Cao Wenjin, founder of IMC Group, put forward in an interview that the global shipping downturn is likely to last longer than expectation to 2017 and newbuilding price may fall further by 20%. Cao advises shipowners “to keep the money in your pocket” to get through current depression and any further predicament.
With new vessels growing bigger and the extension of Panama Canal, Cao expressed his concerns over increasing overcapacity and growing elder vessels for scrapping. According to Cao, owners should order vessels at least after two years or even longer due to the lasting overcapacity and economic depression. Domestic owners even need to wait for five year or longer. Capital and adequate cargoes are the keys for survival.
Besides, Cao suggests that owners should pay more attention to risk control of bank loans. In 1980s, many owners applied for large loans from banks to expand their fleet. But in the later global shipping catastrophe, some owners have to sell all vessels to pay back the loans with ship price and freight rates collapsed.