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Wait until the full force of India kicks in and the burgeoning intra-Asia trade explodes
With its 1.3 billion people and growing middle class, India is now poised to make a China-scale impact on the already gargantuan, but still financially feeble, intra-Asia trade.
As an import destination, less than 22 per cent of Indians live under the global poverty line, nearly an eight per cent reduction from 29.8 per cent over a two-year period. Forty million now are classified as middle class in India. One estimate even sees India's middle class rising to 475 million by 2030.
Slowing things down though, is the sorry state of India's clogged, outmoded transport infrastructure and archaic bureaucratic procedures. While these problems are being addressed by a reform-minded government, there is still much to do before serious and widespread technical flaws are put right.
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Doing what needs to be done to rid intra-Asian ports of congestion that stymies their success
With the intra-Asia market expected to grow four to six per cent a year, it is now vital to eliminate the congestion that threatens to make failures out of the success of ports' growing cargo volumes truly represent.
"Intra-Asia trade places requirements on ports and terminals for flexibility and efficiency. This creates challenges to terminal operations in yard shuffling needs, as well as transshipment and operational complexity," warned Hutchison Ports research Chief Helen Li.
Today, intra-Asian growth areas include Vietnam, Malaysia and the Philippines. Ports that are well-positioned to serve the trade because they are also sources of cargo and well able to contribute well-established networks, but are still prone to congestion.
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Which way to go in intra-Asia? With LNG, scrubbers or hybrid low-sulphur gasoil blends
For many, if not most ocean carriers plying the intra-Asia trade, the decision of what fuel to use before January's United Nations imposition of a worldwide virtual sulphur ban is becoming clearer given the unique cost structures involved.
From January 1, 2020, the IMO will require shipowners to either use fuel with a sulphur content of 0.5 per cent or less - down from 3.5 per cent today - by using low-sulphur gasoil blends, liquefied natural gas (LNG) or scrubbers.
Being in the highest volume and least lucrative of the world's major trades, intra-Asian carriers must keep costs down if there is to be the slightest chance of profitably. In this, there appears to be one choice of three available for those dedicated to the trade lane as opposed to others, which can treat it as a loss leader extension of their principal east-west trades.
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Advantage lurks in downmarket nature of world's biggest but least valuable trade
Intra-Asia, the world's biggest, yet least lucrative, trade by volume is facing interesting times this year and the next as the industry faces IMO 2020, the UN's dreaded sulphur cap next January.
Unless there is substantial non-compliance to the UN's International Maritime Organisation's (IMO) virtual ban on sulphur emissions from ships, this is the first time such draconian regulations will be applied to the intra-Asia trade.
Maritime think tanks like BIMCO and Drewry say weaker lines may well go bankrupt if they cannot get shippers to pay the much higher fuel costs coming their way in January.
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Intra Asia Trade Specialists |
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