Regional shipping growth expected

Dubai: While the Gulf region is not immune to the effects of the global financial meltdown, the regional shipping sector would continue its upward growth and development trajectory, said executive vice chairman of DP World Jamal Majid Bin Thaniah as he spoke on the state of the maritime industry at Sea-trade Middle East Maritime on Monday.

"We have seen what happened in the US, we have seen what is happening in Europe, in Japan and for some reason we have not been affected yet.

"We have not seen any drop in volume here, trade in the Far East and the Gulf is strong, showing double digit growth," he said.

He, however, added that the effects may be seen at a later stage as the region was not immune to the impact of the crisis.

According to a report by the UN Conference on Trade and Development (Unctad), international seaborne trade increased dramatically in 2007 but has since declined due to the financial crisis.

The report said the global supply and demand for the commodities shipped aboard dry bulk carriers dropped by over 90 per cent between May and November 2008.

The Unctad report show-ed that by 2008 the world merchant fleet expanded by 7.2 per cent reaching 1.12 deadweight tonnes and the order book for new vessels earlier this year was at its highest level ever.

However, it said from mid-2008 evidence of cancellations of new ships emerged which could have a dramatic impact on ship building countries such as China, the Republic of Korea and Japan.

Shipping operators faced with losses may also decide to scrap old tonnage which could have implications for steel prices and jobs in major ship-breaking nations including Bangla-desh and Pakistan, the report said.

Thaniah said the bad news in the region was that shipping lines may suffer due to freight rates but encouraged them to examine rates and keep the industry healthy in order to combat the low demand prompted by the crisis.

"Experts say a recovery is expected in the second quarter of 2009, we are saying lets place ourselves on top now and by the time the recovery happens we can catch up and move forward with growth. I am not too pessimistic about growth in the region," he said.

He urged the industry to improve efficiency.