Aug’10 export from Asia to Europe was quite promising as shown with 2 digits growth for the past 7 months on end while Eastbound from Europe to Asia was continuously minus for 4 months in growth. Meantime, the freight rate has already begun weak by larger container ships entered in the service. In USA Sep consumption was not expanded as strong as expected for demand of new school term. The credit turnover including the credit card has been shrunk for continuously 23 months. This seems to have made American change their life under loan which might certainly cause a bit worry about misfire of year-end sale rush. The average slot occupation ratio of ships in Transpacific routes has been reduced to around 90% but not worse than Europe routes. In China all offices and factories would be closed from Oct 1 to 7 due to the Anniversary of the Founding of the People’s Republic of China. Therefore, shipping lines would reduce the number of ships to cope with actual demand and at the same time in order to cut the cost. However, shipping lines used to promote lower freight rate to fill the space of own ships.
It is the key for shipping line how to manage overtonage by introducing the new containerships and how to stand pressure of downturn in freight rate toward slow cargo movement in winter season. It would be predicted to need to cut ship space max one million TEU by the end of this year. This means that ship space cut will be back from the lowest, 220,000 TEU to over one million TEU in Jan’10 when 1.51 million ship cut was recorded. Shipping lines’ situation will be continuously severe for a while.
The subject changing to be serious one. The past one month is to be the month which China government has proposed people in the world if China is truly worthy for world factory through the territorial issue of Senkaku islands with Japan by capture of Chinese fishing boat which had made Chinese government poor excuses /revenge such as export stoppage of rare earth, delay of procedure of import & export, custody of employees of Fujita company as a spy charge, of course including cancellation of meeting with many Cabinet class and cancellation of nongovernment events, group tour to Japan which are countless if nominated. The strong ambition of Chinese government for the territorial issue, the ocean right and interest have been disclosed. We easily know how seriously the current political power (Communist) has a crisis sense for collapse if we would see their rigid control in freedom of speech. Therefore, Nobel peace prize given Mr.Liu Xiaobo who is imprisoned as a democratic activist would be totally unacceptable by Chinese government.
China could be quoted as the lion woke up after long sleeping, who could obtain the power to control the world (which is the illusion). China is proud of being as the world factory which has made China possess No.1 foreign currency reserves in the world and operate it as money game and acts like obtaining the miracle chicken lay an gold egg by spending money to buy the bonds of USA, Japan, Greek etc and would take advantage of using them. Especially challenging to Japan. Sometimes, they are aiming to put Japan into economic chaos and weakening Japan in economy. It seems to be the sword in the throat to Japan if Japan fully depends on China and it would make China confident in easy control for Japan. To buy Japanese bonds would guide Japanese Yen strong which would shake up Japan de-industrialization. In fact China made profit through selling Japanese bonds up to 2 trillion Yen in Aug. They are an amazing alchemy who are equal to an excellent American Money Fund. China might concoct an territory issue to turn everybody eyes away from the fund issue. China is strongly pressing Japanese companies to disclose their black box to get them join in their domestic market as a bargaining point and they try to use them as their own technical skills to sell their products to the world. As a result, their sense of patent is not high and too generous in a fake.
Own currency has been linked to US dollar. China has not at all left it to be subject to the market but be controlled. (They are afraid of stoppage of their economic growth as collapse of their government.) Harmony on human rights with countries of the world would make them in danger? China is insisting that they don’t come a grownup yet so that they request to treat them with care until grownup.
What I want to say is only Japan who could peacefully turn China into the right direction. It is natural that manufacture places would move from China to Vietnam and to India. However it would take time. We could not neglect 1.3 billion people of China. Japan has been in close relation with China since ancient times like Japanese culture flowered in Japan after Chinese culture was imported through Korea of which culture DNA has been transferred from generation to generation of Japanese. It might happen to be quarrel each other because of neighbor. It does not mean that they hardly could understand each other. It is inevitable for us to endeavor to get to know more about China and to get the true character of the peaceful China known to the world in cooperation with mentally close countries such as Korea, Taiwan, Hong Kong, Thailand and Singapore. An individual of each country is friendly, wonderful, beautiful and cheerful people. Therefore, there is no reason to understand each other better. Japanese is the most suitable to help China to play an important role in the world in coming century.
Returning the story back to the container, prosperity of container industry should exist in the peaceful world. Container is the box which should bring happiness to the world. Each leasing companies have been keeping high utilization such as over 95% which promises them to keep the year of 2010 to be No.1 profitable year in the history. Containers have been operated under long term lease which guarantee them staying long in shipping lines’ system due to lower rates and most of them to be returned in Asia of demand area.
Under such promising leasing situation M & A (mergers & Acquisitions) would be restored again. The 40 years’ history of container leasing companies has been for M & A. The most active leasing company would be the target for M & A because the huge profit would guaranteed the owner from selling the company. It is regrettable to say that Triton which I had worked for 26 years would be for sale this time due to confliction among 11 heirs of the Pritzkers in Chicago who is one of the richest families in the world. The selling price would be US$1 billion which is lower than US$2.5 billion for sale in 2006 which was said to be included the debt. This time seems to be quite serious for Triton to be for sale. Thus, I would just pray Triton to be not sold to the existing leasing company because all employees would lose their job. One of funders of Triton, Chairman, Ed Schneider would suggest the Pritzkers to sell Triton to the money fund company who invests money but not involved in management. At moment nobody know who is the buyer of Triton under economic circumstance. I just wish Triton to be sold in the best buyer who would make everybody happy.
Anyway, the container leasing company is to aim at operating larger scale of fleet which make their operation cost saved. The current fleet size of Triton is 1.6 million TEU. If this operation fleet would become double of 3.2 million TEU with the same manpower it simply could cut half of operation cost. Why not aiming at it? The current computer control system would easily manage the fleet of over 3 million TEU. The existing container leasing companies seem like the finance leasing companies which would not be attractive to shipping lines any more. How does each leasing company charm the shipping lines with the same quality of containers? If they just compete with long terms they have been nothing but competition in the rate.
It is said that TAL, GeSeCo would be on sale in any situation. In early 1970s CTI, one of major leasing companies would introduce the concept of Master Lease Contract which allows shipping company to return certain volume of containers at the certain places in the world. Seacontainer would adopt DPP (Damage Protection Plan) in leasing containers which had contributed more in container leasing among shipping lines. Interpool had been specializing in long term lease which contributed to shipping lines at the cheap finance-like containers rate. Such all unique leasing companies have already disappeared in the leasing market. If the existing leasing companies are satisfied at the current situation there would be no bright future to them.
The new container price would be reduced to $2500 per d2 from $2700~2800 in Oct. it would be true that the price of $2700~2800 would be at high side in the history. Therefore, the new price would be set at appropriate price. If container is just the box to carry cargo safe its price would be more cheap and stable.
From now on it is true that millions of old containers would be put in the 2nd hand market. In order to find 2nd life for the old containers 2nd hand container dealers would be required important role in the world and it would be their mission. I would like to contribute something better for old containers in domestic market by rousing public for convenience of containers and create demand of old containers.