K Line president Eizo Murakami has used his annual New Year’s message to highlight the need for stability and certainty in geopolitics and trade in order to sustain economic growth.
Murakami said 2018 was a year of “gradual improvement” for the world’s economy.
This was despite setbacks in developing markets, such as the economic slowdown in Latin America, and currency depreciation in Argentina and Turkey.
The strong US economy has lent support to this global growth, he continued, but could also be a destabilising force, which could have a knock-on effect on shipping.
“The trend towards protectionism, which has arisen in recent years, has grown even stronger. In particular the development of ‘America First’ policies by the United States has had a major destabilising effect around the world,” the K Line president said.
He cited the US’s renegotiation of the North American Free Trade Agreement and trade friction with China as examples.
“Such actions have greatly upset the global economy, and there is great concern regarding the effect they will have on trade, which is the very foundation of our business,” Murakami said.
Instability in the Middle East, due to increasing tensions between Iran and Saudi Arabia, and the UK’s problematic exit from the EU have led to increased uncertainty and could potentially hamper the steady growth in the world economy that is expected during 2019, he explained.
K Line is monitoring these risks and the effects they could have on operations and will “promptly take whatever countermeasures are needed”.
Murakami said the supply-demand dynamic in international shipping is steadily improving, as economic growth worldwide translates into increasing demand for marine transport.
Reduced tonnage supply pressure within the dry bulk and container sectors is also having a positive effect.
This has led to gains in K Line’s energy and dry bulk segments, but its container and car carrier operation remain embattled and will likely cause the group to post a loss during the fiscal year 2018-19, said Murakami.
