SINGAPORE – The war in Ukraine has already placed a greater strain on shipping with air and rail cargo delivery disrupted, but the “strong fundamentals” of the shipping industry means that its medium-term outlook is still good, Deputy Prime Minister Heng Swee Keat said.
This is despite the more than 100 ships now stuck in ports in the Black Sea due to the armed conflict, and potential manpower issues with Russia and Ukraine accounting for 15 per cent of the global seafaring workforce, he said.
Shipping remains the most cost and carbon efficient mode of transportation, and carried more than 80 per cent of global trade volume last year, reaching an all-time high.
“Although the global maritime industry is cyclical and facing challenges, we are approaching the future from a position of strength,” he told participants at the opening ceremony of the Singapore Maritime Week at Sands Expo & Convention Centre on Monday (April 4).
“The fundamentals for growth in the medium term are strong, despite the short-term headwinds.”
But Mr Heng also cautioned that the high global container shipping fees, which are now four times that of pre-Covid-19 levels, will not last.
“We should not expect it to. Persistently high rates will dampen trade and undermine the lifeblood of the global economy,” Mr Heng said, adding that large swings in shipping fees also create uncertainty and stymie the growth of the sector.
“Shipping capacity is stretched now. New capacity is coming on stream over the next few years. Herein lies the risk – that excessive investment in shipbuilding now could eventually lead to another capacity glut, which we saw after the Global Financial Crisis.”
He suggested that companies moderate the boom and bust shipping cycle through greater awareness of the risk and “measured and continuous investment”. This will allow the industry to be more adaptive, he said.
During the opening ceremony, Mr Heng launched a revised Sea Transport Sector Industry Transformation Map for Singapore, which wants to grow the sector by $2 billion by 2025 and create 1,000 jobs.
It wants to better support small- and medium- enterprises and pursue growth in new areas, such as through the digitalisation of operations and green financing.
Mr Heng said under-investment during the previous down-cycle also had a part to play in the supply chain crisis last year.
