Chinese shipbuilders will prolong a glut of container ships and dry-bulk carriers because low freight rates help the country’s development, according to billionaire Wilbur Ross.
Chinese companies control about 20 percent of the world’s container ships delivering manufactured goods and build 40 percent of new vessels, the founder of WL Ross & Co. said in an interview on Bloomberg TV’s “The Pulse” with Anna Edwards today. The country wants to preserve jobs in the industry and make its exports competitive by keeping transportation costs low, he said.
“China has an incentive to keep rates down because it facilitates their exports,” Ross said. “There’s a great danger in those segments like container, and maybe bulk, that China will continue to force-feed vessels and hold those rates down.”
Earnings slumped after owners ordered too many ships before the global recession. The capacity of commodity carriers swelled 68 percent since 2009, more than double the pace of trade growth, according to Clarkson Plc, the world’s largest shipbroker. The container fleet expanded 45 percent while trade advanced 20 percent, figures show.
Ross was among investors who bought a fleet of 30 tankers hauling gasoline and diesel two years ago in a $900 million transaction. His company also has a majority stake in Navigator Holdings Ltd., which controls one-third of the world’s midsized carriers of liquefied petroleum gas.