The Daily View: China’s local bistro shipyard model

YOU DON’T need a Michelin star rating to operate a thriving neighbourhood restaurant. Just make sure the food is delicious, keep the bills inexpensive and hire friendly young waiters to serve the dishes up, and the hungry diners will come flocking through your doors.

That’s why the Els Café & Bistro on Stoke Newington Road — which carries my personal recommendation if you ever find yourself peckish in the environs of London N16 — is always packed for Sunday brunch.

The same underlying principals hold true if your chosen line of business is running a shipyard rather than a local eatery.

As markets editor Rob Willmington reports: “China is cementing its share of the global containership orderbook, with almost three-quarters of boxship capacity on order currently assigned to Chinese shipbuilders.”

I’ll spare you the obvious puns about key takeaways from Rob’s story, but orders for new containerships now stand well above 10m teu, equivalent to more than 30% of fleet capacity currently in service.

Nearly 99% of the book is being constructed in the three big shipbuilding nations of Asia, and almost 74% of it in China alone.

China’s dominance has been secured by competitive pricing and a reputation for almost always delivering high-quality output on time.

In other words, the winning formula is comparable to the restaurateur business model. On top of that, the sector also enjoys extensive state support, which Els Bistro does not.

That said, its owner does not have to contend with the active efforts of the world’s most powerful government to drive diners away.

Chinese shipyards, by contrast, have so far shrugged off the Trump administration’s drive to strong-arm shipowners into ditching their services by imposing extortionate fees on Chinese vessels calling at US ports.

This has been one of the big topics for my journalism this week, including a look at what tactics owners should be adopting while the US and China face each other off on the issue.

Trump’s motivation seems to be a desire to rejuvenate America’s long-dormant shipbuilding industry. So far — as the continued supremacy of Chinese yards underlines — the plan is not working.

It cannot possibly work, at least until the US has the metal-bashing muscle to start banging out basic boxships and bulkers once again. That day is some years off.

Will US-built tonnage offer the same value for money as Chinese vessels? Will the quality standards be just as good? Will delivery deadlines be met as universally? We shall see.

But let me draw these observations to a close by pointing out that the UK franchise of Pizza Hut went into administration a few days back.

Nobody can be forced into eating at American fast food chains if reasonably priced, far healthier and entirely more tasty alternatives are on hand in walking distance.

David Osler
Law & marine insurance editor, Lloyd’s List

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