SINGAPORE: It has not been smooth sailing for the global shipping industry: The economic slowdown and falling oil prices have led to some consolidation among shipping companies and the largest bankruptcy debacle, with Korean shipping line Hanjin unable to pay its debt.
Singapore, as a key maritime hub along some of the busiest trade routes in the world, has not been spared.
Mr Andy Lane, who is a partner at Container Transport International Consultancy said: “I think the impact maybe has not been fully felt just yet.
“I think as the shipping companies go through the integration, they will then start to need to focus on reducing costs. And that could mean that office space, positions, could start being less."
Singapore-based Grindrod Shipping has also felt the pain. CEO Martyn Wade said this year has been the worst the company has seen.
"It's been tough. On the dry side, this would now rank historically as the worst year ever," said Mr Wade. "After 2015 - it was the third worst year, after 2012, the fourth worst year, so it has been really, really tough.
"I think the market bottomed in the first quarter; I think that was rock bottom, and since then we've seen improvement in commodity demand."
The number of ships anchoring off Singapore's waters is often seen as an indicator of the country's economy. As an open and trade-dependent nation, the maritime sector contributes to around 7 per cent of Singapore's economy and the 5,000 shipping-related companies here employ around 170,000 workers in a wide variety of job functions.
OFFSHORE MARINE SECTOR HIT BY LOW OIL PRICES
Meanwhile, weak oil prices have also hurt the offshore marine sector, an important segment of the maritime industry. Crude oil prices have plunged from more than US$100 a barrel in 2014 to hit a low of around US$26 a barrel early this year.
It has since rebounded to hit US$55 in recent times, on the back of landmark OPEC agreements.
Among oil rig builders, plunging losses have led to the retrenchment of thousands of workers in Singapore.
Mr Lane cautioned about slowing growth in the coming years: “I think growth generally, is going to be very modest. We see certain trends already occurring in terms of manufacturing centres: China becoming less of an export factory and more of an internal market. And we still have to see how the implications of Brexit and the Donald Trump presidency will also pan out.
"It's difficult to tell, but I will not expect anything more than 3 per cent annual growth moving forward in terms of container shipping volumes."
Mr Lane added: “It's going to be a tough year - 2017 (through) 2018. So if anybody owns a ship and your only strategy is treading water, my recommendation is that you need to be more proactive. Otherwise it will be a very tough period."
ONE BELT ONE ROAD; OVERSEAS EXPANSION
Some experts hold that the One Belt One Road initiative in China could be a silver lining for the shipping industry in the coming years. For one, transporting goods by sea remains a cheaper option.
The demand for raw materials could also help prop up incomes for shipping lines, said Mr Wade.
"This will not affect shipping," he said. "Conversely it's going to be very positive. The steel, cement - they need (these). This is why we believe that China imports are still going up, like iron ore, producing steel, and they're exporting this. They've built the world's infrastructure.”
Echoing his thoughts, the Singapore Shipping Association’s president Esben Poulsson said this could “be a fantastic opportunity”.
He added: “I see (that) with the infrastructure built, One Belt One Road will indirectly and directly be helpful to shipping, and in a way the rise we’ve seen in the bulk market is in some attributable way related to One Belt One Road.”
Meanwhile, industry players in Singapore have also started looking abroad for opportunities. Singapore port operator PSA International earlier announced that it is investing in China's rail container network through the acquisition of Hong Kong-based Luck Glory International Limited, which owns 15.33 per cent stake in China United International Rail Containers Co, Limited.
Further afield in Egypt - home of the Suez Canal - Singapore-based shipping firm Pacific International Lines has invested US$30 million into its first logistics facility in Cairo. The company is also looking towards Africa for further expansion.
Mr Poulsson said these are part of overall efforts by companies to take a long-term strategic view and ride out the cyclical wave.
He said: “Shipping is quite a long-term business. (If) you invest in a ship, it's like investing in a building. It's not something you are going to unleash unless you are very lucky. You're not going to write it off in a matter of years. It's a long-term write-down period, so you must look strategic.
"I think some owners here in Singapore have seen opportunities and in other parts of the world. Brazil for that matter, (has) a lot of activity by Singapore companies. So this is part of international business - and shipping, you could say, is the ultimate international business."
Mr Poulsson added that the current climate could present opportunities for companies to acquire assets for cheap. "If you have the capacity to do it, of course with many assets being much lower in terms of acquiring companies for sale and at relatively much lower prices, there are a lot of assets of the hands of banks and so on. Those with the financial capacity - it is an opportunity, yes."
THINK LONG-TERM TO RIDE OUT THE WAVES: OBSERVERS
Industry players are not resting on their laurels amid the lull period.
The Singapore Maritime Foundation is hoping to attract more talent to join the industry. It has tied up with various stakeholders, including government and those in the private sector, to dangle incentives like scholarships in a bid to meet long-term demand for talent.
Mr Goh Teik Poh, chairman of the Maritime Industry Advisory Committee at the Singapore Maritime Academy, also acknowledged that some companies are facing difficulties doing this in the immediate term.
"I think we've to be careful when we talk about employers in general. Because there are those who will continue to train. In fact they will continue to recruit and train because they are taking a long-term view and the nature of the business is such that they need to continue with that.
“(There are also) some parties who - because of the downturn and loss in business - will have to scale back. So there is a mixture."
Despite the doom and gloom, a bright spot for Singapore could very well come from its ports. Observers have said that the cost of operating from Singapore remains higher than that of regional competition, but the infrastructure of its ports, efficiency and the rule of law here will ensure that Singapore remains at the forefront of the global shipping industry.