United Arab Shipping Corporation (UASC) Considers Size As Matter

United Arab Shipping Corporation (UASC) Considers Size As Matter

8/26/2014 Umut Türker 2070 Times Read

Dubai: For at least five years now, the container sector has been in indifferent health. Several efforts have been made by the big players to improve profitability – forging alliances, resorting to slow steaming, announcing unmaintainable rate restoration initiatives.

 

United Arab Shipping Corporation (UASC) thinks it has the problem licked by introducing such economies of scale into its operations as to remain profitable with even rates that, on the face of it, appear unremunerative.

 

 “If we have good load factors, and resort to slow steaming, our slot costs go down significantly,” says the Dubai-headquartered shipowner’s president and CEO Jorn Hinge.

 

“We can ensure that our slots are filled by having joint container pools, joint terminal contracts and container interchange arrangements,” he adds, in a nod to ongoing speculation that UASC will be drawn into some container alliance soon.

 

“Alliances make good sense in liner shipping. They allow lines to adjust capacity more easily to fluctuating market demand,” Hinge says.

 

UASC’s belief in its strategy is apparent from a fresh $2.3bn newbuilding programme at Korea’s Hyundai Heavy Industries, involving 11 latest-generation 18,000 teu leviathans, of which partner China Shipping Container Line (CSCL) has ordered five – for delivery beginning the second quarter of 2015.