Asia/Pacific News
NOL: Singapore Still Competitive Maritime Hub, Outgrew Need for NOL Years Ago
Ng Yat Chung, CEO of Neptune Orient Lines Limited (NOL), says that, even though the shipping line failed to remain profitable, he remains "bullish" on the future of Singapore - the world's biggest bunkering port - and is confident that it will maintain its position as a global maritime hub, local media reports.
As Ship & Bunker reported Monday, CMA CGM S.A. (CMA CGM) has announced that its all-cash voluntary conditional general offer to acquire outstanding shares of NOL has been accepted by the company's majority stakeholders, with CMA CGM now owning 78.07 percent of NOL's shares.
NOL was formed in 1968 by the government to support Singapore's role as a maritime hub, which Ng notes "might have been useful in the early days... but Singapore has become such a success now. Nearly all major carriers from around the world have a substantial presence here."
"Singapore's status as a maritime hub has outgrown NOL for some time. It is not dependent on NOL. It is attractive to the offshore sector, the LNG (liquefied natural gas) sector, there are other sectors that have come up," Ng concluded.
"Of course, the high cost of doing business here is an issue, but I think if we can continue to improve our productivity, we will be able to offset some of that," Ng.
Explaining why NOL had such difficulty during the shipping market's downturn, Ng cites Singapore's high costs for doing business, a NOL business model that did not fit the market environment, and ships that were too small compared to the company's competitors.
"In this environment of extreme overcapacity and severe freight rate erosion, competition is based on cost... Unfortunately, we haven't been able to cut costs fast enough to offset the collapse in freight rates," said Ng.
"The largest part of the cost for a carrier like us comes from the terminal costs, trucking costs, fuel costs – all these, you get a significant advantage in getting a better rate when you have big volumes. So when freight rates are very low, every dollar of the cost advantage matters. Otherwise, you're hamstrung."
One of the many maritime sectors Singapore is expanding into is LNG bunkering.
In February, Ship & Bunker reported that the Maritime and Port Authority of Singapore (MPA) had awarded its first licences for LNG bunkering, and that the new gas fuel suppliers were looking forward to developing Singapore into Asia's LNG bunkering hub.
