The sub-prime financial crisis was in full bloom in August so market awareness of the declining consumer expenditure was self-evident. As the core family wealth item, the house, began to lose value, even if only theoretically, the consumer reacted quickly as a result of the insecurity. Add to that some lead paint and there you have it.

The US West Coast railroads have also experienced another economic principle - price elasticity. Increases in rail costs have apparently found the boundary of the price elasticities. There is an imbalance of westbound empty containers, i.e. fulls are moving east, but they are not returning empty in the same number.

At the same time, the US East Coast ports are reporting a sharp increase in empty container handling, suggesting that an inland move from the Midwest eastward is cheaper than westward. As boxes are not in such high demand in Asia due to the slow-down in trade, carriers can take their time returning the empties and are using the All Water vessels via Panama.

The lesson to be drawn from this is that at the end of the day, economic principals do apply, even in an era of globalisation and we are at peril if we ignore this. The extension of this thought to the Asia-Europe trade is a cause for concern. Too much new capacity may be chasing a market not growing at double digit rates beyond 2007. Are carriers headed for a hard landing?