Zhang Ye: World shipping development should focus on Chinese policy
The JOC’s 7th Annual TPM Asia Conference was held during Oct 16-17, in Shenzhen. Zhang Ye, president of Shanghai Shipping Exchange attended the meeting as a conference speaker. In his speech “World shipping development should focus on Chinese policy”, he gave four points towards to China shipping development.
First, attention should be given to “Guidance on resolving contradiction of severe overcapacity” recently imposed by State Council. Mr. Zhang said, in the coming 5 years, these new policies aimed at reining in severe overcapacity in the steel, cement, electrolytic aluminum, plate glass and shipping industries, may result in a slightly turbulence of shipping, while benefit will be brought by such policies in long run.
Second, China is tackling chronic overcapacity problems, and the shipping industry should look into the Twenty Suggestions on Helping the Shipping Industry to Reform and Become a Healthy China (hereunder “the suggestions”) ,which includes tackling the overcapacity, transformation and upgrading the industry, improving the market supervision, relieving the burden of enterprise and upgrading the service level of the industry. Mr. Zhang believed that, such policies will help the recovery of the industry and promote a smooth, sustainable development of the domestic shipping market.
Third, Zhang believed the China (Shanghai) Pilot Free Trade Zone is an opportunity for carriers and SSE. The exchange also plans to set up a derivative trading company in the new zone aimed at furthering the development of the freight derivate market and promoting the development of Shanghai shipping center.
Four, Mr. Zhang believes that supervision, transparency, long-term agreements (especially the index linked contract) and derivatives will be the four key factors to maintain freight rates. The recent launch of accurate shipping rates filing system by Ministry of Transport would be the first step to meet the target. Mr. Zhang said,” in the past, they only needed to provide a range of shipping freight. Some carriers were providing their shipping freight in a range of $50 to $5,000, which is ridiculous”. When comes to the prospective of China derivative development, Mr. Zhang is full of confidence. He believes the industry will become more receptive to the derivatives market. “It is a very good tool for hedging, and it all depends how you are going to use it,” Mr. Zhang said.
The question, given by the moderator, Peter Tirschwell, is whether the shipping giants of P3 alliance have knocked at the right door in China. “As the law-ruled government, the Chinese government will manage this issue according to law”, Mr. Zhang said.