a New Year address to his company, which has been ranked as the third largest tanker company in the world.

Ashida quoted Panasonic Group founder Konosuke Matsushita: “Boom is welcome. Recession is more welcome.” According to Ashida, recession could be seen as a process to adjust current and future over-tonnage concerns. “And, for a respective company, recession makes its weakness apparent, which is invisible under normal circumstance, and leads to the next rapid progress if proper efforts [are] rendered to overcome such weakness,” said Ashida.

According to him, worries of an over-supply of tonnage would be quelled as yards that had planned for rapid expansion were now being squeezed for funding and an increasing numbers of orders were being cancelled before delivery.

“If the market had dropped one or two years later, the massive volume of new vessels would have been delivered. It is not too much to say that this is an act of providence,” he said.
Ashida added that the scrapping of aged vessels, which have been used longer than their original schedules under very strong market conditions, would be accelerated due to recent market deterioration.

“These movements will reasonably and favourably contribute to adjust demand and supply balance of world tonnage,” he said.

“What's more, we will have more possibility in reducing overall costs especially in maintenance and repairs, bunkers and lubricants, the price of which went up sharply due to the hike of material and crude oil prices for some years.”
According to one source, Singapore-based MOL Tankship Management Asia handles some 19 VLCCs along with a few chemical tankers.

London-based MOL Tankship Management Europe handles three VLCCs, two suezmaxes, four aframaxes and 16 chemical and product carriers.
Tokyo-based MOL Tankship Japan has 14 VLCCs on its books.
In addition, its Singapore unit handles nine LPG carriers.

Cowan Thant Zin, 6th January 2009 04:09 GMT
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