ASF SERCASF Shipping Economics Review Committee
c/o Japanese Shipowners’ Association
Kaiun-Building, 6-4 Hirakawa-cho 2-chome
Chiyoda-ku Tokyo Japan 102-8603
E-mail : int@jsanet.or.jp
Tel:+81-3-3264-7180 Fax:+81-3-5226-9166

2 November 2011, Seoul

NOTE OF UNDERSTANDING
adoptedat the 24th Interim Meeting of the Asian Shipowners’ Forum (ASF)
Shipping Economics Review Committee (SERC)

The 24th Interim Meeting of the ASF SERC was held in Seoul on 2 November 2011.
The meeting was attended by 21 delegates from the ASF member associations ofASEAN, China, Chinese Taipei, Hong Kong, India, Japan and Korea. The attendancelist is attached. At the beginning of the meeting, the delegates expressed their deepest
sympathies to the victims of the flood in Thailand and agreed to make their maximum
possible efforts to give their support and contribution for the relief of the victims.
1. World Economy
In light of overall economic outlook emanating from the sovereign debt crisis, straining
global financial markets, weak economic growth and unacceptably high unemployment
in advanced economies, as well as elevating inflationary pressures on emerging
economies, SERC delegates recognised that the global economy was close toplunging into a double-dip recession, unless all necessary actions are taken bypolicymakers. Under these circumstances, the meeting noted the importance of senior
executives of shipping companies making their individual business decisions based on
evaluation of accurate market and trade data to support smooth flows of global trade,
coupled with considering the recent experience of the industry during the difficult
period since the collapse of Lehman Brothers in 2009.
2. Dry Bulk and Tanker Shipping1) Dry Bulk
Delegates heard a report on recent upward trends in the Capesize market since thesummer of 2011 mainly in the wake of accelerated charter of vessels due to typhoons
occurring in the Asia region in the summer and recovering demand for iron ore shipped
to China against a backdrop of relatively lower global prices. It was reported that
although stable seaborne growth is expected to continue partly due to firm demands forurbanisation in the emerging countries, the current recovery was unlikely to besustainable in the long-term and the market would be difficult over at least the next few
years as a direct result of the continued introduction of new vessel capacity and thesluggish global economy. In the meantime, some positive impact on prospects of the-1PR1NOU 24th SERC (final_rev).doc

market was also noted resulting from accelerated scrapping of obsolete vessels andexpected further consolidation in Chinese shipyards.
2) Tanker
It was reported that the overall tanker market still remains sluggish, mainly due tofactors such as overcapacity coupled with slower demolitions and slower than
expected phasing out of single-hull vessels. In addition, other factors are higher prices
for crude oil and gasoline triggered by disruptions in the Middle East that areundercutting recovery in petroleum demand in advanced nations, reduced number ofvessels used for floating storage as well as negative economic sentiments present in
the market, despite firm demand in emerging countries that have exceeded the level ofthe previous year. The delegates noted the view that the market does not look good for2012 and beyond. Supply will still outpace demand, hampering market recovery until
2016. The challenge to the industry participants will be how to respond to the supply
and demand gap.
3. Liner Shipping1) OverallContainer business is now facing new challenges which are structurally different fromthe 2009 downturn, followed by a sharp decline in cargo volumes. The meeting
recognised that liner shipping could be at risk of falling into a prolonged slump, owing tothe current supply-demand trends. Delegates shared a sense of concern that themarket could encounter further deterioration, given that it is estimated that newcapacity of 2 million TEU has been ordered since the middle of 2010.
2) Transpacific trade
As for the transpacific trade, it was reported that US containerised imports had falteredwith the third consecutive monthly drop in year-over-year volume from June 2011 dueto the sluggish US economy suffering a slow improvement in the unemployment rateand poor performance in the housing market which has depressed consumerspending. As for volume growth in coming years, it was reported that total volume inthe eastbound trade is forecasted to be down to 2.7% this year and 4% to 5% in 2012
on a year-on-year basis, but others had other perspectives for trade growth. Amid thedifficult time facing the liner industry, shipping companies are urged to make efforts toprovide views to customers to help them recognise the characteristics of the liner
business, especially the close correlation between the quality of liner services and thescale of investment implemented by the shipping companies, in order to achieve asustainable liner business in the long term.
3) Intra-Asia Trade
In connection with the intra-Asia trade, container traffic in the trade remained relatively
brisk, with a steady growth of 5.6% to approximately 9.23 million TEU for the first eightmonths in comparison with the same period in 2010. The delegates shared someconcerns over supply and demand trends, as well as steadily escalating costs and theimpact of port congestion. The delegates also noted that the market would continue to-2PR1NOU 24th SERC (final_rev).doc

be relatively firm owing to increased trade liberalisation in the Asian region and strong
demand in emerging countries. With regard to the flood in Thailand, the delegates
expressed their expectation for the earliest possible normalisation of economic
activities from current disruptions.
4. Antitrust Immunity
Reports were made on recent developments on the antitrust immunity systems for
ocean carrier agreements around the world. The delegates welcomed recent
decisions by the Singapore and Japanese governments that their antitrust immunity
systems should be maintained. It was also noted positively that APEC formally
adopted a set of guidelines related to liner shipping in June 2011, which recommends
APEC member economies continue to exempt non-ratemaking agreements betweenocean carriers from their respective competition laws. The delegates reaffirmed theASF's long-standing position that the antitrust immunity system for all liner agreements
is indispensable for the healthy development of the shipping industry as well as thewhole trading industry.
5. Other Issues
1) A report was made on recent developments on Greenhouse Gas (GHG) emissions
and the delegates expressed concern about the possible risk of the entire shipping
market being covered by an emission trade scheme introduced by the EU. Themembers expressed a concern about the risk that the shipping industry will become amajor source of funding for non-shipping sectors, initiated by the High-level Advisory
Group on Climate Change Financing (AGF). The delegates fully agreed that realisticand effective measures to reduce GHG emissions should be dealt with in the IMO.
2) Reports were made regarding the accelerated increase in piracy attacks off theCoast of Somalia and in the Indian Ocean, and delegates expressed grave concern
about this situation. It was recognised that all possible countermeasures should betaken by governments and international organisations in order to ensure the safe
navigation of vessels transiting high risk area.
***

The ASF Shipping Economics Review Committee (SERC) is a forum for senior
executives of Asian shipping lines to review macroeconomic trade information anddevelopments, as they relate to shipping and trade. The objective of the SERC is toimprove the quality of executive decision-making by the review of available
macroeconomic data and the sharing of perspectives on major trade and shipping
policy issues.
-------------------------------------------3PR1NOU 24th SERC (final_rev).docASF SERCASF Shipping Economics Review Committee
c/o Japanese Shipowners' Association
Kaiun-Building, 6-4 Hirakawa-cho 2-chome
Chiyoda-ku Tokyo Japan 102-8603
Tel:+81-3-3264-7180 Fax:+81-3-5226-9166
E-mail :int@jsanet.or.jp

2 November 2011
The 24th Interim Meeting of
the ASF Shipping Economics Review Committee (SERC)
in Seoul on 2 November 2011

Attendance List
CHAIRMAN< Japanese Shipowners’ Association >Mr Yasumi Kudo

Vice President, Japanese Shipowners’ Association(President, Nippon Yusen Kabushiki Kaisha)

VICE CHAIRMAN< Korea Shipowners’ Association >Mr Young Min Kim(President & CEO, Hanjin Shipping Co., Ltd.)MEMBERS< China Shipowners’ Association >Mr Zhu Changyu(Deputy Manager, Research Department
China Shipping (Group) Co.)

< Federation of ASEAN Shipowners’ Association >< Indonesian National Shipowners’ Association >Mr Djoni Sutji
Capt Witono Suprapto
Mr Bani M Mulia(President Director, PT Indonesia Bulk Carrier)(Director, PT Andhika Lines)(Managing Director, Samudera Indonesia）< Malaysian Shipowners’ Association >Mr Zulkafli M Amin

(General Manager, Commercial Liner Business, MISC BHD)

< Singapore Shipping Association >Mr Goh Teik Poh(President, South Asia Region, APL Co. Pte Ltd.)< Vietnam Shipowners’ Association >Mr Ngo Xuan Hong
Mr Le Van Thanh(CEO, Transport and Chartering Corp., (VIETFRACHT))(Vice CEO, Transport and Chartering Corp., (VIETFRACHT))< Hong Kong Shipowners Association >Mr Allan T S Wong

(Managing Director, Corporate Sales,Orient Overseas Container Line Ltd. (OOCL))-1-

PR3 Attend List 24SERC(final).doc

< Indian National Shipowners’ Association >Mr Haider Nawaz(Vice President Business Development,Varun Shipping Company Ltd.)< Japanese Shipowners’ Association >Mr Takuji Nakai
Mr Yukikazu Myochin
Mr Masafumi Yasuoka
Mr Junichiro IkedaMr Shogo Terajima(President, NYK Container Line Ltd.)(Executive Officer, Kawasaki Kisen Kaisha, Ltd.)(Director, Senior Managing Executive Officer,Mitsui O.S.K. Lines, Ltd.)(Managing Executive Officer, Mitsui O.S.K. Lines, Ltd.)(Executive Secretary to the President, Corporate Planning Group,
Nippon Yusen Kabushiki Kaisha)< Korea Shipowners’ Association >Mr Seock-Dong Lee
Mr Dae-Hyoun Baek

(Senior Vice President, Head of Liner Unit,
Hyundai Merchant Marine Co., Ltd.)(Managing Director, Bulk BU, Hanjin Shipping Co., Ltd.)< National Association of Chinese Shipowners >Mr Huang Chun-WeiMr Randy Chen

(President, Evergreen Shipping Agency (Korea) Corp.)(Director, Wan Hai Lines Ltd.)ASF SECRETARIATMr Yuichi Sonoda(Secretary General, Asian Shipowners’ Forum)

LEGAL COUNSELMr Jeffrey F Lawrence(Cozen O’Connor)

SECRETARIAT
Takashi Ishikawa
Daijiro Mizushima(General Manager, Planning Division,
Japanese Shipowners’ Association)(Assistant Manager, Planning Division,
Japanese Shipowners’ Association)-------------------------2-

PR3 Attend List 24SERC(final).doc