Asian shipping firms faces challenges

Asian shipping firms face "significant" challenges this year due to weakened earnings and limited access to capital, international ratings agency Fitch said Wednesday. "Weakened earnings, high committed capex ( capital expenditures) and restricted access to capital remain challenges for a number of rated shipping companies," it said in a statement. The majority of the seven Asian shipping companies under Fitch's ratings coverage "will continue to face significant operating and credit challenges in 2010 ," the agency said. Three companies are either on "negative outlook" or "negative rating watch", among them Indonesia's PT Arpeni Pratama Ocean Line and PT Berlian Laju Tanker, and Varun Shipping Company of India. "The oversupply of shipping capacity will continue to exert pressure on shipping rates and utilisation levels in 2010 ," Fitch said. Due to the long time needed to build new ships, the shipping industry is inflexible in terms of its ability to respond to the changing global supply and demand picture, analysts say. "The weak fundamentals in the global shipping markets have even affected domestic revenues of Indonesian and Indian shipping companies that benefit from cabotage laws", Fitch added. Cabotage restricts a nation's coastal trade only to ships belonging to that country.