Global Shipping’s ‘Perfect Storm’ to Pass, Veteran CEO Says
The global shipping industry has run into very rough waters in 2020 as the virus crisis that's engulfed China and roiled commodity markets added to headwinds from a seasonal slowdown and poor weather. One chief executive who oversees a fleet of 55 vessels says there'll be a comeback.
"This is certainly temporary," said John Wobensmith of Genco Shipping & Trading Ltd. "We think that the second half will spring right back," the industry veteran said in an interview from New York, citing the potential for stimulus in China aiding demand, coupled with a lower supply of ships.
The health emergency has hurt prices of everything from iron ore to soybeans, and weighed on freight rates that were already under pressure. Genco's dry-bulk vessels ferry iron ore, coal and grains, linking mines and farms with the markets that need the raw materials, including Asia's top economy.
The hit from the virus, which has slowed activity at some Chinese ports, has come on top of other challenges that have hurt rates, according to Wobensmith.
Australia miner Fortescue Metals Group Ltd. this week also highlighted the scope for stimulus. China's desire to hit 2020 growth targets should boost iron ore because it'll require investment in steel-intensive infrastructure, Chief Executive Officer Elizabeth Gaines told Bloomberg Television.
Genco sees potential for stimulus in the second half, which would fuel demand for steel-making raw materials.
At the same time, with more ships being scrapped and no orders for new vessels amid the negative sentiment, that would mean lower supply of vessels when demand picks up, according to Wobensmith. "The industry will be in a stronger situation," he said.
(Updates to add Fortescue comments in penultimate paragraph)
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