February 2016 Commerce Club Featuring David Arsenault, Hyundai Merchant Marine America and Hyundai American Shipping Agency

By Judith Schultz, GHPB

“The Future of the Container Industry” was the topic of the hour as David Arsenault, president and CEO of Hyundai Merchant Marine America (HMM) and Hyundai America Shipping Agency, addressed the Commerce Club luncheon at Brady’s Landing on February 11, 2016. Arsenault presented his thoughts to 200-plus attendees at the Commerce Club, outlining the events he believed to be the top ten factors influencing business in 2015 and 2016.

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“These are the notable events that I believe affect not only carriers, but all stakeholders,” said Arsenault as he introduced the presentation. “This is not an official ‘party line’, just the ‘world according to David Arsenault,’” he added as a disclaimer.

Arsenault named mega ships, intermodal complexity, cargo volumes, truck capacity shortages, chassis model changes, WCO labor disruptions, falling fuel prices, the Chinese economic slowdown, the Trans-Pacific Partnership Agreement, and logistics mergers and acquisitions as his ten most significant influencers of 2015.
Succinctly speaking to each industry event, Arsenault stressed his outlook that business tends to be cyclical in up and down rhythms, and the various factors discussed would lend to reshaping the industry for new opportunities.

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Significant factors cited for 2016 were the Panama Canal expansion conclusion, IMO SOLAS Container Weight regulations, mergers and acquisitions, automated commercial environments, grounded ops (terminal automation), a reduced overcapacity trend, a pending ILWU OCU contract expiration (6/30/16), moderate ocean rate recovery, continued carrier financial stress, and government infrastructure budget cuts.

Emerging trends highlighted by Arsenault included a look at vessel utilizations and idle containership fleets. He explained that although the container ships today are twice the size of 2009, the TEU capacity total in the overall industry is similar. He expects vessel size to increase more to accommodate as much as a 10,000 TEU capacity, with new vessels meeting the tighter emissions control and other marine environmental standards in the future. This leaves the question of how to employ the smaller, older vessels.

“Is there another deployment scheme for those smaller vessels? In some markets, yes; in many places, no,” he concluded. “Scrapping will escalate as ships come out of service.” Arsenault feels these events will serve to level out capacity options in the future and adjust rates upwards again to a more profitable level for business.

Fielding questions during the Q and A time, Arsenault discussed HMM’s focus on highly personalized service as part of their brand differentiation objectives and outcome possibilities from the Chinese economic slowdown.

“China has been on a super-heated run,” observed Arsenualt. “They are slowing down, but they are still the manufacturer for the world … I don’t think it’s the end for China. It’s just slower growth, but it’s still a good one -- 6% to 7%.”

Editor’s Note: Mark K. Knoy, president and CEO, American Commercial Barge Line, is the featured speaker for the next Commerce Club at Brady’s Landing on March 10, 2016. Individual seats and table sponsorships are available. Reserve your seat at www.txgulf.org/commerceclub or by calling (713) 678-4300.

  • Date March 3, 2016
  • Tags March 2016