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Shipping news
30-09-2018, 10:44 AM. (This post was last modified: 30-09-2018, 10:44 AM by karlmarx.)
Post: #161
RE: Shipping news
After following the shipping market, buying ship liner stocks, and reading a well-researched-and-written book on the modern history of shipping and containerisation -- The Box by March Levinson -- I am of the opinion that the outcome of investments into ship assets is more speculative (and less lucrative) compared to other asset types and businesses.

Liners have to compete globally as markets continue to deregulate, the result being an extremely competitive market for shipping rates. And to offer the lowest rates, liners strive towards the lowest cost, leading to the continuous drive to expand ship size for increased efficiency; the intensive capital needs of the business means less return on investor money. So many (big/old) liners have gone bust from over spending on expansion just before they encounter a period low(er) shipping demand or higher fuel cost; even industry experts cannot predict market demand/cycles. At least not all the time. All it takes is one wrong move before a bad market.

Perhaps the clear winners from so much investment into shipping assets are the manufacturers who are able to source for inputs and sell their products more cheaply, as the cost of moving goods fall. And the consumers who purchase these goods at lower prices.

As an aside, the fact that HPHT has no plans -- or is physically unable to -- expand its HIT port capacity means it has already surrendered to competition from mainland ports. Without increasing scale, HIT will not be able to lower prices, and liners will slowly but surely migrate to cheaper ports. While the economic fallout on HIT port workers will hurt, HK can survive without a port. After all, HK is part of China.

On the other hand, Singapore is building ports that are larger than ever. In spite of BRI's intent to drive traffic away from the Straits of Malacca and hence, Singapore, our master planners must have thought that liners will continue to use Singapore's ports if it can offer the lowest cost and fastest turn-around-time. Since Singapore's ports contribute significantly to its economy, it cannot be allowed to fail. At least not until it has alternative growth drivers.

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06-10-2018, 09:39 AM. (This post was last modified: 06-10-2018, 09:39 AM by BlueKelah.)
Post: #162
RE: Shipping news
(30-09-2018, 10:44 AM)karlmarx Wrote: After following the shipping market, buying ship liner stocks, and reading a well-researched-and-written book on the modern history of shipping and containerisation -- The Box by March Levinson -- I am of the opinion that the outcome of investments into ship assets is more speculative (and less lucrative) compared to other asset types and businesses.

Liners have to compete globally as markets continue to deregulate, the result being an extremely competitive market for shipping rates. And to offer the lowest rates, liners strive towards the lowest cost, leading to the continuous drive to expand ship size for increased efficiency; the intensive capital needs of the business means less return on investor money. So many (big/old) liners have gone bust from over spending on expansion just before they encounter a period low(er) shipping demand or higher fuel cost; even industry experts cannot predict market demand/cycles. At least not all the time. All it takes is one wrong move before a bad market.

Perhaps the clear winners from so much investment into shipping assets are the manufacturers who are able to source for inputs and sell their products more cheaply, as the cost of moving goods fall. And the consumers who purchase these goods at lower prices.

As an aside, the fact that HPHT has no plans -- or is physically unable to -- expand its HIT port capacity means it has already surrendered to competition from mainland ports. Without increasing scale, HIT will not be able to lower prices, and liners will slowly but surely migrate to cheaper ports. While the economic fallout on HIT port workers will hurt, HK can survive without a port. After all, HK is part of China.

On the other hand, Singapore is building ports that are larger than ever. In spite of BRI's intent to drive traffic away from the Straits of Malacca and hence, Singapore, our master planners must have thought that liners will continue to use Singapore's ports if it can offer the lowest cost and fastest turn-around-time. Since Singapore's ports contribute significantly to its economy, it cannot be allowed to fail. At least not until it has alternative growth drivers.

The shipping sector sounds a bit like airline stocks doesn't it?  Big Grin  However during boom times, the heavy capital allocation means a lot of capital flowing to shipbuilders. So if you can time the low point and buy shipbuilders early during rebound phase it can be quite lucrative.
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06-10-2018, 03:40 PM.
Post: #163
RE: Shipping news
Market Consolidation In Container Shipping: What Next?
https://www.hellenicshippingnews.com/mar...what-next/


https://splash247.com/un-warns-on-risks-...olidation/
un-warns-on-risks-of-container-consolidation
You can find more of my postings in http://investideas.net/forum/

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06-10-2018, 08:17 PM. (This post was last modified: 06-10-2018, 08:30 PM by karlmarx.)
Post: #164
RE: Shipping news
(06-10-2018, 09:39 AM)BlueKelah Wrote: The shipping sector sounds a bit like airline stocks doesn't it?  Big Grin  However during boom times, the heavy capital allocation means a lot of capital flowing to shipbuilders. So if you can time the low point and buy shipbuilders early during rebound phase it can be quite lucrative.

Indeed it is. Deregulation and building ever-larger planes to reduce per-passenger cost have not only benefited consumers, but also the manufacturers of these larger planes. Unlike the shipbuilding industry though, there are only 2 aircraft manufacturers. So while I agree that many fold returns can be had for calling the correct timing, the investor will also have to choose the correct shipbuilder that will get the majority of orders. Anyway, this is not my kind of game; I have long given up on trying to time. Wink

The similarities don't end there. Singapore is not just in the choice location for container transshipment, but also passenger transshipment. But passenger transshipment is not as lucrative due to the large labour requirements (to house keep, handle baggage, manage security, provide customer service, and chop passport, etc), which means less efficiency. While CAS has certainly grown passenger volumes, the growth in profits isn't as obvious. It is probably the ancillary services, such as SATS, which benefit most from increased passenger volume.

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